Patricia Fraccaro v. Municipal Property Assessment Corporation, 2015 CanLII 24127

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 30, 2015

FILE NO.: WR 131236

Assessed Person(s): Patricia Fraccaro

Appellant(s): Patricia Fraccaro

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 19

Respondent(s): City of Hamilton

Property Location(s): 211 Colleen Crescent

Municipality(ies): City of Hamilton

Roll Number(s): 2518-140-230-08400-0000

Appeal Number(s): 2997408, 3024666 and 3089509 (deemed 2015)

Taxation Year(s): 2013, 2014 (and deemed 2015)

Hearing Event No. 568844

Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

ARB Case Name: WR 131236

Heard: October 21, 2014 in Hamilton, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Patricia Fraccaro	R. Baranowski
MPAC	W. Sommerville and J. Wilson
City of Hamilton	No one appeared

DECISION OF THE BOARD DELIVERED BY CRISTINA MARQUES

ISSUE

1The subject property is a two-storey detached house on a 1.25 acre lot, with an effective frontage of 90.72 feet (”ft.”) and an effective depth of 326.56 ft. The house was built in 2004 and MPAC classifies its quality level as 9. It has total building area of 6,762 square feet (“sq. ft.”) with 4,365 sq. ft. of basement of which 3,100 sq. ft. are finished. In addition it has an attached garage and outdoor swimming pool.

2For taxation years 2013 and 2014 the assessment was returned pursuant to the Assessment Act (“Act”) at $1,869,000.

3William Sommerville, appearing as advocate for MPAC takes the position that the assessments as returned reflect correct current value and should be confirmed.

4Robert Baranowski, appearing as the representative and witness for the appellant, takes the position that assessments as returned are too high. He provided the sale of 133 Deerview Drive, which sold in December 2011 for 1,890,000 or $195 per square foot of building. Applying the $195 per square foot value to the subject property, 6,762 sq. ft., Mr. Baranowski concludes that $1,319,000 is a better reflection of current value for the subject property.

5The Assessment Review Board (“Board”) must determine if the assessments for 2013 and 2014 taxation years reflect correct current value as of the legislated valuation day, January 1, 2012, and if they are equitable, having reference to the assessments of similar lands in the vicinity.

Decision

6The Board finds that the current value of the property is $1,869,000.

7The Board also finds that an assessment at the current value as found is equitable with the assessments of similar lands in the vicinity; hence no reduction is required to achieve equity.

REASONS FOR DECISION

8The Board must have regard to s. 1, 19.(1), 19.2(1), 40.(17), 40.(19), 44.(3)(a) and (b), and 45 of the Act when determining whether or not the assessment under appeal is correct.

9Section 1 of the Act defines current value as follows:

“current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

10Section 19.(1) of the Act states:

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

11Section 19.2(1) of the Act provides:

19.2(1) Valuation days. – Subject to subsection (5)¹, the day as of which land is valued for a taxation year is determined as follows:

2. For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.

12Section 40.(17) of the Act states:

40.(17) Burden of proof. – For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

13Section 40.(19) of the Act states:

40.(19) Board to make determination. – After hearing the evidence and the submissions of the parties, the Board shall determine the matter.

14Sections 44.(3)(a) and (b) of the Act state:

44.(3) Reference to similar lands in vicinity 2009 and subsequent years. – For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

15Section 45 of the Act states:

45. Powers and functions of the Assessment Review Board. – Upon an appeal with respect to an assessment, the Assessment Review Board may review the assessment and, for the purposes of the review, has all the powers and functions of the assessment corporation in making an assessment, determination or decision under this Act, and any assessment, determination or decision made on review by the Assessment Review Board shall be deemed to be an assessment, determination or decision of the assessment corporation and has the same force and effect.

Current Value – Evidence and Analysis

MPAC’s Position

16Jason Wilson, who testified for MPAC, presented Exhibit 1 consisting of an MPAC report which included:

• location and current value study map;
• photograph of the subject property;
• property profile;
• current value study with four comparable sales;
• time adjustment factors table;
• sales for price changes over time schedule;
• equity analysis studies.

17He submitted that the time adjusted sale prices of the four comparables provide an indication of likely values for the subject property. Details of each property on Current Value Study are summarized in Table 1:

Table 1

	Address	Assessment	Sale Date	Sale/ Time Adjusted Sale ($)	Building Size (sq. ft.)	Quality of Construction	Lot Size/ (acres)	Year Built
Subject Property	211 Colleen Crescent	1,869,000	n/a	n/a	6,762	Q9	1.25	2004
Sale A	546 Sulphur Spring Road	1,454,000	Jul-2011	1,700,000/ 1,742,623	4,729	Q8	3.96	1996
Sale B	82 Sulphur Spring Road	957,000	Jul-2012	1,085,000/ 1,054,518	4,074	Q8	0.62	1989
Sale C	269 Deercreek Drive	1,078,000	Aug-2012	910,000/ 880,628	4,785	Q7.5	0.20	1991
Sale D	3 Anslow Court	1,415,000	Jun-2012	1,250,000/ 1,220,156	5,523	Q8	0.60	1997

18Mr. Wilson stated that suggested comparables are considered by MPAC to be good evidence of values of larger dwellings in the vicinity. He relied on these four sales to determine whether properties are assessed at or close to their current values, and indicated that the direct sale comparison approach accurately reflects the value of the property, as required by s. 19.(1) of the Act.

19The assessor testified that the time adjusted sale prices of the four comparables provide a range of likely values for the subject property between $880,628 and $1,742,623. The assessment for the subject property at $1,869,000 is slightly above this range, because the subject property is superior to the comparables, both in building size and quality of construction. He considers sales A and D to be the best comparables because these two properties have lot and building sizes that are most comparable to the subject property.

20In order to find comparable sales, the assessor had to move outside of the subject’s vicinity A06. The suggested comparables are in the vicinities A12 and D06 which is in the same MPAC economic area as the subject property. Mr. Wilson explained that an economic area is a larger geographical neighbourhood that comprises several vicinities that share identical market influences. He indicated that this geographical area is changing in the sense that after the sale, properties tend to undergo substantial renovations, or re-built. Therefore, valuation based on per square foot of building may be misleading. The assessor gave details on MPAC’s analysis of sales that occurred between January 2011 and December 2012, and stated that the area experienced an overall increase of 10.78% in real estate market. Time Adjustment Factors (“TAF”) for each month during the study period were provided together with the data for the 240 sales analyzed.

Appellant’s Position

21Mr. Baranowski filed Exhibit 2 consisting of the appellant’s issues and calculations. He directed the Board to examine his comparable property which in his opinion is a good indication of value for the subject property. Details of the property is summarized in Table 2:

Table 2

	Address	Assessment	Sale Date	Sale/ Time Adjusted Sale ($)	Building Size (sq. ft.)	Quality of Construction	Lot Size/ (acres)	Year Built
Subject Property	211 Colleen Crescent	1,869,000	n/a	n/a	6,762	Q9	1.25	2004
Sale 1	133 Deerview Drive	1,454,000	Dec-2011	1,890,000/ 1,893,780	9,689	n/a	0.48	1988

22He indicated that this property sold on the open market for, an unadjusted for time, price of $195 per square foot. It is his contention that this is the best evidence of current value, and he urged the Board to reduce the current value assessment of the subject property accordingly.

Board’s Analysis of Current Value

23The best indicator of current value is an arm’s length and market-tested sale of the subject property on the valuation date, January 1, 2012, or close to it. Since the subject property did not sell, the Board relies upon the sale of similar properties in the vicinity on or close to the valuation day.

24To permit a direct comparison to be made between the subject property and a comparable there must be sufficient similar elements such as total building area, lot area, age and quality of construction. In this case the Board has five suggested comparables.

25Mr. Wilson provided four sales, and urged the Board to consider two of those sales as the most comparable properties to the subject property. Sales A and D were constructed in 1996 and 1997; have total building areas of 4,729 and 5,523 sq. ft.; have effective lot areas of 0.4 and 1.3 acres. The properties sold in July 2011 and June 2012 for time adjusted prices of $1,742,623 and $1,220,156. The Board also analyzed the other two sales, and notes that the range for the time adjusted prices of all four sales is between $$880,628 and $1,742,623.

26The Board does not agree with Mr. Wilson that a range of value is established by the four sales presented in Exhibit 1. To create a range of value for the subject property it is necessary to have at least one property that is less valuable than the subject property, and at least one property that is more valuable than the subject.

27Mr. Baranowski’s suggested comparable sale, 133 Deerview Drive, was constructed 1988; has a total building area of 9,689 sq. ft.; has an effective lot area of 0.48 acres. The property sold in December 2011 for a time-adjusted price of $1,893,780.

28The Board notes that the four sales suggested as comparables by MPAC are between 18% and 30% smaller than the subject property in building size. On the other hand Mr. Baranowski’s suggested comparable has a building envelope that is 30% larger than that of the subject property.

29The Board does not agree with Mr. Baranowski’s suggested use of a per square foot value to determine the current value of the subject property because the similarities between properties are not sufficient. The house sizes, lot sizes and year built vary,

30The subject property is larger than the suggested comparables provided by MPAC, and accordingly its current value should be greater than the suggested comparable sales A to D. The other suggested comparable property, 133 Deerview Drive, is larger than the subject and accordingly the subject property’s current value should be lower than that.

31The range of values of the five properties submitted to the Board, by both parties; provide a range of time adjusted sale values between $880,628 and $1,893,780. The current value assessment of the subject property at $1,869,000 is at the higher end of this range, but does not appear to be unreasonable. It is both plausible and reasonable that it accounts for the considerably newer and higher quality of construction of the subject property in relation to the older construction and lower quality class of the comparable properties.

32The Board finds that the correct current value of the subject property is $1,869,000.

Equity Analysis

33Section 44.(3)(b) mandates and directs that after determining current vale, the Board shall have reference to the value at which similar lands in the vicinity are assessed. The Assessment to Sales Ratio (“ASR”) determined by dividing the assessment as returned with the time adjusted sale price is a tool that is often used to determine if an equity adjustment is required. An ASR falling below 1.0 is an indication that MPAC’s valuation methodology may be resulting in assessments below values determined in the market place. Conversely, an ASR falling above 1.0 is an indication that MPAC’s valuation methodology may be resulting in assessments above values determined in the market place.

34Mr. Baranowski argued that the assessed values per square foot of the properties listed below should be used to determine the equitable assessment for the subject property:

• 133 Deerview - $150 per sq. ft.
• 685 Deervalley - $251 per sq. ft.
• 189 Lover - $237 per sq. ft.
• 370 Brookview - $245 per sq. ft.
• 71 Oak - $241 per sq. ft.
• 18 Sun - $225 per sq. ft.

Average Assessment of $224 per sq. ft.

35He submitted that all six properties are located in the same general vicinity as the subject property, and that their average assessment of $224 per square foot is a good indication that the subject property needs an equity adjustment pursuant to s. 44.(3)(b) of the Act.

36The Board does not agree with Mr. Baranowski’s suggested use of a per square foot value to compare the assessment of the subject property to the assessments of the suggested comparable properties. The Board has already determined that the properties are not similar enough to determine the current value using a per square foot analysis. For the same reason the Board finds that it is not appropriate to use a per square foot value to determine if the assessment at current value is equitable.

37MPAC relies on the sales of 30 properties, within close proximity of the subject property, to determine whether properties are assessed at or close to their current values, as listed in the Equity analysis of Exhibit 1. The median ASR for the sold properties is 0.99, which is within MPAC’s acceptable range of ASRs between 0.95-1.05. This result satisfies the Board that MPAC’s valuation methodology is achieving values similar to those determined in the marketplace and no further equitable adjustment is warranted.

38The Board prefers the ASR analysis based on a larger sample of properties. MPAC’s larger sample shows that properties in the subject property’s vicinity are not over-assessed.

CONCLUSION

39The assessment is confirmed at $1,869,000 for the 2013 and 2014 taxation years.

2015 DEEMED APPEAL

40An appeal for the 2014 taxation year is presently before the Board. Section 40.(26) provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2014 appeal before March 31, 2015. For that reason, this decision also applies to the 2015 taxation year.

41Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.

Footnotes

1. 1Subsection 5 permits the Minister to prescribe a different valuation day. A different day has not been prescribed.