2049098 Ontario Inc. v. Municipal Property Assessment Corporation, Region 15, 2015 CanLII 30356

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 28, 2015

FILE NO.: WR 129938

Assessed Person(s): 2049098 Ontario Inc.

Appellant(s): 2049098 Ontario Inc.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 15

Respondent(s): Town of Milton

Property Location(s): 1120 Maple Avenue

Municipality(ies): Town of Milton

Roll Number(s): 2409-090-100-11742-0000

Appeal Number(s): 2996192, 3032042 and 3083202 (deemed 2015)

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

Hearing Event No. 573110

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

ARB Case Name: WR 129938

Heard: January 8, 2015, in Milton, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

2049098 Ontario Inc.

Roman Andrzejweski

MPAC

Roger Leroux and Less Aberdeen

City of Milton

S. Radenic

DECISION OF THE BOARD DELIVERED BY CRISTINA MARQUES

ISSUE

1The subject property has a site area of 27,007 square feet (“sq. ft.”) (0.620 acres). The property is improved with 10,552 sq. ft. two storey commercial building that operates as a day care facility.

2Mr. Leroux, appearing as advocate for MPAC, takes the position that the assessment as returned reflects current value. He maintains that the assessment should be confirmed by the Assessment Review Board (“Board”) as returned at $1,730,000 for 2013 and 2014 taxation years.

3Mr. Andrzejewski, appearing as the representative and witness for the appellant, takes the position that the assessment for the subject property is too high.

4The Board must determine the current value for the 2013, 2014 and deemed 2015 taxation years. The Board must also determine whether the assessment at current value is equitable, having reference to the assessments of similar lands in the vicinity.

DECISION

5The Board finds that current value is $1,730,000.

6The Board also finds that an assessment at the current value as found above is equitable and no reduction is required.

REASONS FOR DECISION

Legislation

7The Board must have regard to s. 1, 19.(1), 19.2(1), 40.(19), 44.(2) of the Assessment Act (“Act”) when determining whether or not the assessment under appeal is correct.

8Section 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.

9Section 19.(1) of the Act states:

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

10Section 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.

11Section 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.

12Sections 44.(3)(a) and (b) of the Act state:

44.(3) Same, 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.

Current Value

13The best indicator of current value is an arm’s length and market-tested sale of the subject property on the valuation date, January 1, 2008, 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.

14Mr. Aberdeen, who testified for MPAC, stated that the property was assessed using the cost approach to value and that there are no issues in regards to the valuation of the building. To establish structure values MPAC employs its Automated Costing System (“ACS”). The land valuation is done using the residual analysis methodology. This approach removes the commercial structure’s value as determined by MPAC’s ACS from a property’s selling price, so as to determine that property’s residual site value. Land values per square foot, as determined, are applied to the subject property, to which its MPAC-determined structure value is added, yielding the indicated value for assessment.

15In support of the assessment as returned, Exhibit 1 was presented consisting of an MPAC report which included:

• location and current value study map

• photographs of the subject property

• property profile

• current value analysis

16Details of each property on the Current Value Analysis are summarized in Table 1:

Table 1

Address	Assessment	Lot size	Building size	ACS Building Value/ Per sq. ft. ($)	Time Adjusted ACS Land Value/Per sq. ft. ($)	SaleDate	Sale/ time adjusted sale
1120 Maple Avenue (Subject Property)	1,730,000	27,007	10,552	949,187/ 89.95	780,813/ 28.91	n/a	n/a
174 Mill Street	1,426,000	26,136	6,481	654,804/ 101.03	847,239/ 32	Jun 2012	1,525,000/ 1,502,043
64 Ontario Street	1,795,000	17,860	5,475	530,793/ 96.95	842,014/ 47	Mar 2011	1,325,000/ 1,372,807
69 Main Street	2,098,000	32,670	12,111	774,252/ 63.93	834,849/ 26	Aug 2011	1,580,000/ 1,609,101

17Mr. Aberdeen submitted the sales as set out in Table 1, and testified that the suggested comparables are considered by MPAC to be similar to the subject property. He relied on these sales to determine whether properties are assessed at or close to their current values, and confirmed that the three suggested comparables are assessed using a land residual approach, as is the subject property. The properties sold in the open market, in arm's length transactions, for time adjusted sale prices ranging from $26 to $47 per sq. ft. of land. Based on the sales of these properties, Mr. Aberdeen argued that the subject property is under assessed at $29 per sq. ft. of land. He is if the opinion that the property should be valued at:

• Land value ($32, median value per sq. ft. x 27, 007) $864,224

• Building value $949,187

• Total assessment $1,814,000 (rounded).

18Since MPAC is not seeking an increase in value, the assessor urged the Board to confirm the assessment as returned at $1,730,000.

19Mr. Andrzejewski testified that the subject property was built specifically to accommodate a day care facility, and that its marketability is limited to that specific user market because of the specialized fixtures relating to licenced day-care operations, and the design specific architecture. As such the best comparables are specific-built day care properties regardless of their vicinity. He argued that MPAC’s suggested comparables are superior properties than the subject property because they are easily converted to accommodate various utilities, resulting in an increased marketability.

20Mr. Andrzejewski submitted two sales, in the Town of Milton, that are not operating as day care facilities, one, 69 Main Street, and the other 250 Martin Street. Mr. Andrzejewski argued that the average sale per sq. of building for the two properties located in Milton is $100 per sq. ft. of building, and that value applied to the subject property results in ($100 x 10,552 sq. ft.) a valuation of $1,055,000 (rounded).

21MPAC indicated that 250 Martin Street sold under a power of sale, and Mr. Andrezejewski did not challenge the accuracy of that information. The Board rejects this because it may not be a sale that meets the definition of current value. As for 69 Main Street, which is the same as MPAC’s sale 3 the Board will address it in the sales analysis bellow.

22Mr. Andrzejewski also presented eight sales of day care facilities all located outside of the Milton region, some as far away as Toronto, Barrie, and Oshawa. He submitted that the average sale price per sq. ft. of building for these properties is $71 per sq. ft. of building, and that value applied to the subject property results in ($71 x 10,552 sq. ft.) a valuation of $749,000 (rounded).

23Mr. Andrzejewski argued that the subject property should be valued within the range of $749,000 and $1,055,000.

24To permit a direct comparison to be made between the subject property and a comparable there must be sufficient elements of such as total building area and lot area, age and quality of construction. The Board does not agree with Mr. Andrzejewski suggested used of a per square foot value to directly compare the current value of the subject property to the per square foot value of the sale of the suggested comparables properties because the similarities between properties are not sufficient, chiefly because the comparables are all located in cities that have considerably different markets than Milton. The argument that the subject property should only be compared to properties with similar utility is erroneous because retrofitting a building to modify its utility is a cost of doing business, and not an ongoing concern in current valuation.

25The Board analysed MPAC’s comparable sales one of which is also used by Mr. Andrzejewski as comparable property. The three sales preferred by the Board for this analysis are similar to the subject property in the sense that they all commercial properties, and within the same vicinity as the subject property, and most importantly they all could be transformed into day care facilities because the zoning allows for it. Their median time-adjusted land sales rate is $32 per sq. ft. of land. The subject property’s land is assessed at $28.91 per sq. ft.

26Mr. Andrzejewski presented no evidence or argument indicating he disagrees on the valuation of the structure. The Board must utilize the best evidence to determine the probable current value, which in this instance is derived from Table 1, whereby the Board adds the building value that it has determined for the subject to the $949,187 site value used by MPAC.

27The Board finds the current value to be $1,730,000, calculated as follows:

• Land $ 780,813

• Building $ 949,187

Total $1,730,000

Equity Analysis

28Section 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.

29The parties presented no evidence on equity; from this the Board infers that is not at issue. The Board finds that the assessment as returned is equitable and no adjustment is required.

30The assessment is confirmed at $1,730,000 for the 2013 and 2014 taxation years.

2015 DEEMED APPEAL

31An 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.

32Section 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.