Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 29, 2015

FILE NO.: WR 127246

Assessed Person(s): Vera McNally

Appellant(s): Vera McNally

Respondent(s): City of Etobicoke

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Property Location(s): 25 Shorncliffe Road

Municipality(ies): City of Etobicoke

Roll Number(s): 1919-031-020-00250-0000

Appeal Number(s): 2971799, 3013985 and 3078062 (deemed 2015)

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

Hearing Event No. 563947

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

Heard: August 11, 2014 in Toronto, Ontario

APPEARANCES:

Parties	Counsel+/Representative
V. McNally and G. McNally	Self-represented
MPAC	W. Williams
City of Etobicoke	No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA AND CHARLOTTE SLOAN

INTRODUCTION

1The subject property consists of a site of approximately seven acres (“a.”). It is a standard industrial property. The property was inspected in early June 2014. The property’s classification is commercial (CT).

2The subject property is assessed at $2,045,000 for the 2013 taxation year.

3Winston Williams, on behalf of MPAC, is of the opinion that the subject property is not over-assessed at $2,045,000 based on its highest and best use of redevelopment into a high density development and asks that this value be confirmed.

4Vera McNally is one of six different property owners that are parties to an agreement to jointly apply to the city for development approval to allow a proposed high density condominium development. This group owns the Dunshorn Holdings site. Their application for a zoning by-law amendment has not yet been enacted. Ms. McNally is of the opinion that the value of $2,045,000 is too high and that the subject property should be assessed at $1,285,000, the value as returned in the original Property Assessment Notice for the 2013 taxation year.

5The issue is whether the assessment as returned for the subject property for taxation years 2013 and 2014 is at current value as at the January 1, 2012 valuation date, and whether it is equitable with the assessments of similar lands in the vicinity.

DECISION

6The Assessment Review Board (“Board”) finds that the current value of the subject property, as of the valuation day of January 1, 2012 is $1,285,000 and that it does not require a further adjustment under s. 44.(3)(b) of the Assessment Act (“Act”), R.S.O. 1990, c.A.31, as amended, in order to make it equitable with similar lands in the vicinity.

7For the 2013, 2014 and deemed 2015 taxation years, the assessment of the subject property is reduced from $2,045,000 to $1,285,000 in the commercial property class (CT).

REASONS FOR DECISION

The Legislation

8For the 2013, 2014 and deemed 2015 taxation years, in determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Act.

9Section 19.(1) of the Act states that the assessment of the land shall be based on its current value. Current value is defined in s. 1 to mean, 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 19.2(1)(3) of the Act provides that for each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years. Therefore, for the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

11In determining the value at which the land shall be assessed, s. 44.(3) of the Act requires that the Board (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.

12Section 36.(1) of the Act requires assessments to be made annually and s. 36.(2) requires that the assessment roll be returned to the municipality ”not later than the second Tuesday following December 1 in the year in which the assessment is made.”

13Section 32.(1) of the Act permits MPAC to “correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly” at any time “before the time fixed for the return of the assessment roll.” Section 32.(1.1) of the Act permits MPAC to correct any error in the assessment or classification of property that has resulted from incorrect factual information about the property, and not from a change in opinion as to the current value” and this change can be done “at any time during the taxation year”.

14Section 40.(17) of the Act provides that, where value is the ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

15After hearing the evidence and the submissions of the parties, the Board shall determine the matter pursuant to s. 40.(19).

ANALYSIS

MPAC’s Evidence

16On behalf of MPAC, Winston Williams submitted Exhibit 1A, an Assessment Analysis, and Exhibit 1B, a Zoning By-law Amendment Report.

17Mr. Williams stated that MPAC is aware of a report (Exhibit 1B) prepared by the Director, Community Planning, Etobicoke York District to the Etobicoke York Community Council concerning applications for zoning by-law amendments for two separate but abutting sites (Dunshorn Holdings and Alder Place). The proposals are similar and were processed concurrently. The subject property is a part of the Dunshorn Holdings site development that sought an increase in density from 3.5 to 4.2 in order to allow a proposed condominium development to proceed. The report dated October 17, 2011, reviews and recommends approval of the applications to amend the zoning by-law.

18Mr. Williams stated that MPAC monitors zoning changes and takes the position that although the zoning by-law amendment has yet to be enacted, it believes that it will. As stated in MPAC’s Assessment Analysis (Exhibit 1A), what needs to be completed are the necessary details to finalize the zoning change. The Dunshorn Holdings site, of which the subject property is a part, is well on its way to being redeveloped into a high density development. MPAC believes this to be the highest and best use for the subject property, and that the value has increased even though the density has not yet been increased. He added that all of the properties in the block of properties have been treated similarly and their assessed values increased.

19MPAC relies on three sales comparables that have become or are approved to become condominium developments. They are summarized below in Table 1.

Table 1

Address	Sale Date	Sale Amount ($)	Site Area (a.)	Sale price per a. ($)
25 Shorncliffe Road (subject property)			.7	2,921,428 (assessment per a.)
5365 Dundas Street West	June 2013	15,500,000	5.46	2,838,827
5312 Dundas Street West	December 2007	3,442,000	1.69	2,036,686
3503-3515 Lakeshore Boulevard West	February 2010	1,264,000	.382	3,308,900

20The property at 5365 Dundas Street West is a redevelopment sale. It sold in June 2013. It is located east of the subject property and close to Kipling Avenue and the Kipling subway station. It is being redeveloped to accommodate a 3,000-unit condominium high rise development, with an asking price of $450 per square foot. The density has been increased. As per the report (Exhibit 1B), the approved development has a density of 4.3.

21The property at 5312 Dundas Street West is also a redevelopment sale and is in the process of being changed and developed into a condominium development. It is located further east from the subject property.

22The property at 3503 – 3515 Lakeshore Boulevard West is also development land sold to builders for development into condominiums. It sold in February 2010. It is located further away and south on Lakeshore Boulevard.

23Mr. Williams noted that the sales prices per acre are in the range of $2,036,686 to $3,308,900. The subject property’s assessed value of $2,921,428 per acre falls within the range of sales prices per acre. He noted that the sales comparables are in the process of being changed and that some have been redeveloped after their sales. He asks that the assessment of $2,045,000 be confirmed.

24Under cross-examination, Mr. Williams stated as follows:

• MPAC knows development will happen.

• It is hard to predict when the change in density will be approved. He noted that Exhibit 1B is a final report. It is an indication that this block of properties (including the subject property) has passed through all of the other requirements and is on its way to being redeveloped into a high density development.

• The zoning density for the three sales comparables is 4 to 5, a bit more than the subject property.

• MPAC’s records show a site area of 5.46 a. for 5365 Dundas Street West, whereas the RealNet report (Exhibit 2 A) shown to him by Mrs. McNally indicates a site area of 5.99 a. and high density.

• MPAC has assessed the whole block in the same manner. The subject property is just part of the puzzle. The report (Exhibit 1 B) is evidence that the density will change and redevelopment will occur.

• He considered 3503-3515 Lakeshore Boulevard West to be comparable as builders purchased it with the intention of changing the density and redeveloping it.

Appellant’s Evidence

25Mrs. McNally referred to a series of property assessment notices (Exhibit 2C). The property’s value was increased from $1,285,000 to $2,045,000 by way of an Amended Property Assessment Notice for the 2013 - 2016 taxation years received in 2013. There is a hand written notation of a March 28, 2013 date on the copy of the Amended Property Assessment Notice. The change was effective for taxation beginning January 1, 2013.

26Mrs. McNally stated that MPAC was comparing the subject property to other industrial properties until the report (Exhibit 1B) was found which led to the change in assessment. The Dunshorn Holdings site group (of which the subject property is a party) has an application to increase density, but the change in density has not yet been enacted. Mrs. McNally stated that the City refuses to approve the increase in density until the Dunshorn Holdings site group and Alder Place come to an agreement regarding the interior roads. Alder Place has an application to increase density. However, Alder Place also has long term leases in place. The subject property has month to month tenants because of the redevelopment and the building is in need of repairs, a new roof, etc. Until rezoning is enacted and the density increased, the subject property cannot be used for anything more than an industrial building.

27Mrs. McNally is of the opinion that the increase in assessment is premature. She asks that the subject property be assessed at $1,285,000, the value it was originally assessed at for the 2013 taxation year.

28Mrs. McNally contended that the subject property should be compared to other industrial properties. The property is located behind a high wall. There are easements along the side beside the railway track and along the front beside the underpass elevation. There is no room for expansion. There is a right of way entrance to their building and a single car length for parking (Exhibit 2C, e-mail dated May 26, 2014). There is no frontage. She referred to a series of photographs at Exhibit 2B showing the wall and a truck parked close to the building.

29Mrs. McNally referred to three industrial properties in Exhibit 2B and summarized as follows based on information contained in the multiple listing services (“MLS®”) listings. She stated that they are all larger and nicer properties and most sold for less than the subject property’s assessment as originally returned at $1,285,000. She could not confirm if any were undergoing changes in density.

Address	Site Area (a)	Building Area	Height	Year Built	Assessment	Sale Price	Sale Date
25 Shorncliffe Road (subject property)	.7	8,400	9	1964	2,045,000
23 Taber Road		11,700	14			1,050,000	7/4/2013
31-33 Coronet Road		14,500	16			800,000	11/20/2013
87 Skyway		14,461	12			1,350,000	11/01/2013

30Regarding MPAC’s properties, Mr. McNally submitted that that 3503-3515 Lakeshore Boulevard should be excluded as it is in a more desirable area and close to the lake. 5365 Dundas Street West and 5312 Dundas Street West are more desirable properties and have a higher density as they are closer to the subway station at Kipling and Dundas.

31Mr. McNally stated that the group of owners that make up the Dunshorn Holdings site group have shared expenses incurred to date. They would like to develop the property. The others in the group have a right of first refusal should they decide to sell the subject property.

The Board’s Analysis

Current Value

32Mr. Williams stated that MPAC became aware of a report (Exhibit 1B) as referred above dated October 17, 2011, that reviewed and recommended approval of the applications for zoning by-law amendments for two separate but abutting sites. The subject property is part of the Dunshorn Holdings site proposal that sought an increase in density for the site from 3.5 to 4.2 in order to allow a proposed high density condominium development to proceed.

33MPAC subsequently modified the assessment for the subject property. The subject property’s assessment was increased from $1,285,000 to $2,045,000 in the commercial property class by way of an Amended Property Assessment Notice for the 2013 - 2016 taxation years. The changes were effective for taxation beginning January 1, 2013 (Exhibit 2C).

34Section 32.(1) of the Act permits MPAC to “correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly” at any time “before the time fixed for the return of the assessment roll.” Section 32.(1.1) of the Act permits MPAC to “‘correct any error in the assessment or classification of property that has resulted from incorrect factual information about the property, and not from a change in opinion as to the current value” and this change can be done “at any time during the taxation year.”

35In many instances, the Board has concluded that the Act permits a new assessment each taxation year and that s. 32 cannot be read in a limited manner. The Board notes that despite the four-year valuation base year, s. 36.(1) of the Act requires assessments to be made annually and s. 36.(2) requires that the assessment roll be returned to the municipality ”not later than the second Tuesday following December 1 in the year in which the assessment is made.” In requiring an assessment to be returned each year, the legislature has left it open to MPAC to change its opinion of value each taxation year, provided it occurs prior to the roll return.

36Mr. Williams was of the opinion that redevelopment into a high density condominium development is the highest and best use for the subject property. The subject property should be assessed using the sales comparison approach (Table 1). He supported his contention of the highest and best use of the subject property through a planning document, Exhibit 1B dated October 17, 2011 as referenced above and, three nearby sales that have become or are approved to become high density condominium developments (Table 1).

37While redevelopment is contemplated, Mrs. McNally contends that until rezoning is enacted and the density increased, the subject property cannot be used for anything more than an industrial building.

38The basic definition of highest and best use is found in The Appraisal of Real Estate, Third Canadian Edition: “The reasonably probable and legal use of vacant land or an improved property that is legally permissible, physically possible, appropriately supported, financially feasible and that results in the highest value.” That is, in order to establish the highest and best use of land, it must be determined which uses are legally permissible or possible, physically possible and financially feasible and from those potential uses determine which is the most productive use of land. The Appraisal of Real Estate is also clear that market analyses must be done in order to assess those criteria and include a fundamental analysis, an inferred analysis, a market study and a marketability study.

39Mr. Williams did not provide any market analyses to assess these criteria. In relying on Exhibit 1B, he appears to be relying on the Appellant’s pursuit of redevelopment as part of the Dunshorn Holdings site group to demonstrate that the requisite studies have been completed. However, that is not sufficient for the Board to make a determination of highest and best use. The report, Exhibit 1B, demonstrates that redevelopment is contemplated.

40The current zoning does not permit a high density development. Such use would only be permitted if a zoning change were granted. Furthermore, Mr. Williams provided no assessment of the probability that the Dunshorn Holdings site group of which the Appellant is part of, will be able to obtain the requisite zoning enactment to redevelop the land into a high density condominium development. His opinion is that he believes it will be. That is not enough to satisfy MPAC’s onus of proving a change in the highest and best use on a balance of probabilities.

41The Board has considered the detailed final report prepared by the Director, Community Planning, Etobicoke York District concerning applications for zoning by-law amendments for two separate but abutting sites (Exhibit 1B). The proposals are similar and were processed concurrently. The detailed report dated October 17, 2011, reviews and recommends approval of the applications to amend the zoning by-law. According to the report, the sites comprise seven separate properties with six different property owners. The Appellant is one of six different property owners (the Dunshorn Group) that are parties to an agreement to jointly apply to the city for development approval. The remaining property is the Alder Place site. All existing buildings are to be demolished and replaced with six condominium apartment buildings containing eight high-rise towers, a public park, and a new publicly accessible private road network. Three buildings on the south portion (where the subject property is located) would be residential only and three buildings fronting on Dundas Street West would have an eight storey base section with commercial uses on the first floor facing Dundas Street West and office space on the second and third floors. The remaining floors would be residential.

42According to the report, “the proposed development advances the Official Plan and Provincial policies of intensification in the Centres and provincial Growth Centres and Mobility Hubs.

43The Board notes the Dunshorn Holdings site of which the subject property is a part, has redevelopment potential. However before introducing bills to City Council for the enactment, the owners are required to enter into some individual agreements pursuant to s. 37 of the Planning Act regarding a number of matters. Other matters are recommended to be secured in the s. 37 Agreements as a legal convenience to support development including an agreement regarding private roads.

44Mrs. McNally stated that the City refuses to approve the increase in density until the Dunshorn Holdings site group and Alder Place enter into an agreement regarding the interior roads. According to Mrs. McNally, Alder Place has a long term leases in place and is not in a hurry.

45The Board concludes that the probability of rezoning on the redevelopment horizon remains speculative. The Board notes that as at the hearing date, there was no enactment of the applications to amend the zoning by-law, nearly three years after the report reviewed and recommended approval. There remains a great deal of uncertainty on how the redevelopment will proceed, and so the requirement of being legally permissible cannot yet be said to be reasonably probable. The Board finds that as at the roll return date for the 2013 assessment of December 10, 2012, MPAC has failed to meet the burden of proving that redevelopment into a high density condominium development is the highest and best use for the subject property.

46For all of these reasons, the Board finds that MPAC has failed to meet their burden in proving that the highest and best use of the property for the 2013 assessment on December 10, 2012 is other than its use as a standard industrial building.

47The Board has considered the evidence of current value before it.

48The Board has considered the three sales comparables put forward by MPAC. Mr. McNally was of the opinion that 3503-3515 Lakeshore Boulevard should be excluded as it is in a more desirable area close to the lake. The Board agrees. There remain two redevelopment sales involving 5365 Dundas Street West and 5312 Dundas Street West. These sales are in the immediate vicinity of the subject property which is itself part of proposed high density development. These two sales may also have higher densities than the proposed density of 4.2 FSI on the Dunshorn Holdings site. However, given the Board’s finding on the highest and best use of the subject property as an industrial building, those two suggested redevelopment sales are not helpful.

49The Board did not consider the Appellant’s evidence of three industrial properties (Exhibit 2D). The Board notes that details for the three comparables put forward were lacking in details such as site area, year of construction and current value assessments so as to allow meaningful comparisons with the subject property.

50Accordingly, the Board sets the current value at $1,285,000, the value as returned in the original Property Assessment Notice for the 2013 taxation year.

Determining Equity

51The Act was amended for taxation years beginning with 2009 to require the Board to determine whether the current value as determined above for the subject property is equitable with the assessments of similar lands in the vicinity.

52The Board finds that the evidence does not support the conclusion that the current value of the property require a further adjustment in accordance with s. 44.(3)(b) of the Act in order to make it equitable with similar lands in the vicinity.

53The Board finds that the current value of the subject property, as of the valuation day of January 1, 2012 is $1,285,000 and that it does not require a further adjustment under s. 44.(3)(b) of the Act in order to make it equitable with similar lands in the vicinity.

54For the 2013, 2014 and deemed 2015 taxation years, the assessment of the subject property is reduced from $2,045,000 to $1,285,000in the commercial property class (CT).

2015 DEEMED APPEAL

55An 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.

56Section 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.