Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 4, 2015 FILE NO.: WR 128838

Assessed Person(s): Norman Charles Springer Appellant(s): Norman Charles Springer Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 5 Respondent(s): City of Kingston

Property Location(s): 87 King Street East Municipality(ies): City of Kingston Roll Number(s): 1011-010-030-06500-0000 Appeal Number(s): 2980847, 3018371 and 3073221 Taxation Year(s): 2013, 2014 (and deemed 2015) Hearing Event No. 567476

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

Heard: November 6, 2014 in Kingston, Ontario

APPEARANCES:

Parties	Counsel+/Representative
N. C. Springer	P. Radley
MPAC	P. McIntyre
City of Kingston	M. Petersen

DECISION OF THE BOARD DELIVERED BY CRISTINA MARQUES

ISSUE

1The subject property is a two-and-one-half storey detached house on a 10,680 square foot (“sq. ft.”) lot, with an effective frontage of 89 feet (“ft.”) and an effective depth of 120 ft. It was built in 1926 and renovated in 1970, for an effective year built of 1943. It has a total building area is 6,001 sq. ft. with an unfinished basement area of 2,088 sq. ft. In addition it has a 525 sq. ft. detached garage. The property is a corner lot, abuts a multi-residential property, and is located on a street with medium traffic. None of these variables are recognised by MPAC as needing adjustment in the model used by MPAC to determine current value.

2The assessment was returned at $1,210,000 for the 2013 and 2014 taxation years. Paul McIntyre appearing for MPAC recommended an assessment of $1,184,000 for both taxation years based on the condition of the property. He testified that a 21% negative adjustment is built into the model, which is carried on from previous base years. He did not know why this adjustment exists, but speculated that it may be because the property abuts a high-rise.

3Peter Radley, appearing as the advocate for the Appellant, rejected the recommendation as being inadequate because he believes the subject property is inferior to all the suggested comparables in evidence before the Board. He submits that a better value for the property is approximately $1,000,000.

4The Assessment Review Board (“Board”) must determine the correct current value for the 2013 and 2014 taxation years as of the legislated valuation day, January 1, 2012 and if that value is equitable, having reference to the assessments of similar lands in the vicinity.

DECISION

5The Board finds that the correct current value of the property is $1,184,000 for both taxation years. The Board finds an adjustment to $1,065,000 is required to make the subject property equitable with that of similar properties in the vicinity. Accordingly the Board reduces the assessment of the subject property from $1,210,000 to $1,065,000 for the 2013 and 2014 taxation years.

REASONS FOR DECISION

Legislation

6The Board must have regard to s. 1, s. 19.(1), s. 19.2(1), s. 40.(19), s. 44.(3)(a) and (b), and s. 45 of the Assessment Act (“Act”) when determining if the assessment under appeal is correct.

7Section 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.

8Section 19.(1) of the Act states:

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

9Section 19.2(1) of the Act provides:

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

1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.

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

3. 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.

10Section 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.

11Sections 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.

12Section 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

13Mr. McIntyre, in support of the assessment as recommended, presented Exhibit 1 consisting of an MPAC report which included:

• location and current value study map

• current value study with three comparable sales

• time adjustment factors table

14Details of each property on the Current Value Study are summarized in Table 1:

Table 1

Address	Assessment	Sale Date	Sale/ Adjusted Sale ($)	Building Size (sq. ft.)	Lot Size (sq. ft.)	Year/ Built/ effective
Subject Property 87 King Street East	1,210,000/ Recommended 1,184,000	n/a	n/a	6,001	89x120/ 10,680	1926/ 1943
Sale A 45 King Street East	985,000	August 2010	1,215,000/ 1,458,059	5,0076	66x132.8/ 8,755.56	1840/ 1954
Sale B 154 Earl Street	892,000	December 2012	1,182,000/ 952,377	3,668	41x127.8/ 5,239.8	1890/ 1966
Sale C 181 William Street	917,000	March 2011	1,220,000/ 1,283,431	4,179	45.54x125.9/ 5,734.68	1872/ 1985

15Mr. McIntyre testified that the suggested comparables are considered by MPAC to be similar to the subject property on the basis of location, building and lot size, and quality. He relied on these 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 subject property. The assessor gave details on MPAC’s analysis of sales in the neighbourhood of the subject property between August 2010 and December 2012, and stated that the area experienced an overall increase of 48.94% in real estate market values over that time frame. Time adjustment factors for each month during the study period were provided together with the data for the 290 sales analyzed. Mr. McIntyre testified that the time-adjusted sale prices of the three comparables provide a range of likely values for the subject property between $952,377 and $1,458,059. The recommended assessment for the subject property is well within that range. For that reason he submitted that the assessment as recommended at $1,184,000 is reflective of current value as required by s. 19.(1) of the Act.

16Mr. Radley disagreed with the assessor; in his view the sales presented by MPAC are not comparable to the subject property. He argued that MPAC fails to recognize that the subject property is modest in comparison to the suggested comparables, because they are all of much better quality and have extensive renovations. He argued that the subject property’s marketability is negatively impacted by the loss of privacy due to the high-rise building located at the rear of the property and from a pathway that leads to the same building, and because it needs extensive renovations and upgrades. For those reasons, he submitted that the subject property is over assessed.

17Mr. Radley called Stephen Rayner, a qualified appraiser as a witness, whom Mr. McIntyre agreed is qualified to express opinions in regards to the subject property.

18Mr. Rayner filed Exhibit 2 consisting of:

1. An appraisal report for the subject property, prepared by S. Rayner and Associates Ltd, with five comparable properties.

2. Interior and exterior photographs of two of the comparable properties.

3. Correspondence between Mr. Rayner, Mr. Radley and Mr. Springer.

19Details of each of the five properties are summarized in Table 2:

Table 2

Address	Assessment ($)	Sale Date	Sale/ Adjusted Sale ($)	Building Size (sq. ft.)	Lot Size (sq. ft.)	Building age
Sale 1 200 Albert Street	588,000	Nov. 2012	700,000/ 709,800	2,800	50x132	100+
Sale 2 154 Earl Street	892,000	Aug. 2012	1,182,000/ 1,066,164	3,668	41x114	124+
Sale 3 73 Sydenham Street	1,156,000	Dec 2011	1,200,000/ 1,203,600	3,754	74.13x66	126+
Sale 4 161 Earl Street	1,038,000	Oct. 2011	869,00/ 881,166	4,318	68.6x83.6	147+
Sale 5 181 William Street	917,000	Jan. 2011	1,220,000/ 1,311,500	3,681	50.2x127	142+

1- Mr. Rayner’s appraisal report shows living floor area square footage, unlike MPAC’s report that shows total building area square footage. 2- Sales 1 and 5 are shared by both parties.

20Mr. Rayner testified that the second and third floors of the subject property have not changed or been upgraded, since year built, and limited upgrades were done to the main floor in 1960. Mr. Rayner explained that the third floor’s use is extremely limited due to the extreme roof slope, and in general the whole building is in need of extensive renovations and upgrades in order to bring the property to current building codes.

21Mr. Rayner is of the opinion that the property should be valued using $184.09 per sq. ft. based on sales in the vicinity. He feels that the third floor area has little value because of the extreme roof slope, and that it should be removed from the total floor area for the purpose of MPAC’s calculations. In his view the valuation for the subject property should be ($184.09 x 5,432 sq. ft.) for a value of $1,000,000 (rounded).

22The Board finds that the evidence of Mr. Rayner does not lead it to the conclusion that a reduction in the assessment to the value of $1,000,000 is required, as it is argued by the Appellant, for the following reasons.

23The Board is satisfied from the evidence that the subject property is in a much poorer condition than any of the comparable properties, but it cannot speculate on the value as it did not receive proper evidence upon; the Board is unable to use the information presented to support a further reduction in assessment because no estimates were presented to the Board as to how much it would cost to renovate the property. The Board cannot arbitrarily assign a negative or positive value to a variable; a value must be based on evidence.

24The Board accepts that the high-rise property located at the rear of the subject property together the pathway may be a negative influence of marketability, but MPAC, according to the testimony of the assessor, has adjusted the current value assessment (“CVA”) for that nuisance by 21%.

25To 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. Rayner’s 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 have undergone extensive renovations, such is not the case of the subject property.

26The best indicator of current value is an arm’s length and market-tested sale of a 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.

27The best market evidence before the Board is provided by the six sales provided by both parties. The time adjusted sale price for these properties is between $709,800 and $1,458,059. The assessment as recommended at $1,184,000 is in the range of these sale values. It is reasonable that the assessment of the subject property would be lower to reflect that the property needs renovations and upgrades, and by the assessor’s own admission MPAC recommendation to reduce the CVA by a further $26,000 is due to the property’s condition. The Board has also considered, however that the subject property has the largest lot size of all of the properties in evidence both in frontage and square feet.

28The Board determines the current value of the subject property to be $1,184,000.

Equity Analysis

29Section 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”) is a tool often used to determine if an equity adjustment is required. An ASR is determined by dividing the assessment as returned with the time adjusted sale price. 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.

30MPAC relied on the sales of 30 properties, all within 0.79 kilometres 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 0.90, which is lower MPAC’s acceptable range of ASRs between 0.95-1.05

31MPAC’s Equity Study shows that similar properties in the vicinity have a median ASR of 0.90, and applying 0.90 to the current value of $1,184,000, so that the subject property has the benefit of the same under-assessment, lowers it to ($1,184,000x0.90) $1,065,000 (rounded).

CONCLUSION

32The Board determines the current value of subject property to be $1,184,000; finds that an adjustment to achieve equity with similar lands in the vicinity is required, and reduces the assessment of the subject property from $1,210,000 to $1,065,000 for the 2013 and 2014 taxation years.

2015 DEEMED APPEAL

33An 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.

34Section 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.