Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: June 4, 2015
FILE NO.: WR 127741
Assessed Person(s): 1602978 Ontario Inc.
Complainant(s): 1602978 Ontario Inc.
Respondent(s): City of Markham
Property Location(s): See schedule “B” attached
Municipality(ies): City of Markham
Roll Number(s): See schedule “B” attached
Appeal Number(s): See schedule “B” attached
Taxation Year(s): 2012
Hearing Event No.: 562399
Legislative Authority: Section 364.(14) of the Municipal Act S.O. 2001, c.25, as amended
Heard: September 2, 2014 in Markham, Ontario
APPEARANCES:
| Parties | Counsel+/Representative |
|---|---|
| 1602978 Ontario Inc. | T. White |
| City of Markham | M. Jones |
DECISION OF THE BOARD DELIVERED BY BERNARD COWAN AND CHARLOTTE SLOAN
ISSUE
1These complaints relate to nine commercial office condominium units in a newly-built building at 3621 Highway 7. These were unsold premises that remained vacant in the building for consecutive periods exceeding three months in 2012.
2The Municipal Act (“the Act”) requires municipalities to establish a program that provides formulaic property tax relief to owners of eligible commercial properties which satisfy the evidentiary requirements that a particular municipality may establish.
3The City of Markham (“City”), acknowledges that the complainant has met all of its criteria to qualify for the rebate, except for the one that requires providing copies of a Multiple Listing Services (“MLS®”) listing or rental advertisement” for any of the nine units. The City considers the absence of documentation for either of these to be fatal to the rebate applications. It implies, without having directly argued the point substantively, that the Board may lack jurisdiction to grant a vacancy rebate if any of the municipality’s evidentiary requirements are not met. Certainly, the extent of our jurisdiction was the proverbial “elephant in the [hearing] room”.
4The complainant has appealed the City’s rejection of the rebate applications. It maintains that its business practice does not include the listing of the properties with realtors or rental advertisements for the vacant condominium premises that it does not intend to lease, being in a sales program. It maintains that these units were reasonably, rationally and successfully marketed and sold by alternative means, and hence the stipulation respecting provision of copies of any listings or rental advertisements was an impossible one for it to fulfill, as no such documentation existed.
5We must determine firstly if there is any leeway in granting or rejecting the complaints, faced with the absence of one of the City’s evidentiary requirements that according to s. 364.(5) of the Act “must be satisfied”. If we find that we have the requisite jurisdiction, we must then determine if any vacancy rebates are merited in these specific matters.
DECISION
6We find that we have the requisite jurisdiction to address the complaints in this matter because the absence of copies of MLS® listings or rental advertisements is not fatal to the vacancy rebate applications in this particular instance. Furthermore, we find that the complainant has acted responsibly in mitigating its vacancy losses, and consequently is entitled to receive the nine vacancy rebate claims totaling $9,301.69, as set out in the attached Schedule “A”.
REASONS FOR DECISION
Jurisdiction
7Ontario Regulation 325/01 (“O. Reg. 325/01”) prescribes the requirements for a property or portion of a property to be eligible property. There is no issue between the parties that the nine properties before us are eligible properties, having been vacant and wholly unused for in excess of 90 consecutive days. Consequently, our focus respecting jurisdiction is exclusively directed on the Act.
8Section 364.(1) states in part:
364.(1) Vacant unit rebate. – Every local municipality shall have a program to provide tax rebates to owners of a property that has vacant portions if that property is in any of the commercial classes or industrial classes …
9Section 364.(5) states:
364.(5) Evidentiary requirements. – The program may include evidentiary requirements that must be satisfied for the owner to be entitled to a rebate under this section.
10Clearly and succinctly, the legislative objective is to provide tax relief to owners who must otherwise pay full property taxes, if they suffer vacancy losses for eligible properties that exceed the 90 consecutive days stipulated by O. Reg. 325/01. It is compulsory for each municipality to have a mandated program. It is discretionary for each municipality to establish its evidentiary requirements that must be met for an applicant to qualify for a vacant unit rebate.
11In this particular instance, the complainant’s representative, Ted White, maintains that the City’s evidentiary requirements have prevented the otherwise ostensibly compliant applicants from benefitting from the relieving purpose of this section of the Act. He argues that the City’s insistence on its evidentiary requirements being met is at odds with the legislation.
12Mike Jones, an assessment analyst appearing for the City, maintains that the failure to provide evidence of the properties having been listed on MLS® or been advertised for sale is the reason for it having determined that no rebates are to be granted. He is not prepared to accept “word of mouth” that alternatives to either of the two required documents were undertaken.
13Mr. Jones introduced the September 2008 Board decision Chelsea Square Ltd. v. Markham (Town) 61 O.M.B.R.380 (“Chelsea”) as determined by a differently constituted panel. That decision addressed rebate applications for two properties respecting the 2003, 2004 and 2005 taxation years. That decision denied the application for reasons that included non-compliance with the municipality’s eligibility criteria.
14We find that in this instance the necessary jurisdiction is present to enable us to evaluate the complaints on their merits. This conclusion is derived from our interpretation of the City’s rebate application process.
15The Chelsea decision did indeed find that the City had adopted certain evidentiary requirements that must be satisfied for an applicant to qualify for a rebate, and that “Markham is entitled to lay out the rules of the program and to determine that compliance must be met in order for rebate [sic] to be payable...”.
16What Chelsea does not indicate is any question as to the Board being restricted solely and exclusively to the municipality’s evidentiary requirements. Indeed, that panel acknowledged that “While the Board may not be bound to strictly apply all of Markham’s evidentiary requirements, there must still be sufficient evidence to persuade the Board on a balance of probabilities.”
17Furthermore, we find that the City’s Application for Rebate of Property Taxes (“Application”) form that is in evidence and that is required of all applicants to complete affords the City, and hence ourselves, the opportunity to deviate from strict application of its evidentiary requirements. This document indicates quite properly in our view, in its Page 1 Instructions at the top of the Application that “The application must be complete and all required information provided.” It points out that the onus to provide documentation in support of the application rests with the applicant, and most importantly from our perspective, the application form’s instructions conclude with the assertion that “Failure to provide the above documentation may [emphasis added] result in the rejection of the rebate application.”
18The “above documentation” reference immediately above relates to a preceding paragraph in the Instructions that links eligibility for a rebate to satisfying the eligibility conditions that are listed on Page 2 of the Application. These set out six “Required Vacancy Details” that are repeated verbatim on Page 3 under the heading “Application Requirements”. Below that list and under that same heading at the end of the Application, it repeats that “Failure to provide the above documentation may [emphasis added] result in the rejection of the rebate application.”
19Clearly, the City’s rebate program recognizes the flexibility afforded by its adoption of the discretionary “may result” terminology. While it may choose to apply its eligibility evidentiary requirements strictly, the Board is not obligated by to do so in every instance. If we deviate from the stance adopted by the City by choosing to not reject an application due to the absence of certain documentation, we will not be in contravention of our jurisdiction. We do not, however, encourage consideration by any tribunal of the Board to deviate from this municipality’s evidentiary requirements other than in matters that clearly merit doing so.
20The absence of specific evidentiary requirements from the City’s vacancy rebate application process is accordingly not invariably beyond our jurisdiction.
Determination of the rebate applications on their merits
21Michael Uster was the witness for the owner of all nine units for which the vacancy rebates are claimed. He is a Senior Vice President of Liberty Development Corporation (“Liberty”), an active builder/developer of a varied type of realty projects over the last 15 years, and having numerous buildings under construction at the time of this hearing.
22Mr. Uster testified as to Liberty’s marketing business model utilized for sale of its commercial condominium projects, and hence for the condominium office building in which the subject properties were located. The sales program purposely avoided MLS® listings and media advertising, as not being as cost effective or as efficient as the three alternative marketing techniques based upon:
- exploiting multiple realtor contacts by offering them an opportunity to present offers without the constraint that a single realtor having a MLS® listing would present.
- approaching directly the extensive body of past commercial renters and buyers at other projects.
- engaging in-house marketing personnel to undertake and facilitate the marketing efforts of the realtors and past contacts.
23Mr. Uster confirms that Liberty has cooperated fully with all questions or requests by the City respecting the rebate application, other than providing non-existent MLS® listings or rental advertisements. The nine unsold units remaining when the applications were made have since been sold, and their sales agreements offered to the City. He testifies that there were no listing contracts or other contracts signed with any of Liberty’s realtor-contacts respecting the subject units, other than for commissions related to specific individual sales introduced and consummated. He found no e-mails indicative of contracts with realtors, and advises that such contacts are not the norm as dealings with the marketing persons is accomplished by phone or personal walk-in to Liberty’s office.
24Mr. Jones draws our attention to the Chelsea decision that rejected affidavit evidence as proof of the vacancies for which rebates were sought. He urges us to rely on the City’s evidentiary requirements for documentation, and not default to “word-of-mouth”.
25We find that the complainants are entitled to the rebates claimed totaling $9,301.69, based on our following deliberations.
26The circumstances respecting these complaints can be differentiated from those in Chelsea, because:
- Documented evidentiary deficiencies. In Chelsea, the vacant areas were not indicated by the required sketches and no lease agreements with previous tenants/rent rolls were provided. Instead the complainants offered an affidavit which the Board found to be insufficient evidence in the circumstances. Recognizing that the owner bore the onus to prove the vacancies and their duration, the panel noted “It is quite reasonable for a municipality to insist on some form of verification beyond simply accepting the word of the applicant”.
The applicant’s deficiencies in Chelsea were at the core of the application. Nothing respecting the purported vacant areas was documented, and the owner did not even appear personally to be cross-examined. Simply, the opportunity for the mischief that the municipality’s evidentiary requirements were established to limit was certainly present. Such is not the case in these complaints before us. Rather, every document available has been presented to the City. Furthermore,
there is no hint from the complainant or from the City itself that any marketing and/or sales activity was deferred or not persistent. The only potential mischief in this matter could have been a lack of urgency in the sales program due to the properties not having been listed on MLS® or advertised for alternative rental. Here, Mr. Uster was present to be cross-examined, and to answer to this panel. He was accordingly able to outline the reasoning for not following the City’s rigid stipulations to pursue what that body believes to be a conventional marketing program based on MLS® so as to mitigate the vacant periods.
Balance of probabilities. The tribunal in Chelsea found that the owner bore the onus to prove, on the balance of probabilities, that the property was vacant during the period claimed. Here, we find that the complainants have met their burden of proof, having employed a successful marketing strategy and provided the City with all of the documentation to meet its eligibility requirements that it had.
Differing nature of evidentiary requirements: Our review of the City’s criteria to be met in order to qualify for a s. 364 vacancy rebate is viewed by us as creating two distinct types of evidentiary requirements: those to establish which areas were vacant and for what duration; and those to satisfy the municipality that appropriate measures had been undertaken to shorten and or mitigate the number of applicable vacant days. We view the former as necessitating empirically based evidence, and the latter as being a more subjective requirement to protect the City against circumstances whereby poor management or other motivations might lengthen the duration of specific vacancies.
The primary issues in Chelsea relate to the claimed vacant areas themselves being unproven and improperly defined or indicated by mere sketches. In the matters before us, this is not the case. These matters address the more subjective question that is understood, but not directly posed: “What proof can be offered that you acted responsibly in limiting the duration of each of the nine vacant spaces?” We believe that the nature of the complainants’ deficiencies in Chelsea is absolute and conceptually deficient in addressing the legislative intent of s. 364, whereas in this matter we are satisfied that a sufficient and meaningful process occurred to appropriately limit the vacant periods for each of the units.
27The City should not be imposing a business strategy that mandates how vacancies are expeditiously overcome. In those instances where an alternative business model is successfully utilized, the City’s requirements should allow discretion, and it indeed does, by its indication that rebate applications may be rejected. By implication an application may not be rejected, if alternatively determined to be genuinely appropriate. It appears that the City’s evidentiary requirements are more closely geared to rental vacancies/turnover than to initial condominium sales. The complainant undertook an alternative but successful marketing approach that it has determined to have withstood the test of time. As Mr. White correctly states, “The proof is in the pudding.” These nine units were the few remaining unsold units in a larger condominium project. They were successfully sold; and indeed the vacancy rebate claims for three of the nine were for periods concluding before the end of 2012.
28We find that the complainants acted responsibly, reasonably and effectively in limiting the vacancies of these nine unsold units, as we are satisfied that Liberty had no ulterior motives and hence contemplated no mischief insofar as its vacancy rebate applications were concerned. The complainants are entitled to the rebates sought, the purpose of which the legislators contemplated when establishing s. 364 of the Act.
29On their merits, the vacancy rebate applications are hereby approved. Exhibit 2, as introduced by Mr. White, is correspondence between the parties that includes a listing labelled Vacancy Rebate Calculation Estimates. Both he and Mr. Jones confirm that these are correct calculations, and we accordingly adopt them, as set out in the attached Schedule “A”.
“Bernard Cowan”
BERNARD COWAN
MEMBER
“Charlotte Sloan”
CHARLOTTE SLOAN
MEMBER
Assessment Review Board
A constituent tribunal of Environment and Land Tribunals Ontario
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248
SCHEDULE “A”
| Roll Number | Rebate ($) |
|---|---|
| 1936-020-127-24313-0000 | 2,024.91 |
| 1936-020-127-24327-0000 | 1,495.38 |
| 1936-020-127-24372-0000 | 572.80 |
| 1936-020-127-24373-0000 | 572.80 |
| 1936-020-127-24374-0000 | 1,135.97 |
| 1936-020-127-24375-0000 | 1,133.57 |
| 1936-020-127-24376-0000 | 575.21 |
| 1936-020-127-24377-0000 | 404.50 |
| 1936-020-127-24384-0000 | 1,386.55 |
| Total | 9,301.69 |
SCHEDULE “B”
| Appeal No. | Roll No. | Property Address |
|---|---|---|
| 2994498 | 1936 020 127 24313 0000 | 3601 Highway 7 Level 3 Unit 13 |
| 2994499 | 1936 020 127 24327 0000 | 3621 Highway 7 Level 3 Unit 30 |
| 2994500 | 1936 020 127 24372 0000 | 3621 Highway 7 Level 5 Unit 18 |
| 2994495 | 1936 020 127 24373 0000 | 3621 Highway 7 Level 5 Unit 19 |
| 2997202 | 1936 020 127 24374 0000 | 3621 Highway 7 Level 5 Unit 20 |
| 2997203 | 1936 020 127 24375 0000 | 3621 Highway 7 Level 5 Unit 21 |
| 2997204 | 1936 020 127 24376 0000 | 3621 Highway 7 Level 5 Unit 22 |
| 2997205 | 1936 020 127 24377 0000 | 3621 Highway 7 Level 5 Unit 23 |
| 2998528 | 1936 020 127 24384 0000 | 3621 Highway 7 Level 6 Unit 5 |