1282652 Ontario Limited v. Municipal Property Assessment Corporation, 2015 CanLII 38432

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

June 30, 2015

FILE NO.:

WR 132286

Assessed Person(s):

1282652 Ontario Limited

Appellant(s):

Attwood

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 9

Respondent(s):

City of Toronto

Property Location(s):

12 Stoffel Drive

Municipality(ies):

City of Toronto

Roll Number(s):

1919-038-220-01100-0000

Appeal Number(s):

2995168, 3014019 and 3079403

Taxation Year(s):

2013, 2014 and 2015

Hearing Event No.

569984

Legislative Authority:

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

Heard:

April 29, 2015 in Toronto, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

1282652 Ontario Limited

Paul Grosman

MPAC

Bashi Mohamed

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY WARREN MORRIS

Preliminary Issues

Admissibility of Exhibit 2

1At start of the hearing, among its evidence MPAC presented a document consisting of a chart containing data from six properties on the top half of the page while the bottom of the page was filled with various handwritten notes containing abbreviations and numbers (Exhibit 2). Mr. Grosman objected to Exhibit 2 being entered as evidence since MPAC had not disclosed the document 21 days prior the hearing as required by Rule 45(2) of the Board’s Rules of Practice and Procedure (the “Rules”). The Board confirmed with Mr. Grosman that he did in fact receive a document virtually identical to Exhibit 2 but without the handwritten notations, within the required time. The Board accepted Exhibit 2 into evidence emphasizing that the Board would ignore any of the handwritten notations and instructed MPAC not to make reference to any of the handwritten notations.

Qualifying Mr. Grosman as an Expert

2At the beginning of the Appellant’s presentation of evidence, Mr. Grosman presented his professional qualifications (Exhibit 5) to support his request that he be qualified as an expert. Mr. Grosman noted that the Board’s Rules permit a non-lawyer representative to appear as both advocate and witness during proceedings in the direct to hearing stream. The Board acknowledged the Rules, and was impressed with Mr. Grosman’s professional qualifications. Nonetheless, given the additional duties the Rules place on experts, the Board denied Mr. Grosman’s request to be deemed an expert. Having Mr. Grosman appear as advocate and expert was awkward and unnecessary. The Board acknowledged Mr. Grosman’s qualifications would go towards the weight given to his testimony as an ordinary witness.

INTRODUCTION

3This appeal relates to the assessed value of a 12,112 square foot (sq. ft.) industrial building with 1,822 sq. ft. of office space, located on a 1.19 acre (51,836 sq. ft.) lot at 12 Stoffel Drive in Toronto, near Pearson International Airport, in an area bordered by Highway 401, Highway 27 and Dixon Road. The building, built in 1963, has 15.6 foot ceilings and covers approximately 23% of the lot. For the 2013 to 2016 tax years, MPAC assessed the subject property as having a current value of $1,653,000. The property owner believes the assessment is too high.

4At the hearing, MPAC presented five sales of purportedly comparable properties, of which it suggests four to be the most comparable. After making adjustments to three of the four most comparable sales to account for the smaller lot size, MPAC applied the median sale price per sq. ft. of $127 to the subject property and recommended a current value assessment of $1,538,000. The Appellant relied on the same five comparable sales, however argued that adjustments for lot size were not appropriate. Alternatively, the Appellant argued that a downward adjustment for equity was appropriate.

5At the completion of the hearing, the Board reserved its decision.

ISSUE

6The issues are to determine the current value of the property, and to ensure that the current value is equitable relative to the assessed values of similar properties in the vicinity.

DECISION

7The Board finds that the current value of the subject property is $1,327,000.

8Further the Board finds that there is no evidence before it leading to the conclusion that the current value, as determined above, requires an adjustment in accordance with s. 44.(3)(b) of the Assessment Act (“Act”).

9Accordingly, the assessment of the subject property for the 2013, 2014 and 2015 taxation years is reduced from $1,653,000 to $1,327,000.

REASONS FOR DECISION

The Legislation

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 1 of the Act defines “current value” as:

“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.

12Section 19.2(1)3 of the Act states:

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:

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.

13Section 44.(3) of the Act states:

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

14The best indicator of current value is an arm’s length and market tested sale of the subject property on the valuation day, January 1, 2012 or close to it. If, as in this case, no such transaction took place, the next best measure of current value is arm’s length and market tested sales of comparable properties in the same vicinity and market on or close to the valuation day. To enable an estimate of value for the subject property to be derived from a comparable property there must be sufficient elements of similarity, in terms of location and physical factors such as total building area, building type, land area, age of construction, ceiling height and physical condition so as to enable a direct comparison to be made between the comparable property and the subject property.

15The Board reviewed the five property sales presented into evidence by the parties. With the exception of 26 Airview Road, the other four comparable properties are sufficiently similar to the subject property to be considered comparable. Although 26 Airview Road appears somewhat comparable to the subject property, the Board has given it less weight primarily due to its inferior location, which is reflected by a somewhat outlier sale price being $20 per sq. ft. less than the median price of the four other comparable sales. The median sale price of the four comparable sales amounts to $109.50 per sq. ft. When the median sale price per sq. ft. is applied to the subject property, the value amounts to $1,326,264. Given that the subject property is reasonably similar to the four most comparable sales in most every aspect except for lot size, the current value of the subject property must be at least $1,326,264.

16MPAC’s principal argument for recommending a higher current value assessment was that the subject property is superior to the comparable sales due to the larger lot size. The subject property has a lot size of 51,836 sq. ft. (1.19 acres) whereas the four comparable sales presented have lots sizes ranging from 24,829 sq. ft. (0.57 acres) to 38,768 sq. ft. (0.89 acres). MPAC’s position was that the larger lot size of the subject property contributes significantly to value over the comparable properties. To calculate the value added of the larger lot, MPAC presented four different sales of vacant land in the vicinity ranging from 3.17 to 5.26 acres in size. The median sale price of the vacant land amounted to $711,336 per acres which MPAC rounded down to a $600,000 per acre and applied this adjustment to the smaller comparable sales. Since three of the comparable sales had lots that were at least a half-acre smaller than the subject, MPAC adjusted those three sales upward by at least $300,000. In the case of the 0.69 acre lot at 1 Meridian Road, the $1,400,000 sale price was adjusted to $1,700,000. In the case of the 0.57 acre lot at 19 Shaft Road, the $1,470,000 sale price was adjusted upward to $1,844,400. In the case of the 0.65 acre lot at 21 Kelfield Street, the sale price of $1,362,500 was adjusted upward to $1,685,900.

17The Board rejects MPAC adjustment calculations. Firstly, MPAC failed to show the nexus between the value of vacant land and the value of excess land at the subject property. MPAC did not proffer any evidence indicating that the excess land at the subject property was capable of being severed and sold. Further, not only did MPAC fail to provide any evidence as to the amount of excess land at the subject property, MPAC testified that it was unaware as to whether there was any excess land at the subject property at all. MPAC’s evidence was merely that the subject had a larger lot size and proceeded to make adjustments based on vacant land sales.

18Based on the evidence provided, the Board finds that the subject property must be worth at least $1,326,264 due to it having a superior lot size as compared to the comparable property sales. In the absence of credible evidence to value the superior lot size, the Board is limited to rounding upward, and finds that the current value of the subject property to be $1,327,000.

19In seeking a lower current value assessment, Mr. Grosman put forth the argument that the subject property was inferior to all the comparable sales due to the fact that the subject property had the least amount of finished space within the industrial building. According to Exhibit 3, the subject property had 0% finished office area (contrary to MPAC’s property description testimony that was specifically agreed upon by Mr. Grosman - that being that there is 1,822 sq. ft. of office space or 15% of the building area), whereas the five comparable properties had finished areas ranging from 7% to 44%.

20The Board rejects Mr. Grosman’s argument. Firstly, there was no clear correlation between the sale price per sq. ft. and percentage of office space among the five comparable sales. Even if such a correlation could be demonstrated, there was no evidence proffered as to how to value the higher percentage of finished space. Finally, MPAC’s testimony was that finished area within an industrial building is generally a tenant specific improvement with limited, if any, additional value.

Equity

21The Act requires the Board to address the issue of equity by having reference to the assessment of similar lands in the vicinity of the subject property. The Appellant has the burden of proving that the CVA is not equitable relative to similar lands in the vicinity of the subject property.

22Based on the actual sale prices of the four best comparable sales, the assessment to sale ratios (ASRs) have a mean of 0.97 and a median of 1.01. Both MPAC and the Appellant agree that the mean and median ASR indicate that the CVA of similar lands in the vicinity of the subject property are very close to their actual values, and that in such circumstances, a downward adjustment for equity would not be warranted.

23However, the Appellant made alternative submissions for a downward equity adjustment of 24% in the event that the Board accepted the adjusted comparable sales presented by MPAC accounting for the difference in lot size. Had the Board accepted MPAC’s submissions, the median adjusted sale price of the four comparable sales would be significantly higher at $127 per sq. ft., resulting in an assessment to adjusted sale ratio of 0.76. Given that the Board rejected MPAC adjustments, the Board need not consider the Appellant’s argument for a downward adjustment.

24The Board finds an equity adjustment is not warranted.

CONCLUSION

25The assessment of the subject property for the 2013, 2014 and 2015 taxation years is reduced from $1,653,000 to $1,327,000.

Footnotes

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