Habiba Kahane v. Municipal Property Assessment Corporation, 2015 CanLII 40067

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

July 8, 2015

FILE NO.:

WR 132586

Assessed Person(s):

Habiba Kahane

Appellant(s):

Habiba Kahane

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s):

City of Toronto

Property Location(s):

633 Queen Street West

Municipality(ies):

City of Toronto

Roll Number(s):

1904-062-610-00500-0000

Appeal Number(s):

2995079, 3015667 and 3075122 (deemed 2015)

Taxation Year(s):

2013, 2014 (and deemed 2015)

Hearing Event No.

574036

Legislative Authority:

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

Heard:

May 25, 2015 in Toronto, Ontario

APPEARANCES:

Parties

Counsel+/Representative

Habiba Kahane

Solomon Kahane

MPAC

Elca Tere

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY BARBARA KOWARSKY AND MARGARITA OKHOVATI

ISSUE

1The issue is to determine whether the assessment of 633 Queen Street West located in the City of Toronto (“subject property”) as returned at $1,630,000 for the 2013 and 2014 taxation years is correct, and whether it is equitable with that of similar lands in the vicinity.

DECISION

2In order to determine the value assessment of a property, the Assessment Review Board (“Board”) is legislated to follow two steps:

3Section 44.(3)(a) of the Assessment Act (“Act”) which requires the Board to:

(a) “determine the current value of the land.”

The Board determines the current value to be $1,183,000.

4Section 44.(3)(b) of the Act directs the Board to:

(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.”

5The Board finds that, an adjustment for equity pursuant to s. 44.(3)(b) is not required in order to make the assessment of the subject property equitable with that of similar properties in the vicinity. Therefore, the decision of the Board is to reduce the assessment from $1,630,000 to $1,183,000 for the 2013, 2014 and deemed 2015 taxation years. This value is apportioned at $579,670 residential and $603,330 commercial.

REASONS FOR DECISION

The Subject Property

6The subject property, a two-storey retail building with one residential unit on the second floor, was built in 1902. It has a total building area of 2,376 square feet (“sq. ft.”) and is situated on a lot measuring 2,156 sq. ft. It has a frontage of 22 feet (“ft.”).

The Position of MPAC

7MPAC was represented by Elca Tere. She submitted the following package of material into evidence, which is marked collectively as Exhibit 1:

i. A Market Analysis including six suggested comparables situated in the same homogeneous neighbourhood as the subject property.

ii. An MPAC explanation of the Market Data Approach used in the valuation methodology.

iii. Photographs of the subject property and the six suggested comparables.

8She testified that:

i. All of the six suggested comparables are located on Queen Street West, west of Bathurst Street. The subject property is located on Queen Street West just east of Bathurst Street.

ii. In her opinion, the value of properties in this neighbourhood lies in the front footage and lot size and that the size of the building does not affect value as much as the lot and front footage.

iii. In her opinion, the best comparable properties are 680 and 636 Queen Street West.

iv. The median value of the lots of the comparables, based on the time adjusted sale prices is $761. When this is applied to the subject property, the result is $1,640,716.

v. The Board should confirm the current value assessment of $1,630,000.

The Position of the Appellant

9Solomon Kahane, representative for the Appellant, his mother, submitted the following into evidence:

i. A photograph of two suggested comparables and a proposed opinion of value (Exhibit 2).

10Mr. Kahane testified that these two properties, 699 and 701 Queen Street West have not sold, but are very similar in frontage, lot size and building area to the subject property.

11He testified that:

i. Using the same mathematical approach as used by MPAC, he calculated the value for frontage, site area and building area for each of the comparables.

ii. He then calculated the average and applied these figures to the subject property.

Subject Property

699 Queen Street West

701 Queen Street West

Average

Frontage

22 ft.

20.75 ft.

21.33 ft.

Lot Size

2156 sq. ft.

2047 sq. ft.

2090 sq. ft.

Assessment

$1,630,000

$1,292,000

$1,211,000

Assessment/Frontage

$62,265

$56,774

$59,520

Assessment/Lot Size

$631.17 per sq. ft.

$579.43 per sq. ft.

$605.30

Assessment/Total Building Area

$416.77 per sq. ft.

$390.65 per sq. ft.

$403.71

i. When these figures were applied to the subject property, the result is an assessment for the subject property of $1,191,227.

12In summary, Mr. Kahane argued that the buildings have value and that only focusing on lot size is unfair. Furthermore, in his summation, he informed the Board that the assessor had offered a reduction in the assessment from $1,630,000 to $1,500,000, which he turned down, as he believes the assessment should be lower than that amount.

The Legislation

13In arriving at a decision, the Board must consider the following provisions of the Act:

14Section 19.(1) of the Act states:

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

15Section 1 of the Act states:

“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.

16Section 19.2(1)(2) 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.

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.

17Section 40.(17) of the Act provides:

40.(17) Burden of proof. – For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

18Section 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.

19Section 44.(3)(a) and (b) 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.

Analysis and Findings

20The assessment legislation, as amended for taxation year 2009 and subsequent years, directs the Board to determine the current value of the subject property, having reference to the value at which similar lands in the vicinity have been assessed. Once current value is determined, the Board may reduce an assessment where it finds that it is inequitable with that of similar lands in the vicinity.

The Current Value of the Land

21The best evidence of current value is an arm’s length and market tested sale of the subject property on the valuation date, January 1, 2012, or close to it. This did not occur.

22The Board is perplexed as to why the assessor first asked the Board to confirm the assessment at $1,630,000 and then, after Mr. Kahane mentioned that MPAC had recommended a reduction to $1,500,000, Ms. Tere acknowledged that that offer was still valid.

23She testified that the “real” value of the subject property is in the lot and the frontage and therefore she did not rely on the value of the buildings.

24No evidence was submitted to support this approach. Furthermore, if this position were valid, the Board would have expected to see evidence that after the purchase of the six MPAC suggested comparables, there would have been demolition of these buildings since they had “little value.” Instead, the Appellant testified that some had had major renovations and others had been re-faced. Therefore the Board finds that the sales most certainly included value for the existing structures.

25The Board must rely on the evidence submitted, which it finds to be reliable, in order to make a fair, open and transparent decision. Current value must be based on relevant sales that occurred during the assessment period in proximity to the January 1, 2012 valuation date. The Appellant’s two suggested comparables did not sell during the assessment period and therefore cannot be considered in the sales analysis. The only sales submitted into evidence were the six presented by MPAC. The average sale price per square foot of the six suggested comparables based on the time adjusted sale prices is $498.00. When this is applied to the subject property, the result is $1,183,248, or $1,183,000 rounded. Therefore, the Board finds that the current value for the subject property is $1,183,000.

Equity with Similar Lands in the Vicinity

26The Board is required under s. 44.(3)(b) of the Act to 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 land of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment.

27The Board finds that no equity adjustment is required.

CONCLUSION

28Based on the totality of the evidence presented, the Board reduces the assessment of the subject property from $1,630,000 to $1,183,000 for the 2013, 2014 and deemed 2015 taxation years. This value is apportioned at $579,670 residential and $603,330 commercial.

2015 DEEMED APPEAL

1An 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.

2Section 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.