Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
August 17, 2015
FILE NO.:
WR 132686
Assessed Person(s):
Magnum Opus Developments
Appellant(s):
Magnum Opus Developments
Respondent(s):
Municipal Property Assessment Corporation (“MPAC”) Region 9
Respondent(s):
City of Toronto
Property Location(s):
1955, 1973, 1991 Victoria Park Avenue
Municipality(ies):
City of Toronto
Roll Number(s):
1901-032-650-00200-0000 1901-032-650-00300-0000
Appeal Number(s):
2993213, 3014701 and 3075854 (deemed 2015) 2993205, 3016245 and 3079771 (deemed 2015)
Taxation Year(s):
2013, 2014 (and deemed 2015)
Hearing Event No.
581841
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard:
May 19, 2015 in Toronto, Ontario
APPEARANCES:
Parties
Counsel
Magnum Opus Developments
Benjamin Blufarb
MPAC
Donald Mitchell
City of Toronto
No one appeared
DECISION OF THE BOARD DELIVERED BY MEMBER SONIA LIGHT
ISSUE
1The subject properties 1955, 1973 and 1991 Victoria Park Avenue, form a contiguous 5.16 acre parcel on the east side of Victoria Park Avenue comprised of two adjacent 2.34 and 2.82 acre parcels situated approximately 500 meters north of Lawrence Avenue East. The subject properties enjoy easy access to the Don Valley parkway, the 401, TTC transit, major shopping centers, restaurants and shopping. 1955 is improved with three multi-residential townhouse-style structures with a total of 24 two-bedroom units and 12 three bedroom units. 1973-1991 is improved with four multi-residential townhouse style structures with a total of 32 two bedroom units and 16 three bedroom units. The properties are zoned M, RM, being Residential Multiple Dwelling.
2The combined 2012 current value assessments (“CVA”) for the subject properties were returned at $9,676,000 for the 2013 and 2014 taxation years, with $4,185,000 attributed to1955 Victoria Avenue and $5,491,000 attributed to 1973-1991 Victoria Park Avenue.
3The Appellant’s position is that the combined assessments for the subject properties, is too high and that the assessments should be reduced by 50% to a total combined value of $4,837,000 with $2,092,000 attributed to 1955 Victoria Park Avenue and $2,745,000 attributed to 1973-1991 Victoria Park Avenue. The representative for MPAC argued that the retuned assessments should be confirmed.
4The Assessment Review Board (“Board”) must determine whether the 2013 and deemed 2014 assessments are correct and equitable.
DECISION
5For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act (“Act”) the Board finds that the sale of the subject property at $10,000,000 is appropriate evidence of the current value of the subject properties at $9,676,000.
6The Board finds no basis to support a reduction in the current value pursuant to s. 44.(3)(b) of the Act based on equity considerations.
7Accordingly, the combined assessment of the subject properties for the 2013 and 2014 taxation years is confirmed at $9,676,000 with $4,185,000 attributed to 1955 Victoria Avenue and $5,491,000 attributed to 1973-1991 Victoria Park Avenue.
REASONS FOR DECISION
Legislation
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 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.
10Section 19.2(1)2 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:
For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.
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.
11Section 44.(3) 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.
12Section 40.(26) of the Act directs:
40.(26) 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.
Current Value Analysis
13Tanya Djurdjevic is a property valuation analyst with MPAC. She has twelve years of experience in the assessment of multi-residential properties and recently commercial properties were added to her portfolio. The Board finds that she is an expert in property valuation for assessment purposes based on her experience with MPAC and found her qualified to present opinion evidence to the Board on assessment matters.
14She prepared MPAC’s Response and Valuation Report which was filed as Exhibit 2 at the hearing. She also compiled an additional book of documents that she filed as Exhibit 3 at the hearing.
15Tab 7 of Exhibit 3 includes the RealNet summary of the most recent sale’s information for the subject properties. The subject properties contained derelict town house buildings and were purchased by the current owner for redevelopment at a purchase price of $10,000,000 on July 22, 2011. As this market sale of the subject properties occurred less than six months prior to the valuation date, the sale price is an excellent indicator of the current value of the subject properties. Furthermore, the evidence at the hearing was that the market of property values was increasing from the sale to the valuation date.
16After the purchase the owner evicted the remaining tenants and invested an additional $5,000,000 for renovations and improvements.
17Ms. Djurdjevic compared the $1,934,200 price per acre paid by the purchaser for the subject properties with the sale prices per acre of other redevelopment sites in Scarborough and found that the price per acre paid by the purchaser was lower than both the median and the average sale price per acre of the other redevelopment sites. Therefore, she concludes that the property is not over assessed at a combined assessment of $9,676,000
18Mr. Blufarb argued strenuously for the Appellant that the MPAC model or methodology used in returning the assessment is flawed. However, the issue before the Board is whether the current value assessment is correct and not the methodology used to by MPAC in producing the returned assessments. As mentioned, the aforementioned sales information provided to the Board at the hearing, supports the assessments as returned.
19Furthermore, there is nothing in the evidence that would suggest that the purchaser was an imprudent investor. Ms. Djurdjevic demonstrated at page 10 of Exhibit 2 that the acquisition cost of the land and improvements to the subject properties will result in a stabilized income flow supporting a current value of $18,853,000 resulting from the $15,400,000 invested to date. This she concludes justifies the assumption that the investor in this case has acted in a rational business manner and did not make reckless spending decisions.
20Beverly Foster is employed by PS Johnson Valuation Consultants Ltd. as a Property Tax Consultant. Her responsibilities as set out in her C. V. primarily relate to reviewing the realty taxes and ASR’s for industrial, commercial and investment properties and coordinating appeals with MPAC and ARB. She has compared Gross Income Multipliers (“GIM’s”) for properties but has not herself developed GIM’s for any types of property. She also did not personally inspect the row housing relied on by MPAC in calculating GIM’s for various types of row housing including the subject properties in a renovated condition.
21Ms. Foster testified in support of the Appellant’s position that the assessment as returned for the subject properties should be reduced by 50% in view of their dilapidated condition at the time of acquisition and the minimal income stream being generated then by the properties. Her view is that this approach would be consistent with that normally taken by MPAC where vacant land is undergoing improvements. However, she was unable to direct the Board to the MPAC policy she believed required the application of a 50% reduction to the assessment of the subject properties. She also seemed to be uncertain as to whether this would be a reduction under Municipal or Assessment Act legislation.
22Furthermore, the Board finds that the income generated by the original low end rental use (ie: prior to purchase and redevelopment) and the associated potential gross income and corresponding GIM for that use is no longer relevant and therefore the application of a further 50% reduction to the original GIM (or potential gross income) is arbitrary and without any rational basis.
23Most seriously, Ms. Foster also completely ignored in her analysis the sale of the subject properties for $10,000,000 six months prior to the valuation date in a rising market, and offered no justification or explanation for this neglect. In the Board’s view this neglect undermined her credibility and standing as either an independent or objective expert professional in assessment matters.
24Ms. Foster also did not believe that the purchase price of the subject property was determined based on its potential as a redevelopment site but she admits that she did not personally discuss this issue with the owner in preparation for her attendance at this hearing. She also testified that it was her opinion that the suggested comparable sales of non-residential redevelopment sites presented by MPAC were not appropriate comparable sales for the valuation of multi-residential properties, but did not explain the basis for this theory.
25The Board prefers Ms. Djurdjevic’s view that the sale prices of redevelopment properties are appropriate comparables to assess the validity of the $10,000,000 sale price of the subject properties and to support the assessment at $9,676,000. It is clear that the subject properties were purchased with the intention of redevelopment because the properties were in fact redeveloped shortly thereafter as higher end rental units.
Equity Analysis
26The issue of equity was not raised at the hearing and the Board was not presented with evidence to support a reduction in the assessment of the subject properties pursuant to s. 44.(3) of the Act.
27Accordingly, the Board does not order any reduction in the returned assessments based on equity considerations.
2015 DEEMED APPEAL
28An 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.
29Section 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.
“S. Light”
S. LIGHT
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