Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 31, 2015 FILE NO.: WR 132788

Assessed Person(s): Krzysztof Hollas, Maria Hollas Appellant(s): Krzysztof Hollas, Maria Hollas Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 16 Respondent(s): Town of Penetanguishene

Property Location(s): 118 Fox Street Municipality(ies): Town of Penetanguishene Roll Number(s): 4372-010-006-07935-0000 Appeal Number(s): 2994834, 3022828 and 3087692 (deemed 2015) Taxation Year(s): 2013, 2014 and (deemed 2015) Hearing Event No.: 584453

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

Heard: June 4, 2015 in Penetanguishene, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Krzysztof Hollas, Maria Hollas	Jaroslaw Wowk - After-Tax Paralegals
MPAC	David Zhao, Darren Manuel, Tammy Wells-Garrett
Town of Penetanguishene	Donna Lacroix (Observing only)

DECISION OF THE BOARD DELIVERED BY TYRONE D. SKANES

PRELIMINARY ISSUE

1Prior to starting the hearing, the Appellants' representative, Mr. Wowk, asked for a witness exclusion order because MPAC had two witnesses and he wished for them to be examined separately.

MPAC submitted that this would be impractical during examination in chief as MPAC's two witnesses had jointly prepared the evidence and would be answering questions at the same time.

2The Board asked Mr. Wowk if removing one witness during cross examination would satisfy his request and he agreed that it would. The Board ordered that during the cross examination of MPAC's witnesses there would an exclusion order for the witness not being examined.

INTRODUCTION

3This appeal is in respect of the assessment of a single family detached dwelling for the 2013 and 2014 taxation years. The subject property was built in 2007 and was purchased by the Appellants from the builder in 2008. The house is situated on an effective site of 9,637.76 square feet ("sq. ft.") with an effective frontage of 65.12 feet ("ft.") and an effective depth of 148 ft. The house is a single storey dwelling with 1,535 sq. ft. and an unfinished basement with the same square footage. The basement has a walkout to the back yard. There is an attached garage measuring 564 sq. ft.

4MPAC submitted that the returned current value assessment of $286,000 is based on the sales comparison approach to value and this represents an increase of $1,000 over the returned assessment in the previous assessment cycle. MPAC further submitted that the assessment is fair and reasonable and recommended that it be confirmed at $286,000 the 2013 and 2014 taxation years, in the residential tax class.

5Mr. Wowk submitted that the assessment was neither fair or reasonable and he recommended that the Board accept one of three values ($181,000, $234,000, $236,000) as a fair assessment.

ISSUE

6The issue before the Assessment Review Board (“Board”) for determination is whether the assessment of the subject property for the 2013 and 2014 taxation years is at current value and whether the assessment is equitable with the assessment of similar lands in the vicinity.

DECISION

7The Board is required by s. 44.(3)(a) of the Assessment Act (“Act”) to determine the current value of the land and have reference to the value at which similar lands in 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.

8The Board finds that the current value of the subject property as of January 1, 2012, is $276,000 (rounded) and that value is equitable with the assessments of similar lands in the vicinity.

REASONS FOR DECISION

Relevant Legislation

9Section 19.(1) of the Act states:

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

10Section 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.

11Section 19.2(1)3 of the Act states:

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:

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.

12Section 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.

13Section 40.(17) of the Act states:

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.

14Section 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.

MPAC's Position

15Mr. Zhao appeared on behalf of MPAC and called two witnesses, Mr. Manuel and Ms. Wells-Garrett. They introduced a valuation report into evidence as Exhibit 1 and a Property Profile Sheet and a Property Assessment Details report for the subject property, as Exhibit 2. Both witnesses contributed to the preparation of the exhibits.

16Mr. Manuel testified that an inspection had not been completed on the subject property and they had to rely on the details from the 2009 inspection. He said that he requested an inspection but the request had been refused by the Appellants.

17Mr. Manuel presented a Price Change over Time analysis where the sales of 480 residential properties from Penetang and the town of Midland and Tiny Township, were examined between January 2009 and December 2012. This analysis indicates that there had been an market increase during this time period of approximate 9.42%. The assessor also said that this analysis was used to establish Time Adjustment Factors (“TAF”), found in Exhibit 1.

18Mr. Manuel stated that the direct sales comparison approach to value had been used in determining current value. He presented the sales of five properties that he said were comparable to the subject property. He submitted that these sales, especially sales B and C, indicate that the subject property has a market value of approximately $292,000. Mr. Manuel concluded by saying said that based on their analysis the assessment of $286,000 for the subject property was fair and reasonable. He also said that the returned assessment was equitable with similar lands in the vicinity. Mr. Manual recommended that the returned assessment be confirmed for the 2013 and 2014 taxation years.

19Mr. Zhao summed up MPAC's position by saying that the proposed assessment of $286,000 was only $1,000 higher than the 2008 assessment, despite evidence showing that the market had increased by approximately 9% between the valuation dates. He submitted two prior Board decisions¹ for the Board's consideration.

Appellants' Position - Preliminary Matters

20Mr. Wowk entered a documentary package into evidence as Exhibit 3. Mr. Zhao asked that this exhibit be reviewed as it appeared that there was material contained therein that had not been previously disclosed.

21This review revealed that pages 5, 6, 12, 13 and 14 had not been disclosed to MPAC in accordance with the Board Rules of Practice and Procedure on disclosure. The parties were invited to make submissions on whether this material should be admitted.

22Mr. Zhao asked that the relevant pages not be allowed into evidence as it had not been provided to MPAC in accordance with the Board Rule on disclosure. He said he was quite confident that in a reverse situation the appellants representative would be adamant in his opposition.

23Mr. Wowk advised that he did not know why the entire package had not been provided to MPAC, as someone else in their firm had sent it. He said that the Board had the authority to disregard the disclosure rule and encouraged the Board to do just that. He said that there was no prejudice attached to MPAC not receiving it and the material was vital to his presentation.

24The Board considered the parties positions and ruled that pages 5, 6, 12, 13 and 14 of Exhibit 3 could not be entered into evidence and would not be considered by the Board, as it had not been provided to MPAC in accordance with the Board's rule on disclosure. The Board's rule is known to all of the parties and is very specific. The parties have to ensure that they are prepared to proceed when appearing before the Board and this includes having complied with the disclosure rule.

Appellant's Position - Current Value

25Mr. Wowk presented three options for the Board's consideration. They are described as follows:

• Option 1: The median TAS price of two properties ($181,000) was presented as an option. Mr. Wowk submitted that these properties were good comparables and this could be a method to determine the subject property's current value;

• Option 2: The sale of one property, 67 Church St., was submitted as the most comparable to the subject property. The TAS price per square foot of this comparable ($154) was multiplied by the subject property's total square footage to arrive at a recommended current value of $236,000. This is Mr. Wowk's preferred valuation method and,

• Option 3: The average per square foot sale price of eight sales comparables ($152) was multiplied by the subject property's total square footage to arrive at a recommended current value of $234,000.

Appellant's Position - Equity

26Mr. Wowk addressed the equity issue by testifying that the average value of the nine properties that he used in his analysis was $237,000 and this indicated to him that a downward adjustment was required for equity. Mr. Wowk also submitted three prior Board decisions² for the Board's consideration.

Board's Analysis - Current Value

27MPAC and the Appellant submitted a number of sales comparables and the Board has carefully considered them. When considering comparable properties, the Board does not expect exactness or sameness nor does the legislation require it. Therefore, the Board looks at similarity of characteristics, amenities and location to determine comparability.

28The Board usually considers sales of comparable properties that have occurred within one year on either side of the valuation date as the ideal time period for consideration. Sales D and E sold within this time period. Sales A and B sold in 2013 and Sale C sold in 2010. The Board occasionally does extend the time period for considering comparable properties when the parties have demonstrated that there were an insufficient number of relevant sales during the ideal time period. However, that is not the case in this instance. MPAC entered two sales that fell within the acceptable time period and the Appellants entered nine properties that had recent sales. Therefore, the Board will not extend the time period for considering comparable sales and excludes MPAC's Sale C from consideration. Furthermore, MPAC included two 2013 sales in its analysis. In their evidence, the assessors were unable to provide any data whereby they could time adjust the sales prices of those 2013 sales, as had been done with the remaining comparable sales. Therefore, the Board will exclude MPAC's Sales A and B from consideration.

29The Board is left with MPAC's Sales D and E for consideration. MPAC's assessors also testified that they had to expand the vicinity outside of the homogenous neighbourhood R70 to capture a sufficient number of comparable sales. Sale E is located in the adjoining homogenous neighbourhood of R40 and the Board accepts this comparable.

30The Appellants evidence included nine properties for consideration. The Board rejects 72 Fox Street as a good comparable because it is much older than the subject property, has substantially less structure size and, unlike the subject property, does not have a basement. 139 Fox Street is also rejected because it is much older than the subject property and unlike the subject property it does not have a basement and is a multiple storey structure.

31The Appellants representative admitted that he also expanded the vicinity to capture relevant sales comparables, taking properties from homogenous neighbourhoods R40 and T01, both of which he said are within Penatanguishene. MPAC also used Sale E from neighbourhood R40, therefore the Board will accept the properties located at 34 Brule, 50 Sulky, 36 Sulky and 18 Brule. Since Mr. Wowk was unable to advise the Board where neighbourhood T01 was in relation to the subject property, the Board rejects 5 Hallen, a property located in TO1, as being a good comparable.

32This leaves the Board with eight properties from all parties to consider when determining current value. These properties are listed in Table 1 below. However, before considering these properties the Board will address Mr. Wowk three options.

33In option 1 Mr. Wowk suggested using the median time adjusted sales price of two properties that he said were good comparators to the subject property. However, one of these properties was excluded by the Board as it has been built in 1935 and was substantially smaller than the subject property. Therefore, the Board will not consider this option.

34In option 2 the representative used the property at 67 Church Street as the sole comparator to the subject property. He used the price per square foot of the TAS price of this property and multiplied it against the square footage of the subject property to determine what he said was a fair assessment. The Board will occasionally use this method of determining value when all other avenues of determination are either exhausted or do not exist. Using only one aspect of similarity of characteristics severely limits making a fair determination of assessment. This is why the Board is generally reluctant to limit itself, particularly when there are several comparable properties that have been deemed to be appropriate for comparison, as in this case. Therefore, the Board will not consider this option.

35In option three, the representative presented eight properties and used MPACs TAF to determine the TAS prices of these properties. He then again used the price per square foot analysis to arrive at what he said was a fair assessment. The Board will not consider this option as it, again, uses only one aspect of character similarity, namely the square footage of the properties. This excludes all other relevant characteristics that the comparable properties may have in common with the subject property.

36In considering the eight remaining comparable properties the Board finds that in all relevant areas of comparison the properties are more similar than dissimilar to the subject property. There is some variance in age of construction with the subject property being built in 2007 whereas all of the comparable properties were built in the 1980's or the 1990's. However, MPAC's Sale D was built in 1986 as was the Appellants property at 67 Church Street and this represented the greatest range in age of construction. Therefore, the comparable properties were all built within a few years of each other and the Board finds the age range acceptable.

37The Board compared the sales comparables' site areas, building area and year built with that of the subject property and found three properties were inferior to the subject property and five were relatively comparable. As can be seen from Figure 1 below, the Board finds that the current value range is established by the high of the TAS range for the inferior comparables ($264,160) and the high end of the relatively comparable properties ($287,528). The Board is of the view that the mid-point of the current value range for the subject property is the best evidence of current value.

Table 1

Property	Effective Site Area ("sq. ft.")	Building Area ("sq. ft.")	Year Built	Returned Assessment	TAS Price	Relatively Comparable, Inferior or Superior
Subject	9,637	1,535	2007	$286,000	N/A	N/A
Sale D	8,437	1,695	1986	$250,000	$261,315	Inferior
Sale E	9,000	1,718	1989	$279,000	$281,062	Relatively Comparable
67 Church	8,347	1,695	1986	$250,000	$261,360	Inferior
34 Brule	9,011	1,776	1992	$281,000	$252,500	Relatively Comparable
50 Sulky	7,246	1,425	1989	$248,000	$264,160	Inferior
19 Pommel	7,641	1,694	1990	$271,000	$287,528	Relatively Comparable
36 Sulky	7,246	1,638	1993	$260,000	$248,472	Relatively Comparable
18 Brule	9,000	1,718	1989	$276,000	$281,010	Relatively Comparable

Figure 1

Inferior Comparables TAS Range $261,315 - $264,360

Current Value Range for the SP TAS Range - Properties that are Relatively Comparable to the Subject Property $248,472 Sale E, 34 Brule, 19 Pommel, 36 Sulky & 18 Brule $287,528

38The Board therefore finds that the current value for the subject property is $276,000 (rounded).

39The Board notes that MPAC stated that their recommended assessment of $286,000 is only $1,000 greater than that of the returned assessment for the previous assessment period. The Board has often been presented with similar pleadings from appellants who argue that their returned assessments are inordinately high compared to the previous assessment cycle. In responding to these submissions, the Board has stated in the past that it does not consider the returned assessments from previous assessment cycles when determining current value. It must determine current value according to the provisions of the Act, and the date the land is valued for the 2013-2016 taxation years, is January 1, 2012. The Board would have also informed the appellants that it may be that the previous returned assessment was too low and/or that the demand for similar lands has changed since the last assessment cycle. Similarly, the Board addresses MPAC's observation that the recommended assessment has only increased by $1,000 over the previous assessment cycle by stating that: A) the Board must determine current value according to the provisions of the Act and, B) perhaps the returned assessment was too high in the previous assessment cycle and/or, the market demand in this assessment cycle has changed for lands similar to the subject property.

Board's Analysis - Equity

40MPAC entered an equity study into evidence that revealed that the median ASR was 1.0 and MPAC asserted that this demonstrated that similar lands in the vicinity were being correctly assessed and an adjustment was not required for equity. The Appellant's representative disagreed with the equity study and asked the Board to disregard it because there were many errors in the report, not all of the included properties were in the same property code as the subject property and that MPAC could not advise if any outliers has been omitted from the study.

41However, the representative did not present any equity evidence as it had formed part of the evidence package that had been excluded from consideration, due to not being disclosed. He did say that the average value of the nine properties he used was $237,000 and this indicated to him that a downward adjustment was required for equity.

42Although the representative said that there were many errors in MPAC's equity study he did not highlight exactly what those errors were and how the result was affected. He also said that outliers had been omitted but he did not explain to the Board how the outliers being omitted affected the result. Lastly, he said that the result was affected by not having all of the properties from the same property code. He referred to the decision rendered by Member Light in Simos v MPAC as evidence that the Board requires these issues to be considered when examining equity studies. There is nothing to indicate exactly what evidence Member Light heard and how it impacted on her decision. Therefore, the Board does not consider the Simos decision to be of assistance when considering equity. Consequently, the Board accepts MPAC's equity study and finds that no adjustment is required for equity.

CONCLUSION

43The Board finds that the current value for the subject property as at January 1, 2012 to be $276,000 (rounded) and that value is equitable with assessments of similar lands in the vicinity.

2015 DEEMED APPEAL

44An 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.

45Section 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. 1Cote v. Municipal Property Assessment Corp., Reg. No. 17 [2014] O.A.R.B.D. No 311 and Ontario Ltd. v. Municipal Property Assessment Corp., Region No. 15 [2013] O.A.R.B.D. No. 145.
2. 2Chiu v. Municipal Property Assessment Corp., Reg. No. 9, [2011] O.A.R.B.D. No. 405, Simos v. Municipal Property Assessment Corp., Reg. 14,[2015] Board File No. WR 130636 and 1429829 Ontario Inc., v. Municipal Property Assessment Corp., Reg 16, [2015] Board File No. WR 1307787.