Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 18, 2015 FILE NO.: WR 133787

Assessed Person(s): Bajwa Consultants Inc. Appellant(s): Bajwa Consultants Inc. Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 9 Respondent(s): City of Toronto

Property Location(s): 45 Forty Second Street Municipality(ies): City of Toronto Roll Number(s): 1919-053-440-00400-0000 Appeal Number(s): 3064802 Taxation Year(s): 2015 Hearing Event No. 586840

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

Heard: July 14, 2015 in Toronto, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Bajwa Consultants Inc.	Daniel Attard
MPAC	Kauser Taslim
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH and MARK SPRAGGETT

INTRODUCTION

1The appeal before the Assessment Review Board ("Board") is filed by the Assessed Person in respect to the returned assessment of $4,678,000 for 2015 taxation year for the subject properties in the City of Toronto.

ISSUE

2Kauser Taslim, representative for MPAC is of the view that the returned assessment of $4,678,000 for the subject property is fair and equitable. She testified that the returned assessment was determined by the Income Approach to value.

3Daniel Attard, representative for the Assessed Person/Appellant is of the view that the subject property is assessed too high, based on similar properties in the vicinity. He agrees with MPAC that the Potential Gross Income ("PGI") for the subject property is $531,998. However, Mr. Attard disagrees with MPAC's Gross Income Multiplier ("GIM") of 8.79 and argues that it should be 8.0 based on sales of similar lands in the vicinity. He also argued that the subject property with a total of 53 units should be assessed as a high-rise multi-residential property instead of a walk-up multi-residential property.

4Based on his argument, Mr. Attard believes that a fair and equitable value should be $4,257,000 for the subject property for the 2015 taxation year.

5The City of Toronto was not in attendance at the hearing.

6The Board has to decide:

• Whether the returned assessment of $4,678,000 for the 2015 taxation year for the subject property is at current value as at the valuation date January 1, 2012; and
• Whether the value is equitable with the assessments of similar lands in the vicinity.

DECISION

7The Board determines the current value to be $4,745,000 as of the valuation date of January 1, 2012.

8The Board finds that the evidence does not support the conclusion that an equity adjustment is required under s. 44. (3)(b) of the Assessment Act ("Act").

9As there is no appeal before this Board to increase the returned assessment value of $4,678,000, the Board finds that this value is fair and equitable. Therefore, the Board confirms the returned assessment for the subject property at $4,678,000 for the 2015 taxation year.

REASONS FOR DECISION

Background

10The subject property is described as a four storey, multi-residential building, with seven or more self-contained units (excluding row-housing), with parking facility, and on a site area of 0.83 acre. The building was originally built in 1962 and it contains three bachelors, 36 one-bedroom and 14 two-bedroom for a total of 53 unit apartments in the City of Toronto.

The Legislation

11In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Act:

12Section 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.

13Section 19.(1) of the Act states:

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

14Section 19.2(1)2 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:

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.

15Section 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.

16Section 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.

17In determining the value at which any land shall be assessed, s. 44.(3)(a) and (b) of the Act requires the Board to do two things:

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

MPAC's position

18In support of her argument, Ms.Taslim presented Exhibit 1, containing sales analyses that included time adjusted and actual sales values. The Board did not rely on the time adjusted sales because Ms. Taslim failed to demonstrate how she arrived at the factors used to adjust the sales to the valuation date of January 1, 2012. Instead, the Board relied on the actual sales date presented into evidence.

19In reviewing the nine sales presented by MPAC, Exhibit 1, p.17, the Board did not rely on the four sales which occurred in 2010. The reason being, that these four sales are too far removed from the valuation date of January 1, 2012 to provide any meaningful test of current value.

20The remaining five sales of walk-up multi-residential properties sold in 2011 and located at 42 Third Street, at 317 Park Lawn Road, at 4 Crown Hill Place, at 9 Crown Hill Place, and at 34 Riverwood Parkway have a median GIM of 8.92 which is higher than the GIM of 8.79 used to determine the 2012 Current Value Assessment ("CVA").

21In regard to the issue of why multi-residential properties are considered high-rise or walk-up. Ms. Taslim testified that multi-residential properties are considered high-rise because of extensive amenities (swimming pools, fitness centre, laundry facilities, visitors parking etc.) and higher ratio of expenses than that of walk-ups. She testified that although walk-ups are generally considered 30 units and lower, it is not always the case because amenities as stated above are major factors as to which type they are assessed as. In support of this argument, Ms. Taslim cited four sales of multi-residential properties, Exhibit 1, p.16, to show that although these comparable properties (317 Park Lawn Road, 4 Crown Hill Place, 9 Crown Hill Place and 34 Riverwood Parkway) have units greater than 30 (range 32 to 60 units) they are assessed as walk-ups because of limited amenities as is the subject property.

22On cross-examination, Mr. Attard argued that the Reported and Stabilized Income and Expenses ratio analysis (Exhibit 1, p.11 and 12) and the four comparable properties at 317 Park Lawn Road, 4 Crown Hill Place, 9 Crown Hill Place and 34 Riverwood Parkway presented by MPAC Exhibit 1, p.16) was not disclosed 21 days prior to the hearing.

23In response, Ms. Taslim agreed that the above information was not sent 21 days prior to the hearing and was sent on July 7, 2015 in response to an email (Exhibit 5) she received from Andrew Attard on June 26, 2015 regarding walk-up multi-residential properties. She also testified that she and Andrew Attard had discussions about the information prior to the hearing.

24In addressing the above disclosure issue, time was offered to Mr. Attard to review the documents and to determine if an adjournment was necessary. In response, Mr. Attard advised the Board that he wanted to bring the issue to the Board's attention and that he wanted to proceed with the hearing.

25In reviewing the email (Exhibit 5), the Board finds that Andrew Attard was in fact aware of the above four sales of comparable properties and the income and expense adjustments (although not in a format as Exhibit 1, p.11) sent in response to his email. However, the Board advised the parties, that the appropriate weight would be given to the above evidence not disclosed 21 days prior to the hearing.

26Cross-examination continued and Mr. Attard argued that the comparable properties at 317 Park Lawn Road, 4 Crown Hill Place, 9 Crown Hill Place and 34 Riverwood Parkway presented by MPAC was part of a bulk sale and should not be considered open market sales. In response, Ms. Taslim testified that these four sales based on MPAC's sales investigation, are open market sales, processed on the same day, as four separate transactions, with four different buyers, and with four different roll numbers. As no factual evidence was presented to the contrary, the Board accepts Ms. Taslim's evidence and finds that the sales of these four comparable properties are open market sales.

Appellant's Position

27In support of his argument, Mr. Attard called Andrew Attard as a witness and he testified to evidence contained in Exhibit 6. Andrew Attard presented an analysis of four sales sold in 2011, 2012 and 2013 (Exhibit 6, p.21). These four sales are located at 80 Blackfriar Avenue sold in April 2013; at 1865 Martin Grove Road, sold in May 2011; at 75 Irwin Road, sold in 2012; and at 18 Fourteen Street, sold in 2011. Based on these four sales, Andrew Attard testified that the average GIM is 8.0 and when applied to the PGI of the subject property it results in a value of $4,257,000 ($532,196 x 8.0). It is important to note that the PGI agreed to by the parties for the subject property is $531,998 and not $532,196. Therefore, the value determined above would be slightly lower at $4,256,000 which is ($531,998 x 8.0).

28In response to the above sales Ms. Taslim argued:

• That the comparable property at 1865 Martin Grove Road is not similar to the subject property because it is a high-rise multi-residential property, whereas, the subject property is a walk-up multi-residential property. She also argued that the sale in 2011 was a private sale discovered through an MPAC sales investigation, and that it was sold as 92 units which is contrary to MPAC's data of 90 units;
• That the comparable property at 75 Irwin Road is not similar to the subject property because it is a high-rise multi-residential property, whereas, the subject property is a walk-up multi-residential property;
• That the comparable property at 18 Fourteen Street should not be relied on because the sale is part of a portfolio with 20 Fourteen Street and the sale was processed as a single transaction; and
• That 80 Blackfriar Avenue should not be relied on because it is located in a less desirable area than the subject property.

29In reviewing the above sales, the Board did not rely on the following sales for reasons stated:

• 80 Blackfriar Avenue sold in April 2013. This sale is too far removed from the valuation date of January 1, 2012 to provide any meaningful test of current value;
• 1865 Martin Grove Road sold in May 2011. The Board finds that Daniel Attard presented no factual evidence (MLS ("Multiple Listings Service")) to show that the sale was an open-market sale. The Board also finds that the Marsh report (Exhibit 6, p.4) supports Ms. Taslim's argument, because the purchaser's name was not indicated on the report which is contrary to other Marsh reports presented into evidence. The report listed the purchaser as "A woman, a resident of North York, age 73";
• 18 Fourteen Street sold in 2011. The Board agrees with Ms. Taslim that this sale was part of a combined (portfolio) sale with 20 Fourteen Street. Together, these two properties sold in July 2011 for $2,700,000, as detailed in a Marsh Report Inc. contained in Exhibit 6, p.11. The Board also could not ascertain whether the value of $1,750,000 attributed to 18 Fourteen Street as stated in the Marsh Report is reflective of true market value because it was a portfolio sale; and
• 75 Irwin Road sold in 2012. The Board disagrees with Ms. Taslim that this comparable property should be excluded because it is a high-rise multi-residential property. The Board finds that this sale provides valuable information that can assist the Board in its determination.

The Board's Analysis and Decision

30In reviewing all of the above evidence, the Board finds the best evidence to be the median GIM of 8.92 of the above five sales of walk-up multi-residential properties presented by MPAC. Applying the GIM of 8.92 to the PGI of the subject property results in a value of $4,745,000 ($531,998 x 8.92).

31It is important to note that although the Board based its determination on the above median GIM, the sale of a similar comparable to the subject property at 9 Crown Hill Place, with 60 units reflects a GIM of 9.27 which is significantly higher than the median GIM of 8.79 for the subject property. The Board also finds that the average Assessment to Sales Ratio ("ASR") of 1.01 based on the five sales presented by MPAC and the Appellant's sale at 75 Irwin Road demonstrates that the returned assessment of the subject property is reasonable.

32In regard to low-rise versus high-rise, the Board agrees with MPAC that the degree of amenities significantly impact the GIM because of the associated expenses. Therefore, the Board accepts MPAC's classification of low-rise for properties with limited amenities and high-rise with extensive amenities. This is supported by Member Walker's decision 1710 Victoria Park Inc. v. Municipal Property Assessment Corp. Region No. 09 [2011] O.A.R.B.D. No. 2 presented by MPAC and in which she stated that "The median expense ratio of the subject property is 54.5%, which is more typical for low-rise building, as compared to 60% for high-rise properties" and by Member Brownlie's decision in Dawson Properties Ltd. v. Municipal Property Assessment Corp. Region No. 32 [2003] O.A.R.B.D. No. 131 presented by Mr. Attard, in which he stated that "smaller buildings sell fairly readily to the kind of investors available in Thunder Bay, whereas larger buildings are very difficult to sell. It follows that large multi-residential buildings are not "similar lands in the vicinity" to "the small buildings".

33Based on all of the above evidence, the Board determines the current value to be $4,745,000.

Equity

34MPAC presented no other evidence in support of equity.

35No other evidence was presented by the Appellant.

36The Board finds that the evidence does not support the conclusion that the current value of the property as determined above requires an equity reduction.

CONCLUSION

37Based on all of the evidence, the Board determined the current value to be $4,745,000, and finds this value to be fair and equitable. However, there is no appeal before the Board to increase the returned assessment $4,678,000. Therefore, the Board confirms the returned assessment of the subject property at $4,678,000 for the 2015 taxation year.

Footnotes

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