Assessment Review Board
Issue Date: September 29, 2015 File No.: WR 134587 Assessed Person(s): Northlea Corporation Appellant(s): Gurjit S. Grewal Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 15, City of Mississauga Property Location(s): 6865 Edwards Boulevard Municipality(ies): City of Mississauga Roll Number(s): 2105-040-117-09268-0000 Appeal Number(s): 2952217, 3033899 and 3083270 Taxation Year(s): 2013, 2014 and 2015 Hearing Event No.: 593735
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard: August 18, 2015 in Mississauga, Ontario
Appearances:
- Gurjit S. Grewal, Self-represented
- Sal Ferrante, for MPAC
- No one appeared for City of Mississauga
Decision of the Board Delivered by Dan Weagant
Introduction
1The subject property is in the Commercial Tax Class and comprises a building of 63,326 square feet ("sq. ft.") including a warehouse area of 56,141 sq. ft., an administrative office of 2,705 sq. ft., a shipping office of 400 sq. ft. and an unfinished storage mezzanine of 4,000 sq. ft. The building sits on a lot area of 3.139 acres. The building was originally constructed in 1997. There is no dispute among the parties with respect to the tax class. The issue for the Board to determine is the current value of the subject property for the 2013, 2014 and 2015 taxation years.
2MPAC has returned a value of $5,596,000. The Appellant believes the current value should be $5,178,000, based on an analysis of the sales of alternative, comparable properties.
Decision
3The Board finds that the current value of the subject property at 6865 Edwards Boulevard is $5,596,000. The Board also finds that there is no evidence before it to suggest that a reduction in the assessment of the subject property is required to make the assessment equitable with that of similar properties in the vicinity.
4Accordingly, the assessment for the subject property is confirmed at $5,596,000 for the 2013, 2014 and 2015 taxation years.
Legislation
5In making its determination on these appeals, the Board must consider s. 1, s. 19.(1), s. 19.2(1) and s. 44.(3) of the Act R.S.O. 1990, c. A.31.
[6] Section 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.
[7] Section 19.(1) of the Act states:
19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.
[8] Section 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.
[9] Section 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.
MPAC's Evidence
10Mr. Ferrante based the current value of the subject property on a comparison of four sales of comparable properties in Mississauga. The four properties used for comparison were chosen owing to their overall comparability, their use, lot sizes, location and the dates of the four sales which occurred in 2011 and 2012; all within 12 months of the valuation date of January 1, 2012.
11Mr. Ferrante testified that he made adjustments to the sale values of the four properties to account for the changes in sale values over time, using a time adjustment factor ("TAF"). The TAF used for each of the sale value in his study were derived from a compilation of 170 sales of commercial properties that occurred between February 2008 and August 2013 which indicates a trend in sale values of commercial properties over that time. For each month within that time span, Mr. Ferrante was able to derive a specific TAF for the four months in which the sales in his study occurred. The application of these TAF's allowed Mr. Ferrante to indicate a theoretical value for each comparable property as though each of the sales occurred on the January 1, 2012 valuation date.
12Mr. Ferrante also made adjustments to the four comparable sale values to account for their differences as compared to the subject property with respect to land area, age, building height and the presence in the subject property of an unfinished mezzanine. Only one of the four properties used in Mr. Ferrante's valuation study includes a mezzanine. For the purposes of determining 'base line' sale value of the buildings and land in his study, he removed the value of the unfinished mezzanine from this one property.
13After these adjustments for the variables in his study, Mr. Ferrante determined a building sale value per square foot for each of the comparable properties of between $88 and $97, with a median of $93. He applied this median value to the building area of the subject property (exclusive of the unfinished mezzanine) of 59,326 sq. ft. to arrive at a value of $5,517,318.
14To account for the value of the unfinished mezzanine existing in the subject property, Mr. Ferrante added a value of $24.39 per sq. ft. which was derived from MPAC's Automated Cost System ("ACS"). Mr. Ferrante testified that the ACS is a method that is commonly used by MPAC to determine the value of built features on any given commercial or industrial property. By applying the $24.39 value derived from the ACS to the 4,000 sq. ft. mezzanine, which had not yet been accounted for in his valuation analysis, he arrives at a value of $79,563. By adding this value to the value of the remainder of the building and the land, Mr. Ferrante arrives at a total value of $5,596,000 (rounded) for the subject property.
15To test the result of the analysis of comparable sales, Mr. Ferrante testified that he applied the ACS to the entire property which resulted in a value of $5,620,000. Accordingly, he believes that this indicates that the returned value is reasonable and therefore correct.
Appellant's Evidence
16Mr. Grewal considered the sales of six properties to make his determination of the current value of the subject property. All six sales of these comparable properties sold within 13 months of the valuation date. The six properties in Mr. Grewal's study are located in Mississauga and Brampton. Mr. Grewal explained that while some of these properties are outside of Mississauga, they are all effectively in the same market as the subject property and as a result are suitable for the purpose of comparison. The total building area of these six properties range from 56,556 to 82,942 sq. ft. with office areas comprising anywhere from 2% to roughly 50% of the total building areas. Land areas of his six comparable properties range from three acres to 6.555 acres.
17The sale value per sq. ft. of the six comparable in Mr. Grewal's study range from $60 to $80.12, with an average of $81.76. Mr. Grewal believes this average value, applied to the subject property, including the 4,000 sq. ft. mezzanine indicates a current value of $5,177,533 or $5,178,000 rounded.
18Under cross examination from Mr. Ferrante, Mr. Grewal advised the Board that no adjustments were made to these comparable properties to account for differences between them and the subject property for land area, age, interior building height, the presence of an unfinished mezzanine or price changes over time. He further submitted that, with respect to interior building height, only warehouse buildings with a height exceeding 30 feet are considered to have additional value per sq. ft. over those with height below 30 feet.
19It is Mr. Grewal's opinion that the sale dates of his comparable properties have sufficient proximity to the valuation date that no adjustment for this variable is justified to provide a reliable indication of value of the subject property.
20Mr. Grewal's opinion is that these variables have little or no impact on the effective value for these kinds of 'purpose built' buildings on the open market. He stated that the variable characteristics of his six sales serve to "cancel each other out" and in his opinion, the per sq. ft. sale values of the six comparables are suitably accurate to derive a median per sq. ft. value that can be reliably applied to the subject property to determine its current value.
21Mr. Ferrante also questioned Mr. Grewal on three of the sales in his study with respect to the reliability of the data represented. In response to MPAC's submission that one of the sales appeared to be a 'distress' or bank sale, Mr. Grewal believes the value of that sale is sufficiently indicative foot value per sq. ft. to be included in his analysis. Mr. Ferrante pointed our discrepancies in sale values between MPAC records and the values represented in Mr. Grewal's study. Mr. Grewal confirmed that the sale values in his study were drawn from Real Estate Board records and that he could not speak to the values in MPAC's records.
Analysis
22In making its determination, the Board must assess the evidence before it at the hearing. Both parties took similar approaches to determining the current value of the subject property. The difference in their findings is explained by two things. Firstly, the parties used the sales of different comparable properties to arrive at their conclusions. Secondly, MPAC took a more detailed approach to analyzing the data used than the Appellant did.
23While the Board does not discount Mr. Grewal's opinion (one that is developed from many years' experience in appraisal), in this case the Board finds that, given the differences in the comparable properties as compared to the subject property, Mr. Grewal's evidence lacks documentary evidence to support this opinion.
24By contrast, Mr. Ferrante's study looked at specific variables and the Board finds he made reasonable adjustments to the comparable properties in his study to account for these variables in developing his opinion of the current value of the subject property. These adjustments were not refuted by the Appellant. The Board also notes that Mr. Ferrante's comparable properties are all within the City of Mississauga, as is the subject property. Given the depth of analysis provide by Mr. Ferrante, the Board finds that there is no need in this case to go outside of the City for reliable comparison.
25Having made this point, the Board could accept those comparable properties in Mr. Grewal's evidence that lie within Mississauga and use them in combination with the properties presented by Mr. Ferrante. However. Mr. Grewal's evidence of the properties in Mississauga do not have with them sufficient documentary evidence to make adjustments to their characteristics to be appropriately combined with Mr. Ferrante's study.
26The Board prefers the evidence of Mr. Ferrante in that he accounted for the differences between the characteristics of his comparables and the subject so as to arrive at a reasonable per sq. ft. value to be applied to the subject property. In this way, the Board considers Mr. Ferrante's evidence to be superior.
Decision
27The Board finds that the current value of the subject property at 6865 Edwards Boulevard is $5,596,000. The Board also finds that there is no evidence before it to suggest that a reduction in the assessment of the subject property is required to make the assessment equitable with that of similar properties in the vicinity.
28Accordingly, the assessment for the subject property is confirmed at $5,596,000 for the 2013, 2014 and 2015 taxation years.
"Dan Weagant"
DAN WEAGANT 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