Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 28, 2015

FILE NO.: WR 125958

Assessed Person(s): Gerardo Capocci and Rosina Capocci

Appellant(s): Gerardo Capocci and Rosina Capocci

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): 1660 St. Clair Avenue West

Municipality(ies): City of Toronto

Roll Number(s): 1904-032-390-09100-0000

Appeal Number(s): 2997501, 3008656 and 3075428 (deemed 2014 and 2015)

Taxation Year(s): 2013 (and deemed 2014 and 2015)

Hearing Event No. 560018

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

Heard: June 5, 2014 in Toronto, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Gerardo Capocci and Rosina Capocci	Gerardo Capocci
MPAC	Terry Kroi
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY CHARLOTTE D. SLOAN

INTRODUCTION

1The issue for the Assessment Review Board (“Board”) to determine is whether the assessment as returned for the subject property for the 2013 taxation year is at current value as at the January 1, 2012 valuation day; and whether the assessment is equitable with the assessments of similar lands in the vicinity.

DECISION

2The Board is required by the Assessment Act (“Act”) to do two things:

1. Section 44.(3)(a) requires the Board to “determine the current value of land.”

For the reasons stated below, the Board finds that the current value of the subject property as at the valuation day of January 1, 2012, is $310,000.

2. Section 44.(3)(b) requires the Board 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 that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.”

For the reasons stated below, the Board finds that no adjustment is required to be made for the purpose of equity.

3Accordingly, the current value of the subject property is $310,000 as of January 1, 2012, apportioned $155,000 to the commercial class and $155,000 to the residential class and the assessment of the subject property is reduced from $536,000 to $310,000 for the 2013 taxation year.

REASONS FOR DECISION

The Subject Property

4The subject property is an attached two-storey retail building with commercial on the main floor and residential on the second floor, located at 1660 St. Clair Avenue West in the City of Toronto in MPAC’s Q06 homogeneous neighbourhood, and more particularly in the St. Clair Gardens Business Improvement Area (“SCG-BIA”). The dwelling, built in 1928, has a total building area of 1,858 square feet (“sq. ft.”), made up of 929 sq. ft. of commercial on the first floor and 929 sq. ft. of residential on the second floor and an unfinished basement area of 929 sq. ft. There has been a store-front revitalization effort in the SCG-BIA, including the subject property. The commercial portion of the subject property is owner-occupied by the Appellant. The lot has an effective frontage of 20.65 feet by an effective depth of 124.74 feet, and an effective site area of 2,576 sq. ft. The Appellant pointed out that the laneway at the back of the property results in an irregular lot depth; on behalf of MPAC, Roberto Boccia explained the concepts of effective frontage, effective depth and effective lot size, when dealing with an irregularly shaped lot. The subject property is further described in the MPAC Disclosure Report (Exhibit 2) and photographs of the subject property are included in MPAC’s Exhibit 2-A and the Appellant’s Exhibit 3-A.

The Legislation

5Section 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.

6In determining the value at which land is assessed, s. 44.(3) 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.

7In making its determination, the Board is directed by various other sections of the Act, the most relevant being the following:

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 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) 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:

1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.

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.

11Section 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.

MPAC’s Position

12Terry Kroi called upon Mr. Boccia, an MPAC Property Valuation Analyst as MPAC’s witness. Mr. Boccia was accepted by the Board as an expert witness on residential and small commercial assessment, upon hearing testimony as to his educational and MPAC employment background; receiving his Curriculum Vitae and Acknowledgement of Expert’s Duty (Exhibit 1); and with no objection from Gerardo Capocci.

13Mr. Boccia stated that the assessment as returned for the 2013 taxation year is $536,000, apportioned $268,000 to the commercial class and $268,000 to the residential class. According to Mr. Boccia, MPAC originally offered to reduce the assessment to $420,000, apportioned $210,000 to the commercial class and $210,000 to the residential class – those are the amounts shown and used in MPAC’s Disclosure Report. MPAC then offered to further reduce the assessment as returned for the 2013 taxation year to $395,000, apportioned $197,500 to the commercial class and $197,500 to the residential class. That offer was not accepted by the Appellant. Mr. Boccia advised that MPAC would honour that offer.

14Mr. Boccia stated that the current value of the subject property had been determined using the direct sales comparison approach to value. To support MPAC’s position that the current value of the subject property as at January 1, 2012 is the offered-reduced assessment of $395,000, Mr. Boccia provided five sales between May 2011 and December 2012 of suggested comparable properties within the Q06 homogeneous neighbourhood and within the same SCG-BIA. Two maps (one being of the SCG-BIA) showing the location of the subject property and the suggested comparable properties are included Exhibit 2-C.

15The key features of the subject property and the five suggested comparable properties are set out in MPAC’s sales investigation of sold properties (Exhibit 2-D), in the photographs presented by MPAC as Exhibit 2-A and in Mr. Boccia’s testimony. According to Mr. Boccia, all of the suggested comparables have similar physical characteristics, lot sizes and total building areas as the subject property, as well as all having main floor commercial and upper floor residential, which is the same as the subject property. Time-dated photographs of MPAC suggested comparable Sale 5 show that external renovations to that property took place after its sale in 2011. MPAC submitted Exhibit 2-E, the Land Transfer Tax Affidavit for its suggested comparable Sale 4, as evidence that no part of the sale price was for business chattels or equipment.

16Exhibit 2-D sets out the actual sale price of each of MPAC’s five suggested comparable properties. According to Mr. Boccia, the sale amounts of the suggested comparable properties establish a range of values for the subject property of between $390,000 and $465,000. Mr. Boccia further submitted that the offered-reduced assessment of $395,000: falls within the lower end of that range of values; is very similar, on a sale price per square foot of total building area basis, to Sale 1 and Sale 5 (pre-renovation), the two most comparable MPAC suggested properties; and is reasonable.

17Mr. Boccia submitted the Equity Analysis in Exhibit 2-F and further described in Exhibit 2. According to the Equity Analysis, which is comprised of 21 arm’s length sales of commercial properties within the vicinity of the subject property between January 2011 and December 2012, the assessment to sale ratios (“ASRs”) ranged from 0.54 to 1.37 with a median ASR of 1.01. According to Mr. Boccia:

• The median ASR in equity analyses should fall between 0.95 and 1.05; a range that is consistent with International Association of Assessing Officers (“IAAO”) standards and indicates that equity has been achieved because similar properties in the vicinity have been assessed at their current values; and

• The Equity Analysis in Exhibit 2-F, with a median ASR of 1.01, indicates that similar properties in the vicinity of the subject property are assessed at their current values. Therefore, no equity adjustment is required.

18Mr. Boccia submitted that the offered-reduced assessment of $395,000 is the correct current value of the subject property and is reasonable, using sale prices of comparable properties in the same neighbourhood, of similar quality, condition age and size. Mr. Boccia further submitted that this amount requires no adjustment for equity.

The Appellant’s Position

19Mr. Capocci asserted that the offered-reduced assessment of $395,000 is too high, especially because of the negative issues related to the subject property and its surrounding neighbourhood (location).

20Mr. Capocci testified that he has lived in this neighbourhood all of his life and has very good knowledge about the area. In particular, location is most important for the properties in this area along St. Clair Avenue West and business in this particular part of St. Clair West has really suffered as a result of the St. Clair right-of-way, with about 175 businesses having shut down since the construction of the St. Clair right-of-way. As noted in the Appellant’s Exhibit 3, while the St. Clair and Dufferin/Westmount area is still doing relatively well, the St. Clair and Keele (the Stockyards) area is up-and-coming and many businesses have moved to that part of St. Clair Avenue West. The subject property is in neither of those areas, and the Appellant noted that the subject property is the furtherest away from St. Clair and Keele than any of MPAC’s suggested comparable properties. As a result of all these location factors, properties in the SCG-BIA are losing value, with many of MPAC’s suggested comparable properties selling for less than their 2008 current value assessments.

21Mr. Capocci disagreed with all of MPAC’s suggested comparables except Sale 2 – 1676 St. Clair Avenue West, and in Exhibits 3-C and 3-D he provided photographs and/or Multiple Listing Service (“MLS^®”) listings of the MPAC suggested comparables. Using the photographs and MLS^® listings, the Appellant asserted that, among other things: Sale 5 was “newly rebuilt” and its sale included all chattels, fixtures and equipment; Sale 1 has a finished legal basement apartment and two upstairs apartments, as compared to the subject property’s one upstairs apartment; Sale 4 has a greater frontage than the subject property, which is important for retail on St. Clair Avenue West; and the buyer of Sale 3 paid too much and that sale also included business equipment and chattels.

22The Appellant asserted that many upgrades need to be made to the subject property to make it comparable to MPAC’s suggested comparable property Sale 2, which is the only MPAC suggested property that the Appellant feels is comparable to the subject property, largely because its sale did not include business fixtures or equipment. However, given the 40 year difference in age between the two properties and many more renovations made to Sale 2 and no interior renovations made to the subject property, the Appellant submitted that it would require about $85,000 to be spent on the subject property to be more comparable to MPAC suggested comparable Sale 2. In Exhibit 3-A, the Appellant provided photographs showing the subject property’s lack of upgrades and its needed renovations, in particular to the basement. In Exhibit 3-E, the Appellant provided contractors’ estimates from 2010, totalling about $80,000 for the work that needs to be done to the subject property, as reflected in the Exhibit 3-A photographs.

23Mr. Capocci further submitted that the Board should not accept MPAC’s Equity Analysis since many of the properties included in Exhibit 2-F are so different than the subject property and the sale prices of so many of the properties included in the Equity Analysis are so different than their current value assessments. The Appellant asserted that, with so many questions surrounding MPAC’s Equity Analysis, it should not be relied upon by the Board.

24Mr. Capocci submitted that, given that property values in the subject property’s neighbourhood have gone down over the last few years, the correct current value of the subject property should be its 2008 current value of $304,000. That would also reflect the approximately $85,000 in renovations that are needed to upgrade the subject property in order to make it comparable to MPAC suggested Sale 2, with its May 2011 sale price of $390,900.

The Board’s Analysis and Conclusions

Current Value

25Section 44.(3)(a) of the Act requires the Board to determine the current value of the subject property.

26Section 19.(1) of the Act provides that the assessment of land is based on its current value.

27To determine current value, the best evidence the Board can receive is an arm’s length sale of the subject property at or near the valuation date. If there is no such transaction (as in this appeal), the Board looks to arm’s length sales of comparable properties located in the vicinity of the subject property, at or near the valuation day. For the 2013 taxation year, the valuation date is January 1, 2012 according to s. 19.2(1) of the Act.

28To establish current value, MPAC has submitted information on the sales of five suggested comparable properties in Exhibit 2-A. The Appellant provided his views as to why all-but-one of MPAC’s suggested properties are not comparable to the subject property.

29To enable an estimate of current value for the subject property to be derived from sales of comparable properties, there must be sufficient elements of similarity in terms of physical factors such as total building area, land area, frontage, age of construction, physical condition and characteristics of the dwelling, and in terms of neighbourhood characteristics such as access to amenities, type and nature of housing, etc., so as to permit a direct comparison to be made between the comparable properties and the subject property. The Board does not generally include costs to upgrade, such as those submitted by the Appellant but not substantiated, in its determination of current value based on sales of comparable properties.

30The Board accepts 1676 St. Clair Avenue West, which is Sale 2 of MPAC’s suggested comparable properties since the Appellant has agreed that it is the most comparable to the subject property, despite the 40 year age difference between the properties. It is located very near the subject property, within the SCG-BIA. While its total building area is somewhat larger than the subject property, its effective lot size and effective frontage (which the Appellant identified as key for this type of property in this location) are both somewhat smaller than the subject property. The latter should assuage the Appellant’s concerns about the irregular lot size of the subject property.

31The Board also accepts 1724 St. Clair Avenue West, which is Sale 4 of MPAC’s suggested comparable properties, and which is located very near the subject property within the SCG-BIA. It has a very similar year built as the subject property. While its total building area and effective frontage are somewhat larger than the subject property, its effective lot size is very similar to the subject property. The Board notes the Land Transfer Tax Affidavit (Exhibit 2-E) presented by MPAC as evidence that the sale price of Sale 4 did not include business chattels or equipment.

32The Board does not accept 1701 St. Clair Avenue West (MPAC’s suggested Sale 1) as a comparable property since it has a legal basement apartment as well as two apartments on the second floor, compared to the subject property’s one apartment. When those differences are combined with its somewhat smaller effective lot size and somewhat larger total building area, the Board is not persuaded that MPAC’s Sale 1 is sufficiently similar to the subject property in order to be used for a direct sales comparison analysis.

33The Board does not accept the 1680 St. Clair Avenue West (MPAC’s suggested Sale 3) as a comparable property because of a combination of the 40 year age difference between the properties and substantial differences in their total building areas and effective lot sizes. For all of those reasons, the Board is not persuaded that MPAC’s Sale 3 is sufficiently similar to the subject property in order to be used for a direct sales comparison analysis.

34The Board does not accept 1768 St. Clair Avenue West (MPAC’s suggested Sale 5) as a comparable property since it appears, from its MLS^® listing submitted by the Appellant, that it had undergone at least some renovations prior to the August 2011 sale and the sale did include business chattels, fixtures and equipment. When that is combined with its significantly smaller effective lot size, the Board is not persuaded that MPAC’s Sale 5 is sufficiently similar to the subject property in order to be used for a direct sales comparison analysis.

35As set out in Table 1, the average total building area and effective lot size of the two comparable properties are 2,456 sq. ft. and 2,195 sq. ft. respectively. That is comparable to the subject property with a total building area and effective lot size of 1,858 sq. ft. and 2,576 sq. ft., respectively.

Table 1

Address of Property	Total Building Area (sq. ft.)	Effective Lot Size (sq. ft.)	Sale Price($)	Sale Price ($) per sq. ft. of Total Building Area (rounded)
1660 St. Clair Ave W Subject Property	1,858	2,576
1676 St. Clair Ave W MPAC Sale 2 and Appellant Suggested Comparable Property	2,488	1,815	390,900	157
1724 St. Clair Avenue West MPAC Sale 4	2,424	2,575	428,000	177
Average	2,456 (rounded)	2,195 (rounded)		167

36The Board finds the best evidence of current value is by reference to the average sale price per square foot of the two comparable properties in Table 1, being $167 per sq. ft. of total building area. That is lower than the offered-reduced assessment of the subject property ($395,000) per square foot of total building area (1,858 sq. ft.), being $213 (rounded).

37When $167 is applied to the total building area of subject property, the result is $310,286 ($310,000 rounded).

38Based on the evidence provided, the Board finds that the current value of the subject property is $310,000 as of January 1, 2012. Neither party presented the Board with any evidence that the current value should be apportioned in any way other than 50:50, commercial to residential. Therefore, the current value of $310,000 is apportioned $155,000 to the commercial class and $155,000 to the residential class.

Equity

39Section 44.(3)(b) of the Act requires the Board to determine if the assessment of a property at current value is equitable with the assessments of similar lands in the vicinity and to lower the assessment below current value if required to achieve equity.

40The purpose of the equity test in s. 44.(3)(b) of the Act is to ensure that the municipal tax burden is shared fairly and equitably amongst all similarly situated property taxpayers. If similar properties in the vicinity are assessed at or near 100% of their current value, equity has been achieved.

41Mr. Boccia submitted an Equity Analysis in Exhibit 2-F of 21 arm’s length sales of commercial properties within the vicinity of the subject property between January 2011 and December 2012, with ASRs ranging from 0.54 to 1.37 and a median ASR of 1.01. According to Mr. Boccia, this indicates that similar properties within the vicinity of the subject property have been assessed at their current value.

42The onus in this portion of the assessment appeal is on the Appellant, to show on a balance of probabilities that the assessment of the subject property at its current value (as determined above) is not equitable with the assessments of similar lands in the vicinity.

43Mr. Capocci submitted that MPAC was cherry picking assessments in order to reach the conclusion of a median ASR of 1.01 in its Equity Analysis and that many of the properties included in the Equity Analysis are very different than the subject property. To support that position, the Appellant submitted photographs (Exhibit 3-B) of several of the properties included in MPAC’s Equity Analysis, including strip plazas and corner properties.

44Given this disparity in the positions of the Appellant and MPAC with regard to equity, a useful tool in making the determination required by s. 44.(3)(b) of the Act is the ASRs of both parties’ suggested comparable properties with sales sufficiently close to the valuation date, which acts as a check on the MPAC valuation model to determine whether the model is tending to either over-value (over-assess) or under-value (under-assess) similar properties in the vicinity of the subject property.

45For equity, properties do not need to be as similar as required for valuation purposes. They should be of the same general nature, character and function - similar in such matters as structure, quality and age - and within the vicinity of the subject property. For that reason, in Table 2 the Board has reviewed the ASRs of the five MPAC suggested comparable properties (including the three properties that the Board did not use for the Current Value Analysis but which are sufficiently similar for an equity analysis). The Appellant did not provide any suggested comparable properties; he submitted that MPAC’s Sale 2 was the most comparable of MPAC’s suggested properties.

Table 2

Address of Property	2012 Assessed Value ($)	Sale Price	ASR (Assessment to Sale Amount)
1701 St. Clair Avenue West MPAC Sale 1	506,000	465,000	1.09
1676 St. Clair Avenue West MPAC Sale 2 and Appellant Suggested Comparable Property	564,000	390,900	1.44
1680 St. Clair Avenue West MPAC Sale 3	577,000	420,000	1.37
1724 St. Clair Avenue West MPAC Sale 4	631,000	428,000	1.47
1768 St. Clair Avenue West MPAC Sale 5	521,000	428,000	1.22
Average			1.32

46The above calculations, resulting in an average ASR of 1.32, indicate that similar properties in the vicinity of the subject property are generally assessed at above their current value. Accordingly, there is no evidence before the Board that would require it to adjust the current value of the subject property, determined in the Current Value Analysis above to be $310,000, for the purpose of equity under s. 44.(3)(b) of the Act.

CONCLUSION

47Based on the foregoing, the current value of the subject property is $310,000 as of January 1, 2012, apportioned $155,000 to the commercial class and $155,000 to the residential class, and the assessment of the subject property is reduced from $536,000 to $310,000 for the 2013 taxation year.

2014 and 2015 DEEMED APPEALS

48An appeal for the 2013 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 2013 appeal before March 31, 2014. For that reason, this decision also applies to the 2014 taxation year.

49The Board has not disposed of the 2014 appeal before March 31, 2015. For that reason, the decision also applies to the 2015 taxation year.

50Section 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.