Weien Enterprises Inc. v. Municipal Property Assessment Corporation, 2015 CanLII 69919

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 27, 2015

FILE NO.: WR 134086

Assessed Person(s): Weien Enterprises Inc.

Appellant(s): Weien Enterprises Inc. and Kuo Tong Hsieh

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

Respondent(s): City of Toronto

Property Location(s): 3250 Markham Road and 568 Passmore Avenue

Municipality(ies): City of Toronto

Roll Number(s): 1901-124-800-01600-0000 and 1901-124-800-01700-0000

Appeal Number(s): 3060028, 3078227, 3060027 and 3079785

Taxation Year(s): 2014 and 2015

Hearing Event No. 593629

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

Heard: August 13, 2015 in Toronto, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Weien Enterprises Inc.

Weien Hsieh

MPAC

Ashtyn Rank

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

INTRODUCTION

1The appeals before the Assessment Review Board (“Board”) are filed by the Assessed Person, in respect to the returned assessments for the following subject properties in the City of Toronto:

• $3,718,000 for the 2014 and deemed 2015 taxation years for 3250 Markham Road; and

• $5,506,000 for the 2014 and deemed 2015 taxation years for 568 Passmore Avenue.

PRELIMINARY ISSUE

2At the commencement of the hearing the parties requested that the above appeals be heard together. The reason being that the issues are the same, the Appellant is the same and the Assessed Person is the same for both subject properties.

3The parties also stated that there are no issues relating to the values attributed to the structures on the subject properties.

4Based on the above request and with the parties consent, the Board agreed to hear the appeals together, and accepts their submission that the values attributed to the structures are not in dispute.

ISSUE

5Ashtyn Rank, representative for MPAC is of the view that the above stated returned assessments, which were based on the Cost Approach are fair and equitable for the subject properties. She also submitted that the sales of similar properties in the vicinity support the returned values.

6In regard to the issue of classification (farm lands used for farm purposes), Ms. Rank argued that although the zoning is agricultural, the Appellant has not met the burden of proof to demonstrate that the subject properties have not been farm lands used for farm purposes in 2014 and deemed 2015 taxation years.

7Weien Hsieh, Appellant is of the view that the subject property is assessed too high because MPAC failed to recognize the Zoning as Agricultural for the subject properties for the 2014 and deemed 2015 taxation years. He argued that a portion of the subject properties was farm lands used for farm purposes and that MPAC failed to recognize the current use of the land in 2014 and deemed 2015 taxation years.

8Mr. Hsieh also argued that the subject properties are assessed too high as compared to similar properties in the vicinity. However, he presented no suggested assessment value that he believes is fair and equitable.

9The City of Toronto was not in attendance at the hearing.

10The Board has to decide:

• Whether the returned assessment of $3,718,000 for 3250 Markham Road and the returned assessment of $5,506,000 for 568 Passmore Avenue for the 2014 and deemed 2015 taxation years are at current value as at the valuation date January 1, 2012; and

• Whether these values are equitable with the assessments of similar lands in the vicinity.

DECISION

11The Board determines the current value to be:

• $3,275,000 for 3250 Markham Road as of the valuation date of January 1, 2012; and

• $4,874,000 for 568 Passmore Avenue as of the valuation date of January 1, 2012.

12The 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”).

13Therefore, the Board reduces the assessment of 3250 Markham from $3,718,000 to $3,275,000 for the 2014 and deemed 2015 taxation years; and reduces the returned assessment of 568 Passmore Avenue from $5,506,000 to $4,874,000 for the 2014 and 2015 taxation years.

14Based on the above finding, the apportionment breakdown for the subject property located at 3250 Markham Road is as follow:

• For the 2014 taxation year:

Full Commercial is reduced from $1,239,000 to $1,091,000;

Full Residential is reduced from $2,479,000 to $2,184,000; and

• For the 2015 taxation year:

Full Commercial is reduced from $1,239,000 to $1,091,000;

Commercial Excess Land is increased from $0 to $1,505,000; and

Full Residential is reduced from $2,479,000 to $679,000.

15Based on the above finding, the apportionment breakdown for the subject property located at 568 Passmore Avenue is as follow:

• For the 2014 taxation year:

Full Commercial is reduced from $1,599,000 to $1,415,000;

Full Residential is reduced from $3,907,000 to $3,459,000; and

• For the 2015 taxation year:

Full Commercial is reduced from $1,599,000 to $1,415,000;

Commercial Excess Land is increased from $0 to $3,459,000; and

Full Residential is reduced from $3,907,000 to $0.

REASONS FOR DECISION

Background

16The subject property located at 3250 Markham is described as having a residential structure built in 1994, a storage building built in 1994 and a green house built in 2000. These structures have a total building area of 12,384 square feet (“sq. ft.”) and are situated on a total site area of five acres. Although the zoning for this subject property is agricultural, the returned assessment is based on an apportionment of residential and commercial use.

17The subject property located at 568 Passmore Avenue is described as having a Driving Range Shop with a total building area of 1,037 sq. ft. built in 2008 and situated on a total site area of 9.77 acres. Although the zoning for this subject property is agriculture, the returned assessment is based on an apportionment of residential and commercial use.

The Legislation

18In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Act:

19Section 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.

20Section 19.(1) of the Act states:

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

21Section 19.2(1)2 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.

22Section 19.3 Classification day of the Act states:

19.3 Classification day. – The day as of which land shall be classified for a taxation year is June 30 of the previous year.

23Section 19.(5) Farm Lands and buildings of the Act states:

19.(5) Farm lands and buildings. – For the purposes of determining the current value of farm lands used only for farm purposes by the owner or used only for farm purposes by a tenant of the owner and buildings thereon used solely for farm purposes, including the residence of the owner or tenant and of the owner’s or tenant’s employees and their families on the farm lands,

(a) consideration shall be given to the current value of the lands and buildings for farm purposes only;

(b) consideration shall not be given to sales of lands and buildings to persons whose principal occupation is other than farming; and

(c) the Minister may, by regulation, define “farm lands” and “farm purposes”.

24O. Reg. 5. Commercial Property Class states:

5.(1) The commercial property class consists of the following:

1. Land and vacant land that is not included in any other property class.

2. A care home, as defined in the Tenant Protection Act, 1997, to which that Act does not apply, that is operated with the intention of generating a profit and that does not have seven or more self-contained units.

3. If a portion of land is in the office building property class, any other portion of the land that is not included in any other property class.

4. If a portion of land is in the shopping centre property class, any other portion of the land that is not included in any other property class. O. Reg. 282/98, s. 5.

(2) For the 2000 and subsequent taxation years, a building that is used exclusively for storage purposes at the site where manufacturing, production or processing takes place is included in the commercial property class if the building is,

(a) not attached to a building or structure or portion of a building or structure that is included in the industrial property class; or

(b) linked to a building or structure or portion of a building or structure that is included in the industrial property class by means of a minimal connection or corridor constructed only for the purpose of moving material or goods between the buildings. O. Reg. 356/00, s. 2.

25O. Reg. 21.(3) Excess Land states:

21.(3) A portion of a parcel of land is included in the subclass for excess lands for a class of real property if,

(a) it has not been developed in any way, other than to service the parcel of land;

(b) it is not being used other than for farming purposes; and

(c) it is in excess of the municipal requirement for any existing development elsewhere on the parcel. O. Reg. 45/02, s. 3.

26Section 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.

27Section 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.

28In 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

29In support of her argument Ms. Rank called Jamie Brown to testify as a witness for MPAC. First Mr. Brown presented an abbreviated summary of his related work experience and education (Exhibit 3) and then testified to the following contained in Exhibit 1:

30That the returned assessments as stated above were determined using the Cost Approach to value. He testified that the subject properties were inspected twice, on June 3, 2015 and again on July 21, 2015. Mr. Hsieh confirmed that he was present for both inspections. Mr. Brown testified that the homogeneous area of the subject properties has seen rapid development in the last 15 years, where farmlands are being improved with industrial buildings, restaurants, LCBO, Lowes and gas stations to name a few.

31That he observed during the inspection of 568 Passmore Avenue that approximately 10 to 12 rows in approximately six sections were cleared and planted at different stages with various types of vegetables. Mr. Brown estimated the area planted with vegetables to be somewhere in the range of 1.2 to 1.7 acres. The rest of the land was covered with grass and that he saw no evidence of any farming equipment.

32That he is of the view that the vegetable garden was for personal use, because the Appellant failed to provide proof of anything associated with farming (receipts for sales and/or purchases, rental contract, valid farm registration number, equipment etc.) when requested by MPAC. Photographs were presented to show the planted and grass covered areas (Exhibit 1, Tab 2).

33That he observed that the driving range shop was used for storing golf related supplies (golf balls, flags and golf clubs etc.) and the nets which contained the flying balls within the golf range were taken down and wrapped around the very tall poles at the back of the subject property’s site area. Mr. Brown presented photographs to illustrate what he observed at the time of the July 21, 2015 inspection (Exhibit 1, Tab 2).

34That a portion of the subject property at 3250 Markham Road is leased to Farm Boys, who operate a landscaping, soil, equipment and supplies business. Mr. Brown presented copies of photographs taken on July 21, 2015 showing Farm Boys’ trucks, bricks, signs, and forklift in support of his testimony (Exhibit 1, Tab 1).

35That although the zoning of the subject properties is agricultural, an application for a Minor Variance/Permission (Section 45 of the Planning Act) was approved on May 30, 2007 for a period of five years, to operate a recreational golf driving range with certain conditions (Exhibit 1, Tab 4). After the expiration of the first five years, another application was made to continue this same venture and it was denied on January 23, 2014 (Exhibit 1, Tab 4).

36In support of land value, Mr. Brown presented nine sales of vacant industrial land sold over the period 2010 to 2013 (Exhibit 2). Mr. Brown testified that due to a scarcity of vacant land in the immediate vicinity of the subject properties he expanded the search to the wider vicinity as demonstrated on the attached map of Exhibit 2.

37In reviewing these nine sales, the Board did not rely on the five sales which occurred in 2010 and 2013 (Exhibit 2) because these sales are too far removed from the valuation date of January 1, 2012 to provide any meaningful test of current value. An analysis of the remaining four sales which occurred in 2012 demonstrated a median sales price of $486,483 per acre.

38Applying the above median sales price to the five acres at 3250 Markham Road would result in value of ($486,483 x 5 acres) = $2,432,415. In the preliminary stages of the hearing the Appellant concurred with MPAC that there are no issues regarding the total value of $843,139 of the total structure (Exhibit 1, Tab 1). Therefore, the total value determined for 3250 Markham Road is $3,275,000 rounded which is ($843,139 for total structure determined by the Cost Approach + $2,432,415 for total land value based on the above sales).

39Applying the above median sales price to the 9.77 acres at 568 Passmore Avenue results in a value of ($486,483 x 9.77 acres) = $4,752,938. Again, there are no issues relating to the total value of $98,297 for the total structure (Exhibit 1, Tab 2). Therefore, the total value determined for 568 Passmore Avenue is $4,874,000 rounded which is ($23,140 for yardwork value + $98,297 for total structure determined by the Cost Approach) + $4,752,938 for total land value based on the above sales).

40Finally, Mr. Brown presented Exhibit 1, Tab 3, a CBRE Inc. real estate listing for Markham Road and Passmore Avenue. Although Mr. Hsieh is of the view that the subject properties are assessed too high, 568 Passmore Avenue is shown to be listed for $12 million as retail land.

41On cross-examination, Mr. Hsieh argued that the subject properties are zoned agricultural and should be assessed as such. He also argued that the above sales of comparable properties presented by MPAC are not similar because these comparable properties are industrial and commercial property types. In response, Mr. Brown argued that the subject properties are assessed based on their current and potential use (residential and commercial) and not based on the zoning.

42Mr. Hsieh argued that the assessed value of the greenhouse increased by almost three times the previous assessment. In response, Mr. Brown testified that the property was inspected in 2008 and MPAC’s ACS was updated to reflect the findings of the inspection. Mr. Brown explained that such upgrades like wiring, cost of building and other data changes could all impact the assessed value.

43Mr. Hsieh argued that the comparable property at 30 Ironside Crescent was a parking lot and is not similar to the subject properties. In response, Mr. Brown testified that the property was sold in 2012 as a vacant lot.

44Mr. Hsieh also questioned the low sale price of the comparable property at 2201 Markham Road presented by MPAC. In response, Mr. Brown explained that this comparable property is negatively impacted by being located in close proximity to railway tracks and exposed to dust and noise, has limited uses because it is a pie shape lot, and assessed at a lower cost per sq. ft. because of its size (economy of scale, meaning the more you buy the less you pay).

45In regard to the above questions raised on cross-examination, the Board finds MPAC’s responses satisfactory.

Appellant’s Position

46In support of his argument, Mr. Hsieh presented Exhibit 4 and Exhibit 5 and testified to the information contained in Exhibit 5.

47Mr. Hsieh testified that historically and currently 3250 Markham Road and 568 Passmore Avenue are both zoned agricultural. That both properties have been exclusively used for farming with the exception of 2007 through 2013. During that period, a Minor Variance/Permission application was approved to operate a golf range effective May 2007 for a period of five years (Exhibit 5, Appendix B). Attempts to extend the application were rejected by the City of Toronto on January 23, 2014.

48With the rejection of the Minor Variance/Permission application in 2014, Mr. Hsieh testified that farming resumed on both properties. In support of his argument, Mr. Hsieh presented an unaudited Weien Enterprises Inc. Statement of Operations and Deficit report for the year ending December 31, 2014. (Exhibit 5, Appendix C). It is important to note that that the author’s name and no supporting documents were attached to the report.

49Mr. Hsieh testified that the farm business number was reactivated in July 2015 and that he was able to retain the same 2002 farm business number FBN: 3076528 (Exhibit 5, Appendix C, p.2). Again, no supporting documents were presented to show an approved and active FBN number. He also testified that prior to the approval of the variance in 2007, his family farmed the subject properties from 2002 to 2006 (Exhibit 5, Appendix D).

50Mr. Hsieh argued that the North West portion of 3250 Markham Road about 2.9 acres of previous golf range land should be assessed as farm lands, similar to nearby farm lands in the vicinity. He argued that the comparable properties presented by MPAC are zoned industrial land and are therefore, not comparable to the subject properties which are zoned agricultural.

51Mr. Hsieh argued that the assessments of the subject properties are too high, because there were no improvements to the land, and yet the value increased by 262% for the Markham property and by 510% for the Passmore property from the taxation year 2012 to 2016 (Exhibit 5, p.2). He also argued that the returned assessment is too high as compared to similar properties in the vicinity.

52In support of current value, Mr. Hsieh presented three comparable properties located at 1395 Tapscott Road, at 8885 Sheppard Avenue East and at 3012 Kennedy Road. The Board did not rely on these three comparable properties because they are not sold and provide insufficient information to assist the Board in determining current value.

The Board's Analysis and Decision

53In reviewing all of the above evidence, the Board finds:

• That Mr. Hsieh presented no factual evidence to show that he was approved for a farm business number after the expiration of the Minor Variance/Permission in May 2012;

• That Mr. Hsieh presented no supporting documents to show how he arrived at the values incorporated into the unaudited Statement of Operations and Deficit report for the taxation year 2014;

• That Mr. Hsieh presented no other factual evidence to show that the subject properties or portions of the subject properties are farm land used for farm purposes in the taxation years 2014 and 2015. The Board did not accept Mr. Hsieh’s argument that the subject properties should be assessed based on the zoning (agricultural). The fact that a Minor Variance/Permission was approved in 2007 for five years would support the fact that zoning by itself is not the only determinant of current value and that the current use is a major factor. Hence, the application was approved for commercial activities of operating a golf range. The Board also agrees with Justices Jennings, Day, and Cameron JJ in their decision of Ontario Property Assessment Corp. v. Praxair Canada Inc. [2002] O.J. No.121, that “Classification must be determined with due regard to the function of the portion under consideration. It cannot be based solely on the zoning of the portion except where prescribed specifically”.

• That although Mr. Hsieh argued that the subject properties are assessed too high, the subject property at 568 Passmore is listed for sale for $12 million as retail land as stated above. It is important to note that the list price is more than the combined assessment of both subject properties;

• That in the absence of any factual evidence to support the argument that portions of the subject properties are farm lands used for farm purposes, the Board accepts MPAC’s argument that the vegetable garden as demonstrated in MPAC’s photographs is nothing more than a garden;

• That assessment is not based on percentage increases. Instead, assessment of land shall be based on its current value, which is defined as the amount of money the property would realize if sold at arm’s length by a willing seller to a willing buyer at a specific valuation date as stipulated by the ACT. For the appeals at hand, the valuation date is January 1, 2012. The Board also agrees with Member Wyger in Cooney v. Municipal Property Assessment Corp. Region No. 14 [2006] O.A.R.B.D. No. 140, that “The Board takes the view that there are many factors which went into the determination of the 2003 current value, none of which are relevant to the 2005 base year value. The Board does not consider percentage increases over previous assessment years as any basis for determining current values. The Board prefers actual sales evidence from the new base year as being more directly indicative of a property’s value at that time”; and

• That the best evidence in support of land value is the four sales of vacant land presented by MPAC with a median value of $486,483 per acre. With no new evidence to suggest that the values attributed to the structures is incorrect, the Board accepts the parties’ testimony that there are no issues with the total value determined by the Cost Approach to value for the structures as stated above.

54Therefore, based on all of the above evidence, the Board determines the current value to be:

• $3,275,000 for 3250 Markham Road; and
• $4,874,000 for 568 Passmore Avenue.

Equity

55MPAC presented no evidence in support of equity.

56No other evidence was presented by the Appellant.

57The Board finds that the evidence does not support the conclusion that the current value of the subject properties as determined above requires an equity reduction.

CONCLUSION

58Based on all of the evidence, the Board determined the current value to be:

• $3,275,000 for 3250 Markham Road; and

• $4,874,000 for 568 Passmore Avenue.

59The Board finds the above current values to be fair and equitable.