Soporific Investments Inc. v. Municipal Property Assessment Corporation, 2015 CanLII 77365

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: November 19, 2015

FILE NO.: WR 136090

Assessed Person(s): Soporific Investments Inc.

Appellant(s): Soporific Investments Inc.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 05

Respondent(s): City of Kingston

Property Location(s): 283 Brock Street

Municipality(ies): City of Kingston

Roll Number(s): 1011-020-130-06500-0000

Appeal Number(s): 2958837, 3018366 and 3073211

Taxation Year(s): 2013, 2014 and 2015

Hearing Event No. 597946

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

Heard: October 29, 2015 in Kingston, Ontario

APPEARANCES:

Parties	Representative
Soporific Investments Inc.	David Skurdelis
MPAC	Art Merrill
City of Kingston	Maureen Peterson

DECISION OF THE BOARD DELIVERED BY SCOTT McANSH

INTRODUCTION

1Soporific Investments (“Soporific”) is the owner and operator of a paved parking lot in central Kingston. The primary issue before me is what that parking lot would have sold for on January 1, 2012. MPAC and Soporific both rely on the sales and assessed values of other parking lots in Kingston, but differ a great deal on the proper conclusions to draw from that evidence. MPAC suggests that the parking lot would have sold for $592,000, while Soporific argues that the parking lot would have sold for $271,846.

2For the reasons set out below I find that the sales evidence supports a value of $330,000 and that no downward adjustment is required to make that value equitable with the assessment of similar properties in the vicinity. As such, I reduce the assessment of the parking lot from $592,000 to $330,000 for the 2013, 2014 and 2015 taxation years.

Law

3Section 44.(3)(a) of the Assessment Act (“Act”) requires that I “determine the current value of the land.” Current value is defined in s. 1 as “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.” That is, I must determine what the subject property would have sold for in an arms-length transaction on the relevant valuation day, set pursuant to s. 19.3 of the Act as January 1, 2012 for the 2013, 2014 and 2015 taxation years.

4Once I have determined the current value, s. 44.(3)(b) requires that I “have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land” if that adjustment would lower the assessment.

Current Value

5MPAC supported its assessed value of $592,000 with six suggested comparable properties, using a value per square foot comparison metric. Those properties are all other parking lots in Kingston, though they differ greatly in size and location. Four of those parking lots were sold within two years of the January 1, 2012 valuation day. While MPAC relied on the assessed value of the other two, I cannot accept the assessed value of other parking lots as evidence of what the property would have sold for on the valuation day.

6The assessment of any property is solely determined by MPAC and is not evidence of market behavior at the relevant time. Rather, an assessment is MPAC’s best guess of the market value, albeit based on mass appraisal mythology. It is inappropriate for MPAC to then rely on those guesses at value as evidence of the value of the parking lot before me. I must base my decision on the best evidence before me. Market transactions are objective and testable in a way that MPAC assessments are not. The assessed value of other properties will almost never be the best evidence of value.

7The four parking lots presented by MPAC that have market data are 15 Earl Street, 74 Brock Street, 495 Princess Street and 289 Princess Street. Soporific provided evidence of three additional sales: 18 Queen Street, 51 Queen Street, and 630 Princess Street.

8The parking lot before me is paved and has a total lot area of 9,375 square feet, with 68 feet of frontage. It is a long, narrow lot and in a moderately desirable area of Kingston.

915 Earl Street is comparable in size to the parking lot before me. It is 961 square feet larger and has 8 more feet of frontage. It sold in December 2013 for $700,000, or $68 per square foot. The parking lot is adjacent to a large employer and is used exclusively for employee parking. It is not open to the public. It was sold by that employer, but with a 10 year lease back as part of the sale. It is more centrally located than the parking lot before and I find that the parking lot here would not have sold for more than $68 per square foot.

1074 Brock Street is significantly smaller than the parking lot before me. It is 6,457 square feet smaller with 25 feet less frontage. It sold in October 2014 for $229,000 or $78 per square foot. MPAC did not consider this a valid sale as it was sold to the owner of an adjacent parcel of land in a private sale. While a competitive sale is better evidence of value, a market transaction is still some evidence of value. This parking lot is in a more central location than the one before me. I find that the parking lot before me would not have sold for more than $78 per square foot.

11495 Princess Street is comparable in size and location to the parking lot before me. It is 625 square feet larger, with 18 feet less frontage. It is located under there blocks from the parking lot here, but is on a busier street. It sold in April 2014 for $350,000, or $35 per square foot. This is the best evidence of the value of the parking lot before me.

12289 Princess Street is significantly larger than the parking lot before me. It is 15,712 square feet larger, or more than twice the size, and has 21 more feet of frontage. It is located in a more central area of Kingston. It sold for $875,000 in November 2011, or $35 per square foot. MPAC suggested that this was not a valid sale as it was part of a portfolio sale, and the apportionment between properties and the discount that comes with bulk sales, makes it difficult to accurately assign a reliable value to this parcel of land based on that sale. I agree that portfolio sales are not preferred for those reasons. However, I have a limited number of sales before me and put some weight on this sale.

1318 Queen Street is a municipally operated parking lot. It is significantly larger than the parking lot before me. It is 15,577 square feet larger and has 257 more feet of frontage, as it is a corner lot. It is also in a superior commercial location to the parking lot before me. It sold in November 2014 for $875,000, or $35 per square foot. MPAC noted concerns with this sale, as it was also part of a portfolio sale. Again, I agree with those concerns, but these properties provide some evidence of value and should not be discarded outright.

1451 Queen Street is very significantly larger than the parking lot before me. It is 37,496 square feet larger, or over four times as large, with 608 feet more frontage, as a corner lot. This parking lot is also in a superior location. It sold in November 2014 for $1,750,000, or $37 per square foot. MPAC raised similar concerns about this property being part of a portfolio sale and I echo my comments in that regard that a non-portfolio sale is better evidence, but this is some evidence of value.

15630 Princess Street is comparable in size to the parking lot before me. It is 2,915 square feet larger with 11 more feet of frontage. It is in a similar location to the parking lot before me. It sold in August 2010 for $311,000 or $25 per square foot. This is lowest value per square foot of the sales before me and is a more dated sale than the others. I find that the parking lot before me would not have sold for less than $25 per square foot.

16The sales data points to a value per square foot somewhere between $25 and $68. The bulk of the sales indicate a value of $35 per square foot. While many of those are portfolio sales, 495 Princess Street is not and is the best evidence of value. I find a value of $35 per square foot to be amply supported by the sales evidence. That indicates a value of $328,125, which I would round to $330,000.

17Soporific also provided some income data to support its suggested current value. This was in the form of gross revenue and was presented as a ratio to the property taxes payable at each parking lot. This was not a useful metric for comparison. Taxes are based on the assessed value, which may or may not be accurate. The ratio of income to taxes is also not helpful in determining the current value of the parking lot before me, as I do not have information on the mill rate or any caps of claw backs on the taxes levied on any of the other properties. Income is used in valuation on the basis of capitalization rate, which creates a present value by weighing risk. Without evidence on the appropriate capitalization rate, which was not provided to me, I cannot use the revenues of other parking lots to generate a value. I therefore put no weight on the income information provided by Soporific.

18The best evidence before on the current value of the parking lot is the sales of other parking lots in Kingston, which indicate a value of $330,000.

Equity

19The Act requires that I look to the value at which similar property in the vicinity is assessed and make an adjustment if the current value is inequitable. Both parties presented the assessed value of other parking lots as a basis for determining current value. While I do not find that evidence helpful in determining current value, it is the best evidence of equity.

20MPAC presented the assessed value of six parking lots in Kingston, while Soporific presented the assessed value of an additional five. These 11 parking lots range greatly in size and location. An assessment of the assessed value per square foot seems the fairest method of comparison. The assessed values range from $23 per square foot at 490 Macdonnell Street to $149 per square foot at 74 Brock Street. The median assessment per square foot is $52 and the mean assessment per square foot is $55. These values are significantly higher than the current value per square foot of $35 determined above. As such, no adjustment is required to meet the requirements of s. 44.(3)(b).

CONCLUSION

21I find that the current value of the parking lot is $330,000 and that no downward adjustment is required to make that value equitable with the assessment of similar properties in the vicinity. I therefore reduce the assessed value of the parking lot from $592,000 to $330,000 for the 2013, 2014 and 2015 taxation years.