Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: November 26, 2015
Assessed Person(s): 1798571 Ontario Inc.
Appellant(s): 1798571 Ontario Inc., Kun Run Gao
Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 9
Respondent(s): City of Toronto
Property Location(s): 66 Trethewey Drive
Municipality(ies): City of Toronto
Roll Number(s): 1914-054-080-02100-0000
Appeal Number(s): 3047198 and 3077093
Taxation Year(s): 2014 and 2015
Hearing Event No. 596143
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard: February 26, 2015 and September 10, 2015 in Toronto, Ontario
APPEARANCES:
| Parties | Counsel+/Representative |
|---|---|
| 1798571 Ontario Inc. | Tae Gao |
| MPAC | Osmondo Bocalbos |
| City of Toronto | No one appeared |
DECISION OF THE BOARD DELIVERED BY BARBARA KOWARSKY
INTRODUCTION
1This appeal first came before the Board on February 26, 2015. It was adjourned to September 10, 2015 because the property owner, Kun Run Gao, did not agree with the total building area as submitted by the assessor.
ISSUE
2The issue is to determine whether the assessment of 66 Trethewey Drive located in the City of Toronto (“subject property”) as returned at $1,694,000 for the 2014 and 2015 taxation years is correct, and whether it is equitable with that of similar lands in the vicinity.
DECISION
3In order to determine the value assessment of a property, the Assessment Review Board (“Board”) is legislated to follow two steps:
4Section 44.(3)(a) of the Assessment Act (“Act”) which requires the Board to:
(a) “determine the current value of the land.”
5The Board determines the current value to be $1,178,000 for the 2014 and 2015 taxation years.
6Section 44.(3)(b) of the Act directs the Board to:
(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.”
7The Board finds that, an adjustment for equity pursuant to s. 44.(3)(b) is not required in order to make the assessment of the subject property equitable with that of similar properties in the vicinity.
REASONS FOR DECISION
The Subject Property
8The subject property is a gas station situated at the corner of Trethewey Drive and Clearview Heights, 450 metres north of Eglinton Avenue West in the City of Toronto. It was built in 1950 and was renovated in 2005 and 2006. There is a retail store on site. There are eight gas pumps and a canopy that is 15-20 feet high. It has a total building area of 2,000 square feet and is situated on a lot measuring 11,308 square feet. Entry is via Trethewey Drive and egress via Clearview Heights.
The Position of MPAC
9MPAC was represented by Osmondo Bocalbos.
10At the initial hearing on February 26, 2015, Mr. Bocalbos submitted a Valuation Report which was marked Exhibit 1.
11Mr. Bocalbos testified that:
a) Based on his analysis, using MPAC’s Market Modified Cost Approach (A.C.S.), he is recommending a reduction of the current value assessment from 1,649,000 to $1,188,000.
b) This analysis includes establishing replacement at the current price of materials, and then it is depreciated based on the age and life of the existing building. A.C.S. determines standard rates for existing assemblies.
c) This property sold in 2009 for $2,500,000 which included the business and this sale presents the best indicator of value.
d) He investigated five gas stations that sold in the legislated time period.
e) The land values ranged from $49 to $118 per square foot with no adjustments for structures. The median is $82 per square foot. This is also the value used by the Appellant to calculate his proposed assessment of $927,000.
f) He then added the replacement cost of $360,854, less depreciation, and arrived at the recommended assessment of $1,188,000.
12When the hearing reconvened today, Mr. Bocalbos revised MPAC’s recommendation based on the re-measurement of the total building area. The net effect is a further $10,000 reduction to $1,178,000.
13Mr. Bocalbos testimony is encapsulated as follows:
i) He submitted a revised report based on his inspection (Exhibit 3), and an equity study of the Appellant’s equity evidence (Exhibit 4).
ii) On page 10 of the revised report, he lists the same five suggested comparables used in the first valuation report (Exhibit 1), time adjusted as of January 1, 2012. He segregated the value of the land from the value of the buildings. He determined that the improvements to the buildings were insignificant as comparables 1 and 3 had none, and comparables 4 and 5 presented an insignificant increase.
iii) The inspection of the buildings enabled him to determine the value based on when it was improved; the economic life of the improvement and the condition of the improvement.
iv) This was applied to the adjusted sale price in order to arrive at the land value.
v) The most comparable is 920 Albion Road (comparable 3). It is in the same neighbourhood and similar to the subject property.
vi) Comparable 3 and comparable 4 (4758 Dundas Street West), are closest in land size. The range in value per square foot is $82 to $85. The subject property is $82 per square foot of land.
vii) The structure of the subject property was renovated in 2006 for $120,000 (this amount is undisputed). This increases the economic life of the property. The 2012 current value assessment (“CVA”) reflects the gas bar and canopy renovation. The net value is $248,000.
viii) Comparable 2, 2881 Keele Street, was similarly renovated in mid-2012. The 2012 CVA of that property reflects the un-renovated condition and the net value is $240,000.
ix) This leads him to conclude that the subject property is in line with the values of comparable properties in the vicinity.
14Finally, Mr. Bocalbos addressed the equity study in which he selected properties from the Appellant’s suggested comparables. He only used those comparables which he was able to determine to be legitimate arm’s length sales that occurred in the open market. These 13 properties had a median assessment to sales ratio (“ASR”) of 1.0 and a time-adjusted median of 0.98. This further supports MPAC’s recommended value of $1,178,000.
The Position of the Appellant
15Mr. Tae Gao, representing 1798571 Ontario Inc., submitted a report on February 26, 2015 (Exhibit 2), but did not speak to its contents as he objected to the total building area and asked for an inspection at the conclusion of Mr. Bocalbos’ testimony.
16At today’s hearing, Mr. Gao referred to page 7 of his report and testified that:
a) All of MPAC’s comparables are assessed lower than the subject property.
b) In his opinion, the MPAC comparables are superior to his property and are situated in superior locations.
c) His unsold comparables are more similar to the subject property and the Board should put more weight on equity.
d) He calculated the median value of these comparables as $82 per square foot based on lot size.
e) His property is over-assessed by 7% and the current value should be $927,000.
Analysis and Findings
17The assessment legislation (attached to this decision as “Appendix A”), as amended for taxation year 2009 and subsequent years, directs the Board to determine the current value of the subject property, having reference to the value at which similar lands in the vicinity have been assessed. Once current value is determined, the Board may reduce an assessment where it finds that it is inequitable with that of similar lands in the vicinity.
The Current Value of the Land
18The best evidence of current value is an arm’s length and market tested sale of the subject property on the valuation date, January 1, 2008, or close to it. This did not occur.
19The Board finds that the most compelling evidence was given by the assessor, Mr. Bocalbos. His testimony was based on a sound evidentiary foundation.
20Mr. Bocalbos analyzed the subject property as well as five similar gas stations that sold within the time period. He was able to separate the land and structure values and calculated the median value of the land based on sales to be $82 per square foot. This is the median value that Mr. Gao used to calculate his suggested value.
21Mr. Bocalbos then calculated the value of the structures based on the process described above. After inspecting Mr. Gao’s property, he recommended a further reduction of the assessment to $1,178,000.
21To support this recommendation, Mr. Bocalbos referred to his equity study in which he used only the 13 equity comparables submitted by Mr. Gao, and that Mr. Bocalbos was able to confirm that these were the only comparables that were arm’s length sales in the open market. The median ASR of these sales is 1.0 and the time-adjusted median is 0.98.
22The subject property was purchased in November, 2009 for $2,550,000. Mr. Gao states on page 2 of his report (Exhibit 2), that his “was far from being the market price of that property.”
23The Board finds that such a statement strains common sense because Mr. Gao testified that this was an arm’s length sale and there was no coercion or undue influence to make the purchase.
24He went on to write that “there are no similar property (sic) in the entire old City of York that sold in that time period.”
25Mr. Gao’s analysis on pages 4 and 5 of his report lists properties situated in the City of Toronto, which he suggests are similar to the subject property.
26The Board finds that there is no indication as to whether these prices do or do not include structures, business or goodwill and therefore the Board is not persuaded to rely on Mr. Gao’s calculation of $63 per square foot or the value of $712,000 as the current value for his property.
27Mr. Gao writes on page 7 of his report that when he analyzed MPAC’s comparables, using $82 per square foot, he found the value to be $927,000. However, the Board notes that this avoids including the value of the structures (which were available). Furthermore, his opinion in regard to “superior locations, vibrant commercial areas and superior real estate markets” are unsupported by any evidence.
28And finally, in his conclusion, Mr. Gao suggests an assessed value of $836,000. The Board finds such a suggested assessment to be speculative without any evidence whatsoever to support it.
29Based on all the evidence submitted by both parties, the Board finds the best evidence to be that of Mr. Bocalbos. His analysis is inclusive of Mr. Gao’s evidence, and is thorough, comprehensive, complete and factually inclusive. The Board notes that both parties used the same value of $82 per square foot to determine the land value, and coupled with the structural analysis, the Board finds that the current value for the 2014 and 2015 taxation years to be $1,178,000.
Equity with Similar Lands in the Vicinity
30The Board is required under s. 44.(3)(b) of the Act 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 land of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment.
31The Board finds no adjustment in regard to equity is required.
CONCLUSION
32Based on the totality of the evidence presented, the Board reduces the assessment of the subject property from $1,694,000 to $1,178,000 for the 2014 and 2015 taxation years.
“Barbara Kowarsky”
BARBARA KOWARSKY
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
APPENDIX ‘A’
The Legislation
In arriving at a decision, the Board must consider the following provisions of the Act:
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.
“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.
Section 19.2(1)(2) of the Act provides:
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:
For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.
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.
Section 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.
Section 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.
Section 44.(3)(a) and (b) 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.