Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 10, 2015 FILE NO.: WR 134789

Assessed Person(s): Qualico Headwaters (Ontario) Inc. Appellant(s): Qualico Headwaters (Ontario) Inc. Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 32 Respondent(s): Town of Kenora

Property Location(s): 10 Foresty Bay Suite 203 Municipality(ies): Town of Kenora Roll Number(s): 6016-010-002-03810-0000 Appeal Number(s): 3049380, 3049875 and 3093820 (deemed 2015) Taxation Year(s): 2013, 2014 (and deemed 2015) Hearing Event No. 599674

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

Heard: August 20, 2015 in Kenora, Ontario

APPEARANCES:

Parties	Counsel^+/Representative
Qualico Headwaters (Ontario) Inc.	D. Betker
MPAC	C. Steiner
Town of Kenora	M. Saunders M. Shaw

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI AND ANTHONY LaREGINA

INTRODUCTION

1The appeals before the Assessment Review Board (“Board”) are filed by the Assessed Person/Appellant, Qualico Headwaters (Ontario) Inc. in respect to the returned assessments of $623,000 for the subject property in the Town of Kenora for 2013 and 2014 taxation years.

ISSUE

2The subject property is a residential condominium. This unit is part of Registered KSCP12 Headwaters Condo built in 2010. This unit is located on the main level and has a total building area of 2,024 square feet (“sq. ft.”) with a 264 sq. ft. terrace/patio. This unit has one indoor parking stall.

3For taxation years 2013 and 2014 the assessment was returned at $623,000. The current value assessment was determined by MPAC’s Direct Sales Comparison Approach.

4Mr. Betker, representing the Appellant took the position that the assessment is too high and urged the Assessment Review Board (“Board”) to consider a value of $525,000 (rounded), which is an estimated fair value of the subject property as of January 1, 2012.

5The Town of Kenora was represented by M. Saunders and M. Shaw.

6The Board has to decide:

• Whether the returned assessments of $623,000 for 2013 and 2014 taxation years for the subject property is at current value as of the valuation date January 1, 2012; and

• Whether the value is equitable with the assessments of similar lands in the vicinity.

DECISION

7The Board finds the current value of the property for the 2013 and 2014 taxation years to be $557,000.

8The Board also finds that the assessment at current value is equitable with the assessments of similar lands in the vicinity; hence no further reduction is required to achieve equity.

9The Board orders that the assessment be reduced from $623,000 to $557,000 for the 2013 and 2014 taxation years and deemed for the 2015 taxation year.

REASONS FOR DECISION

Legislation

10The Board must have regard to s. 1, s. 19.(1), s. 19.2(1), s. 40.(17), s. 40.(19), s. 40.(26) and s. 44.(3)(a) and (b) of the Assessment Act (“Act”) when determining whether or not the assessment under appeal is correct.

11Section 1 of the Act defines current value as follows:

“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.

12Section 19.(1) of the Act states:

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

13Section 19.2(1) 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:

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.

14Section 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.

15Section 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.

16Section 40.(26) of the Act directs:

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.

17Section 44.(3)(a) and (b) of the Act state:

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 - Evidence and Analysis

MPAC’s Position

18Carlene Steiner, the assessor from MPAC in support of the assessment as returned presented Exhibit 1. Exhibit 1 is a Valuation Report of the subject property and other units which are also under appeal. This includes a Market Analysis Map, Property Profile of the subject property and a chart of all sales and assessments of the subject property and other units.

19In Appendix A, Exhibit 1, Ms. Steiner provides the property profile of 11 properties. Property 1 is at 5 Unit 605 Bay Road and the remaining 10 properties are units within the Forestry Bay complex. Ms. Steiner indicates that the unit at 605 Bay Road is in a different condo complex and that it is similar to the Forestry Bay complex because it is situated on Lake of the Woods and also has a boat slip to access the lake. She asserts that the only inferior attribute for this unit is its age, which was built in 2006. This unit was sold in July 2013 for $649,900 and has a total building area of 2,011 sq. ft. No further information is provided regarding the amenities and upgrades in this unit.

20In Appendix B, Exhibit 1, Ms. Steiner further provides, an analysis of the 10 units at 10 Forestry Bay including the subject property, and in this analysis, defended her current value assessment based on median sales calculated on sale value per square foot of 8 units. The eight units which sold were all builder sales and the two remaining units are still vacant and listed on the market since 2010.

21In Appendix C, Exhibit 1, Ms. Steiner provides a detailed report of the purchase price, amenities and upgrades of the 10 units at Forestry Bay complex.

22No time adjustment factors were provided..

23Details of Ms. Steiner’s analysis on current value study is summarized in Table 1 below:

Table 1

Unit Building Total Area	Date of Sale	Purchase Price ($)	Assessment	ASR	Price per sq. ft.	Value @ 309.99 per sq. ft. ($)	Value @ 326.86 per sq. ft ($)
Subject property 101- 1845 sq. ft.	May 2012	570,847	576,000	1.01	309.40	571,931	603,056
102 -1,338 sq. ft.	June 2012	474,424	442,000	0.93	354.57	414,766	437,338
103-1,845 sq. ft.	July 2015	485,840	576,000	1.19	263.32	571,931	603,056
201-2,024 sq. ft.	May 2012	583,922	623,000	1.07	288.49	627,419	661,564
202- 1,338 sq. ft..	May 2012	488,499	442,000	0.90	365.09	414,766	437,338
203			623,000			627,419	661,564
Penthouse- 2,271 sq. ft.	May 2012	778,314	688,000	0.88	342.71	703,987
301- 2,024 sq. ft.	June 2012	661,582	623,000	0.94	326.86	627,419	661,564
302- 1,338 sq. ft.	May 2012	464,506	442,000	0.95	229.49	414,766	437,338
303- 2,024 sq. ft.			623,000			627,419	661,564

24Using Table 1, Ms. Steiner derived the median and average for the above sales. This analysis can be seen in Table 2 below:

Table 2

Median not including 2015 sale	0.94	$326.86
Median Including 2015 Sale	0.94	$318.13
Average not including 2015 Sale	0.95	$316.66
Average including the 2015 Sale	0.98	$309.99

25Ms. Steiner further submits that using the median sale per square foot of $326.86 not including the 2015 sale, the current value is $661,564. If using the average of $309.99, including the 2015 sale, it will be $627,419. These two figures are still above current value assessment of $623,000 for the subject property, consequently, she argues that based on the square footage and quality of construction, the current value assessment for the subject property is reasonable and therefore she would not recommend a change in the assessed value at $623,000.

26Mr. Betker challenged Ms. Steiner’s analysis of sale per square foot arguing that all the units in Appendix A (Table 1 above) have different amenities, upgrades and building areas consequently, MPAC’s analysis of sale value per square foot is skewed.

27Ms. Steiner defended her analysis by submitting that MPAC does not value some of the amenities, that it is all tied into the quality of the unit, in which they are valued.

Appellant’s Position

28In Mr. Betker’s Statement of Issues, he argues that the best indication of value for the subject property is the estimated fair value as of January 1, 2012 of $525,000, since the subject property is still vacant and was listed in 2010 for $557,388.

29Mr. Betker submits that there are three additional units in this building with the same square footage of 2,024 sq. ft. The three units are known as the Tamarack units. Unit 201 sold in February 2012 for $583,922.12. Unit 301 sold for $628,318.28 in September 2011. He advised the Board that this Unit (301) included close to $44,000 upgrades. Unit 303 was listed for $575,120 in 2010 and is still vacant. He also advised the Board that Unit 303 had an offer in June 2014 for $450,000 which was countered at $500,000 and was rejected.

30Mr. Betker submits that the condominium project in total has not performed as anticipated. Since the start of construction in 2009, there are still two vacant units for sale (including the subject property). The original sale prices were high compared to what the market is today for the units. He further confirmed this fact by stating that Unit 103 sold in July 2015 for $40,000 less than the 2010 listing price and Unit 303 was offered $75,000 less than the 2010 listing price.

31Mr. Betker states that the subject property assessment increased by 33.4%, while a comparable condominium complex at 5 Bay Road had an average increase of 13.17% from 2012 to 2013 and that the average increase in assessment for residential properties in Kenora was 6.9%.

32Mr. Betker submits that the best indication of January 1, 2012 market value of the subject property is the estimated fair value of the subject property, which he determined as $525,000.

The Board's Analysis and Decision

33The thrust of the Act is to rely on current value as the basis for assessed 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.”

34The best evidence of current value is the sale of the subject property on or close to the valuation day of January 1, 2012. If, as in this case, no such sale occurred the sales of similar properties in the vicinity will be considered to establish current value of the subject property.

35The only sales evidence submitted to the Board in support of current value are the comparable sales provided by MPAC.

36Mr. Betker has provided no additional comparable sales to those entered by MPAC.

37The Board is in agreement with Mr. Betker that the subject building is a new unique building that appears to be struggling in the marketplace considering that two units are still vacant after five years on the market. The Board is also in agreement with Mr. Betker that the one unit that sold at 5 Bay Road is part of an established condominium project and should not be considered to establish the current value of the subject property. Furthermore, we have no detail on the extra upgrades at 5 Bay Road in order to compare to the subject property.

38In the absence of any other open market sales the Board will therefore consider the builder sales presented by MPAC in the subject building at 10 Forestry Bay to establish current value of the subject property.

39When analyzing MPAC’s sales at 10 Forestry Bay, the Board is in agreement with Mr. Betker that the analysis by Ms. Steiner utilizing sales value per square foot is skewed. In calculating value per square foot, properties must be similar in size and quality including similar amenities and upgrades. In this case, the evidence clearly shows that the units used in the analysis have different building area and different amenities and upgrades. The Board will therefore reject the analysis presented by Ms. Steiner applying the median sale value per square foot from all the sales to each of the units for the purposes of establishing the current value.

40In reviewing sales of similar units in this complex, there are two similar properties that sold in or around the valuation day of January 1, 2012. The first is Unit 201. Unit 201 sold on February 3, 2012 for $583,922.12. This unit when compared to the subject property has substantial upgrades such as: one outdoor parking stall, one storage locker, cabinets and vanities, plumping, lighting, and garburator. The only upgrades in the subject property are: granite backsplash, trim package and one indoor parking stall. The other property that sold is Unit 301, which sold in September 2011 for $628,318.28. This unit had close to $44,000 in upgrades, which are: flooring, granite and tiles, cabinets and vanities, lighting, fireplace titles and doors and decorative wall panels. These upgrades are substantial when compared to the subject property.

41Based on the substantial upgrade in Units 201 and 301, it is reasonable to conclude that the sale price for these units will be greater than the value of the subject property. Consequently, even at this listing price $557,388 the subject property is still vacant. Sequel to this, Mr. Betker argues that the current value for the subject property should be $525,000, which is an “estimated fair value” as of January 1, 2012, since the unit has been unable to sell. Mr. Betker did not present evidence to the Board to show how he arrived at the suggested current value assessment of $525,000. He only argues that it is an “estimated fair value” as of January 1, 2012. The panel of this Board can only determine current value based on evidence. The best evidence of current value for the subject property is the list price of $557,388 listedsince 2010 and therefore the ceiling value as of January 1, 2012.

42The Board therefore orders that the current value of the subject property is $557,000 (rounded).

Equity Analysis

43Section 44.(3)(b) mandates and directs that after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed. The Assessment to Sale Ratio (“ASR”) is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the sale price.

44While the burden of proof respecting current value rests with MPAC, and its evidence in that respect has been found to be determinative, the burden of proof respecting s. 44.(3)(b)’s equity requirement rests with the Appellant.

45MPAC provided eight sales of properties in the same building as the subject which also included a sale in 2015. The Board concludes that the median assessment of the eight sales submitted by MPAC is not a large enough sample to provide a meaningful analysis of the market with respect to equity. Therefore based on insufficient evidence the Board will make no further adjustment to the current value for equity purposes.

CONCLUSION

46The Board finds that the assessment should be reduced from $623,000 to $557,000, for the 2013 and 2014 taxation years.

2015 DEEMED APPEAL

47An appeal for the 2014 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 2014 appeal before March 31, 2015. For that reason, this decision also applies to the 2015 taxation year.

Footnotes

1. 1Subsection 5 permits the Minister to prescribe a different valuation day. A different day has not been prescribed.