Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 10, 2015

FILE NO.: WR 134787

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 Forestry Bay, Unit 103

Municipality(ies): Town of Kenora

Roll Number(s): 6016-010-002-03807-0000

Appeal Number(s): 3049377, 3049872 and 3093819 (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 and 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 $576,000 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 1,845 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 $576,000. 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 Board to consider a value of $529,000 (rounded), which is the original listing price excluding Harmonized Sales Tax (“HST”) for the subject property in 2009.

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

6The Board has to decide:

• Whether the returned assessments of $576,000 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 $529,000 (rounded).

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 $576,000 to $529,000 for the 2013 and 2014 taxation years and deemed for the 2015 tax year.

REASONS FOR DECISION

Legislation

10The Board must have regard to s. 1, 19.(1), 19.2(1), 40.(17), 40.(19), 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 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

17Carlene 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.

18In Appendix A, Exhibit 1, Ms. Steiner provides the profile of 11 properties. Property 1 is Unit 5 at 605 Bay Road and the remaining 10 properties are units within the Forestry Bay complex. Ms. Steiner indicates that this property is situated in a different condominium complex that is similar to the Forestry Bay complex because it is situated on Lake of the Woods and has a boat slip to access the lake. She asserts that the only inferior attribute for this unit is its age as it 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.

19In 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 the sale value per square foot of the eight units which sold. The eight units which sold were all builder sales leaving the two remaining units which have been listed on the market since 2010 and remain vacant.

20In 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.

21No time adjustment factors were provided.

22Details 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 - 1,845 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

23Using Table 1, Ms. Steiner derived the median and average for the above sales. This analysis can be seen in Table 2 below:

Table 2

Metric	ASR	Price per sq. ft.
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

24Ms. Steiner further submits that using the median sale value per square foot of $326.86 not including the 2015 sale, the current value is $603,056 therefore the current value assessment of $576,000 for the subject property is reasonable and therefore she would not recommend a change in the assessed value for the subject at $576,000.

25Mr. Betker challenged Ms. Steiner’s analysis of sale value per square foot arguing that all the units in Appendix A (Table 1 above) have different amenities, upgrades and different sizes. Consequently, MPAC’s analysis of sale per square foot is skewed.

26Ms. 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 at.

Appellant’s Position

27In Mr. Betker’s Statement of Issues, he argues that the best indication of value for the subject property is the original listing price in 2009 for $528,868 rounded to $529,000 (excluding HST). He submits, that the original listing price was too high, hence this unit was vacant for almost five years and only sold in July 2015 for $485,840.71. Mr. Betker further argued that if this unit was vacant and only sold in 2015, the only value that can be used is the original listing price.

28Mr. Betker submits that the condominium project in total has not performed as anticipated. The original sale prices were high compared to what the market is today for the units.

29He further states that the subject property assessment increased by 33.3%, 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%.

The Board's Analysis and Decision

30The 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.”

31The 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.

32The only sales evidence submitted to the Board in support of current value are the comparable sales provided by MPAC.

33Mr. Betker has provided no additional comparable sales to those entered by MPAC.

34The 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.

35In 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.

36When 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 values 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 areas and different amenities and upgrades. Therefore the Board will reject the analysis presented by Ms. Steiner applying the median value per square foot from all the sales to each of the units for the purposes of establishing the current value.

37The Board agrees with Mr. Betker that the actual sale of each unit is the best indicator of current value when the sale occurred fairly close to the valuation date of January 1, 2012. The subject property sold in July 2015 for $485,840.71. This sale is far removed from the valuation date of January 1, 2012 and there are no time adjustment factors to determine the value of the subject property as of January 1, 2012.

38The only sale we have of a property which is similar in size to the subject property is Unit 101 in the same building which sold for $570,847 on May 2012. We also know that this unit is substantially upgraded as compared to the subject property. The only upgrade in the subject property is one indoor parking stall, while Unit 101 has two indoor parking stalls as well as upgraded granite and tiles, cabinets and vanities, plumbing fixtures, lighting, trim and door package and a storage locker.

39Therefore based on the number of upgrades in unit 101, it is a reasonable conclusion that the current value of the subject property, that is unit 103, as of January 2012 is less than the current value of the unit 101 at $570,847 and greater than the sale value of $485,840 as of July 2015.

40Mr. Betker also pointed out that the unit was listed at $529,000 in 2009 and did not sell because the price was too high.

41The Board is in agreement with Mr. Betker, in the absence of a sale on the subject property close to the valuation date, it is a reasonable conclusion that the current value of the subject property be set at $529,000 (rounded), which is the amount that the subject property was originally listed since 2009 and therefore the upper limit of value as of January 1, 2012. This value would be greater than the selling price in 2015 and less than the sale of Unit 101 at $570,840. In the absence of the value of the additional upgrades this decision would estimate those upgrades at $41,000.

Equity Analysis

42Section 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 Sales 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.

43While 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.

44MPAC provided eight sales of properties in the same building as the subject property which also included a 2015 sale indicating a median ASR of 0.94. The Board concludes that this sample is too small to provide a meaningful market with respect to equity. Therefore based on insufficient evidence the Board will make no further adjustment to the current value for equity purposes.

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 ASR 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 $576,000 to $529,000, 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.

48Section 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.

Footnotes

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