Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

December 29, 2015

FILE NO.:

WR 137087

Assessed Person:

Maxim Berdichevsky

Appellant:

Maxim Berdichevsky

Respondent:

Municipal Property Assessment Corporation (“MPAC”), Region 3

Respondent:

City of Ottawa

Property Location:

1883 Featherstone Drive

Municipality:

City of Ottawa

Roll Number:

0614-105-805-21100-0000

Appeal Number:

3113751

Taxation Year(s):

2015

Hearing Event No.

597738

Legislative Authority:

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

Heard:

November 30, 2015 in Ottawa, Ontario

APPEARANCES:

Parties

Representative

Maxim Berdichevsky

Self-represented

MPAC

Michel Benoit

City of Ottawa

No one appeared

MEMORANDUM OF ORAL DECISION DELIVERED BY DONALD WHITEHURST ON NOVEMBER 30, 2015

PRELIMINARY MATTER

1MPAC asked the Board to refuse the acceptance of three documents that the appellant wished to introduce into evidence, claiming that the appellant did not provide proper notice as required by rule 45.(2) of the Board's Rules of Practice and Procedure.

2Rule 45.(2) of the Board's Rules of Practice and Procedure (“Rules”) states:

Disclosure Prior to a Hearing

45.(2) - In the Direct Hearing Stream, unless the Board orders otherwise, if a party intends to present documentary evidence at a hearing, at least 21 days before the hearing, the part must provide one copy of each to each party.

(a) In documentary evidence is not exchanged at least 21 days before the hearing, the Board may refuse to accept the documents at the hearing.

(b) Material in response must be exchanged 14 days prior to the hearing and other parties may respond 7 days prior to the hearing.

3Maxim Berdichevsky, the appellant, appeared on his own behalf. He said that the three documents did not contain evidence that MPAC was not already aware of; they contained charts, spreadsheets and percentage calculations of information (Exhibits 1 & 2) already exchanged between the parties. The Board reviewed the documents and agrees with Mr. Berdichevsky that they do not contain new evidence. Consequently, the Board finds that MPAC is not prejudiced by the appellant's failure to provide copies of the documents as per rule 45. The Board therefore allowed the documents (Exhibits 3, 4 and 5) to be introduced into evidence.

INTRODUCTION

4The subject property ("SP") is described by MPAC as a 1,822 square foot single family home built in 1966 and situated on a 0.11 acre lot. The appellant purchased the SP in August of 2011 for $441,000, or a time adjusted sale ("TAS") price to January 1, 2012 in the amount of $444,881. MPAC returned the assessment at $439,000 for the 2015 taxation year using the sales comparison approach to value.

5Michel Benoit appeared on behalf of MPAC. He stated that after an inspection and discussions with the property owner, MPAC changed its records to reflect a different renovation year for the SP. He now recommends that the returned assessment be reduced to $435,000.

6Mr. Berdichevsky stated that although he purchased the SP in August of 2011 at the listed price of $441,000, he claimed it was not worth that amount. He said that he would not have paid $441,000 for the SP but for the fact he was under pressure to quickly purchase a residence; having already lost the purchase of two properties because of "bidding wars". Mr. Berdichevsky also offered other reasons why the SP's assessment should be reduced to between $400,000 - $405,000.

ISSUE

7The Assessment Review Board (“Board”) has to determine the SP's current value for the 2015 taxation year and ensure that it is equitable with the assessments of similar lands in the vicinity.

DECISION

8The Board finds that the SP's current value is $435,000. Consequently, the SP's returned assessment is reduced from $439,000 to $435,000 for the 2015 taxation year. The Board also finds that the SP's $435,000 assessment is equitable with the assessment of similar lands in the vicinity.

REASONS FOR DECISION

The Legislation

9Section 1 of the Assessment Act (“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.

10Section 19.(1) of the Act states:

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

11Section 19.2(1) of the Act states:

Valuation days

19.2 (1) 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.

Exception

(5) Subsection (1) does not apply in respect of the valuation of land for a taxation year after 2004 if the Minister prescribes a different day as of which land is valued for that year.

12Section 44.(3) 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.

MPAC’s Position

13Mr. Benoit submitted a report (Exhibit 1) in support of his recommendation to set the assessment at $435,000. He compared the characteristics of five sales of four comparables to that of the SP; one of which was the sale of the SP. He submitted that all the sales comparables were relatively comparable to the SP and that the sale of the SP was the best evidence of current value. Mr. Benoit also submitted that the recommended assessment for the SP falls within the range of time adjusted sale values established by the sales comparables and it was equitable with the assessment of similar lands in the vicinity.

Appellant's Position

14Mr. Berdichevsky submitted a number of documents (Exhibits 2 - 5) in support of his submission that the assessment should be set at or near $400,000. He stated that his estimate of current value is based on a number of observations and submissions that led him to conclude that MPAC seems to have valued the SP with an additional structure and/or a larger lot, and/or in a higher priced neighbourhood. These submissions/observations are listed below:

1. Sale of the SP: When Mr. Berdichevsky moved to Ottawa, his employer gave him a limited amount of time to find suitable housing. He said that as he neared the end of his allocated time, he had already lost two homes through bidding wars. Mr. Berdichevsky therefore decided not to bargain the asking price when he purchased the SP. Consequently, he believes the sale price is "somewhat inflated."

2. Ottawa Housing Market: Mr. Berdichevsky concluded from his review of MPAC's Exhibit 1 Appendix B (Sales real estate over time) and Ottawa area sales data (Exhibit 2) that the housing market in Ottawa did not move very much between 2011 to 2014 (Exhibits 3 and 4). He noted that housing values in the City of Ottawa increased by 21.39% from the 2008 base year to the 2012 base year; whereas the SP's assessment increased 31.04% during the same period using $335,000 as the base for 2008 and $439,000 as the base for 2012. Mr. Berdichevsky submitted that the 21.39% increase leads to (1.2103 X $335,000) = $405,000 which, in his opinion, is a better indicator of current value than MPAC's estimate.

3. Change in the 2008 Base Year Assessment: Mr. Berdichevsky noted that MPAC changed the SP's 2008 base year assessment from $319,000 to $335,000 (Exhibit 2). Apparently, this was caused by renovations to the kitchen and bathroom completed by the prior owners. MPAC told him that the increase was the result of information provided found in a questionnaire. Mr. Berdichevsky stated that he did not recall completing a questionnaire (which MPAC can no longer locate). He also said that MPAC recently informed him that the recommended 2015 assessment ($435,000) is based on an inspection of the SP. Mr. Berdichevsky concluded by stating that he could not comprehend how a low quality renovation could lead to a $16,000 increase in the 2008 base year assessment which he believes has a bearing on his 2012 base year assessment.

4. Assessment of Similar Properties: Mr. Berdichevsky stated that he obtained the assessment information of two properties which look exactly like the SP (Exhibit 2). These properties are located at 1862 Sharel and 1870 Illinois in the City of Ottawa. 1862 Sharel is located behind the SP. He noted that the properties have a detached garage (1862 Sharel) or a carport (1870 Illinois) whereas the SP does not have a garage. Mr. Berdichevsky also said that these properties have lots that are much larger than the SP. Furthermore, 1870 Illinois is located in a better neighbourhood. He submitted that the fact these properties are only assessed at $455,000 (1862 Sharel) and $499,000 (1870 Illinois), is an indication the SP's returned assessment is too high.

5. MPAC's Equity Analysis - Average Sales Price: Mr. Berdichevsky reviewed MPAC's equity analysis (Exhibit 1) and noted that the SP's TAS price exceeded the average and median TAS price of the 30 properties by 17.6% and 20.1%. He was of the opinion that this is another indication that the SP's returned assessment is too high. Mr. Berdichevsky added that if the SP's assessment was lowered to $400,000 then the assessment to sales ratio of the SP would be 0.90 (Exhibit 5) and this is within the International Association of Assessing Officers ("IAAO") standard that the medium should fall within between 0.90 - 1.10 (Exhibit 1).

Board's Analysis - Current Value

15The best evidence of current value is the valid sale of the SP. When no such sale occurs, the Board looks to the valid sale of other vicinity comparable properties if the sales occurred at or near the valuation date. The Board does not attribute much weight to non-sale evidence when there exists sufficient sales evidence that enables the Board to make a current value determination.

16In order for a sale to be valid, it must comply with the definition of current value in the Act. That term is defined 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". The Board believes that, even though the appellant was pressed for time when he purchased the SP, that fact does not make him an unwilling buyer. The Board therefore finds that the sale of the SP is valid and is the best evidence of current value.

17The Board would normally find that the SP's current value is the TAS price ($444,881) but it accepts MPAC's recommendation that it be reduced to $435,000 because the sale of similar vicinity properties supports the recommendation. For comparison purposes, the Board has listed in Table 1 below some information and features concerning MPAC's sales comparables and the appellant's two non-sale comparables. After reviewing the information in Table 1, the Board finds that all the comparables are relatively comparable to the SP.

Table 1

Property

Returned Assessment

TAS Price

Year Built

Lot Size

Square Footage

Renovation Year

Garage or Carport

Relatively Comparable to the SP?

SP/Sale E

$439,000

$444,881

1966

5110

1822

2002

Carport

Sale A

$434,000

$483,594

1966

5000

1647

2011

Garage

Yes

Sale B

$421,000

$500,833

1965

5076

1833

2012

Garage

Yes

Sale C

$421,000

$425,538

1965

5076

1833

2012

Garage

Yes

Sale D

$448,000

$409,781

1967

5000

1981

2013

Garage

Yes

1862 Sharel

$455,000

No Sale

1964

8039

1828

Unknown

Garage

Yes

1870 Illinois

$499,000

No Sale

1960

6063

1826

Unknown

Carport

Yes

18Figure 1 below shows MPAC's recommended assessment in relation to the current value range established by the relatively comparable sales comparables. The Board notes that the SP is slightly less desirable compared to the sales comparables because it does not have a detached garage and was renovated some years prior to the other sales comparables. This leads the Board to conclude that the SP's current value assessment should be located in the lower half of the current value range established by the sales comparable. Since MPAC's recommended assessment is located in the lower half of the current value range, the Board accepts it and finds that the SP's current value is $435,000.

Figure 1

Current Value Range

Sales that are Relatively Comparable to the Subject Property

←$409,781 Sales A, B, C,D and E $500,833 →

19The Board will now address the appellant's other submissions previously outlined in paragraph 14 above.

• Ottawa Housing Market: The Board has often heard similar submissions in the past and found that it is not the best evidence compared to a valid sale of the SP and/or good comparable sales evidence. The underlying reason is that, although the area housing market may provide a good indication of the area housing market, it does not provide a good indication of current value or equity for a particular residence such as the SP.

• Change in the 2008 Base Year Assessment: The Board assigns no weight to this submission because, whatever the SP's correct 2008 base year assessment is, it does not assist the Board in determining the SP's current value for the 2015 taxation year. This is because the Act states that the SP's 2008 base year assessment must be based on its current value as of the January 1, 2008 valuation day, whereas, the SP's assessment for the 2015 taxation year must reflect the SP's current value as of the January 1, 2012 valuation day.

• Assessment of Similar Properties: The Board agrees with the appellant that the unsold similarly structured residences are somewhat superior to the SP. The Board notes that these properties have higher returned assessments than the SP. This is to be expected as these properties are slightly superior to the subject property. However, there is no evidence to assist the Board in determining how much lower the SP's assessment should be compared to these comparables.

• MPAC's Equity Analysis - Average Sales Price: The Board assigns no weight to this submission because it merely indicates that the SP is more valuable than the 29 other properties that MPAC included in its equity study. It does not indicate what the SP's current value should be. Furthermore, the fact that the SP's assessment to sales ratio would be 0.90 had the assessment been returned at $400,000, it still does not assist the Board in determining the SP's current value as of the January 1, 2012 valuation day. Nor does it suggest that the recommended assessment would be inequitable with the assessment of similar lands in the vicinity.

Board's Analysis – Equity

20The Board reviewed the evidence and finds there is insufficient evidence to support a finding that the SP's current value is not equitable with that of similar lands in the vicinity. The Board assigns little weight to the appellant's direct and indirect submissions on this matter (Ottawa Housing Market - Assessment of Similar Properties - MPAC's Equity Analysis - Average Sales Price) for the reasons outlined in paragraph 19 above. The Board finds that MPAC's equity study (Exhibit 1), which concludes that no equity adjustment is required, is the best equity evidence because it meets the criteria established by the IAAO.

CONCLUSION

21The Board finds that the SP's current value is $435,000 and reduces the returned assessment from $439,000 to $435,000 for the 2015 taxation year. The Board also finds that the reduced assessment of $435,000 is equitable with the assessment of similar lands in the vicinity.

“Donald Whitehurst”

DONALD WHITEHURST

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```