Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
August 21, 2015
WR 133139
Assessed Person(s):
Vijay Baghi and Daljeet Kaur
Appellant(s):
Vijay Baghi
Respondent(s):
Municipal Property Assessment Corporation (“MPAC”) Region 15
Respondent(s):
City of Brampton
Property Location(s):
10651 Clarkway Drive
Municipality(ies):
City of Brampton
Roll Number(s):
2110-120-001-06211-0000
Appeal Number(s):
3030948 and 3083639 (and deemed 2015)
Taxation Year(s):
2014 (and deemed 2015)
Hearing Event No.
585444
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard:
June 2, 2015 in Brampton, Ontario
APPEARANCES:
Parties
Counsel+/Representative
Vijay Baghi
Self-represented
MPAC
Dayna Scott and Olivia Medeiros
City of Brampton
Aida Karreman
DECISION OF THE BOARD DELIVERED BY SUSAN F. MATHER AND ROBERT STEINBERG
INTRODUCTION
1The property under appeal is a 3,535 square foot home built in 1989 located on a one-acre lot. The house is a raised bungalow with two double-car basement garages. The property is zoned Agricultural and abuts a Holstein milk production farm. The Appellant’s stepson lives and operates a limousine service known as “Lucky Star Limousine” on the property.
2For the 2014 and 2015 taxation years MPAC has apportioned the $815,000 assessment of the property between the residential property class and the commercial property class as follows:
Residential Property Class - $781,300
Commercial Property Class - $33,700
3Vijay Baghi the Appellant, appealed his assessment for the 2013 taxation year and was not satisfied with the decision of the Assessment Review Board (“Board”) in File No: WR 123748 to confirm the assessment at $815,000. For that reason he appealed the assessment for 2014 despite the fact that the Board had already made a determination of the current value of the property as of January 1, 2012.
4For the 2013 taxation year the property was wholly classified in the residential property class. MPAC added the commercial property class for the 2014 taxation year after an inspection of the property was done for the 2013 appeal.
5On March 12, 2015 MPAC brought a motion for issue estoppel. MPAC argued that because the Board had already determined the current value as of January 1, 2012 the Appellant was estopped from re-arguing the issue of current value for the 2014 taxation year. The Board denied MPAC’s motion because there was a classification change for the 2014 taxation year and because the Board was satisfied that there was new evidence that was not before the Board at the earlier hearing. The new evidence was a market model report MPAC provided to Mr. Baghi after the first hearing and evidence with respect to the flood plain issue.
6The parties consented to the deemed appeal for the 2015 taxation year being heard with the appeal for the 2014 taxation year.
Issues
7The issues the Board must determine are:
The current value of the property as of January1, 2012.
Whether an assessment at current value is equitable with the assessments of similar lands in the vicinity.
The apportionment of the assessment between the Residential and Commercial Property Classes.
8The Appellant argues that in assessing his property MPAC’s multiple regression model has over-valued the land. To support this contention he relies on the Property Assessment Detail Reports or “PAD” reports for the properties that MPAC relies on for sales comparison purposes.
9He submits that the sales relied on by MPAC are of properties in other well-developed neighborhoods with custom built homes. Mr. Baghi asks the Board to adjust the land value in the PAD report for his property to arrive at the current value of the land. MPAC relies on sales of properties with similar size lots and/or homes to support the value determined by the model. MPAC argues the Board must determine the current value of the land based on the sales evidence and not by adjusting values within the model.
10Mr. Baghi also contends that his assessment does not recognize the quality of construction, condition of the property, the regional flood line, the development set back limits, the traffic on Clarkway Drive, the lack of sanitary sewers, the lack of services nearby, and the type of heating.
11The Appellant takes issue with the methodology MPAC has used to apportion the assessment on the property between the residential property class and commercial property class. His main disagreement is the amount of the property MPAC finds is used for the parking and movement of the limousines on the lot.
12These appeals raise the issue of the use of MPAC’s PAD reports generated by the multiple regression model to determine the current value of a property. The Appellant points out that while MPAC argues that the PAD reports cannot be used to determine the current value MPAC relies on the PAD reports to determine the apportionment of the assessment between property classes
DECISION
13The Board finds the current value of the property as of January 1, 2012 to be $815,000.
14The Board finds that an assessment of the property at current value is equitable with the assessments of similar lands in the vicinity and confirms the assessment at $815,000.
15The Board finds the apportionment of the assessment between property class should be changed as follows:
Residential Property Class from $781,300 to $788,000
Commercial Property Class from $33,700 to $27,000
Determination of Current Value
16MPAC determined the current value of the subject property using a multiple regression model that was developed for the City of Brampton. In order to support the assessment arrived at by the model MPAC relies on a sales comparison approach to value. MPAC’s market analysis is found at page 6 of Exhibit 1. MPAC relies on the sales of six properties to determine a range of value for the subject property between $752,318 and $984,754.
17Mr. Baghi argues that MPAC’s properties are not comparable to his property for the reason that the homes are located in sub-divisions while the subject property is zoned agricultural and backs onto a dairy farm.
18The first four sales in MPAC’s market analysis are very similar if not equal in lot size to the subject property. The houses on these five properties however are all at least 1,000 sq. ft. smaller than the house on the subject property.
19Mr. Baghi objects to MPAC’s Sales A and B which are also located on Clarkway Drive. Mr. Baghi’s evidence is that these properties were bought by a developer and torn down and the land is now part of a new subdivision. He submits that a premium price was paid for the lots.
20Properties E and F in MPAC’s report homes are more similar in square footage to Mr. Baghi’s property but they have vastly different lot sizes and are considered by MPAC to be of better quality construction. For these reasons the Board finds they are not comparable to the subject property
21Mr. Baghi submits that the properties located at 10950 Gore Road (Property C) and 10604 McVean Drive (Property D) are the most similar to his property.
22The Board calculates that the time-adjusted sales price per square foot for 10950 Gore Road is $291.00 and the time adjusted sales price per square foot for 10604 McVean Drive is $365 per square foot.
23The subject property, assessed at $230.00 per square foot, is assessed at a rate per square foot considerably lower than these two properties Mr. Baghi considers most comparable to his property.
24In the Board’s view the reason why Mr. Baghi’s property has a higher assessment than the time-adjusted sale price of either 10950 Gore Road or 10604 McVean Drive is that it is a much larger and more recently built home. In Mr. Baghi’s view the reason is that the MPAC does not recognize that his home is not located in an estate subdivision and MPAC’s multiple regression model assigns too much value to the land.
25The Assessment Act, R.S.O. 1990, c. A.31, as amended (“the Act”) requires MPAC to return the assessment of a property at its current value. The term current value is defined in s. 1 of the Act 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.
26The Act does not prescribe how current values are to be determined for most properties and depending upon the type of property current values are determined by using one of three recognized valuation approaches which include the sales comparison approach, the cost approach and the income approach.
27In most instances the current value of residential properties are determined using the sales comparison approach.
28The multiple regression model employed by MPAC to assess residential properties is a sales comparison approach that is used for mass appraisal.
29Mr. Baghi has made a considerable effort to understand how the multiple regression model works and spent much time analyzing the variables for his property and for the other properties that MPAC relies upon as comparable properties to determine the value of his property.
30MPAC provided Mr. Baghi with information on the model and answered many of the questions posed by Mr. Baghi as he worked to understand the model.
31Mr. Baghi has concluded that the land value derived for his property is too high and asks the Board to use the model land value for the MPAC comparable Properties C and D which Mr. Baghi submits are the most comparable to his property. He asks the Board to substitute values in the model to arrive at a lower current value for the subject property.
32Mr. Baghi’s lot size adjustment calculations are found at page 61 and 69 of Exhibit 3 and on page 36 of Exhibit 4.
33MPAC argues that it is not appropriate for the Board to determine a current value by substituting values within a PAD report. MPAC submits that the Board must determine the value based on the sales evidence and that the sales evidence before the Board supports a current value of $815,000.
34In considering the multiple regression model the Board looks to see whether the model appears to be determining current values with an acceptable range of the sales values in the market place. The Board looks at the actual sales evidence and compares the actual sales figures to the assessments returned for the property. The accuracy of the model may vary between neighbourhoods in a City depending on whether the model has been programmed to capture a variable that may affect property value.
35The evidence with respect to the six sales relied upon by MPAC does not suggest that the model is producing assessments that are consistently higher or lower than the time adjusted sales prices for the property.
36The challenge in these appeals is finding properties that are truly comparable to the subject property. MPAC relies on sales of properties in neighbourhoods that are estate lots in estate subdivisions. MPAC submitted the 2013 decision of the Board File No: WR 123748 for consideration. In that hearing MPAC relied on different sales to establish the $815,000 current value for the 2013 taxation year than it has used for the 2014 taxation year despite the same valuation day.
37Mr. Baghi’s evidence is that MPAC also disclosed different comparables in the report it prepared for the March 15, 2015 hearing date for these appeals than it did for the June 2, 2015 hearing date. Mr. Baghi’s frustration with the process is understandable.
38MPAC argues that the model cannot be used to determine current value and yet their evidence is that the adjustment it made to recognize the poor condition of the property was done to the PAD report for the property.
39While the Board sympathizes with the Mr. Baghi’s frustration it is not prepared to determine the current value based on adjustments to the land value in a PAD report. As Mr. Baghi himself points out in the excerpts from two PAD reports showing the changes to the assessments following an ARB hearing on March 2010 two different assessors adjusted the reports in different ways to arrive at the same assessment. (Page 4, Exhibit 5).
40Mr. Baghi submits that the current value of his property should be determined using the land value for MPAC’s comparables C and D. He submits that the land value used for the subject property is derived from the sales of comparable A and B which he submits are not comparable to the subject property as they were sold for development purposes.
41According to MPAC’s “2012 Base Year Residential Valuation Overview” found at page 4 of Exhibit 3, 85% of the current value of a property can be attributed to five characteristics: location, building area, quality, age and land (lot size or frontage and depth).
42Mr. Baghi suggests that MPAC placed his property in a different neighbourhood to eliminate adjustments to his property that would result in a lower assessment. Pages 50-53 of Exhibit three are PAD reports for the for different valuation days.
43Mr. Baghi points out that the reports as of February 2, 2009 show a neighbourhood adjustment for neighbourhood 108, while the PAD report as of March 23, 2010 shows no neighbourhood adjustment for neighbourhood 102. The reports at pages 51 and 52 both show a value of $656,000 for the 2008 valuation day but the values of the factors within the PAD report differ.
44Mr. Baghi’s evidence with respect to the PAD reports is a good example of why the Board cannot determine the current value of this property by making adjustment to the PAD reports. Properties C and D are clearly in different homogeneous neighbourhoods for the purpose of the model. While Mr. Baghi seeks the same lot size adjustment for Property C and D applied for his property he does not seek to have the same neighbourhood adjustment applied.
45The Board’s job is to determine the current value of a property. The Board’s job is not to determine if MPAC has applied its multiple regression model correctly or to make corrections to variables within the model. MPAC’s multiple regression model is a complicated mathematical model based on as many as 200 different factors.
46Mr. Baghi argues that MPAC’s two sales comparables on Clarkway Road should not be used as comparables for the reason that both properties were sold to a developer and are now part of a subdivision. Mr. Baghi also alleges that the sales were not at arm’s length. The Board however does not have any evidence to support his conclusion with respect to this allegation of a non-arm’s length transactions.
47The Board finds that the sales of the two Clarkway Road properties are not required to arrive at the current value of $815,000.
48The Board is satisfied that the assessment of the subject property at $230.00 per square foot of building area, (a rate that is considerably lower that than the rate for the two properties Mr. Baghi relies upon as his best comparables) takes into consideration the land value, the quality of construction and condition of the property; issues that Mr. Baghi argues makes the subject property inferior.
49Based on Mr. Baghi’s evidence the Board is satisfied that this property would sell as a single-family residential home and not for speculative purposes. The evidence with respect to the upcoming change to place a portion of the property within the regional floodplain line and the evidence with respect to the proposed residential development limits support this conclusion.
50The proposed changes do not interfere with its use as a residential property. The comparable sales relied upon by Mr. Baghi and accepted by the Board are residential properties. While Mr. Baghi introduced pictures of some flooding on the property which occurred before he owned the home, there is no evidence that this is an on-going problem or that it has occurred during his ownership.
51While Mr. Baghi introduced evidence with respect to the construction of trunk sewers on his street the evidence is that the sewers are completed and that the construction traffic is not an issues for the valuation day under appeal.
52Mr. Baghi also argues that the electric heat is an undesirable feature for a buyer. He describes that heating system at page 163 of Exhibit 1. No evidence was introduced to quantify the effects that the heating system may or may not have on the property.
53With respect to the lack of municipal sewers the Board has no evidence allow it to quantify how this affects the properties value. The Board received no evidence as to whether any of the comparable properties are connected to municipal sewers.
Equity
54The Board is satisfied that there is no evidence before it requiring a reduction in the assessment below current value to make it equitable with the assessments of similar lands in the vicinity.
Classification
55The Board is satisfied that a portion of the property is used for a limousine business and is properly classed in the residential property class. While Mr. Baghi testified that the limousine business belongs to his stepson and that the business was not a thriving business he does not take the position that there was no business operating from the property. He does not dispute MPAC’s evidence of the sign for the business outside the property gate (page 27 Exhibit 1), the pictures of the limousines (p 28 Exhibit 1) and the website for the business pages 29-30 (Exhibit 1).
56Mr. Baghi takes issue with the amount of assessment apportioned to the commercial property class. He is in agreement with the amended value MPAC has used for the space in the basement used for the office (Page 52 Exhibit 3). He disputes however how MPAC has calculated the value of the property used for parking and maneuvering the limousines on the property.
57The Board does not accept Mr. Baghi’s calculation for the lot space used to park and turn vehicles. The Board finds that the limousines business would require more area than the parking pads areas that Mr. Baghi submits are appropriate. Mr. Baghi’s calculations are found at page 128 of Exhibit 3. He allows a parking area for three vehicles on approximately 240 sq. ft. per vehicle for a total area of 720 sq. ft.
58His evidence is that portion of the area MPAC has included in its calculation of area for the vehicles is used as a walkway and children’s play area.
59MPAC’s calculations are found at pages 24 and 25 of Exhibit 1. MPAC calculates an area of 2,190 square feet as being used for the carport and parking of the limousines. Given the size of the limousines the Board finds the area identified by MPAC as should on pages 24 and 25 to be a reasonable amount of area to be allocated to the commercial property class in that the there needs to be room to maneuver the cars on the property. The photographs of the property introduced by MPAC in Exhibit 1 shows that limousines may be parked in front of the house as well. The Board is satisfied based upon the pictorial evidence of MPAC that an allocation of 2,190 square feet for the parking of vehicles is not unreasonable.
60The Board accepts the use of the PAD report breakdown of land and building components for the determination of the assessment attributable to each property class.
61Neither party presented any alternative method to calculate the area used by the limousine service and both parties based their calculations on this report.
62The Board determines the value to be attributed to the commercial portion of the property to be $27,000.
CONCLUSION
63For the reasons given above the Board finds the current value of the subject property for the 2014 and 2015 taxation years to be $815,000 apportioned as follows:
Residential Property Class – From $781,300 to $788,000
Commercial property class – from $33,700 to $27,000
2015 DEEMED APPEAL
64An 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.
65Section 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.
“Susan F. Mather”
SUSAN F. MATHER
Vice-Chair
“Robert Steinberg”
ROBERT STEINBERG
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```