Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 11, 2015

FILE NO.: WR 131986

Assessed Person(s): Kalyan Biswas and Bishakha Biswas

Appellant(s): Kalyan Biswas and Bishakha Biswas

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 21

Respondent(s): City of Waterloo

Property Location(s): 453 Rideau River Street

Municipality(ies): City of Waterloo

Roll Number(s): 3016-040-001-44126

Appeal Number(s): 3061312, 3061311 and 3089792 (deemed 2015)

Taxation Year(s): 2013, 2014 (and deemed 2015)

Hearing Event No. 574434

Legislative Authority: Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: April 14, 2015 in Waterloo, Ontario

APPEARANCES:

Parties	Representative
Kalyan Biswas and Bishakha Biswas	Self represented
MPAC	Eddy A. Fayad
City of Waterloo	Paul Grivicic

MEMORANDUM OF ORAL DECISION DELIVERED BY JOANNE LAWS ON APRIL 14, 2015

INTRODUCTION

1The appeals before the Assessment Review Board (“Board”) include two s.33 appeals for an omitted assessment value of $476,000, effective October 10, 2013 and for the 2014 taxation year, respecting the subject property located at 453 Rideau River Street in the City of Waterloo. The Board has deemed a 2015 appeal (see the notes at the end of these reasons).

2The primary points of contention between the parties are what constitutes a comparable property, whether the subject property is equitably assessed, and the effect of economic conditions on the housing market as well as the proximity to services, shops, high voltage transmission lines and a airplane fly route.

3The Board must determine whether the omitted assessments effective October 10, 2013 and January 1, 2014 reflects the correct current value and whether the total assessed value is equitable with the assessments of similar properties in the vicinity.

DECISION

4The Board finds that the current value of the subject property, in the residential property tax class, as of October 10, 2013 and for the 2014 and 2015 taxation years is $639,000.

5A reduction of the assessment as returned from $639,000 to $607,000 is required to make it equitable with the assessments of similar lands in the vicinity.

6Accordingly, the omitted assessment for the building portion of $476,000 is reduced to $444,000 effective October 10, 2013 and for the 2014 taxation year.

7The total assessment of the subject property effective October 10, 2013 and for the 2014 taxation, year is reduced from $639,000 to $607,000 in the residential property taxation class. The assessment of the subject property for the 2015 taxation year is confirmed at $607,000.

REASONS FOR DECISION

Legislation

8In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Assessment Act (“Act”):

9Section 19.(1) of the Act states:

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

10Section 1 of the Act states:

“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.

11Section 33 of the Act states:

33.(1) Change re land omitted from tax roll. – The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

1. The assessment corporation shall make any assessment necessary to correct he omission.

2 If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes that would have been payable if the assessment had not been omitted.

3. If the land is located in a non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes that would have been payable if the assessment had not been omitted.

12In determining the value at which any land shall be assessed, s. 44.(3)(a) and (b) of the Act requires the Board to do two things:

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

13The subject property is a single family detached residence located at 453 Rideau River Street in the northwest corner of the City of Waterloo. The lot has 5,085 square feet (“sq. ft.”) with 50 feet (“ft.”) of effective frontage and 102 feet of effective depth. The residence was built in 2013 and MPAC has allocated an undisputed occupancy date of October 10, 2013. The residence has two-stories with 3,318 sq. ft., of building space with an additional 1,561 sq. ft., of unfinished basement.

14Mr. Fayad, representing MPAC, submits that the assessment returned for building and lands was $639,000 with $476,000 allocated for the building and $163,000 allocated for the land. After inspecting the subject property and based upon his market analysis, Mr. Fayad recommends that the total value of $639,000 be reduced to $607,000. Mr. Fayad submits that he applied a 5% reduction to the building portion only resulting in a recommended value of $444,000 for the omitted building and the land value remaining static at $163,000.

15Mr. and Mrs. Biswas, the appellants, argue that the value of the subject property should be approximately $550,000 and submitted arguments and evidence in support of their position.

16The best test of current value is an arm's length and market-tested sale of the subject property on the valuation day, January 1, 2012 or close to it. The appellants purchased the subject property from the builder, presumably on or after October 10, 2013. However neither party presented evidence regarding the sale. Therefore, the next best measure of current value are arm's length and market tested sales of comparable properties in the same vicinity and market on or close to the valuation day.

17Both parties presented suggested comparable properties. In reviewing the parties’ suggested comparables I disregarded the following properties because they were not directly comparable to the subject property or there was no sale close to the valuation day:

• 627 Pinery Trail sold in March 2011 for $550,000. It has a similar sized lot, an older (2008) and smaller (2,730 sq. ft.) residence. It is a corner lot which, by MPAC’s model, is valued at 4% less than a similar property that is not a corner lot. The Board disregards this sale as it is too dissimilar to the subject property.

• 554 Pinery Trail sold in April 2012 for $722,000. The lot is wider (55 ft.) and the residence is older (2008) and smaller (2,719 sq. ft.) with a finished basement. The Board disregards this sale as it is too dissimilar to the subject property.

• 424 Rideau River sold in August 2013 which the Board considers too far from the valuation day when there are comparable sales occurring closer to that date.

• 444, 446 and 448 Rideau River are located near the subject property however no sales evidence was presented.

18In order to use the sales of suggested comparable properties to determine the current value of the subject property, the suggested comparable properties must be sufficiently similar to the subject property to allow for comparison.

• 316 Rideau River Place sold in August 2011 for $815,000. It has a larger lot but a similar building size and is slightly older than the subject property. The appellants argue it is superior to the subject property because it is located in a premier location and has a 50% wider lot. The photographic (Exhibit 4) shows a residence that is superior to the subject in size and appearance. As a result, the Board finds that the subject property would likely sell for less than the time adjusted sale price of $826,000.

• 421 Rideau River Street sold in March 2011 for $528,500. The lot size is slightly smaller as is the residence which has 2,647 sq. ft. and is older (2008). However it is located on the same street as the subject property. The Board finds that the subject property would likely sell for more than the time-adjusted sale price of $544,832 (or 205.83/sq. ft.). (Note that a clerical error occurred at the hearing. The Board used the incorrect sale price of $554,832.)

• 444 and 446 Kelso Drive sold in May 2012 for $597,500 and October 2012 for $600,000, respectively. The lots are deeper however the buildings are older (2009) and smaller at 2,816/2,775 sq. fr. The Board finds that the subject property would likely sell for more than the time adjusted sale prices of $589,135 (or $209.21/sq. ft.) and 582,537 (or $209.92/sq. ft.).

19The sale properties are older than the subject property but the photographic evidence (Exhibit 4) shows they are very similar in appearance. Taking the average time-adjusted sale value per square foot for 421 Rideau River Street and 444 and 446 Kelso Drive and applying that value to the subject supports MPAC’s recommended value ((205.83 + 209.21 + 209.92)/3 = $208.32 x 3,318 sq. ft. = $691,206). Furthermore, this value supports the findings that the subject property will likely sell for more than these three comparable sales. However, because Mr. Fayad has inspected the property and conducted an analysis of the data used to calculate the value, and because there are no directly comparable sale properties, I find MPAC’s assessment as returned of $639,000 is the current value.

20Mr. and Mrs. Biswas argue that real estate prices have declined recently, that housing market prices are being driven downward because there are less buyers than properties for sale and that if interest rates increase housing prices will deflate. The Board cannot give these arguments any weight. The Act provides that the valuation day for the 2013 through 2016 taxation years remains static at January 1, 2012 for all properties in the Province of Ontario. The parties have not provided sufficient data that such changes in the market, whether real or expected, have impacted current value of the subject property as of the valuation day.

21Mr. and Mrs. Biswas also argue that their property’s value is negatively affected by:

• A lack of basic amenities near their home, such as grocery stores, post office, library, gas station etc.

• Proximity to a flight path that creates noise pollution, sleep disturbances and “is a source of high risk”.

• A high-voltage transmission line located within 200 metres of the subject property is a potential health risk.

22The Board found none of these arguments affect the current value of the subject property. The current value was determined by comparing the subject property to sales of neighbouring properties. If these factors affect value, it will be reflected in the sale values of these neighbouring properties and, by extension, in the current value of the subject property.

Equity

23Mr. Fayad presented an Equity Analysis (Exhibit 2) of 240 residential sales in the northwest and west edges of Waterloo. The median assessment to sale ratio (“ASR”) of these sales is 0.97 which, Mr. Fayad argues, indicates MPAC’s model is tending to accurately assess properties in the vicinity of the subject property. Paradoxically, Mr. Fayad recommends a 5% market adjustment to the assessment as returned, not a 3% as indicated in his Equity Analysis.

24Mr. and Mrs. Biswas argue that MPAC is assessing similar lands lower than their assessment. They testified that the adjustments made to the following properties are based upon data obtained from MPAC.

• 448 Rideau River Street, located across the street from the subject property has a slightly smaller lot (4,948 sq. ft.) and building (3,282 sq. ft.) but is assessed at $582,000. They submit it has a 1,192 sq. ft. finished basement, the value of which is $140,742 and that this value should be deducted from their home, which has an unfinished basement. While both parties agree that a finished basement adds value, Mr. Fayad disagrees with the appellants’ valuation of this space.

• 446 Rideau River Street has a slightly smaller lot size (4,918 sq. ft.) and a smaller building (3,098 sq. ft.). It is assessed at $558,000. The appellants submit that “if adjusted to make it exactly comparable to our property the net valuation will be $586,329”.

• 424 Rideau River Street has a slightly smaller lot size of 4,918 sq. ft. and a smaller building (2,721 sq. ft.) and is assessed at $541,000. They argue it is superior to the subject property as it backs onto green space and has a walkout basement, which they estimate is worth $35,000. Using this value and the difference in building area, they argue their home should be assessed at $579,865.

25The appellants argue that MPAC is assessing similar lands in the vicinity of the subject property below the level at which their property is assessed and presented three properties to support their position. I find that the evidence presented, as summarized above, is insufficient to lead me to conclude whether an equity adjustment is warranted and, if so, the amount. The sample is small with only three properties, all of which are smaller than the subject property. I would prefer a much larger sampling before determining whether MPAC’s model is under-assessing similar lands in the vicinity of the subject property. I appreciate the time and effort the appellants took in preparing their case however, in reviewing the evidence and arguments presented, I am not satisfied as to how these properties compare and contrast to the subject and what are the market values of those differences. Had these properties included open market sales close to the valuation day they would have carried more weight.

26In considering equity I also reviewed the data from the seven sales presented by the parties (554 and 627 Pinery Trail, 412 and 424 Rideau River Road, 316 Rideau River Place and 444 and 446 Kelso Drive). The median ASR of these seven sales is 0.95 which correlates to Mr. Fayad’s recommendation of a 5% reduction.

27Therefore, I accept Mr. Fayad’s recommendation of a 5% reduction on the assessment as returned of $639,000 and that this reduction is applied towards only the building portion.

28Accordingly, the current value of the omitted building portion is reduced from $476,000 to $444,000 effective October 10, 2013 and for the 2014 taxation year in the residential taxation class. The total current value for the building and lot is reduced from $639,000 to $607,000 effective October 10, 2013 and for the 2014 taxation year in the residential taxation class. The assessment as returned for the 2015 taxation year is confirmed at $607,000.

CONCLUSION

29The Board, having determined the current value and having found that an equity adjustment is required, determines that a fair and equitable assessment for the subject property is $607,000 in the residential taxation class effective October 10, 2013 and for the 2014 and 2015 taxations years. Based on this finding, the Board determines the omitted assessment to be reduced from $476,000 to $444,000 effective October 20, 2013 and for the 2014 taxation year.

2015 DEEMED APPEAL

30An appeal for the 2015 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 2015 appeal before March 31, 2015. For that reason, this decision also applies to the 2015 taxation year.

31Section 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.