Nichol v. Municipal Property Assessment Corporation, Region 3, 2016 CanLII 1688

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: January 15, 2016

FILE NO.: WR 137886

Assessed Person: Barbara Elizabeth Nichol and William Nichol

Appellant: Barbara Elizabeth Nichol and William Nichol

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

Respondent: City of Ottawa

Property Location: 188 Glebe Avenue

Municipality: City of Ottawa

Roll Number: 0614-052-401-21700-0000

Appeal Number(s): 2995455, 3003513, and 3072044

Taxation Year(s): 2013, 2014, 2015

Hearing Event No.: 608430

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

Heard: December 18, 2015 in Ottawa, Ontario

APPEARANCES:

Parties	Representative
Barbara Elizabeth Nichol and William Nichol	William Nichol
MPAC	Chad White
Township of Bonfield	No one appeared

DECISION OF THE BOARD DELIVERED BY DONALD WHITEHURST

INTRODUCTION

1The subject property ("SP") is located at 188 Glebe Avenue in the City of Ottawa. MPAC described it as a 3,322 square foot residential triplex built in 1910 and situated on a 0.14 acre lot. The SP's assessment was returned at $691,000 for the 2013, 2014 and 2015 taxation years using the sales comparison approach to value.

2Chad White appeared on behalf of MPAC. He testified that he is the assessor of record and inspected the SP in 2014. Mr. White stated that during the inspection he noted ongoing repairs/renovations. He also stated that the returned assessment would be much higher but for the fact that MPAC made adjustments to take into account the cost to cure certain defects and the poor condition of the entire property.

3William Nichol (“Appellant”) appeared on his own behalf. He testified that the returned assessment should be reduced to between $600,000 - $620,000. Mr. Nichol stated that MPAC's cost to cure adjustment was too low. He supported his submission by offering comments and opinions on MPAC's four sales comparables and five unsold neighbouring properties.

ISSUE

4The Assessment Review Board (“Board”) has to determine the SP's current value for the 2013, 2014 and 2015 taxation years and ensure that it is equitable with the assessments of similar lands in the vicinity.

DECISION

5The Board finds that the SP's current value is $691,000 and that it is equitable with the assessment of similar lands in the vicinity. Consequently, the SP's returned assessment is confirmed.

REASONS FOR DECISION

The Legislation

6Section 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.

7Section 19.(1) of the Act states:

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

8Section 19.2(1) of the Act states:

19.2(1) Valuation days. – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

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.

9Section 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

10Mr. White submitted a report (Exhibit 1) in support of his recommendation to confirm the assessment at $691,000. He compared the characteristics of four sales comparables to that of the SP. Like the SP, three of the four comparables are triplex residential properties and the other one is a duplex (Sale C) with a basement apartment. Mr. White calculated the current value of the SP by multiplying the average per square foot Time Adjusted Sales (“TAS”) price of the comparables ($310) by the SP's total living area (3,322) and deducting the cost to cure adjustment ($105,000) and the poor condition adjustment ($122,389). The result is [($310.42) X (3,322 square feet)] - [($105,000) + ($122,389)] = $803,000¹ rounded.

11Mr. White submitted that the Board should confirm the returned assessment ($691,000) because that value, and the value established by the sales evidence ($803,000), fall within the range of TAS values established by the sales comparables and it was equitable with the assessment of similar lands in the vicinity. He supported his submission by noting that the average per square foot sale price of 18 neighbouring properties is $327², which is higher than the average TAS square foot price of the sales comparables ($310).

Appellant's Position

12Mr. Nichol introduced a number of exhibits (Exhibits 2 - 9) to support his submission that the SP's current value should be lowered to between $600,000 to $620,000. He pleaded that his request for a lower returned assessment is supported by the following:

a) PADs: MPAC's 2012 property assessment details ("PAD") for the SP are the same as the 2008 base year. Furthermore, during the period the SP was undergoing renovations, the MPAC's PAD details were incorrect;

b) Average Assessment Increase: The average assessment increase from the 2008 base year to the 2012 base year is 23% whereas the SP's assessment increased by 43%;

c) Failure to Provide Information: MPAC did not provide the 2008 base year current value assessments for the comparables;

d) Unique Property: The SP is a unique triplex. It is in poor condition (Code "P") whereas the sales comparables and other comparables in evidence are in average condition (Code "A"). He is of the opinion that MPAC's sales comparables are superior to the SP;

e) Average Assessments of Code 333 Properties: The average returned assessments of neighbourhood triplexes (MPAC's Code 333) is $623,000 and the Board should consider this value because any other method used to determine current value would be difficult and perhaps impossible.

13Mr. Nichol also stated that in 2007 he provided MPAC with cost to cure estimates that totaled $250,000. He estimates that only 10% of the repairs have been completed.

Board's Analysis - Current Value

14The Board believes that the best evidence of current value is the sale of the SP on or near the valuation date. When no such sale occurs, the Board looks to the recent sale of other similar properties in the vicinity to determine current value. The Board reviewed the evidence and finds that the SP's current value assessment ($691,000) is reasonable and should be confirmed.

15Mr. White stated that he made certain adjustments in determining the SP's current value. Since there is some dispute regarding the adjustments, the Board must address this issue.

"Cost to Cure" Estimate

16Mr. White testified that MPAC estimated that $105,000 was required to cure the SP's defects. He did not explain how he arrived at that amount. The appellant testified that he provided MPAC with written estimates to cure the defects that totaled $250,000. The Board was not provided with precise details regarding the defects. The Board however finds that the appellant's evidence on this matter is the best evidence because the appellant provided written estimates to MPAC which was not challenged. The estimated amount is reduced to $225,000 because the appellant admitted in cross-examination that ten per cent of the repairs had been completed.

"Poor Condition" Estimate

17The Board accepts MPAC's estimated adjustment to account for the SP's "P" Condition ($122,389) because its estimation was the only evidence presented on that issue.

18The Board compared the features of MPAC's four sales as shown in Table 1 below in order to determine whether the sales comparables are Inferior, Relatively Comparable ("RC") or Superior to the SP. Although there are other sales comparables in evidence, the Board utilized the sales listed in Table 1 because they are the only comparables in evidence with sufficient details to enable the Board to make a comparison with the SP. As can be seen from Figure 1 below, the sales determine the current value range for the SP. That range is found between the TAS value of the inferior sale (Sale B - $657,343) and the TAS value of the superior sale (Sale D - $935,571).

Table 1

Property	TAS Price	Year Built	Lot Size	Square Footage	Reno Year	Condition	Bathrooms	Bedrooms	Inferior, RC or Superior to the SP
SP		1910	6,120	3,322		P	2½	4
Sale A	$781,681	1910	3,399	2,397	2008	A	3	4	RC
Sale B	$657,343	1910	3,399	2,384		A	3	4	Inferior
Sale C	$865,554	1913	3,399	2,920		A	4	4	RC
Sale D	$935,157	1922	2,500	2,723	2010	A	3	6	Superior

Figure 1

Sale B Inferior Comparable $657,343 →

SP'S Current Value Range RC Sales A & C ←$657,343 $935,157 →

Sale D Superior Comparable ←$935,157

19The Board believes that its current value finding ($691,000) is reasonable because it conducted a number of current value tests and the findings fall within the lower half of current value range established by MPAC's sales comparables. The tests are described below:

• MPAC's Method: Mr. White calculated the current value of the SP by multiplying the average per square foot TAS price of the four comparables ($310) by the SP's total living area (3,322 square feet) and deducting a cost to cure and poor condition adjustment. The Board recalculated the amount using its adjustment figures. The current value finding using this method is [($310.42) X (3,322 square feet)] - [($225,000) + ($122,389)] = $683,826.

• Most Similar Properties Method 1: In this test, the Board selected triplexes from MPAC's "Duplex/Triplex Sales" list³ that have, like the SP, a large living area (over 2,500 square feet). Those sales are listed in Table 2 below. It should be noted that Sale C is a duplex and is included in Table 2 because it has a basement apartment. It is considered by MPAC (Code 333) to be a triplex. The Board assumes that for test purposes, all the selected properties are in "A" Condition and do not require "Cost to Cure" adjustments. The average TAS price per square foot of the five selected properties is $316. The current value finding using this method is [($316 X 3,322 square feet) - ($225,000 + $122,389)] = $702,363.

• Most Similar Properties Method 2: In this test, the Board selected sales comparables from MPAC's sales comparables that have, like the SP, a large living area (over 2,500 square feet). Only two sales (Sale C and Sale D) meet this criteria and their average TAS price per square foot is $319. The current value finding using this method is [($319 X 3,322 square feet) - ($225,000 + $122,389)] = $712,329.

Table 2

Property	Year Built	Selling Price	Date of Sale	Time Adjustment Factor4	TAS Price	Total Square Feet	TAS Price per Square Foot
Sale C	1913	$860,000	12/07	1.006	$865,1605	2,920	$296
189 Holmwood	1912	$800,000	12/04	1.005	$804,000	3,180	$252
726 Echo	1903	$1,250,000	11/07	1.019	$1,273,750	3,225	$394
Sale D	1922	$925,000	11/08	1.011	$935,175	2,723	$343
24 Powell	1932	$979,500	12/07	1.006	$985,377	3,316	$297
Average							$316

20The Board will now address the appellant's submissions that were outlined in paragraph 12.

a) PADs: Mr. Nichol stated that MPAC used the same PADs for the 2008 and 2012 base year. This may raise questions as to the accuracy of the returned assessments but it does not assist the Board in determining current value; especially when the PADs in question were not submitted in evidence.

b) Average Assessment Increase: The average increase of neighbouring properties is a good indication of the area housing market during the relevant period. However, this does not assist the Board in determining the current value for a particular property such as the SP.

c) Failure to Provide Information: Failure to provide information that the appellant requested does not assist the Board in determining current value. This matter should have been addressed prior to the hearing by way of a motion in accordance with the Board's Rules of Practice and Procedure.

d) Unique Property: The Board agrees that the SP is unique in that, unlike the comparables, it requires repairs and is in poor condition. The Board however disagrees with the appellant that all the sales comparables are superior to the SP. For the reasons outlined in paragraph 18, the Board found that one comparable is superior to the SP, one is inferior and two are relatively comparable. Based on that finding, the Board was able to determine that the SP's returned assessment is reasonable as it falls within the lower half of the SP's current value range.

e) Average Assessment of Code 333 Properties: The Board finds that this is not the best method to determine current value as the Board is able to make a current value finding based on sales comparables. Furthermore, the Board calculated the average current value assessments of all eight Code 333 properties identified in Exhibit 5⁶ to be $713,250 and not $623,000 as the appellant submitted.

Board's Analysis - Equity

21The Board reviewed the evidence and finds that 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 accepts the conclusion in MPAC's equity analysis (Exhibit 1 at pages 26 and 27) wherein it states that no equity adjustment is required.

CONCLUSION

22The Board finds that the SP's current value is $691,000. The Board also finds that the current value assessment is equitable with the assessment of similar lands in the vicinity. Consequently, the Board confirms the returned current value assessment at $691,000.

Footnotes

1. 1Exhibit 1 at page 8.
2. 2Exhibit 1 at page 28 - "Duplex/Triplex Sales in same Neighbourhood as the SP".. Eight duplexes and ten triplexes were used to determine the value.
3. 3Exhibit 1 at page 28. Coded 333 properties are considered to be multi-residential triplex properties.
4. 4These factors were obtained from MPAC's Exhibit 1 at page 15.
5. 5The Board notes that MPAC stated in Exhibit 1 at page 11 that the TAS price is $865,554. The Board cannot account for the slight difference in the TAS prices for the same property (Table 1).
6. 6It should be noted that the parties agreed that the Board must limit its review of Exhibit 5 to nine identified properties because the appellant failed to disclose Exhibit 5 to MPAC prior to the hearing as required by the Board's Rules of Practice and Procedure.