Chello Building Corporation v. Municipal Property Assessment Corporation, 2016 CanLII 21207

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

April 11, 2016

FILE NO.:

WR 138989

Assessed Person(s):

Chello Building Corporation

Appellant(s):

Chello Building Corporation

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”)

Region 3

Respondent(s):

City of Ottawa

Property Location(s):

50 Camelot Drive

Municipality(ies):

City of Ottawa

Roll Number(s):

0614-120-615-02282-0000

Appeal Number(s):

2966119, 3005219, 3072770 and 3144380

(deemed 2016 appeal)

Taxation Year(s):

2013, 2014, 2015 and 2016 (deemed appeal)

Hearing Event No.:

599390

Legislative Authority:

Section 40 of the Assessment Act, R.S.O. 1990,

c. A.31, as amended

Heard:

March 3, 2016 in Ottawa, Ontario

APPEARANCES:

Parties

Representative

Chello Building Corporation

Michael Bradley

MPAC

Katherine Kennedy-Boisvert

City of Ottawa

No one appeared

RESERVED DECISION DELIVERED BY JACQUES LAFLAMME

INTRODUCTION

1The subject property is classified as commercial (CT) and consists of a commercial/industrial warehouse having 8,363 square feet situated on a lot having 37,418 square feet. The land is zoned “IG1”. MPAC used the cost approach to valuation to assess the property.

2MPAC submits that the January 1, 2012 current value for the subject property is $1,695,000. This value is used for the 2013, 2014 and 2015 tax years. According to the appellant, the only issue for the Assessment Review Board (“Board”) to determine is the correct “land value component of the assessment” which they claim is lower than the returned assessment.

ISSUE

3The Board must determine the subject property’s current value for the 2013, 2014 and 2015 taxation years and, once that is done, adjust the subject property’s current value assessment to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment.

DECISION

4The Board confirms the current value of $1,695,000 and the classification (CT) for the 2013, 2014 and 2015 taxation years. No equity adjustment is required.

REASONS FOR DECISION

Position of MPAC

5The assessor, Katherine Kennedy-Boisvert indicated to the Board that although the appellant’s sole objection was the land value applied to this property, she would be presenting evidence of land and building as a total valuation. Ms. Kennedy-Boisvert believed it was the total assessment under appeal, land and building.

6Ms. Kennedy-Boisvert submitted one exhibit only. Exhibit 1 is MPAC’s valuation report. This report contains a property description, excerpts from Ontario Regulation 282/98, maps, a picture of the subject property, a listing of eight built on sold properties which she deems to be comparable and an equity analysis using six properties.

Position of Appellant

7Mr. Michael Hupfau, a senior consultant with the Altus Group, submitted four exhibits.

8Exhibit 2 is a valuation report which contains a property description, a map of the neighborhood and three vacant land sales.

9Exhibit 3 is an excerpt from a book The Appraisal of Real Estate.

10Exhibit 4 is an excerpt from a book Institute of Municipal Assessors course material dealing with “cost and depreciation analysis”.

11Exhibit 5 is a valuation of the subject property using the income approach.

12Mr. Hupfau’s only argument is that the land assessment is overstated and should be reduced. He based his argument of a lower land value solely on three industrial vacant land sales. He presented no sales of built on properties. He further stated that “We do not dispute the cost approach methodology or the building component to arrive at the current assessment, however, the land component appears to be overstated.” Mr Hupfau submitted no equity analysis.

The Legislation

13The following provisions of the Assessment Act (“Act”) instruct the Board in appeals of this nature.

14Section 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.

15Section 19.(1) of the Act states:

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

16Section 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.

17Section 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.

18Section 44.(3)(a) and (b) 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.

The Board’s Analysis - Current Value

19Under the Act the Board is required to do three things:

1. Find the current value of the property.

2. Make reference to the value of which similar lands in the vicinity are assessed.

3. Adjust the assessment of the subject property if the adjustment will result in a reduction in the assessment.

20The first issue to deal with is whether the Board should consider the land valuation completely on its own, ignoring the reality that this is a built on property. The Cost Approach to Valuation is used on this property as is the case for all similar type properties. All parties agree that this approach is the proper one and gives the best indication of current value. The Board agrees.

21Mr. Hupfau has given the Board three vacant land sales. These sales were of lots in the vicinity, have similar zoning and sold within a reasonable time frame from the base year of valuation which is January 1, 2012. These sales were undisputed by MPAC. On their own, these sales would indicate a lower land value for the subject property. Nowhere in Mr. Hupfau’s valuation report does he address the total current value of the subject property. In other words, he simply wants a lower land value and makes no mention of how a lower land value would give you a more accurate total current value. Mr. Hupfau does not concern himself with the totality of the current value and simply “cherry picks” one component of the cost approach.

22MPAC, on the other hand, submitted to the Board, eight sales of built on properties. These eight sales were of properties in the same homogeneous neighborhood. These sales were time adjusted to reflect a January 1, 2012 value, which is the base year of valuation. These eight sales were undisputed.

23Although Mr. Hupfau criticized MPAC for not submitting any evidence to prove the accuracy of the Time Adjustment Factors (“TAF”), he himself submitted nothing.

24Ms. Kennedy- Boisvert compared the eight adjusted sales to their current value as calculated by MPAC. The median assessment to sales ratio (“ASR”) was 0.92. This indicated that in general, the commercial/industrial properties in this neighborhood were under assessed by approximately 8%.

25The Board prefers the evidence of MPAC. The Board cannot simply lower the land value as requested by Mr. Hupfau and ignore the effect that it would have on the total current value. Lowering the land value would compound the problem of the already under assessed properties.

26Section 19.(1) of the Act is clear. “The assessment of land shall be based on its current value”. Current value includes both land and building. The Board cannot look at one component only and ignore the effect that it has on the total current value.

27MPAC has satisfied the burden of proof as required by s. 40.(17) of the Act.

28Based on the evidence submitted by MPAC, the Board confirms the current value of $1,695,000.

Equity

29The Board had reference to the assessments of similar properties in evidence to try to discern if the current value determined is fair and equitable relative to those assessed values. The Board requires evidence that many similar properties are assessed at a lower level than the subject property in order to warrant an equity adjustment under s. 44.(3)(b). MPAC presented to the Board an “equity” analysis in Exhibit 1 using the land valuation portion only of four unsold properties in the neighborhood. The Board puts no weight on this study because as the Board stated previously, it is the total valuation that the Board must rule on. However, when the assessor compared the current value assessments to the time adjusted sales of the eight sold built on properties, the median assessment to sales ratio was 0.92. This means that MPAC is slightly under assessing the neighboring properties. There is no indication to indicate that this property does not benefit equally from this systemic undervaluation.

30Mr. Hupfau did not address the equity analysis in his valuation report, Exhibit 2.

31No equity adjustment is required.

CONCLUSION

32The assessment is confirmed at $1,695,000 for the taxation years 2013, 2014 and 2015.

2016 DEEMED APPEAL

33An appeal for the 2015 taxation year is presently before the Board. Section 40.(26) of the Assessment Act 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, 2016. For that reason, this decision also applies to the 2016 taxation year.

34Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

(26) 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.