Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 12, 2016

FILE NO.: WR 138939

Assessed Person(s): Westpen Properties Ltd.

Appellant(s): Westpen Properties Ltd. c/o Bentall Kennedy (Canada)

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 15

Respondent(s): Town of Milton

Property Location(s): Nipissing Road, Con 3 NS PT LOT 13 RP

Municipality(ies): Town of Milton

Roll Number(s): 2409-010-002-69010-0000

Appeal Number(s): 3094475 and 3154376 (deemed 2016 appeal)

Taxation Year(s): 2015 and 2016 (deemed appeal)

Hearing Event No.: 617430

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

Heard: February 24, 2016 in Milton, Ontario

APPEARANCES:

Parties	Representative
Westpen Properties Ltd.	T. Bock
MPAC	D. Bernacik
Town of Milton	S. Radenic

DECISION OF THE BOARD DELIVERED BY MEMBER S. LIGHT

ISSUE

1The subject property comprises a 32,900 square foot irregularly shaped parcel of land zoned as commercial with a frontage of 167 feet and a depth of 197 feet. It is a paved vacant lot used in conjunction with Milton Mall located directly across the road to satisfy the mall’s parking requirements under the zoning by-law.

2MPAC returned the assessment for the 2015 taxation year at a value of $989,000. The representative for MPAC argues that the assessment is correct and equitable and should be confirmed as returned.

3The representative for the Appellant argues that the assessment is too high and is also inequitable compared to similar properties in the vicinity.

4The Assessment Review Board (“Board”) must determine whether the 2015 assessment is correct and equitable.

DECISION

5For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act (“Act”) the Board finds that the current value of the subject property is $806,387.

6The Board finds that a further reduction in assessment in the current value pursuant to s. 44.(3)(b) of the Act based on equity considerations would be appropriate in the circumstances and accordingly reduces the assessment to $580,599.

7Accordingly, the assessment of the subject property for the 2015 taxation year is reduced to $580,599.

REASONS FOR DECISION

Legislation

8Section 19.(1) of the Act states:

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

9Section 1 of the Act defines “current value” as:

“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 19.2(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.

11Section 44.(3) 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 land.

Current Value Analysis

MPAC Position

12Biagio Galle is a property valuation analyst with MPAC. He was called by D. Bernacik as the witness for MPAC at this hearing. Mr. Galle presented a valuation report and an equity analysis for MPAC at this hearing which he submitted to the Board as Exhibits 1 and 2 respectively. In the valuation report, he indicates relying on a direct comparison approach to value based on what he referred to as a land residual analysis and what the representative for the Appellant called an extraction analysis methodology. This method involves subtracting from the sale values of the suggested comparable properties the costs of building the related structures less the value of depreciation, to determine the value of the land alone. Mr. Galle testified that he used this approach due to the limited number of sales of vacant commercial land located in close proximity to the subject property. He indicated he was looking for properties relatively close to the subject property with a similar lot size and surrounding uses as the subject property, based on the premise that the subject property would have similar development potentials as the properties selected.

13Mr. Gallo used the aforementioned approach and presented two suggested comparable sales, being 174 Mill Street and 89 Ontario Street. He calculated the land residual price per square foot as $33 and $52 per square foot, respectively. He then calculated the average land residual prices per square foot to be $42. He reasoned that these values supported the $30 per square foot returned assessment of the subject site on the basis that the subject property is substantially larger than the suggested comparable properties and an economy of scale would account for the subject property having a lower assessed value per square foot.

14However, according to Tristan Bock, a certified appraiser representing the Appellant, the irregular dimensions of the subject properly significantly curtails its development potential as does its location in a secondary commercial area without direct exposure to a main street like Ontario Street, being the main north south corridor through the town.

15Mr. Bock also argued that the reliability of the “extraction” methodology is highly dependent on the accuracy of the data in MPAC’s system used to determine the cost value of the respective buildings on the suggested comparable properties and the data being up to date. Therefore, Mr. Bock argued, that in order for MPAC to properly rely on this data someone should have inspected the buildings on MPAC’s suggested comparable properties to verify the information prior to presenting it at the hearing, which Mr. Galle admits was not the case.

16The Board accepts Mr. Brock’s submission because it was not presented with sufficient information to comfortably rely on the accuracy of data used to determine the cost value of the buildings of the suggested comparable properties.

Appellant’s Position

17The Assessment Appeal Disclosure Report (Exhibit 3) submitted by Mr. Bock at the hearing does not contain suggested comparable sales of vacant commercial land. However, at the hearing Mr. Bock presented as Exhibit 7 an analysis entitled Comparable Properties - Milton Small Parcel Sales, being a further analysis of comparable sales which he was only able to prepare after receiving a copy of MPAC’s equity analysis (Exhibit 2). MPAC’s equity analysis revealed additional sales of vacant commercial land which Mr. Bock had been unaware of until that analysis was delivered to him after the disclosure deadline, just a short time before this hearing.

18Mr. Bock did mention in his Exhibit 3, the sale of 378 Ontario Street, being a sale of commercial vacant land which he argued has a superior development potential to the subject property based on its rectangular dimensions with full exposure to a main commercial street. That property containing 33,670 square feet sold for $1,000,000 on May 21, 2012 and is being assessed at just $570,000.

19In his analysis of Milton Small Parcel Sales (Exhibit 7), Mr. Bock included 378 Ontario Street with two other commercial vacant land properties he selected from the MPAC equity analysis (Exhibit 2) based on their being closest in square footage to the subject property and their location in Milton. He calculated a median time adjusted sale price per acre of $1,061,035 based on these three properties. He multiplied this value by 0.76 acres to determine the current value of the subject property to be $806,387. The Board considers this to be the best evidence of current value presented at the hearing.

20Accordingly, the Board finds the current value of the subject property is $806,387.

Equity Analysis

21Mr. Bernacik submitted MPAC’s equity analysis which his witness Mr. Galle testifies demonstrates a median time adjusted Assessment to Sales Ratio “ASR” of 1.01 and supports a finding that similar properties in the vicinity are being assessed in an equitable manner. However, in cross-examination Mr. Galle agreed that the analysis contained many properties that were not even located in the Town of Milton and were actually in Burlington and Oakville. Therefore, the Board considers the analysis flawed as it does not meet the legislative test as being a reflection of similar properties “in the vicinity” of the subject property.

22The Board has reviewed the comparable vacant land assessment analysis on page 7 of Exhibit 3 of the Appellant and the further analysis in the Appellant’s Exhibit 7. In the Exhibit 3 chart showing the assessed values of comparable vacant land designated 105 like the subject property, the median assessment of the six properties is $12.21 per square foot with the average being $15.35 per square foot. The analysis in Exhibit 7 indicates a median ASR for the suggested comparable sales of 0.72. Based on this information it appears to the Board that the current value of the subject commercial vacant land property should be adjusted based on equity considerations.

23The Board calculates that based on a current value of $806,387 and 32,900 square feet of site area, the Appellant would be assessed at $24.51 per square foot. The Board considers this value inequitable compared to the assessment of similar properties in the vicinity. By applying the median ASR of 0.72 determined by Mr. Bock in Exhibit 7, the assessment would be reduced to approximately $17.64 per square foot which would be more in line with the assessed values per square foot for the properties indicated on page 7 of Exhibit 3 and the ASR of the properties in Exhibit 7 and therefore more equitable with similar properties in the vicinity.

24Therefore, the Board finds that the analysis supports a further reduction in the assessment for equity pursuant to s. 44.(3)(b) of the Act.

25Accordingly, the Board finds that the assessment of current value should be reduced to $580,599.

2016 DEEMED APPEAL

26An 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.

27Section 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.