Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 8, 2016

FILE NO.: WR 136536

Assessed Person(s): 2324289 Ontario Ltd.

Appellant(s): 2324289 Ontario Ltd.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): 481, 483 and 485 Wilson Avenue

Municipality(ies): City of Toronto

Roll Number(s): 1908-051-060-00500-0000 1908-051-060-00400-0000 1908-051-060-00300-0000

Appeal Number(s): 3108447, 3108446, 3108445, 3149565, 3148712 and 3148711 (deemed 2016 appeals)

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

Hearing Event No. 599349

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

Heard: October 30, 2015, in Toronto, Ontario

APPEARANCES:

Parties	Representative
2324289 Ontario Ltd.	Andrew Attard and Jill Bender
MPAC	Drew Samuels
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

INTRODUCTION

1The subject properties, 481, 483 and 485 Wilson Avenue, are three semi-detached two storey purpose built triplex brick structures, in the residential property tax class, wherein two semis form a complete building. A total of nine self-contained units are divided among three buildings equally, with an apartment on each floor including the basement and each building containing a built-in double car garage. The subject properties have building areas of 2790, 2837 and 2837 square feet (“sq. ft”) respectively, in addition to a finished basement. Situated on an effective site area of 4290, 4565 and 4565 sq. ft., respectively, each property has an effective depth of 110 feet as well as an effective frontage of 41.50 feet, with the exception of 481 Wilson Avenue, which has an effective frontage of 39 feet. MPAC assigns a quality class designation of 6.0 to these properties. Built in 1958 and renovated in 1990, they have an effective built year of 1978.

2All parties agreed to address the three properties concurrently for this hearing, as they were sold as a bulk sale to one Buyer, the current owner and Appellant. The assessments under appeal for each property are $622,000 for 481 Wilson Avenue, and $626,000 and $626,000 for 483 and 485 Wilson Avenue for the taxation year 2015.

ISSUE

3Drew Samuels, appearing on behalf of MPAC, stated that the properties were sold in an estate sale and therefore constitute a non arms-length transaction making them unsuitable for determining current value, as per s.1 of the Assessment Act (“Act”). Mr. Samuels is asking the Board to reject the subject properties as a valid sale and not to consider their sale in the determination of current value.

4On behalf of the Appellant, Andrew Attard is asking the Assessment Review Board (“Board”) to accept the recent transaction of the subject properties as valid open market sales reflecting the correct market value for these properties. Mr. Attard argues that the fact it was an estate sale should not impact on the validity of the sale, as the properties were for sale on the open market, resulting in a successfully negotiated offer by a willing buyer and a willing seller. The Appellant is asking the Board that the current value assessment (“CVA”) be adjusted to $1,665,000 factoring in the benefit of a 4% downward adjustment for time adjustment of sale, as per MPAC’s testimony, apportioned as follows, $556,000 (481 Wilson Avenue); $556,000 (483 Wilson Avenue); and $553,000 (485 Wilson Avenue), failing which, the Appellant’s position is the sale price, unadjusted for time, of $1,735,000, apportioned as follows, $579,000 for 481 Wilson Avenue; $579,000 for 483 Wilson Avenue and $577,000 for 485 Wilson Avenue.

5The first issue before the Board, is to determine whether the sale of the subject properties constitute a valid sale. The second issue for the Board to determine what is the current value of the subject properties and whether MPAC has correctly assessed them for the 2015 taxation year.

DECISION

6The Board finds that the correct current values for the subject properties are $729,761; $729,761 and $685,799 for 485, 483 and 481 Wilson Avenue respectively for the 2015 taxation year.

7The Board notes that the current value determined by the Board is higher than the assessments as returned established by MPAC. As no party has requested an increase in the assessment of the subject property, the Board therefore confirms the assessment of the subject properties in the amounts of $622,000, $626,000 and $626,000 for the 2015 taxation year, for 481, 483 and 485 Wilson Avenue.

8The Board has made reference to similar lands in the vicinity and finds that there is no evidence before it leading to the conclusion that a further reduction in current value of the subject property is required for equity under s. 44.(3)(b) of the Act.

9Accordingly, as at the valuation day, January 1, 2012, the assessment of the subject properties for the 2015 taxation year is confirmed in the amounts of $622,000, $626,000 and $626,000 as returned, for 481, 483 and 485 Wilson Avenue.

REASONS FOR DECISION

10Under the Act, the Board is required to do three things:

1. Find the current value of the property: The initial task for the Board is to determine the current value of the subject property as required by s. 44(3) (a) of the Act “…the Board shall…determine the current value of the land…”. Section 19.(1) of the Act states that “…the assessment of land shall be based on its current value…” and s. 1 of the Act defines current value as “…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…”.

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

3. Adjust the assessment of the subject property to make it equitable with that of similar lands in the vicinity if the adjustment would result in a reduction in the assessment.

Current Value Criteria

11The 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. If no such transaction took place, the next best measure of current value would be arm’s length and market tested sales of comparable properties in the same vicinity and market, on or close to the valuation day. This measure acts as a benchmark and a gauge of the accuracy for the assessed value of the subject property and comparable properties.

12To enable an estimate of value for the subject property to be derived from a comparable property, there must be sufficient elements of similarity, in terms of physical factors such as total building area, land area, land frontage, age of construction, physical condition, etc.; and in terms of neighbourhood characteristics such as access to amenities, type and nature of housing etc., so as to enable a direct comparison to be made between the comparable property and the subject property.

13Furthermore, to be indicative of both, the market and values on the valuation day, a sale of a suggested comparable property should occur close to the valuation day. Generally, the Board prefers the sale of properties that occur within six months on either side of the valuation day. When such evidence is either limited or not available, the Board has accepted sales of properties up to 18 months on either side of the valuation day, or in exceptional circumstances, greater time periods.

Sale of Subject Property Evidence

14The owner of the subject properties passed away sometime in 2011. Shortly thereafter the son and wife of the deceased owner, offered for sale on the open market all three properties, structured in a bulk sale format, asking $1,799,900 (Exhibit 3, p.8). The properties were on the market for fifteen days before receiving an Offer. The Offer was negotiated, resulting in a successful sale in the amount of $1,735,000, a 3.6% reduction from the asking price.

15Mr. Samuels for MPAC alleges that the subject properties were sold as an estate sale which constitutes a non-arm’s length transaction and therefore should not be considered as a valid sale. Furthermore, Ester Hon, witness for MPAC, testified when asked by Mr. Samuels why the sale price was not indicative of the three properties if sold separately, that a bulk sale, as in this case, results in a lower final sale price.

16Mr. Attard for the Appellant testified that the sale of the subject properties constitutes a valid sale. Jill Bender, of Property Tax Services, is the author of Mr. Attard's Report, Exhibit 3 and a witness for the Appellant, upon questioning from Mr. Attard, stated there was no Vendor Take Back (“VTB”) financing involved in the sale, that the properties were on the open market as a single offering, similar to how they were originally sold to the late owner many years earlier. Mr. Attard remarked that the properties were on the market for fifteen days before receiving an Offer and underwent negotiations by all parties before resulting in a successful agreement.

17In order for the Board to make a determination whether the sale of the subject properties is valid or not, the Board makes reference to the hearing testimony and Exhibit 3, in particular to the Agreement of Purchase and Sale presented by the Appellant:

1. Toronto Real Estate Board (“TREB”) MLS property open sale information, page 8: i. The Seller asking price is $1,799,900. ii. The Contract Date commencing on January 5, 2012 between the Seller and the Seller’s Agent. iii. The DOM (Days on Market) is shown as 19 days. iv. The Last Update is January 23, 2012, however the property as of that date continues to be offered for sale, as indicated next to the “List” price in the upper right hand corner of the document.

2. The “Buyer Customer Service Agreement”, page 11: i. Seller’s agent entered into a signed agreement between the Buyer and the Brokerage on January 19, 2012.

3. The “Agreement of Purchase and Sale Commercial” document: i. Page 13, Offer to purchase the subject properties was prepared on January 19, 2012; ii. Page 13, “Irrevocability” date until January 26, 2012. iii. Page 13, Initial offer price of $1,675,000 was subsequently modified to $1,725,000 and finally accepted at $1,735,000. iv. Page 17, Buyer signed the initial Offer on the 19th of January. v. Page 17, Seller signing the Offer on the 24th of January. vi. Page 17, Buyer accepted the Offer at 5:15 p.m. on the 24th day of January, 2012. vii. Page 18, Buyer increases deposit as consideration an additional $40,000, making the total deposit $75,000. viii. Page 18, Offer is conditional for ten (10) banking days from the date of acceptance, to perform due diligence and arranging of a first mortgage.

4. The Board notes that Ms. Bender, during cross-examination by Mr. Samuels, stated that there was no prior relationship between the Buyer and Seller.

5. Mr. Attard refers to Case of 1906661 Ontario Inc. v. Municipal Property Assessment Corp. Region 15 [2015] O.A.R.B.D. No. 270 (WR 135136) (“1906661”), page 3, paragraph [8], citing the negotiation was between a willing buyer and a willing seller, not unlike the appellant's situation.

18The Board also notes the following reasons given by Mr. Samuels and Ms. Hon of MPAC:

1. Properties sold as an estate sale.
2. Not an arm’s length sale transaction.
3. Not a willing Seller and a willing Buyer.
4. Circumstances around sale makes it subject to doubt.
5. Sellers not present at hearing to clarify sale.
6. Bulk Sale not reflecting current value. Sale price is less because sold in bulk.
7. Possible duress influenced sale, alleged by Mr. Samuels.
8. Upon cross-examination by Mr. Samuels, Ms. Bender responded that properties sold together could have a discount, however Ms. Bender said in this instance there are other factors at play.
9. Alleges Sellers offloaded properties as a lot, although each property had their own respective pins and could have been offered for sale separately.
10. Refers to Case of 592182 Ontario Ltd. v. Municipal Property Assessment Corp. Region No. 9 [2008] O.A.R.B.D. No.165 (“592182”).

BOARD’S ANALYSIS

Determination of a Valid Sale

19The Board has considered MPAC’s position that the sale was non-arm’s length because it was an estate sale. In making its determination on the validity of the sale transaction, the Board notes the property came onto the open market January 5, and received its first offer on January 19, 2012, fifteen days later. The Board heard testimony from Ms. Bender that the Buyer and Seller had no prior relationship. The Board notes that although the Offer appeared on January 19, 2012, it was only accepted by the Seller on January 24, 2012, as a conditional offer, supporting the position by the Appellant that negotiations took place between Buyer and Seller before a deal was struck.

20The Board also notes the terms of the sale had to satisfy two conditions involving the Buyer obtaining adequate mortgage financing and being satisfied with the condition of the property and its revenue generating performance. The evidence provided by both parties does not suggest any incentive from the Buyer to the Seller to reduce its selling price with alternate forms of compensation. The Board finds the terms of the Offer to reflect a reasonable process of due diligence on the part of a Buyer seeking the services of a third party financial institution to qualify for a mortgage and ensuring the property is a viable investment proposition.

21Furthermore, the Board finds the negotiations that ensued over the selling price and amount of deposit as consideration, reflected a reasonable pattern of negotiation to open market transactions. The Board notes the final sale price is only 3.6% less than the asking price, an amount the Board finds to be absent of any indication of a Seller under duress.

22Although the Board appreciates the potential significance of an estate sale on value, in this instance it finds insufficient evidence to support a behavior suggesting that the open market sale process was a non arms length transaction resulting in a quick sale. The Board takes note of the case of 592182 submitted by Mr. Samuels. In this case Member J. Brownlie states in s. (27)(2) “…properties located …. are not good indicators of those properties’ current values because they involved estate sales….”, and further down states “…both properties were sold within a day of each other to the same purchaser.” In this instance the market transaction did not occur in one day and there was sufficient evidence to support the position that the estate sale was arms-length. The Board needs more substantial evidence from MPAC, to argue in favour of an estate sale being non-arms length. In this instance the Board finds there was insufficient evidence to conclude a non-arms length sale had occurred.

23The best evidence suggests that the Seller simply sold the properties the same way they were purchased in the first place; that the length of time the properties were exposed to the open market before an offer was presented suggested nothing unreasonable; that the negotiation processes on price adjustments and deposit amounts demonstrated separate self interest by all parties requiring serious negotiation; and finally that the parties appeared to have no prior relationship. The Board finds no evidence has been submitted to suggest that a fifteen day market exposure is insufficient and implying a quick sale. The Board rejects MPAC’s position that the sale was non-arm’s length, for the reasons above.

24It is the position of the Board to accept the bulk sale as being arm’s length and therefore as a valid sale that may be considered in determining the correct current value for each property.

Determination of Current Value

MPAC’s Evidence

25Ms. Hon provided eight suggested comparable properties (Exhibit 2) as shown in Table 1 below. All eight properties are considered inferior to the subject property in terms of location, smaller frontage and building area.

TABLE 1

Property	Assessment	Sale Date	Sale Price	Sale Price Time Adjusted ($)	Bldg. Area (Sq. Ft)	Lot Size Effective (Sq. Ft.)	Year Built/Reno Year (Effective Year)	Quality
481 483 485 Wilson Ave (Subject Properties)	622,000 626,000 626,000	May 2012	1,735,000		2,790 2,837 2,837	39.00x110/4,290 41.50x110/4,565 41.50x110/4,565	1958/1990 (1978)	6.0
225 Pannahill Road	626,000	March 2011	630,000	669,135	2,530	30.44x115/ 3,500.60	1958/1990 (1978)	6.0
221 Pannahill Road	625,000	April 2011	625,000	679,799	2,530	28.13x119.03/ 3,348.31	1958/1990 (1978)	6.0
218 Pannahill Road	644,000	March 2012	685,000	669,135	2,624	32.13x130.00/ 4,176.90	1958/1990 (1978)	6.0
244 Pannahill Road	642,000	May 2012	640,000	613,805	2,609	32.21x130.00/ 4,187.30	1958/1990 (1978)	6.0
146 Overbrook Place	615,000	April 2011	650,000	706,991	2,464	33.00x160.56/ 5,298.48	1957/1990 (1978)	6.0
34 Garthdale Court	636,000	July 2012	638,000	600,955	2,450	36.35x120.00/ 4,362.00	1958/1990 (1978)	6.0
18 Garthdale Court	594,000	March 2011	576,000	633,032	2,250	33.00x120.00/ 3,960.00	1958/1990 (1978)	6.0
14 Stanstead Drive	626,000	June 2013	660,000	0	2,572	33.00x115.00/ 3,795.00	1958/1990 (1978)	6.0

26Although similar to the subject properties in terms of age of construction, physical condition and type of use, their building and lot sizes are smaller. Mr. Samuels asked Ms. Hon what significance this would have on value, to which she replied that it would impact negatively on value.

27The choice of location for the eight selected comparables is considered less favourable than the subject properties’ location. Ms. Hon testified that MPAC could not locate any suitable properties built in 1958 that were close to the subject properties’ location and had to resort to a wider neighbourhood search.

28Mr. Samuels noted that the subject properties’ location experiences a heavy traffic pattern and therefore the subject properties would benefit from a five (5%) downward adjustment.

Appellant’s Evidence

29Ms. Bender presented a report, Exhibit 3, (“Report”), as evidence to argue the Appellant’s request for a lower assessment for each of the three subject properties. On page seven of the Report, Ms. Bender states “…we have been unable to find anything to suggest the combined sale price paid for the three properties reflects a discount relative to what the property owner might have paid had they purchased each property individually.” The Board notes that no evidence was submitted by the Appellant to corroborate this statement. No other properties were submitted as evidence to support their position that bulk sales did or did not have an impact on the final sale price of each property individually.

30Ms. Bender further states on page seven of the Report that, “…we do not believe it is necessary to look to other sales when a valid 2012 sale of the subject property exists….”. It is the position of the Board, in the absence of evidence as per paragraph [29] above, to look at the best evidence available and determine whether the valid open market bulk sale has no discount effect in this instance, on the subject properties individually, in order to determine the correct current value.

31Mr. Attard stated that the Appellant is seeking a CVA of 4% below the purchase price to account for a time adjustment, failing which, the sale price unadjusted should be the basis for the CVA. See Table 2 below.

TABLE 2

Property Address Wilson Avenue	MPAC’s Assessment	Sale Price (Unadjusted)	Sale Price (Adjusted) (-4%)	Appellant’s Assessment Value Adjusted (-4%)	Appellant’s Assessment Value UnAdjusted
481 483 485 (Subject Properties)	622,000 626,000 626,000	1,735,000	1,665,000	553,000 556,000 556,000 (1,665,000)	577,000 579,000 579,000 (1,735,000)

32The Board takes note of the Case of 1906661 submitted by Mr. Attard, the Counsel for the Appellant. In this case Member F. Saponara states in paragraph [8]:

….Counsel for the Appellant, takes the position that the best indicator of current value…is the purchase price paid by the Appellant…..this price was negotiated by the seller and buyer in an arm’s length transaction, between a willing buyer and a willing seller.

33The Board acknowledges the position of the Appellant as stated in paragraph [8] above. This position is further clarified in paragraph [25] of the same case, stating:

…that if there is a sale of the subject property, this evidence is of primary importance and provided certain criteria are met, it is the most reliable evidence of a property’s current value. If the sale of the subject is valid, the Board takes the position that there is no need to look beyond this evidence and resort to other estimating methods for determining current value. Therefore, the Board will first consider the evidence related to the sale of the subject property. Only if the Board is unable to rely on this evidence, other estimating methodologies need to be considered.

Board’s Findings

34The Board acknowledges Mr. Attard’s position regarding the sale of the subject properties as the best indicator of current value. However, the Board notes in this instance the sale was structured as a bulk sale. The Act has no position on ‘Bulk Sales’ per se, in determining current value. Although all parties agreed at the outset of this hearing to look at all properties concurrently, the Board nevertheless is mandated to determine the correct current value of each property individually.

35The witness for the Appellant has stated that they were unable to find anything to suggest a discount relative to what each property could have sold for individually. Ms. Bender testified that in this instance other factors played a role, suggesting the bulk sale had no influence on current value for the individual properties. The Board notes that no evidence other than the subject properties was provided by the Appellant to support their position.

36It is worth noting that, all parties have admitted that a bulk sale tends towards a discounted open market sale, possibly due to economies of scale. For these reasons, after considering the evidence related to the sale of the subject properties, the Board is unable to rely on this evidence alone, to determine the correct current value.

37It is the mandate of the Board to determine current value, including the testing of the sale in the market with that of other market tested sales of comparable properties. After hearing the testimony of both parties, the Board finds the only acceptable evidence available is based on MPAC’s submission of eight suggested comparable properties. The Board will rely on these comparables as the best evidence available for determining current value.

38Although the suggested comparables are located in a less favourable location and are slightly smaller, the Board finds sufficient similarities to the subject properties for determining current value. Upon reviewing all eight suggested comparables, only the first seven will be used to determine current value. The eighth property, 14 Stanstead Drive, has a sold date considered too far removed from the valuation date and therefore will not be considered.

39As there are sufficient similarities, the Board accepts that the best approach to determining current value is based on the sales of similar properties using the Direct Sales Comparison approach. Taking the median sold price per square foot of effective site area of the seven comparables, namely, $159.86, and multiplying it to the subject properties’ respective site areas, the calculated current values are $729,761; $729,761 and $685,799 for 485, 483 and 481 Wilson Avenue respectively. The Board notes that all the suggested comparable properties are located in less favourable locations than the subject properties. Combined with their smaller size than the subject properties, the Board is of the position that the subject properties would most likely, notwithstanding minor downward adjustments suggested by Mr. Samuels, sell for more than any of the suggested comparable properties.

40Based on the suggested comparables used to determine the CVA of the subject properties, and noting adjustments for differences in scale, the Board finds the current values for the subject properties to be significantly higher than the open market bulk sale outcome. It is the position of the Board that the Bulk sale approach in this instance, has prejudiced each individual property from realizing a higher sale in the open market.

41As these results are also higher than what MPAC is seeking and noting that neither party has requested a higher CVA, and MPAC’s position is to recommend that the Board accept the assessment as returned, the Board accepts as reasonable the assessments as returned by MPAC.

42The Board is comforted in knowing that the assessments as returned falls within acceptable limits compared to other assessed properties in the vicinity.

Equity Analysis

43The Act was amended for taxation years beginning with 2009, to require the Board to lower an assessment below current value if required to make the assessment equitable with the assessments of similar properties in the vicinity.

44Section 44.(3)(b) of the Act states that:

…the Board shall…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.

45For the purposes of establishing equity, properties do not need to be comparable, they only need to be of a similar nature and within reasonable proximity.

46The burden of proof respecting current value rests with MPAC, however the burden of proof respecting equity, in particular s.44.(3)(b), rests with the Appellant. As neither party submitted any equity evidence, the Board is unable to make a finding that the subject properties' current values would need to be reduced in order to make them equitable with the assessed values of similar properties in the vicinity.

47Accordingly, the Board finds that there is no evidence before it leading to the conclusion that the current value of the subject property, as determined above, requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

CONCLUSION

48The Board finds that the current value of the subject properties is as follows: $729,761; $729,761 and $685,799 for 485, 483 and 481 Wilson Avenue respectively.

49The Board notes that the current value determined by the Board is higher than the assessments as returned established by MPAC. As no party has requested an increase in the assessment of the subject property, the Board therefore confirms the assessment of the subject properties in the amounts of $622,000, $626,000 and $626,000 for the 2015 taxation year.

50The Board finds that there is no evidence before it leading to the conclusion that the current values of the subject properties, as determined above, requires a further adjustment in accordance with s.44.(3)(b) of the Act.

2016 DEEMED APPEALS

51Appeals for the 2015 taxation year are 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 appeals before March 31, 2016. For that reason, this decision also applies to the 2016 taxation year.

52Section 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.