Konrad Lewinski and Jane Elizabeth Agnew v. Municipal Property Assessment Corporation, 2016 CanLII 35412

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

June 09, 2016

FILE NO.:

WR 127345

Assessed Person(s):

Konrad Lewinski and Jane Elizabeth Agnew

Appellant(s):

Konrad Lewinski

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 03

Respondent(s):

City of Ottawa

Property Location(s):

174 Kehoe Street

Municipality(ies):

City of Ottawa

Roll Number(s):

0614-095-102-14900-0000

Appeal Number(s):

2994688 and deemed appeals 3006360, 3070640 and 3143814

Taxation Year(s):

2013 and deemed years 2014, 2015 and 2016

Hearing Event No.

558293

Legislative Authority:

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

Heard:

March 14, 2014 and June 17, 2014 in Ottawa, Ontario

APPEARANCES:

Parties

Representative

Konrad Lewinski and Jane Elizabeth Agnew

Glenn Lucas and Garth Allen

MPAC

Dan Kelleher

City of Ottawa

No one appeared

DECISION OF THE BOARD DELIVERED BY TERRY DENISON

INTRODUCTION

1The subject property is a single-family detached residence at 174 Kehoe Street, in the neighbourhood known as Britannia Village of the City of Ottawa. It has frontage of 53 feet (“ft.”) and an effective lot depth of 171 ft., was constructed in 2003, has two bedrooms, two full bathrooms, and a total building area of 2,713 square feet (“sq. ft.”). It is on the eastern shore of Britannia Bay of the Ottawa River. MPAC assessed the current value of the property at $1,059,000 for the 2013 taxation year in the residential (RT) property class for a January 1, 2012 valuation day.

2One of the owners of the subject property, Konrad Lewinski, appealed the returned assessment of the property as provided in s. 40 of the Assessment Act (“Act”) having first made a request for reconsideration as provided in s. 39.1 of the Act, saying that the assessment was too high.

ISSUE

3Is $1,059,000 the correct current value of the property as returned on the assessment roll, having reference to the assessment of similar lands in the vicinity is there a need to adjust the assessment of the subject property to make it equitable to that of similar lands?

DECISION

4Based on the evidence provided in this hearing the correct current value of the subject property is $980,950 for a valuation day of January 1, 2012. In considering the assessments of similar properties in the vicinity a reduction of the assessment to $922,000 is warranted. The assessment of the subject property for the 2013 taxation year is reduced from $1,059,000 to $922,000. This decision applies to the deemed appeals for the 2014, 2015 and 2016 taxation years.

Legislation

5This appeal was made under s. 40.(1) of the Act:

40.(1) Appeal to Assessment Review Board. – Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board,

(a) on the basis that,

(i) the current value of the person’s land or another person’s land is incorrect,

(ii) the person or another person was wrongly placed on or omitted from the assessment roll,

(iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support,

(iv) the classification of the person’s land or another person’s land is incorrect, or

(v) for land, portions of which are in different classes or real property, the determination of the share of the value of the land that is attributable to each class is incorrect; or

(b) on such other basis as the Minister may prescribe.

6The Act provides in s. 44(3)(a) and (b) that once the Assessment Review Board (“Board”) has made a determination of the correct current value of a property it must then 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 adjustment would result in a reduction of the assessment of land.

7In s. 1(1) of the Act current value has the following definition:

“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;

8The Act provides in s. 19.(1) that land is to be assessed at its current value:

Section 19.2 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.

9The statutory task that the Act assigns to the Board on an appeal is set out in s. 40.(19):

40.(19) Board to make determination. – After hearing the evidence and the submissions of the parties, the Board shall determine the matter.

10The Board’s powers are set out in s. 40.(22):

40.(22) Power to determine law and fact. – The Assessment Review Board, as to all maters within its jurisdiction under this section, has the authority to hear and determine all questions of law or of fact and a decision of the Board under this section is final and binding, unless it is appealed under section 43.1.

11Section 40.(17) of the Act provides that “for 2009 and subsequent taxation years, where value is the ground of an appeal, the burden of proof of the correctness of the current value of the land rests with the assessment corporation.”

REASONS FOR DECISION

MPAC’s Evidence

12Dan Kelleher is a Property Valuation Analyst with MPAC. He prepared a property valuation report of the subject property for the purposes of this hearing and presented it in evidence.

13The report was tendered as Exhibit 1 in this hearing. The first section of the report is a narrative description of the subject property, 174 Kehoe Street, in which Mr. Kelleher identified seven sales of properties which he said were comparable to the subject property. The report narrative has a market analysis with time adjustment of sales prices to the statutory valuation day for seven comparable property sales, a Google map showing the location of the subject property and comparables, and an equity analysis for the purpose of s. 44.(3)(b) of the Act.

14Mr. Kelleher’s analysis concluded that there had been a 15.2% increase in the sales prices of houses in the vicinity of the subject property between October 2010 and December 2012. He applied this factor to make a time adjustment to the comparable sales to reflect an estimated sale price on the statutory valuation day.

15Mr. Kelleher’s valuation report includes a photograph of the front of the subject property and describes it as a “Single Family Detached on water located at 174 Kehoe Street in the City of Ottawa.” He noted that “the area has a beach and marina located within walking distance and is known for its Ottawa River pathways.”

16Mr. Kelleher acknowledged that none of his comparables were located in Britannia where the subject property is located.

17The seven comparable sales chosen by Mr. Kelleher, like the subject property, are all on lots with some shoreline frontage on the Ottawa River. The subject property is located on the easterly shore of Britannia Bay and the comparables are all located further west around Britannia Bay. Five of the comparables are located on Grandview Road and two are on Nesbitt Street. The map in the report shows that the comparables are located about a 10 or 12 minute drive along Carling Avenue from the subject property. Mr. Kelleher stated that he was unable to find sales of comparable properties closer to the subject property but he felt that the sales he located were comparable and within the vicinity of the subject property.

18The following chart summarizes particulars of the subject property and the comparables used by Mr. Kelleher in his analysis:

Subject Property

174 Kehoe

Sale A

167 Grandview

Sale B

225 Grandview

Sale C

231 Grandview

Sale D

281 Grandview

Sale E

45 Grandview

Sale F

27 Nesbitt

Sale G

7 Nesbitt

Time adjusted sale price

$2,207,790

$1,365,184

$1,757,104

$2,349,615

$1,139,564

$1,705,565

$1,230,993

Lot dimension in feet

53 X 171

70X179

106.75 X193.01

210.56 X392.43

120 X 353

84.94X286

100X264

75X151

Lot area In square feet

9,063

12,530

20,603.81

82,764

42,353

24,292.84

26,430

11,325

Quality

7.5

7.5

7.5

6.0

8.0

7.0

8.0

7.0

Year built /effective year built

2003 /2003

2001 /2001

1988 /1999

1965 /1980

1982 /1988

1931 /1977

1998 /2006

1969 /1992

Building total area

2,713

4,771

4,463

1,902

4,874

3,216

5,787

1,702

Finished Basement area

0

0

0

1,255

0

537

500

259

19Mr. Kelleher’s evidence in his report and orally on the properties was as follows:

(a) Sale A, 167 Grandview Road was superior. It has a larger lot and a larger dwelling than the subject property and was two years older. He assumed that the market value of the subject property would be lower than the $2,207,790 time adjusted sale price for this comparable.

(b) Sale B, 225 Grandview Road, was superior with both a larger lot size and larger dwelling, although the dwelling was 15 years older than the subject property. He assumed that the market value of the subject property would be less than the time adjusted sale price of $1,365,184.

(c) Sale C, 231 Grandview Road, was inferior, although it had a larger lot than the subject property, because the dwelling was older and smaller. He said that the subject property would be greater than the adjusted sale price of Sale C, that is $1,757,104.

(d) Sale D, 281 Grandview Road, has a larger lot size and dwelling than the subject property and the estimated market value of the subject property would be less than the time adjusted sale price of Sale D, that is less than $2,349,615.

(e) Sale E, 45 Grandview Road, has a larger lot than the subject property and the dwelling is 72 years older than the subject property. It had a time adjusted sale price of $1,139,564, and he considered this property to be inferior to the subject property concluding that the subject property would sell for more than $1,139,564.

(f) Sale F, 27 Nesbitt Street, he viewed as superior to the subject property because it had a larger lot and larger dwelling. He indicated that the subject property would sell for more than the time adjusted sale price of Sale F, that is $1,705,565.

(g) He considered Sale G, 7 Nesbitt Street, because of its slightly smaller lot size and smaller older dwelling to be inferior to the subject property and surmised that the subject property would sell for more than $1,230,993, the time adjusted sale price of Sale G.

20In considering all of his chosen comparables and adjustments Mr. Kelleher opined that Sale A was most comparable to the subject property, even though its dwelling was larger. He felt that it had similar lot size, construction quality and age. He also felt that the sale date was close to the statutory valuation day so minimal time adjustment was required to arrive at a time adjusted sale price of $2,207,790. By accounting for the difference between the structure size and location of the subject property and Sale A, he estimated the market value of the subject property to be $1,573,338, and therefore concluded that a current value assessment of the subject property at $1,059,000 to be understated. However, neither MPAC nor the Appellant had served a notice seeking a higher assessment.

21Mr. Kelleher’s evidence concluded that the “correct” current value of the subject property was $1,059,000.

22Garth Allen, as representative for the Appellant, cross-examined Mr. Kelleher. He asked Mr. Kelleher if there were waterfront properties or floodplain properties in the properties that Mr. Kelleher had used for determining time adjustment, to which Mr. Kelleher answered that he didn’t know. Because there was a prospect of the City carrying out certain berming works for flood control in the area he also asked what consideration MPAC had given to the effect of any easements on the value of the property. Mr. Kelleher answered that he thought all the neighbouring properties might be so affected, but he was unsure what the impact on value would be.

Motion for Non-Suit of MPAC by the Appellant

23At the conclusion of evidence by MPAC and cross-examination by the Appellant, the Appellant made a motion to non-suit MPAC for not meeting the required burden of proof. It is ironic that although s. 40.(17) of the Act places the burden of proof as to the correctness of the current value of the land on MPAC a successful motion of non-suit by an Appellant would leave the Board with no evidence to determine the appeal if it granted the motion before the Appellant lead evidence. Consequently, the Board reserved its decision on this motion to permit the Appellant to provide evidence.

MPAC’s Objection to Appellant’s Proposed Evidence

24MPAC objected to the use of certain evidence that the Appellant proposed to lead on the basis than the Appellant had not disclosed the evidence 21 days prior to the hearing as required in the Board’s Rules. MPAC requested that the hearing be adjourned to permit it to review the proposed evidence. The Board granted the request and the hearing was adjourned to June 17, 2014.

Resumption of the Hearing on June 17, 2014

Issue on Role of Appellant’s Representatives

25When the hearing re-convened on June 17, 2014 Glenn Lucas, the Appellant’s representative called his associate, Garth Allen, to provide evidence. Both Mr. Lucas and Mr. Allen are paralegal members of the Law Society of Upper Canada.

26Because he had appeared as advocate on the first day of the hearing, Mr. Kelleher, on behalf of MPAC, asked Mr. Lucas to clarify what role Mr. Allen was to have in the continuation of the hearing.

27Mr. Lucas advised that he did not intend to call Mr. Allen as an “expert” witness but simply to introduce evidence of sales and to comment on such information.

28At this point the Board expressed concerns. First, it is generally not permitted for persons to appear before the Board in a hearing as both advocate and witness, particularly as an expert witness. Expert witnesses may only comment or give opinion evidence if they have been recognized by the Board as being qualified to do so. The Board tolerates some leeway with this for the purpose of providing expeditious and cost-efficient hearings, but the danger of appearing as both an advocate and a witness, particularly as an expert witness, is that an advocate’s first duty is to his client and an expert’s first duty is to be impartial before the Board. The Board’s Rules are somewhat more lenient than the Law Society’s Rules of Professional Conduct, in that the former permits an expert who has signed an acknowledgement of duty to give evidence if qualified as an expert by the Board, and the latter prohibits lawyers or paralegals from acting as an advocate and expert in the same hearing. The matter was resolved in this hearing by Mr. Lucas stipulating that Mr. Allen’s evidence would be factual and that he would not be tendering opinion evidence. On that basis, without the Board qualifying Mr. Allen as an expert witness, Mr. Allen proceeded to give his evidence.

Evidence of the Appellant

29Mr. Lucas asked Mr. Allen to confirm that the subject property was wholly within a floodplain. His question was more in the form of a statement than question and Mr. Allen agreed with the statement. It was not clear on what basis they determined that the subject property was in the floodplain. The Board would expect such evidence to be given in the form of an official map from a conservation authority or in the municipality’s zoning. A chart titled “Recently-Sold Properties in the Vicinity of 174 Kehoe Street” was tendered as Exhibit 2. It included data on three properties near the subject property, namely 156 Kehoe Street, 162 Bradford Street, and 186 Bradford Street. The information on the chart was intended to demonstrate that the three properties, like the subject property, were within the 1:100 year Ottawa River Flood Plain as defined by the Rideau Valley Conservation Authority but there was no foundation for the properties being in the floodplain. The chart had time adjusted sales prices for the three properties as well as their January 1, 2012 current value assessments. The sales information came from the Ottawa Real Estate Board’s Multiple Listing Service (“MLS®”). The conclusion was that the median ASR of the three properties was 1.157 indicating that they were assessed higher than actual selling prices. This is a very small sample compared to the 30 properties that MPAC usually considers when conducting an “equity analysis”.

30The information on Mr. Allen’s chart entered as Exhibit 2 is summarized here:

Recently Sold Properties In the Vicinity of 174 Kehoe Street

Address

Waterfront

Sale Date

Sale Price

Time-Adjusted Price

January 1/2012 CVA

ASR

156 Kehoe Street

Yes

June 2011

$750,000

$795,000

$989,000

1.244

162 Bradford Street

No

Oct. 2011

$520,000

$528,000

$611,000

1.157

186 Bradford Street

No

July 2011

$595,000

$613,000

$622,000

1.015

31What appears to be a portion of a City zoning map was introduced as Exhibit 3. It served to locate the subject property and showed Kehoe Street, which is three short blocks long between Jameson Street Maud and Salinas Street There are about a dozen houses on the east side of Kehoe and approximately 20 homes on the west side including the subject property. On the west side five of the homes are detached residences and the remainder to the south of the subject property are attached townhouses. All of the homes on the west side of Kehoe Street face the Ottawa River. The map illustrates that the homes in the neighbourhood are on typical city lots in a grid pattern. The map also locates 156 Kehoe Street, 162 Bradford Street, and 186 Bradford Street for which Mr. Allen provided sales and assessment information and photographs.

32Mr. Allen also introduced as Exhibit 4 a copy of an Ottawa Real Estate Board MLS® documents for 156 Kehoe Street. The listing price for the property was initially $1,250,000 in 2010 but was successively reduced until it apparently sold in June of 2011 for $750,000. The listing included remarks that the property was vacant and that there had to be a “48 hour irrevocable on all offers.” It was noted that this was an “as is” property with no warranties, no survey and buyer to perform “due diligence.” Exhibit 5 was an MPAC Basic Report for 156 Kehoe Street showing an assessed value of $989,000 and noting the sale price of $750,000 as of June 2011. Exhibit 6 was a photograph of 156 Kehoe Street. While not a perfect comparable to the subject property, this property may be the closest to a comparable that was presented in evidence, although it would be considered to be inferior to the subject.

33Mr. Allen introduced exhibits related to 162 Bradford Street, Exhibit 7 was a MLS® listing for the property, Exhibit 8 was a MPAC Basic Report for the property showing it assessed at $611,000 and its most recent sale in October of 2011 at $520,000, and Exhibit 9 was a photograph of 162 Bradford Street.

34Mr. Lucas called Jane Agnew Lewinski, one of the owners of the subject property. She provided the Board with a history her involvement with the subject property that included many complications in dealing with the Conservation Authority and the City of Ottawa in its development, culminating in an Ontario Municipal Board hearing. Ms. Lewinski introduced a copy of a plan of the Britannia Village Flood Control Works prepared by Delcan Engineering, which was filed as Exhibit 13. She explained how the area is subject to flooding and that this area is the entry point for the flooding. This can make the area challenging to live in.

Analysis of the Evidence

35Mr. Kelleher’s analysis of the market provided no consideration of the characteristics of the neighbourhood in which the comparable properties were located compared to that of the subject property. There was no attempted adjustment that would take into account the fact that the subject property was located in a neighbourhood with a street grid with relatively standardized urban lots, mixed housing types with row dwellings immediately to the south, and smaller converted cottage dwellings, and only a small number of properties with shoreline frontages, where by comparison, the neighbourhood where the comparables were located was primarily large dwellings built on large lots along a street paralleling the Ottawa River where all of the properties on one side had shoreline frontages. The reason that there was no attempted adjustment may be that the neighbourhoods are dissimilar. This raises the question of whether it is possible to find good comparables in dissimilar neighbourhoods. The Board finds that the two neighbourhoods are not similar.

36As well as the fact that the neighbourhoods are not similar, it is difficult to find that the comparables chosen by MPAC are so closely similar to the subject property that they are useful in determining its value. The Board finds that because of the significant differences in the sizes of the dwellings and the lots on which they sit, as well as the differing neighbourhood characteristics, that none of the comparables chosen by MPAC support the conclusion of value reached in MPAC’s analysis. If adjustments are required an explanation of how they were done must be given in the evidence. But none was given.

37Mr. Kelleher reached a conclusion that Sale A was the best indicator of value for the subject property if he made adjustments for the difference between the structure size and location of the subject property and Sale A. He stated that the adjustments applied to Sale A’s time adjusted sale price of $2,207,790 would produce a market value for the subject of $1,573,384. Unfortunately, no satisfactory evidence was given as to how this adjustment was quantified. From this he concluded that the “correct” current value of the subject property was the returned assessment of $1,059,000. But, if the statutory definition of current value is to be applied, it is unclear how this conclusion was reached. If $1,573,384 reflects what the subject property would sell for in a market transaction on the valuation day then it would be the “correct” current value, but for no explained reason Mr. Kelleher discards it.

38During the submissions in this hearing reference was made to an earlier decision by the Board (differently constituted) for the subject property for a January 1, 2008 valuation day. In Lewinski v. Municipal Property Assessment Corp., Region No. 3, [2010] O.A.R.B.D No. 424, Member Nalezinski, made a finding that the current value of 174 Kehoe Street, was $853,000 for the 2009 and 2010 taxation years. In arriving at this decision Member Nalezinski considered comparables used by MPAC at 93 Grandview Road, 163 Grandview Road, 111 James Cummings Avenue, and 19 Rocky Point Road. These are all in the same neighbourhood as MPAC’s comparables in this hearing. Member Nalezinski stated:

19All of the submitted properties are not in the same neighbourhood as the subject property. The assessor stated that he was unable to find sales of similar properties in the same neighbourhood within a reasonable period of the valuation day, January 1, 2008.

20Mr. Foy has made significant adjustments for the differences in the comparables to try and establish a range of value for the subject property. The four properties chosen by the assessor are not comparable to the subject property and the Board has not used them in its analysis for determining the current value of the subject property.

39In this hearing the Board is faced with the same problem as Member Nalezinski and reaches the same conclusion. None of the comparables in the Grandview Road neighbourhood relied on by MPAC are useful in determining the correct current value of the subject property.

40Consideration must then be given to the evidence that Mr. Allen and Mr. Lucas provided on behalf of the Appellant. They referred to three properties that were in the vicinity of the subject property, 156 Kehoe Street, 162 Bradford Street and 186 Bradford Street. However, the evidence they lead did not suggest that these properties were comparable to the subject property, only that they were nearby. They used a comparison of the sales prices for these properties and the values they were assessed at to suggest that MPAC was returning assessment values for properties on the waterfront or in a floodplain at higher amounts than could be supported by actual sales. It appears to be true for the three properties they identified, however, what does that mean in terms of the subject property?

41The legislation requires the Board to reduce an assessment if the correct current value, when compared to the assessment of similar properties in the vicinity of the subject property, support a downward adjustment of the assessment to achieve equity.

42Mr. Kelleher provided an “Equity Analysis” with Exhibit 1. Based on a review of 30 sales within the vicinity of the subject property. Mr. Kelleher found 30 sales within 0.84 kilometers of the subject property. Comparing the time-adjusted sales for these properties on the statutory valuation day with the assessed values he found that the median assessment to sales ratio (“ASR”) of properties in the vicinity of the subject property was 0.94. As this fell just outside the acceptable range Mr. Kelleher concluded that an equity adjustment may be warranted for the subject property.

43The ASR values of the properties in Mr. Allen’s analysis found in Exhibit 2 might support an upward adjustment of the assessment of the subject property, but the Act only contemplates equity adjustments that lower an assessment. Further, this analysis used only three properties and some questions were raised in cross-examination about whether or not the sales were normal market transactions or if they were affected by factors such as being mortgage power of sale transactions that may have resulted in under market prices.

44In any event, the Board prefers the equity analysis provided by MPAC because it is based on a larger sample of 30 sales and follows a methodology used consistently by MPAC in carrying out an equity analysis. MPAC’s analysis suggests that there may be justification for a slight adjustment for equity because the ASR found in its analysis was 0.94, which is just outside the acceptable range of 0.95 to 1.05.

45There was no strong evidence of the sale of comparable properties presented in this hearing either by MPAC or the Appellant. But the Board determined the correct current value of the subject property in a prior hearing for a January 1, 2008 valuation day to be $853,000 for the 2009 and 2010 taxation years. MPAC’s analysis in this hearing reviewed sales for the period from October 2010 to December 2012 and found that “house prices increased approximately 15.2% over this timeframe in the subject property’s vicinity.” If the Board accepts MPAC’s evidence that sales indicated an increase by that percentage over the period it would appear to be a reasonable conclusion that the subject property would also increase in value by that amount over the period. That would result in a change in the current value over the previous assessment from $853,000 to $980,950 for a January 1, 2012 valuation day. If an equity adjustment, as suggested by MPAC’s equity analysis was applied, the assessment would be reduced by 6% resulting in an assessment of $922,000.

CONCLUSION

46The correct current value of the subject property as of a valuation day of January 1, 2012 is $980,950 and an adjustment to make it equitable results in an assessment of $922,000 for the taxation year 2013 and for the deemed appeals for the 2014, 2015 and 2016 taxation years.

DEEMED APPEALS - 2014, 2015, 2016

47An appeal for the 2013 taxation year is presently before the Board. Subsection 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 2013 appeal before March 31, 2014. For that reason, this decision also applies to the 2014, 2015 and 2016 taxation years.

48Section 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.