2227418 Ontario Inc. v. Municipal Property Assessment Corporation ("MPAC") Region 09, 2016 CanLII 45376

Assessment Review Board

Commission de révision de

l’évaluation foncière

ISSUE DATE:

July 15, 2016

FILE NO.:

WR 141193

Assessed Person(s):

2227418 Ontario Inc.

Appellant(s):

2227418 Ontario Inc.

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”)

Region 09

Respondent(s):

City of Toronto

Property Location(s):

30 Ironside Crescent

Municipality(ies):

City of Toronto

Roll Number(s):

1901-126-500-08000-0000

Appeal Number(s):

3040372, 3036903, 3043485, 3074836 and 3148227 (deemed 2016 appeal)

Taxation Year(s):

2013, 2014 2015 and 2016 (deemed appeal)

Hearing Event No.

596236, 613731, 618534 and 628184

Legislative Authority:

Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard:

September 22, 2015, April 15, 2016 and

June 21, 2016 in Toronto, Ontario and on December 8, 2015 by teleconference call

APPEARANCES:

Parties

Counsel^+^/Representative

2227418 Ontario Inc.

S. Gupta, T. Revesz, J. Bhinder

MPAC

D. Samuels

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY MARGARITA OKHOVATI AND

JOSEPH WYGER

INTRODUCTION

1The Markham Banquet and Convention Centre (“Banquet Hall”) is an upscale wedding/ballroom venue that was built on a five acre parcel of land in 2012, and commenced operation as a banquet hall in 2014. During the same time period a commercial condominium development was being constructed and occupied on the same parcel. The condominium declaration was registered on June 30, 2015. MPAC assessed the Banquet Hall and the full five acres for 2014 and 2015 taxation on a single roll number. Sunil Gupta, the first agent for the appellant developer argued that the Banquet Hall is situated on only one-half acre and should be assessed for that, and the 4.5 acres remaining ought to be assessed to the condo development for both tax years. He sought to be reimbursed by the condo buyers who were occupying the units during that time. The five acres was purchased in 2012 for $4.75 million, and the assessor reduced his land valuation to this amount. The appellant did not seriously dispute that figure for the full five acres.

2The costing of the structure itself was a matter of some dispute. The assessor used the Automated Cost System (“ACS”) to estimate the building cost at $3,683,416 or $153 per square foot (“psf”). He referenced the costs of three other banquet halls in Scarborough having an average and median building cost of $160 psf. and $151 psf. respectively. The appellant’s proposed total building cost of $1,910,168 was based on his architect’s estimate for the shell. He maintained that this value, plus the value of only a half-acre of land was substantially lower than MPACs total value of $8,433 million.

3There was insufficient evidence at the first hearing to determine whether the subject parcel was five acres or some acreage less than that during the taxation years in question. The Assessment Review Board (“Board”) re-convened the hearing on April 15, 2016 in order to hear further evidence on this issue, and MPAC provided sufficient

evidence to demonstrate that the property was indeed five acres in size and had not been severed as Mr. Gupta had suggested at the initial hearing in September.

4On April 15, 2016 Mr. Gupta did not appear. Preet Dass appeared as a principle for the appellant developer and was represented by Thomas Revesz. They requested that the Board permit them the chance to bring the actual construction cost invoices to support a lower building cost value, as Mr. Gupta had failed to do so. The Board found that it would be unfair to the appellant to penalize them for Mr. Gupta’s oversight. The Board ordered the hearing adjourned to June 21, 2016, and ordered the appellant to provide MPAC with all actual construction costs by May 16, 2016. The appellant failed to provide any such information by May 16 or by the next hearing date of June 21, 2016. The Board was advised that Mr. Revesz was unable to obtain the actual costs from the Appellant, and removed himself as agent for the appellant.

5On June 21, 2016 the appellant was represented by a third different agent, Mr. Jay Bhinder, who provided no construction costs, but sought to raise other issues with MPAC’s costing. On motion by Drew Samuels the advocate for MPAC, the Board refused to allow these new issues to be raised at this late date because the Board had confined the issue to a review of actual construction costs. The hearing proceeded and ended on this day.

DECISION

6The Board determines the building cost to be the ACS derived value of $3,683,000.

7The Board determines the land value of the five acre parcel to be the sale price of $4,750,000, rounded.

8The Board concludes that the current value is $8,433,000 and found no evidence in the assessments of similar properties to demonstrate that this value is inequitable.

9The assessment is reduced from $9,306,000 to $8,433,000 for the 2014, 2015 and 2016 taxation years for the s. 40 appeals. The s. 34 appeals for 2013 tax year are reduced from the $4,950,000 to $4,750,000 and from $4,356,000 to $3,683,000.

REASONS FOR DECISION

Facts

10The Banquet Hall is a structure of some 23,546 square feet, built in 2012 and situated at 2901 Markham Road in the City of Toronto, formerly Scarborough. It is described as being a “luxurious ballroom facility” for weddings and similar functions. The site consists of five acres, with the Banquet Hall surrounded by retail condominium units. The assessment was returned at $9,306,000 for the 2014 and 2015 taxation years, and MPAC recommended a reduction to $8,433,000.

Legislation

11Section 19.(1) of the Assessment Act (“Act”) states:

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

12Section 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 Position and Evidence

13Drew Samuels, advocate for MPAC, and his valuation witness Rupi Anand asserted the position that the appellant’s one page architect’s estimate for a shell building hard cost only, was not sufficient information for them to use it in their cost analysis, as it was missing specifications, soft costs, overhead and profit among other items normally included in a building cost. Mr. Anand provided a valuation report which relied on an ACS analysis, that resulted in a building cost of $3,683,000, or $153 psf. This value was supported with reference to three other banquet halls in Scarborough with building costs of $141, $151 and $188 psf. Mr. Anand testified that the subject cost value was correct as it was very near both the average of $160 psf. and the median of $151 psf. for these comparable properties.

14Mr. Anand’s original land value of $4,950,000 was reduced to $4,750,000 to reflect a valid sale of the five acre parcel in December of 2012.

Appellant’s Position and Evidence

15Sunil Gupta presented the case for the corporate appellant at the initial hearing, and based his building cost value estimate entirely on a Memorandum Re: Shell Building Hard Cost Estimate for Building (Exhibit 2) from an architect showing a total cost of $1,910,168. This number was broken down into 13 cost categories in Exhibit 3. Mr. Gupta insisted that these values were a much better reflection of actual building cost, than the assessor’s ACS valuation. He indicated that he could provide the actual building costs if the Board permitted.

16On land value, Mr. Gupta contended that the parcel of land on which the Banquet Hall sat was only one-half of an acre and not the five acres it is assessed for. He maintained that the balance of the five acres belongs to commercial condominiums, and should be assessed to those owners. He submitted that the one-half acre should be valued far less than the $4.75 million sale price of the full five acres.

17At the subsequent hearing, Mr. Revesz renewed the request to provide the Board with actual building costs, but despite being given that opportunity, the appellant failed to produce them on any of the three hearing dates.

Analysis – Current Value

Building Cost

18The Board accepts the building valuation provided by the assessor, Mr. Anand. He is an experienced assessor having familiarity with ACS. His inputs appear entirely reasonable and well-supported. We agree with him that Mr. Gupta’s architect’s estimates of cost are lacking in particularity and detail. They are clearly stated to be only the hard costs for a “shell”, which is a building with no finishes. Photographs of the interior of the Banquet Hall confirm that it is no shell. Mr. Gupta’s insistence that the only additions to the shell were painting and light fixtures was contradicted by interior photos displaying finishes that bring to mind the great hall at the Palace of Versaille.

19In addition, Mr. Gupta had no answer to the Board’s enquiries about the actual invoiced costs, rather than pre-construction estimates as being the best evidence of the actual construction cost. The Board expects that the quality of the finishes evident in the photographs placed the final costs much closer to MPAC’s total building cost, than the architect’s pre-construction estimate for a shell only.

Land Value

20The sale of the five acre parcel in the base year of 2012 is the best evidence of its value. There was no dispute that it was a valid, arm’s length sale for $4.75 million. The assessor reduced his land value estimate to that figure, and the Board accepts it as the current value for the five acre parcel.

Analysis – Equity

21Neither party raised an issue in equity, but the Board is still required to have reference to any assessed values in evidence, in accordance with s. 40.(3)(b). Mr. Anand provided the assessments of three other banquet halls in the vicinity with unit building cost values in the same range as the subject property’s recommended current value. There is nothing in this evidence that could give rise to a finding that the current value is inequitable when compared to those similar properties.

CONCLUSION

22The Board determines the building cost to be the ACS derived figure of $3,683,416. The land value of the five acre parcel is determined to be the sale value of $4.75 million. The assessment is hereby reduced as follows:

Appeal No.

Section No.

Classification

“From” Value

“To” Value

3040372

34

Commercial

$4,356,000

$3,683,000

3036903

34

Commercial

$4,950,000

$4,750,000

3043485

40

Commercial

$9,306,000

$8,433,000

3074836

40

Commercial

$9,306,000

$8,433,000

3148227

40

Commercial

$9,306,000

$8,433,000

2016 DEEMED APPEAL

23An 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.

24Section 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.