Jiening Zhu and E & E Firmland Investment Inc. v. Municipal Property Assessment Corporation, 2016 CanLII 48795

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 20, 2016

FILE NO.: WR 141192A

AMENDED DECISION ISSUED: July 29, 2016

Assessed Person(s): E & E Firmland Investment Inc.

Appellant(s): Jiening Zhu and E & E Firmland Investment Inc.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 18

Respondent(s): Town of Fort Erie

Property Location(s): 255 Garrison Road

Municipality(ies): Town of Fort Erie

Roll Number(s): 2703-010-036-07200-0000

Appeal Number(s): 3130242 and 3155998 (deemed 2016 appeal)

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

Hearing Event No. 625451

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

Heard: May 13, 2016 in Fort Erie, Ontario

APPEARANCES:

Parties	Representative
Jiening Zhu	Self-represented
E & E Firmland Investments Inc.	Jiening Zhu
Town of Fort Erie	Gillian Corney
MPAC	Tammy Kramar

DECISION OF THE BOARD DELIVERED BY MARILYN SHARMA

Amended pursuant to Rule 130 of the Assessment Review Board’s Rules of Practice and Procedure, effective January 4, 2016

INTRODUCTION

1The subject property is a 2.88 acre parcel of land with several buildings located at 255 Garrison Road in the Town of Fort Erie.

2The subject property is classed in the Commercial and Commercial Excess Land categories.

3The total square footage of the buildings on the property is 9,336 square feet and are of various ages ranging from 1981 to 2001.

4The buildings on the property provide various services including a Full Service Gas Bar, Car Wash facility, Lube Shop, Convenience Store and Office and Washroom facilities.

5The assessment of the subject property for the taxation year 2015 is $941,000 apportioned as follows:

Commercial (CT) class: $883,000

Commercial Excess (CU): $ 58,000

6Jiening Zhu, argues that the assessment of the subject property is too high in relation to the assessment of other properties in the vicinity.

ISSUE

7The issue before the Assessment Review Board (“Board”) is to determine whether the subject property has been over assessed in relation to other properties in the neighbourhood.

DECISION

8The Board finds that the current value of the subject property is $819,000.

9The Board finds that an adjustment of 11% is required for equity purposes under s. 44.(3)(b) of the Act. The Board applies the equity adjustment to the revised current and makes an adjustment for equity from $819,000 to $729,000 (rounded).

10Accordingly, the assessment of the subject property for the 2015 taxation year is reduced from $941,000 to $729,000 broken down as follows:

Commercial $685,260

Excess Land $ 43,740

REASONS FOR DECISION

The Legislation

11For the 2015 taxation year, in determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Act:

12Section 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.

13Section 19.(1) of the Act states:

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

14Section 19.2(1)3 of the Act states:

19.2(1) Valuation days. – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

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

15Section 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.

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.

Analysis

18Under the Act the Board is required to do three things:

(1) Find the current value of the property.

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

(3) Adjust the assessment of the subject property if the adjustment would result in a reduction in the assessment.

Current Value

19The best measure of current value is an arm’s length and market tested sale of the subject property on the valuation date of January 1, 2012, or close to it. If no such transaction took place, a further measure of current value is arm’s length and market tested sales of comparable properties in the same vicinity and market. This measure acts as a benchmark and gauge of the correctness of the assessed value of the subject property. The onus for establishing the correctness of the current value lies with MPAC.

MPAC’s Evidence

20MPAC provided seven suggested comparable properties as shown in Table 1.

Table 1

MPAC’s Suggested Comparable Properties

Address	Site. Area (acre)	Property Code	Sale Amount	Current Value Assessment	Assessment to Sales Ratio	Sale Date
255 Garrison Rd. (subject property)	2.88	421	1,820,000	941,000	0.52	Oct. 2007
22 Lavinia Street	11,286	421	145,000	145,000	1.00	March 2012
208 Ridge Road N	21,780	421	245,000	181,000	0.74	Jan. 2011
260-262 Gorham Road	31,363.2	420	592,000	314,000	0.53	May 2015
959 Garrison Road	1.79	421	550,000	506,000	0.92	Feb. 2011
1326 Garrison Road	1.33	420	2,100,000	575,000	0.27	Feb. 2015
919 Kraft Road	2.12	421	95,000	87,000	0.92	March 2015
2260 Streetsville Road	34,412	421	50,000	50,000	1.00	May 2015

21The Assessor stated that in order to establish the current value of the subject property the Cost Approach was used.

22The Assessor provided a brief explanation of how the Cost Approach methodology is used and what factors are included in the calculations to arrive at an estimate of value by the Cost Approach method. Based on this method, the current value of the subject property was determined to be $941,000.

23The Assessor informed the Board that she conducted an Assessment to Sales Ratio study based on the assessed values of the sold properties as of January 1, 2012 and based on her analysis she was satisfied that similar properties in the vicinity have been assessed at their current values and are equitable; therefore in her view the assessment of the subject property is correct.

24The assessor indicated that while she determined the assessed value of the subject property based on the Cost Approach and found the value to be $941,000, she informed the Board that she adjusted the value of subject property by “adding additional obsolescence to buildings which were not reflected in the costing of the structures”. As a result of the adjustment she reduced the current value from $941,000 to $819,000. This reduction was offered to the Appellant but was refused.

Appellant’s Evidence

25The Appellant presented various arguments to contradict the basis of MPAC’s rationale and decision regarding the assessment of his property which include the following:

a. That the annual increase in the assessed value of his property for the 2012 to 2016 taxation years was $102,000 while the annual increases for the properties located at 1326 Garrison Road and 959 Garrison Road were $1,500 and $16,5000 respectively. With regard to the other properties the increase was zero dollars for the property at 919 Kraft Road whilst the property at 191 Garrison received a reduction in the assessed value for one year and zero increase for the remaining three years. The appellant believes that the changes in the annual assessments of his four suggested comparable properties demonstrate that his property is considerably over assessed and that it is unfair for him to be saddled with a very high annual increase while the properties he presented are levied increases considerable smaller amounts and in some cases no increases whatsoever.

b. That the four suggested comparable properties he presented are all Automotive Auto Repair and Car Wash or Automotive Fuel Station with Service Facilities, are all Commercial Properties, all are similar to his property but all have assessed values of $87,000, $274,000, $506,000 and $573,000 while the assessed value of his property is $941,000. He believes that his property should

have an assessed value that is in line with the suggested comparable properties he submitted.

c. That the area of excess land identified by MPAC is understated and he believes that the amount of land that should be classed as Excess Land is approximately 1.53 acres of the total acreage of 2.88. The Appellant further argues that the impact of understating the area of excess land results in a higher level of assessment.

Analysis of MPAC’s Evidence

26The Board was not able to establish comparability of the suggested comparable properties provided by the Assessor with that of the subject property because the assessed values of the suggested comparable properties were established by a different methodology than that which was used to find the current value of the subject property.

27The Board rejects the seven suggested comparable properties submitted by the Assessor. Four of the seven sales are invalid since the sales occurred too far from the valuation date of January 1, 2012. The Board also rejects the remaining three suggested comparable properties which had sales values of $145,000, $245,000 and $550,000 respectively, because the sales values of these properties are significantly lower than the assessed value of the subject property of $941,000. The Board was unable to establish comparability since the explanation provided by the assessor was not sufficient.

28The Board notes that the proportional allocation of the total current value of the subject property is $883,000 in the Commercial Class and $58,000 in the Excess Land class for a total current value of $941,000.

29The Board notes that the Assessor made a recommendation to reduce the current value from $941,000 to $819,000 because she recognized that there was a need to make further provision for additional obsolescence to buildings which had not been reflected in the costing of the structures.

30The Board considered the Assessor’s arguments regarding her determination that no equity adjustment to the current value is required. The Board was not presented with any evidence pertaining to the sales considered, their location in relation to the subject property nor their respective assessments. The Board is therefore unable to accept the conclusion of the Assessor in view of the absence of fundamental information to support her conclusion.

Analysis of Appellant’s Evidence

31The Board reviewed the Appellant’s claim that the annual increase in the assessed value of his property was substantially disproportional to that of the properties located at 959, 1326 and 191 Garrison Road as well as the property at 919 Kraft Road. The Board had no evidence before it to determine the comparability of the properties cited as well as information relating to the method by which the assessed values were established in addition to other factors that may have been included. The Board therefore places no weight on this line of reasoning by the Appellant.

32The Appellant submitted four suggested comparable properties and makes the argument that they are similar to his property and that his property should have an assessed value that is similar to these comparable properties. The Board could not accede to the Appellant’s claim because there is a notable absence of key information pertaining to each suggested comparable property which prevents the Board from making an informed judgement.

33The Board considered the claim by the Appellant that MPAC understated the amount of land area that should be classed as Excess Land. The Board reviewed the sketch provided by the Appellant to support his claim. In particular, the Appellant points to an area of the property that is currently part of the overall paved area that supports the various businesses on the property which he believes should be designated Excess Land. The Appellant did not provide a reasonable argument to support his claim and the Board therefore dismisses his argument.

Determination of Current Value

34The Board finds that the cost approach to value is an acceptable methodology for establishing current value and accepts the Assessor’s cost calculations which determined an assessed value of $941,000. The Board notes that the Assessor reduced the current value from $941,000 to $819,000 because she recognized that there was a need to make further provision for additional obsolescence to buildings which had not been reflected in the costing of the structures. The Board accepts the reduction and finds that the current value is $819,000.

Equity with Similar Lands in the Vicinity

35The Board is required under s. 44.(3) sub-paragraph (b) of the Act, to 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. For purposes of establishing equity, properties do not need to be comparable; they need to be of a similar nature and within a reasonable proximity. To determine equity the Board may look at the Assessment to Sales Ratio (“ASR”).

36The ASR is a ratio of a property’s assessment to its sale price. If sales are in the same homogeneous neighborhood, the Board may infer that MPAC has used the same assessment methodology for the subject property as it did with comparable properties presented. Therefore, the review of ASRs may indicate whether MPAC has been under or over-assessing properties in the area.

37The only evidence provided to establish equity was the sales evidence presented by MPAC in its Comparable Property Report. The three valid sales have an average ASR of 0.89 which means that properties in the vicinity are being under assessed by around eleven percentage points. The Board therefore finds that an adjustment is required for equity in accordance with s. 44.(3) (b) of the Act. The Board notes that the Assessor made an adjustment to the assessed value from $941,000 to $819,000 to account for increased obsolescence. The Board therefore applies the equity adjustment to the value recommended by the Assessor and makes an adjustment for equity to the value assessed value recommended from $819,000 to $729,000 (rounded).

CONCLUSION

38The Board finds that the current value of the subject property is $819,000.

39The Board finds that an adjustment of 11% is required for equity purposes under s. 44.(3)(b) of the Act. The Board applies the equity adjustment to the revised current and makes an adjustment for equity from $819,000 to $729,000 (rounded).

40Accordingly the assessment of the subject property for the 2015 taxation year is reduced from $941,000 to $729,000 apportioned as follows:

Commercial $685,260

Excess Land: $ 43,740

2016 DEEMED APPEAL

41An 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.

42Section 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.