Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 19, 2016

FILE NO.: WR 141392

Assessed Person(s): Oxygen On George Street Inc.

Appellant(s): City of Toronto

Respondent(s): Oxygen On George Street Inc.

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

Property Location(s): 102 Shuter Street

Municipality(ies): City of Toronto

Roll Number(s): 1904-066-300-02920-0000

Appeal Number(s): 3069964 and 3149483

Taxation Year(s): 2015 and 2016

Hearing Event No. 628073

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

Heard: June 23, 2016 in Toronto, Ontario

APPEARANCES:

Parties	Counsel⁺/Representative
Oxygen on George Street Inc.	Hussein Mussani
City of Toronto	Angus Mackay⁺
MPAC	Tony Racioppo

DECISION OF THE BOARD DELIVERED BY BERNARD COWAN

INTRODUCTION AND ISSUES

1102 Shuter Street was assessed for $3,806,000 for the 2015 and 2016 taxation years as a vacant 8,319 square foot (“sf”) lot in the residential property class.

2Because the City of Toronto (the “City”) had adopted amendments to its Official Plan and its zoning by-law in November 2011 for the subject property, the City appealed the 2015 assessment classification, seeking a change to the multi-residential property class. Prior to the hearing all parties agreed to this change in classification for the 2015 and 2016 appeals at issue, and I take no exception to this change, considering the information provided.

3However, the City’s appeals opened the right of Oxygen on George Street Inc., the Assessed Person, to challenge the assessed value of $3,806,000 for the two taxation years, and that is the issue now argued before me.

4According to MPAC’s GRAD Details of the assessment calculation (Exhibit 3), a rate per square foot (“psf”) buildable of $40, enhanced by 25% as a corner property adjustment to $50 psf, was applied to the by-law-approved buildable area of structure of 76,120 sf, yielding the aforesaid $3,806,000.

5Tony Racioppo, representing MPAC, led testimony by Clancy Howes, his witness, that the GRAD report was erroneous in three respects: the $40 psf of buildable area is unsupported; no corner premium for development lots of this type is merited and has not been uniformly followed by MPAC for City properties; and buildable gross floor area for the property is no more than 68,340 sf. On behalf of MPAC, Mr. Howes accordingly recommends a reduction in the assessment to $3,759,000 (rounded). This is derived from his Exhibit 1 Assessment Analysis of five time-adjusted property sales on a psf of zoning-approved basis, modified marginally based on assessments settled by negotiations at $55 psf for properties that he considered as like development sites at a comparable development stage.

6Hussein Mussani, appearing for the Assessed Person/Respondent, considers Mr. Howes’ recommendation to be inadequate. He argues that correcting the GRAD report to delete the 25% corner lot premium and applying the $40 psf to the actual approved buildable area of 68,340 sf. should set the upper limit of the assessment at about $2,733,000. Alternatively, he suggests an assessment of $2,186,900, utilizing a value of $32 psf. This is the approximate time adjusted sale price psf of what he understands to be the buildable area of a property at 60 Shuter Street that was disclosed in MPAC’s response to the City’s Statement of Issues.

7Angus Mackay, representing the City, supports Mr. Howes’ recommendation. While introducing no evidence, Mr. Mackay participated actively in cross-examinations and closing argument.

8I must determine the appropriate value psf of buildable area to apply to the subject property’s 68,340 sf approved buildable area, and hence it’s correct current value. Additionally, I have a statutory obligation to refer to the assessments of similar lands in the vicinity, and to adjust the current value downward if necessary to achieve equity with the other properties’ assessments.

DECISION

9The assessment is reduced from $3,806,000 to $3,759,000 for the 2015 and 2016 taxation years.

10The assessment is equitable with the assessments of similar lands in the vicinity, and hence no additional assessment reduction is necessary.

11The classification of both years’ assessments is changed from the residential property class to the multi-residential property class, on consent of all parties.

REASONS

Current Value

12Section 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.

13The Act establishes January 1, 2012 as the valuation date for 2015 and 2016 taxation and defines current value to mean:

… 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.

Hence, the marketplace is to be determinative of current value.

14The only sales in evidence are those introduced by Mr. Howes. His Assessment Analysis sets out five properties, all sold as sites principally zoned for multi-residential development. A sixth vacant land sale at 60 Shuter Street was included in MPAC’s earlier Response to the City’s Statement of Issues. This parcel merits no weight in my determination for the same reason that it was excluded by Mr. Howes from his Analysis; namely, it does not and did not have approved zoning enabling a specific maximum gross floor area for the intended structure, and was therefore erroneously included in MPAC’s Response.

15Developments of this nature progress over a period of time. On the balance of probability, a site’s value increases as the stages of development progress, and an approved rezoning by-law would likely be a critical later stage in this pre-construction process. It would accordingly be inappropriate to utilize this sale in the determination of the subject property’s value in the marketplace without meaningful evidence to establish the differential in value added by adoption of a rezoning by-law by the municipality. There is no such evidence before me.

16Mr. Mussani introduces the issue of location for my consideration. He maintains that the subject property is east of Yonge Street in the “Moss Park” area, whereas the five sales in Mr. Howes’ Analysis are all west of Yonge Street in what he describes as the “clubbing” district. He contends that values increase as one moves westward.

17While there may possibly be merit to this proposition, I cannot make any such finding without an evidentiary basis to quantify the impact of locational variances, if any, between these two “districts”.

18Neither Mr. Mussani, nor Mr. Mackay drew into question by evidence or by cross-examination the evidence attributable to the five sales utilized by Mr. Howes as to sale dates, their time adjustments, approved gross floor areas, or the adjusted sale prices psf of gross floor areas.

19I find that $55 psf is a reasonable basis to establish current value for the subject property. The range of the five sales psf of buildable area is from $51.40 to $78.26, the median and average being $59.93 and $56.58 respectively. $55 psf falls within this range of sales and is marginally (and favourably to the Assessed Person) below the median and average of the five sale prices psf. Mr. Howes has proposed that $55 psf be the current value as it closely relates to what his sales evidence demonstrates, and it corresponds to appeal settlement values established for two of the sold properties and an unsold property at 68 Shuter Street that was also a vacant multi-residential zoned site. Mr. Henderson adopts Mr. Howes’ conclusion, and so do I for the same reasons.

20I understand the Assessed Person’s discomfort with the erroneous GRAD report, and the subsequent utilization of a $55 psf in lieu of $40 psf of buildable area. It is unfortunate that an incorrect buildable area was indicated, and that there appears to be no basis or explanation for MPAC’s selection of the $40 psf figure. Nevertheless, this circumstance has no bearing on my decision. In an assessment appeal, I must base my determination on the evidence presented. In this instance, the $40 psf of buildable area is not supported by any evidence. Rather, the evidence has been found to support a value of $55 psf. There is no dispute by any party that no corner premium is applicable here, and the undisputed actual maximum buildable area is 68,340 sf. The correct rounded current value is accordingly $3,759,000.

Equity with Other Properties’ Assessments

21Section 44(3) of the Assessment Act states in part:

Same, 2009 and subsequent years

(3) 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.

22I find that the evidence does not indicate an inequity for the subject property, when compared to other properties’ assessments. There is no evidence of other properties’ assessed values, except for Mr. Howes’ testimony referred to above, whereby three properties’ assessments were settled under appeal at $55 psf of buildable area. Two were in the “clubbing” district and one at 68 Shuter Street, in close proximity to the subject,

23These are found to be similar, as a key determinative factor is approved rezoning of vacant land as primarily multi-residential. Additionally, as explained in my opening comments in the hearing, vicinity expands to incorporate a handful of similar lands. While more evidence of other properties’ assessments would have been preferable, I must restrict my reference to the evidence that is presented. Nothing in evidence indicates an assessment based on $55 psf of buildable area for the subject property to be inequitable.

24Mr. Mussani does point out a considerable discrepancy with respect to the substantial variance between the sale price of the 426-438 Adelaide Street property at $78.26 psf, as listed in Exhibit 1, and its assessment settlement at $55 psf. While this may be indicative of something extraordinary respecting this property’s sale, its initial assessment value as returned is not in evidence, nor is any other information. Bearing in mind that the burden of proof respecting equity in this matter rests with the Assessed Person, there is no basis for me to derive any conclusion respecting inequity arising from the variance as impacting on the subject’s assessment in any quantifiable way.

CONCLUSION

25Utilizing the $55 psf of buildable area found to be representative of current value psf based on the determinative sales evidence, restricted to properties having approved zoning principally for redevelopment as multi-residential, the current value for the subject property is found to be $3,759,000.

26This value is not demonstrated to be inequitable in respect to the other similarly zoned properties in evidence.

27The classification is changed, on consent of all parties and with my concurrence, to the multi-residential property class.