Atlantis v. Municipal Property Assessment Corporation, 2016 CanLII 5570

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 4, 2016

FILE NO.: WR 138336

Assessed Person(s): Konrad Dietzel and Richard Dietzel

Appellant(s): Atlantis

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15

Respondent(s): City of Mississauga

Property Location(s): 7205 Millcreek Drive

Municipality(ies): City of Mississauga

Roll Number(s): 2105-040-157-71900-0000

Appeal Number(s): 2962405, 3033561 and 3084805

Taxation Year(s): 2013, 2014 and 2015

Hearing Event No. 601132

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

Heard: January 14, 2016 in Mississauga, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Konrad Dietzel and Richard Dietzel

Nathan Marks

MPAC

Sarah Davis

City of Mississauga

No one appeared

DECISION OF THE BOARD DELIVERED BY SONIA LIGHT

ISSUE

1The subject property is located in the City of Mississauga just south of Highway 401 and west of Derry Road West. The property contains a building of approximately 12,000 square feet on a 1.0 acre site. The building was constructed in 1989 and is classified by MPAC as a standard industrial property. It is currently leased to a single tenant for use as a private school.

2MPAC returned the assessment for the 2013, 2014 and 2015 taxation years at a value of $1,780,000. In reviewing this matter for the hearing, MPAC determined that the assessment should be adjusted upward based on the cost of certain renovations to the subject property and then reduced based on equity considerations. Overall, MPAC recommends the assessment be reduced to $1,674,000.

3The representative for the Appellant argues that based on an analysis of comparable sales and equity considerations, the assessment as returned and the recommended assessment are too high. He argues that the assessment should be reduced to $1,320,000.

4The Assessment Review Board (“Board”) must determine whether the 2013 assessment is correct and equitable.

DECISION

5For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act (“Act”) the Board finds that the current value of the subject property is $1,452,000.

6The Board finds that a further reduction in assessment in the current value pursuant to s. 44.(3)(b) of the Act based on equity considerations is justified and accordingly reduces the assessment to $1,306,800.

7Accordingly, the assessment of the subject property for the 2013, 2014 and 2015 taxation years is reduced to $1,306,800.

REASONS FOR DECISION

Legislation

8Section 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.

9Section 19.(1) of the Act states:

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

10Section 19.2(1) 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.

11Section 40.(26) of the Act directs:

40.(26) Deemed appeals, 2009 and subsequent years. – 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.

12Section 44.(3) 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 land.

Current Value Analysis

13Sarah Davis, property valuation analyst with MPAC, prepared a valuation report for this hearing that she submitted to the Board as Exhibit 1. In her report she indicates that she relied primarily on a cost approach in determining the value of assessment and then used a direct comparison approach to support the original valuation determined using the cost approach. She included in her report two summaries from MPAC’s automated cost system (“ACS”) and it would appear that the second summary is what she relied on at the hearing since it included an upward adjustment for $123,000 for renovations in 2009 that she indicated needed to be added to the initial assessment of $1,780,000 bringing the total revised assessment to $1,903,000 before applying a further adjustment for equity. However, the Board finds that the information in the ACS summaries was not presented or explained in any meaningful or intelligible manner and therefore the Board cannot place much weight on this evidence of value.

14Ms. Davis also prepared a document on comparable sales which she submitted to the Board as Exhibit 2. According to her valuation report (Exhibit 1) she identified five comparable properties in the vicinity based on their being located on side streets and having attributes she considers as similar to the subject property in terms of framing, exterior wall makeup and office areas. She determined time adjusted values for these sales and further adjusted the sales prices by applying adjustment factors from the same ACS data bank used to determine the returned assessment. She considered lot size, year built and height as being “the variables with the greatest impact on value” and used ACS data to make the relevant adjustments. Again, the Board cannot rely on the adjustments made based on ACS data without any explanation as to how these adjustments were derived. This is especially so given the fact that the resulting adjustments based on lot size alone were substantial and therefore, justification for the adjustments was necessary in terms of evidentiary support.

15The Board has reviewed the time adjusted sale prices for the comparable sales provided in MPAC’s Exhibit 2 and calculated the average time adjusted price per square foot of the comparable properties to be $121 per square foot. Again, there was no reliable evidence produced at the hearing that would support an adjustment upward in price per square foot to the time adjusted sale prices submitted by MPAC.

16Nathan Marks presented to the Board as Exhibit 4 the Valuation Report he prepared for the hearing. He argued that MPAC’s cost approach to valuation does not result in a correct valuation based on his review of comparable sales. In his report he presented a larger sample of 15 suggested comparable sales of industrial properties in Mississauga transacted in 2011 and 2012. At page 13 of his report he indicates that the average time adjusted sale price for these sales as $121 per square foot. This tends to corroborate the time adjusted sale per square foot price calculated above based on MPAC’s suggested comparable sales without the adjustments for lot size, building height and age which the Board determined MPAC did not have the evidence to support.

17Therefore, the Board considers that $121 per square foot is a legitimate indicator of the current value per square foot of the subject property. Based on a building size of 12,000 square feet the Board calculated the current value for the subject property as $1,452,000.

Equity Analysis

18Ms. Davis submitted as Exhibit 3 an equity study analysis prepared for MPAC demonstrating that the sales of similar properties in the vicinity of the subject property have a median assessment to sales ratio ie. ASR of 0.90.

19The Board finds that the analysis supports a further reduction in the assessment for equity pursuant to s. 44.(3)(b) of the Act.

20Accordingly, the Board finds that the assessment should be reduced by a further $145,200 to $1,306,800.