1785192 Ontario Inc. v. Municipal Property Assessment Corporation, 2016 CanLII 63435

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 14, 2016

FILE NO.: WR 142092

Assessed Person(s): 1785192 Ontario Inc.

Appellant(s): 1785192 Ontario Inc.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 13

Respondent(s): Town of Whitby

Property Location(s): 1425 Dundas Street East

Municipality(ies): Town of Whitby

Roll Number(s): 1809-040-026-21800-0000

Appeal Number(s): 3139327

Taxation Year(s): 2016

Hearing Event No.: 635199

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

Heard: August 22, 2016 in Whitby, Ontario

APPEARANCES:

Parties	Representative
1785192 Ontario Inc.	Paul Grosman
MPAC	Aaron Glover
Town of Whitby	Malcolm Crowe

MEMORANDUM OF ORAL DECISION DELIVERED BY JENNIFER GRIFFITH ON AUGUST 22, 2016

INTRODUCTION

1The appeal before the Assessment Review Board (“Board”) is filed by the assessed person, in respect to the returned assessment of $2,807,000 for the 2016 taxation year for the subject property at 1425 Dundas Street East, in the Town of Whitby.

ISSUE

2Aaron Glover, representative for MPAC is of the view that the returned assessment of $2,807,000 for the subject property is fair and equitable, based on the sales of similar lands in the vicinity.

3Paul Grosman, representative for the assessed person/appellant is of the view that the subject property is assessed too high and that a fair and equitable assessment should be $2,061,000 (rounded), based on the average Assessment to Sales Ratio (“ASR”) of 0.7343 per cent based on seven sales which occurred over the period 2011 through 2013. To arrive at this value, Mr. Grosman applied the average ASR to the returned assessment value ($2,807,000 x 0.7343 per cent) = $2,061,000 (rounded).

4Malcolm Crowe, representative for the Town of Whitby supports MPAC’s position.

5The Board has to decide:

• Whether the returned assessment of $2,807,000 for the 2016 taxation year for the subject property is at current value as at the valuation date January 1, 2012; and
• Whether the value is equitable with the assessments of similar lands in the vicinity.

DECISION

6The Board determined the current value to be $6,358,000 (rounded) and finds that an equity adjustment is required. When the median ASR of 0.91 per cent is applied to the current value as stated above it results in a value of $5,786,000 (rounded) which is significantly higher than the returned assessment of $2,807,000 and does not support a reduction.

7As this appeal is not seeking an increase in assessment value, the Board confirms the returned assessment for the subject property at $2,807,000 for the 2016 taxation year. The Board finds this value to be fair and equitable.

REASONS FOR DECISION

Background

8The subject property is described as a one-storey commercial building located at 1425 Dundas Street East, in the Town of Whitby. The subject property was built in 1972 and with improvements that range to 1985, with a site area of 3.77 acres, and a total building area of 26,058 square feet (“sq. ft.”) (Exhibit 1, page 3).

The Legislation

9In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Assessment Act (“Act”).

10Section 1 of the Act states:

“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.

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

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

12Section 19.2(1)3 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.

13Section 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.

14Section 40.(19) of the Act states:

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

15In determining the value at which any land shall be assessed, s. 44.(3)(a) and (b) of the Act requires the Board to do two things:

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.

Current Value

MPAC’s position

16In presenting his case, Mr. Glover testified that the returned assessment of $2,807,000 for subject property was determined by the cost approach and that the subject property was sold in November 2012 for $3,630,000. He presented Exhibit 1, containing sales analysis of five sales (including the sale of the subject property) sold in 2011 and 2012 and located in the Whitby, Ajax, Pickering and Uxbridge vicinity. The analysis included both actual sale prices and time adjusted sale prices. The Board relies on the actual sale prices.

17The sales analysis show that these comparable properties have an average total building area of 20,870 sq. ft. and a median sale price of $244 per sq. ft. based on total building area. Applying the median sale price to the subject property results in a value of $6,358,000 rounded ($244 x 26,058 sq. ft.).

Appellant’s Position

18In presenting his case, Mr. Grosman presented Exhibit 2, and called Greg Mason as a witness. Mr. Mason is the owner of the subject property and he testified that the subject property was listed on the open market for a long time, that he did not know the asking price listed on the open market, and that he purchased the subject property directly from the owner (Gus Brown) who happens to be his neighbour. He testified that he negotiated the sale with Mr. Brown and in the end Mr. Brown agreed on the sale price of $3,650,000.

19Mr. Mason testified that he was under extreme pressure from Hyundai Auto Canada Corp. to comply with their operating standards as stated in a copy of a letter to him dated September 12, 2012 (Exhibit 2) or deal with the consequences stated in the letter. It is his view that he paid too much for the subject property in 2012. Although Mr. Mason felt that he paid too much for the subject property, he failed to obtain an appraised value before purchasing the subject property and failed to investigate the listed price on the open market.

20Mr. Mason testified that there were other deficiencies that were not taken into consideration and would have negatively impacted the sale price. These deficiencies he testified are a leaky roof, contamination, low ceiling and unpaved areas. It is his opinion that the cost to cure for contamination would be in the range of $200,000 to $250,000, and paving around $540,000.

21Mr. Grosman presented no sales evidence in support of current value.

22In reviewing all of the above evidence, the Board did not rely on the evidence presented by Mr. Grosman, because he presented no official cost-to-cure evidence in support of a reduction for the deficiencies outlined above, that he presented no factual evidence to quantify the impact of duress by Hyundai Auto Canada Corp. (list price and/or appraisal value) and no open market sales in support of current value.

23Mr. Crowe presented no evidence in support of current value and relies on MPAC’s evidence.

24The Board finds the best evidence to be the median sale price of $244 per sq. ft. presented by MPAC as stated above. Based on the median sale price, the Board determines the current value to be $6,358,000.

25Based on all of the above evidence the Board determines the current value to be $6,358,000.

Equity

26Mr. Glover presented an Equity Analysis, contained in Exhibit 1, based on 30 sales of similar properties which occurred in 2011 and 2012. The analysis show that these 30 sales have a median ASR of 0.91 per cent. Applying the median ASR of 0.91 per cent to the current value of $6,358,000, results in a value of $5,786,000 (rounded).

27Mr. Grosman presented an Equity Analysis, Exhibit 4, based on seven sales from the Durham area, which occurred over the period 2011 through 2013. The analysis show that these seven sales have a median ASR of 0.7343 per cent. Based on this analysis, Mr. Grosman applied the median ASR to the returned assessment of $2,807,000 ($2,807,000 x 0.7343) to arrive at an assessed value is $2,061,000 (rounded).

28Mr. Crowe presented no evidence in support of equity and relied on MPAC’s evidence.

29On cross-examination the issue of the location of the comparable properties presented in support of equity by Mr. Glover and Mr. Grosman was raised. In addressing the issue, the Board agrees with Mr. Grosman that vicinity is not defined in the Act. The Board’s approach is to use sales of similar properties as close to the subject property’s as possible, and if necessary, expand the search for sales of similar properties beyond the immediate area of the subject property in order to assist the Board in its determination.

30Based on all of the evidence, the Board finds that MPAC presented the best evidence in support of equity, with the median ASR of 0.91 per cent which results in a value of $5,786,000 (rounded), when applied to the current value as stated above. This value is significantly higher than the returned assessment of $2,807,000 as stated above.

CONCLUSION

31Based on all of the evidence, the Board determined the current value to be $6,358,000 and when an equity adjustment is applied to the current value it results in a value of $5,786,000 which is significantly higher than the returned assessment of $2,807,000 and does not support a reduction.

32As this appeal is not seeking an increase in assessment value, the Board confirms the returned assessment for the subject property at $2,807,000 for the 2016 taxation year. The Board finds this value to be fair and equitable.