Interes Holdings Limited v. Municipal Property Assessment Corporation, 2016 CanLII 72411

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 20, 2016

FILE NO.: WR 141992

Assessed Person(s): Interes Holdings Limited

Appellant(s): Interes Holdings Limited

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

Respondent(s): City of Mississauga

Property Location(s): 235 Watline Avenue

Municipality(ies): City of Mississauga

Roll Number(s): 2105-040-116-25380-0000

Appeal Number(s): 2962179, 3031180, 3082750 and 3153577 (deemed 2016 appeal)

Taxation Year(s): 2013, 2014, 2015 and 2016 (deemed appeal)

Hearing Event No.: 614146

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

Heard: February 10, 2016 in Mississauga, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Interes Holding Limited	Nathan Marks
MPAC	Biagio Galle
City of Mississauga	Sandie Turnbull

DECISION OF THE BOARD DELIVERED BY CRISTINA MARQUES

ISSUE

1The subject property is improved by a one storey 10,276 square feet (“sq. ft.”) single tenant industrial facility built in 1985. 0.25 acres of the 0.91 acre lot is designated as a “Natural Area” and is included in the City of Mississauga’s Natural Area Survey.

2For the 2013, 2014 and 2015 taxation years, the property is classified in the Industrial Property Tax Class (“IT”) and is assessed at $1,691,000. Biagio Galle, appearing for MPAC, testified that the Automated Cost System (“ACS”) was used to value the subject property.

3Following a sales analysis and a June 3, 2015 inspection, MPAC recommended that the classification of the subject property for the 2013, 2014, and 2015 taxation years be changed as follows:

• 0.25 acres of the lot be classified as Commercial (Excess Land) (“CU”).
• The IT classification to be changed to Commercial (Full) (“CT”) because no actual manufacturing is done on site.

As a result of these changes the revised recommendation for the value of the subject property is:

$1,085,000 CT $ 333,000 CU $1,418,000 Total

4The Appellant accepted the classification changes, but is of the opinion that the assessment for the subject property as recommended is still too high, and urged the Assessment Review Board (“Board”) to reduce the assessment of the subject property to $1,182,000 for all taxation years.

DECISION

5The Board must determine the correct current value for the subject property and whether the assessment of the subject property is equitable with the assessments of similar properties in the vicinity of the subject property:

1. As directed by s. 44.(3)(a) of the Assessment Act (“Act”), the Board finds that the current value of the property is $1,202,000 for the 2013, 2014 and 2015 taxation years.
2. Further, the Board finds that there is no evidence before it to support the conclusion that the assessment of the subject property, as determined above, requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

6Accordingly, the assessment of the subject property for all taxation years is $333,000 in the CU Property Class, and $869,000 in the CT Property Class for a total value of $1,202,000 for the 2013, 2014 and 2015 taxation years.

REASONS FOR DECISION

Legislation

7The Board must have regard to s. 1, s. 19.(1), s. 19.2(1), s. 40.(17), s. 40.(19) and s. 44.(3)(a) and (b) of the Act when determining whether or not the assessment under appeal is correct.

8Section 1 of the Act defines current value as follows:

“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) of the Act provides:

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.(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.

12Section 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.

13Section 44.(3)(a) and (b) of the Act state:

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.

Board’s Analysis

Current Value

14The best indicator of current value is an arm’s length and market-tested sale of a property on the valuation date, January 1, 2012, or close to it. Since the subject property did not sell, the Board will rely upon the sale of similar properties in the vicinity on or close to the valuation day as the secondary test of the cost approach.

15Mr. Galle, in support of the recommendation, presented Exhibit 1 consisting of an MPAC report which included a location and current value study map; photographs of the subject property and of the suggested comparables; a property details report; and a comparable property report with four properties. He testified that MPAC values properties such as the subject property using the ACS. In this methodology an estimate is made for the replacement of the components of the structure based on the current value. The total replacement cost is then adjusted for depreciation, age and obsolescence. This analysis indicates a value of the building and then the value of the land is added to it.

16The assessor identified six sales of properties which were presented to demonstrate the accuracy of MPAC’s method of valuation through the cost approach. Mr. Galle testified that the variables that have greatest impact on value are location, lot size, building quality and character of construction, as well as building age.

17Details of each property proposed by MPAC are summarized in Table 1 below:

Table 1

Address	Building Size (sq. ft.)	Lot Size (acres)	Year Built	Land Value	Sale Date	Sale	Assessment	Assessment / sq. ft.
Subject Property 235 Watline Avenue	10,276	0.91	1985	854,694	n/a	n/a	1,691,000 Recommendation 1,418,000	165 Recommendation 138
Sale 1 264 Watline Avenue	10,506	0.71	1987	n/a	Apr-2011	1,330,000	1,375,000	131
Sale 2 325 Brunel Road	11,336	0.75	1985	n/a	May-2012	1,500,000	1,405,000	124
Sale 3 1060 Stacey Court	10,500	0.60	1986	n/a	Mar-2012	1,200,000	1,177,000	112
Sale 4 3439 Wolfedale Road	21,600	0.87	1986	n/a	Apr-2013	1,575,000	1,512,000	122
Sale 5 385 Watline Avenue	12,160	0.69	1984	n/a	Sep-2010	1,427,500	1,351,000	111
Sale 6 310 Watline Avenue	12,687	0.81	1987	n/a	Feb-2013	1,710,000	1,511,000	119

18Mr. Galle stated that none of the suggested comparable sales have a CU component, but they are all in the same area as the subject property with sales ranging from $72 to $135 per sq. ft. with a median of $122 per sq. ft. He submitted that the subject property’s value at $138 as recommended is correct. In his opinion the 0.25 acre of land within the Natural Survey Area provides the extra coverage for a possible building envelope enlargement.

19Nathan Marks submitted Exhibit 2 consisting of a property profile of the subject property with photographs and a statement of his opinion of value. In his view the land designated by the Municipality in the Natural Survey Area brings no extra value to the subject property.

20The Board received no evidence that the lands designated within the Natural Survey Area can be used to increase the building envelope of the subject property. Although the Municipality was represented by Sandie Turnbull, she did not specify that these lands could or would be beneficial to the Appellant if a building envelope enlargement was contemplated. The 0.25 acres of land designated as Natural Survey Area has value, and MPAC designated it as being $333,000. The Board has no evidence that indicates that this value is incorrect.

21Mr. Marks submitted nine comparable properties in support of his proposed current value. They are located within three kilometres of the subject property and sold within 12 months of the valuation day of January 1, 2012. Details of each property proposed by the Appellant are summarized in Table 2 below:

Table 2

Address	Building Size (sq. ft.)	Lot Size (acres)	Year Built	Land Value	Sale Date	Sale / Time adjusted Sale per sq. ft.	Assessment	Assessment / sq. ft.
Subject Property 235 Watline Avenue	10,276	0.91	1985	854,694	n/a	n/a	1,691,000 Recommendation 1,418,000	165 Recommendation 138
• 1 Also MPAC’s comp 264 Watline Avenue	10,506	0.71	1987	n/a	Apr-2011	1,330,000/ 132	1,375,000	131
• 2 Also MPAC’s comp 300 Brunel Road	13,750	0.82	1987	n/a	Mar-2012	1,622,500/ 117	1,538,000	112
• 3 Also MPAC’s comp 1060 Stacey Court	10,500	0.60	1986	n/a	Mar-2012	1,200,000/ 113	1,177,000	112
• 4 325 Brunel Road	11,400	0.76	1985	n/a	May-2012	1,500,000/ 129	1,374,000	121
• 5 335 Watline Avenue	13,533	0.71	1986	n/a	Jun-2011	1,604,000/ 123	1,450,000	107
• 6 346 Watline Avenue	12,743	1.0	1985	n/a	Jan-2012	1,900,000/ 149	1,696,000	133
• 7 5639 Timberlea Boulevard	14,050	0.95	1987	n/a	Mar-2012	1,530,000/ 114	1,691,000	120
• 8 5195 Timberlea Boulevard	15,190	0.81	1989	n/a	Apr-2012	1,700,000/ 110	1,541,000	101
• 9 1246 Aimco Boulevard	13,500	0.81	1978	n/a	Apr-2011	1,495,000/ 116	1,416,000	105

22Mr. Marks testified that the nine similar properties sold in a range of $110 to $149 per sq. ft. (time adjusted at 0.5% per month) with a median value of $117 per sq. ft. Exhibit 2. He submitted that MPAC’s recommendation for the subject property at $138 per sq. ft. is considerably higher than the market is producing in the vicinity.

23For the purpose of a current value analysis the Board accepts all 12 comparables presented by both parties as being the best evidence of current value. The comparables are all reasonably similar to the subject property because they are all CT class properties, they are similar in building and lot size, and they are all in the same vicinity. This analysis does not contemplate the removal of the lands within the Natural Land Survey area as the lot size with or without the 0.25 acres is within the range of lot sizes of the properties the Board determined are good comparables. For the purpose of this analysis the Board will use unadjusted sale prices because the evidence presented by MPAC is without adjustments. The median unadjusted sale price for the 12 comparable properties is $117 per sq. ft. of building.

24The Board can adjust the value of the subject property by applying the average value per square foot of the comparables, that being $117. This value per sq. ft. applied to the subject property results in a Current Value Assessment (“CVA”) of ($117 x 10,276 = 1,202,292) or $1,202,000 (rounded).

Equity

25Section 44.(3)(b) mandates and directs that after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed. The Assessment to Sales Ratio (“ASR”) is a tool often used to determine if an equity adjustment is required. An ASR is determined by dividing the assessment as returned with the time adjusted sale price. An ASR falling below 1.0 is an indication that MPAC’s valuation methodology may be resulting in assessments below values determined in the market place. Conversely, an ASR falling above 1.0 is an indication that MPAC’s valuation methodology may be resulting in assessments above values determined in the market place. An acceptable ASR should fall between 0.95 and 1.05.

26Mr. Marks argued that the subject property’s CVA should further receive an equity adjustment based on the assessment of the Appellant’s sales of $115 per sq. ft. of build. In the Board’s opinion an adjustment based on square foot value, especially with a very small sample as is this case, is not the best evidence of equity before it.

27The best evidence of equity before the Board is the ASR of the 12 comparable. These ASRs range from 0.88 to 1.10 with a median of 0.95. This is a good indication that MPAC is achieving equity in the vicinity.

CONCLUSION

28The Board finds that the subject property’s value is $1,202,000, and that no further adjustment to this value is required to achieve equity with similar lands in the vicinity. The Board reduces the assessment of the subject property from $1,691,000 to $333,000 in the CU Property Class, and $869,000 in the CT Property Class for a total of $1,202,000 for all taxation years in the Commercial Property Class.

2016 DEEMED APPEAL

29An 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.

30Section 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.