1691498 Ontario Inc. v. Municipal Property Assessment Corporation, Region 15, 2016 CanLII 74067

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 25, 2016

FILE NO.: WR 139143

Assessed Person(s): 1691498 Ontario Inc.

Appellant(s): 1691498 Ontario Inc., Steve Krasic

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

Respondent(s): Town of Oakville

Property Location(s): 571 Argus Road

Municipality(ies): Town of Oakville

Roll Number(s): 2401-030-010-00200-0000

Appeal Number(s): 3002275 and 3084548

Taxation Year(s): 2014 and 2015

Hearing Event No.: 619941

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

Heard: February 25, 2016 in Oakville, Ontario

APPEARANCES:

Parties	Representative
Appellant	Steve M. Pocrnic
MPAC	Raj Rakhra
Town of Oakville	No one appeared

DECISION OF THE BOARD DELIVERED BY M. SPRAGGETT

INTRODUCTION

1This appeal came before the Assessment Review Board (“Board”) on February 25, 2016, in the Town of Oakville.

2The subject property, zoned as commercial (C38, as of 2015), is a 0.29 acre (12,846.01 sq. ft.) vacant parcel of land, in the Town of Oakville. With an effective frontage of 151.88 ft. and an effective depth of 84.58 ft., it is located near Cross Avenue. There is a main train station located across the street (Cross Ave.), host to GO transit, Via Rail and Amtrak train services.

3Raj Rakhra, appearing on behalf of MPAC, presented a Valuation Report (“Report”), outlining that it is the position of MPAC that the highest and best use (“HABU”), for the subject property is, without specifics, commercial use. For vacant commercial land, MPAC applied the “principle of substitution”, by utilizing the Direct Sales Comparison Approach as the valuation methodology to arrive at current value. In this instance, Mr. Rakhra indicated in addition to the Direct Sales Comparison Approach, that the “Land Residual Technique” was also applied to perform a comparative analysis, as there were no vacant lots available for consideration as comparables. In evidence, the sales of three suggested properties were provided by MPAC. Mr. Rakhra stated that the subject property has been assessed based on the evidence of the sales of similar properties in the vicinity of the subject property.

4MPAC is asking the Board to confirm the reduction of the Current Value Assessment (“CVA”) as returned of $804,000 as of the January 1st, 2012 valuation day, to that of $732,000, as being the correct current value for the subject property.

5Steve Pocrnic of Pocrnic Realty Advisors Inc., (“Appellant”), appeared as a representative of the Assessed Person, Steve Krasic.

[6] Mr. Pocrnic argued that:

• The comparable properties suggested by MPAC are superior to the subject property. The new zoning by-laws, C38, (change occurred sometime in 2015), negatively impact on any potential commercial development, by discarding all site specific zoning issues grandfathered from the previous zoning by-laws (C3A). Mr. Pocrnic stated that the new zoning by-laws require onerous set-back minimums, thereby placing the property in a “holding pattern” with no specific commercial application as a standalone property. The Appellant is concerned the property has lost value on account of the new zoning, with perhaps no option other than the lessor valued alternative of parcel assembly.
• The Appellant is appealing MPAC’s CVA of $804,000 as well as the proposed reduced value of $732,000 ($58/sq.ft.). Accordingly, the Appellant suggests a value of $385,000 ($30/sq.ft.)

7The Board must determine both the correct current value of the subject property and whether the assessment of the subject property so determined is equitable with the assessments of similar properties in the vicinity of the subject property.

DECISION

8For 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, as at the valuation day January 1, 2012, is $556,000.

9The Board finds that there is no evidence before it leading to the conclusion that the current value of the subject property, as determined above, requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

10Accordingly the assessment of the subject property as at the valuation day, January 1, 2012, is confirmed at $556,000.

REASONS FOR DECISION

Current Value Analysis

11The initial task for the Board is to determine the current value of the subject property as required by s. 44.(3)(a) of the Act “…the Board shall…determine the current value of the land…”

12Section 19.(1) of the Act states that “…the assessment of land shall be based on its current value…” and s. 1 of the Act defines current value as “…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…”

13The best test of current value is an arm’s length and market tested sale of the subject property on the valuation day, January 1, 2012 or close to it. If, as in this case no such transaction took place, the next best measure of current value is arm’s length and market tested sales of comparable properties in the same vicinity and market, on or close to the valuation day. This measure acts as a benchmark and a gauge of the accuracy for the assessed value of the subject property and comparable properties.

14To enable an estimate of value for the subject property to be derived from a comparable property, there must be sufficient elements of similarity, in terms of physical factors such as total building area, land area, land frontage, age of construction, physical condition etc.; and in terms of neighbourhood characteristics such as access to amenities, type and nature of housing etc., so as to enable a direct comparison to be made between the comparable property and the subject property.

15Furthermore, to be indicative of both the market and values on the valuation day, a sale of a suggested comparable property should occur close to the valuation day. Generally the Board prefers the sale of properties that occur within six months on either side of the valuation day. When such evidence is either limited or not available, the Board has accepted sales of properties up to 18 months on either side of the valuation day, or in exceptional circumstances, greater time periods.

MPAC's Arguments

16Mr. Rakhra of MPAC provided the Board with three sales of suggested comparable properties which he argued are similar and within the vicinity of the subject property. The Land Residual Technique was applied on two of the properties to account for any buildings on the property. The Board rejects the Old Mill Road property as a suitable candidate for comparison to the subject property, as it raises doubts whether the assessment value is for more than one property address. Mr. Rakhra stated that the selection criteria for the comparables was solely based on use and lot size.

17The Board understands MPAC's downward adjustment to $732,000 by selecting the median value of the "Land Residual/Lot Size" of the three comparables provided. However as the median value happens to be associated with the Old Mill Road property, which the Board has rejected, there remains only two principal properties to derive a new median, or in this case a mean value, which is $54/sq.ft. Applied to the subject lot area, the downward adjustment becomes $682,000 and not $732,000.

Appellant's Arguments

18The Appellant argued that the subject property is handicapped in many ways on account of the new zoning by-laws. Mr. Pocrnic noted in his submissions, that there are 73 feet of setback requirements, on a lot of only 83 feet depth. He stated that a very expensive process with an application for a zoning amendment and a full site plan review would be required before it could be determined specifically, what can be constructed on this site. The Board notes the Appellant’s argument, however no evidence is provided to demonstrate the impact on determining current value. The costs associated with business undertakings are speculative in nature and the Board cannot take a position without convincing evidence. In this instance there is no evidence before the Board to show that an application has commenced or is in process for any development plans, for the Board to provide a measured response to these setback issues in its determination of current value.

19The Board heard from the Appellant that this was not the first time for the property to appear before the Board. Mr. Pocrnic stated that for the past three assessment cycles, this property has made appeals before the Board, with the Board's decision usually reversing the assessed value and returning the CVA to the prior sale price of the property. The Board notes however, that the 2008 CVA of $235,000 as well as the 2012 CVA of $804,000 are based on broader open market driven sales activities. The Board notes that the Appellant did not appeal the 2008CVA, and is appealing the current 2012 CVA with a CVA proposal based on recent sales data. It is important to note that the Board has no authority from the Act to reference previous assessment cycles in its determination of current value for the subject property.

20The Board notes that the Appellant is seeking a current value of $385,000 based on comparing properties that have sold in the open market, notwithstanding the admission by Mr. Pocrnic that he used assessment values and not the sales values of these comparables to arrive at his suggested current value for the subject property.

Comparable	Lot Size (sq. ft.)	CVA 2012 (Land and Bldg)	ACS (Bldg)	CVA 2012 Land	CVA Land 2012 per (sq. ft.)	Sold Price	Time Adj. Sale Price	Land Residual (sq. ft.)
Subject 571 Argus Rd.	12,632	0	804,000 (732,000)	64 (58)	64 (58)
68 Shepherd Rd.	8,276	279,000	0	279,000	34	550,000	542,942	61
142 Cross	21,344	926,000	137,567	788,433	37	1,000,000		40
227 Cross	35,284	1,482,901	394,329	1,088,572	31	1,620,000		35
2910 South Sheridan Way	10,890	997,000	506,997	490,003	45	990,000	1,023,721	47
median					33
median								44

21Steve Pocrnic, provided six suggested comparable properties, one of which was not sold, and referenced assessment values, not sold prices in his presentation. Mr. Pocrnic stated that he used assessment to sales ratios (“ASR”) instead of the sales themselves, because the ratio is lower. The Board rejects the Appellant’s approach for determining current value and will make a determination based on sales, not assessed values. The Table above illustrates those properties considered by the Board in making its determination of current value for the subject property.

22The Board rejects Mr. Pocrnics’ suggested comparable of 217 Cross Avenue, adjacent to the subject property. Except for the fact both properties are the same owner, there is no sales activity for the Board to consider. The property is an ongoing business concern for a Swiss Chalet operation. In addition the Board gives no weight to 1129 and 1291 Speers Road as they are far removed from the vicinity of the subject property and are very large lots in comparison to the subject property. The Board accepts the 142 and 227 Cross Avenue comparables for its consideration, as they are similar and particularly within close proximity to the subject property.

23The Board has accepted only three of the six comparables, one of which is also used by MPAC, and referred to the sales of these properties, not the assessed values, as the Board is of the opinion the market driven process is more reflective of current value. The Board also notes that the ASR values are indicating that the comparables are under-assessed. See table in Equity section below.

24Based on the four comparables that provide sufficient similarity to the subject property for the Board to make a determination of current value, see table below, the Board determines the current value for the subject property as being $556,000.

Equity Analysis

Current Value of Subject Property	Comparables	Land $ sq. ft. Median	Subject Current Value
MPAC	2	54	682,128
Appellant	3	40	505,280
Board	4	44	556,000

25The Act was amended for taxation years beginning with 2009 to require the Board to lower an assessment below current value if required to make the assessment equitable with the assessments of similar properties in the vicinity.

26Section 44.(3)(b) of the Act states that “…the Board shall…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.”

27Neither party provided any evidence on the matter of equity. The Board determined the ASRs (see table below) to fall below the median ASR of 1.00, which is a measured value indicative of similar properties in the vicinity of the subject property being equitably assessed at their current values. In this instance the Board finds the properties provided as evidence to be under assessed at their current values.

Property	CVA 2012 Land and Building	CVA 2012 Land Only	CVA 2012 Land $/sq/ft.	Sold Price	CV Residual Land	CV Residual Land $/sq. ft.	ASR
68 Shepherd Road	279,000	279,000	34	550,000	542,942	61	.51
142 Cross Avenue	926,000	788,433	37	1,000,000	862,433	40	.91
227 Cross Avenue	1,482,901	1,088,572	31	1,620,000	1,225,671	35	.89
2910 South Sheridan Way	997,000	490,003	45	1,023,721	516,724	44	.95

CONCLUSION

28Accordingly, the Board finds that there is no evidence before it leading to the conclusion that the current value of the subject property, as determined above, requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

29The Board finds the current value of the subject property, as at the January 1, 2012 valuation day to be $556,000.