Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 07, 2016 FILE NO.: WR 143292

Assessed Person(s): Dalia Serafini, Albert Aragona and Tayme Aragona Appellant(s): Dalia Serafini and Frank Serafini Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09 Respondent(s): City of Toronto Property Location(s): 3 Donnybrook Lane Municipality(ies): City of Toronto Roll Number(s): 1919-022-060-00900-0000 Appeal Number(s): 3117631 and 3148041 Taxation Year(s): 2015 and 2016 Hearing Event No.: 638794

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

Heard: October 12, 2016 in Toronto, Ontario

APPEARANCES:

Parties	Representative
Dalia Serafini	Frank Serafini
Frank Serafini
Albert Aragona	Frank Serafini
MPAC	Maria Cheung and Frank Lee
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1The subject property is a Single Family Detached (not on water), located at 3 Donnybrook Lane in the City of Toronto. It is a long pie-shaped lot with an effective site area of 10,698.17 square feet (“sq. ft.”) that includes an effective frontage of 35 ft. It is improved with a 3,206 sq. ft. two-storey dwelling built in 2013. It has 796 sq. ft. of finished basement and an attached garage. The quality of construction is noted as Quality 8. The subject property is located in The Kingsway neighborhood, a residential neighborhood bounded by Bloor Street West to the south, Dundas Street West to the north, Mimico Creek to the west and the Humber River to the east. The subject property was sold in October 2012 for a time adjusted sale price of $565,683. The new dwelling was completed in 2013. The subject property was sold to the new owner, Albert Aragona, in October 2015 for $1,440,000.

2The assessment was returned at $1,381,000 for the 2015 and 2016 taxation years.

3Maria Cheung, representing MPAC, is of the opinion that the current value falls within the range of the four sales considered in her analysis and that the current value assessment (“CVA”) of $1,381,000 is reasonable and correct and should be confirmed.

4Frank Serafini is the father of Dalia Serafini (“Appellant”), the previous owner of the subject property. He represented his daughter at the hearing. The current owner, Albert Aragona, was also in attendance and provided testimony and submissions to the Board. Peter Simone, a witness, also testified.

5Mr. Serafini is of the opinion that the subject property is assessed too high and that its market value is dramatically affected due to its proximity to a marijuana grow house operation next door at 5 Donnybrook Lane. The owner of 5 Donnybrook Lane holds a valid Personal-Use Production Licence to grow marijuana for medical purposes with 5 Donnybrook Lane listed as his place of storage and production. MPAC’s analysis ignores the marijuana grow house operation next door. Given its unique circumstances, the subject property should be valued for its land value only at $750,000. In his opinion, no one will pay to live there.

6This appeal raises two issues: does the assessment of $1,381,000 reflect the current value of the land; and should the assessment be adjusted to make it equitable with the assessments of similar lands in the vicinity.

DECISION

7For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act (“Act”), the Board finds the current value of the subject property, as of the valuation day of January 1, 2012, to be $1,024,000 and finds that it does not require a further adjustment under s. 44.(3)(b) of the Act in order to make it equitable with similar lands in the vicinity.

8Accordingly, for the 2015 and 2016 taxation years, the assessment of the subject property is reduced from $1,381,000 to $1,024,000.

REASONS FOR DECISION

The Legislation

9The 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.

10Section 19.(1) of the Act states: that the assessment of the land shall be based on its current value. Current value is defined in s. 1 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.

11Section 19.2(1)(3) of the Act provides that for the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

12In determining the value at which the land shall be assessed, s. 44.(3) of the Act requires that the Board (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.

13Section 40.(17) of the Act provides that, where value is the ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

14After hearing the evidence and the submissions of the parties, the Board shall determine the matter pursuant to s. 40.(19) of the Act.

MPAC’s Evidence

15Ms. Cheung assessed the current value of the property using the direct sales comparison approach and provided information on the sales of four properties located in proximity to the subject property. The sales information provided to the Assessment Review Board (the “Board”) included key features of these properties, in order to compare them with the subject property (Exhibit 1). The actual sale price of each property was listed, along with a time-adjusted price for the sales showing the likely value of those properties on the valuation date of January 1, 2012. Ms. Cheung considers Sales A and B as inferior to the subject property and Sales C and D as relatively comparable to the subject property.

16Ms. Cheung also submitted an Equity Analysis included as part of Exhibit 1 that considered 30 arm’s length sales of residential properties within 0.39 kilometers of the subject property that took place between January 2011 and December 2012. They produced a median Assessment to Sale Ratio (“ASR”) of 0.99, well within the International Association of Assessing Officers (“IAAO”) standards of 0.90 and 1.10.

17Ms. Cheung is of the opinion that the current value falls within the range of the four sales considered in her analysis and that the current value assessment (“CVA”) of $1,381,000 is reasonable and correct and should be confirmed.

Evidence regarding the Marijuana Grow House Operation Next Door at 5 Donnybrook Lane

18Mr. Serafini stated that the owner of 5 Donnybrook Lane holds a valid Personal-Use Production Licence to grow marijuana for medical purposes with 5 Donnybrook Lane listed as his place of storage and production. The licence is issued by Health Canada. According to Mr. Serafini, the original licence was issued in November 2012 and allowed five plants. In August 2013, the licence was expanded to allow 317 plants with a maximum storage allotment of 14, 265 grams and 150 grams for personal use. The property located at 5 Donnybrook Lane is listed as an identified marijuana grow house operation in 2013 and 2014 in documentation obtained from the Toronto Police Service in a response dated November 20, 2014 pursuant to an access to information request made by legal representative Robert Aaron (Exhibit 3). An e-mail from PC Miranda dated February 4, 2015 to Mr. Serafini confirms the particulars of the expanded valid Personal-Use Production Licence held by the owner of 5 Donnybrook Lane as detailed above (Exhibit 3).

19Mr. Serafini stated that the house was built in 2013. They did not find out about the licence to grow marijuana until months after the sale and construction was underway. His daughter left the house in August 2014. She has a good job but is subject to random drug testing and did not want to take a chance. The house sat empty as Mr. Serafina alleges it could not be rented or sold because the marijuana grow house operation next door had to be disclosed.

20Mr. Simone referenced photographs included in Exhibit 3 and also referenced in an e-mail dated January 6, 2015 from Mr. Serafini to Faisal Sandhu at the City of Toronto. There is a photograph of a truck containing small marijuana plants that were observed being moved into the house at 5 Donnybrook Lane in December 2014. Another photograph taken through a rear basement window door (since replaced by a steel door) shows maturing plants in the basement of the house. Another photograph shows a large garbage bin in the driveway of 5 Donnybrook Lane in December 2014. It is filled with large green garbage bags. Bins are left in the driveway four times a year for a month at a time. Two other images referenced by Mr. Simone show icicles (some brown in color) flowing from the vents under the soffits in the winter. The house looks decrepit. The marijuana grow house operation is taking place on all three levels of the house plus the garage. The stench is unbelievable raising health concerns. He added that there are people coming and going all the time and cars are parked up and down the street. There are two vicious guard dogs left inside. They are chained to a post when left outside.

21In January 2015, Mr. Serafini and Mr. Simone presented and discussed the evidence (Exhibit 3) with the Ward 4 Councilor for the City of Toronto as the use of 5 Donnybrook Lane was not in compliance with Zoning By–law No. 569-2013, Part 1 Chapter 10, Residential Uses (Exhibit 3). Property Standards shut down the operation. Plants, etc. were taken out. Staff from the Councilor’s office inspected the property at 5 Donnybrook Lane in July 2015 and confirmed that there were no marijuana plants or equipment related to growing marijuana at the location and therefore no contravention in terms of a marijuana grow-house operation at the location (Exhibit 4). Staff was informed by the owner’s representative of the intention to demolish the house and construct a new one.

22The subject property was sold to the current owner in October 2015. It had been listed for sale for over a year. The owner of 5 Donnybrook Lane applied to the Committee of Adjustment for variances concerning the demolition of the existing house and construction of a new one (Exhibit 3). However, nothing happened. After a period of six months, the marijuana grow-house operation resumed at 5 Donnybrook Lane.

23The new owner, Mr. Aragona, stated that the marijuana grow house operation is still in full operation and started up about a month after he moved in with his family, which includes a four year old. The stench is horrid and unbearable. He stated that a large garbage bin was parked outside 5 Donnybrook Lane on the day of the hearing. There are visitors at all hours of the day. He has made complaints to 311 Toronto, the Police and the local Councilor regarding the problem. For all intents and purposes, it is a commercial operation.

24Following the Appellant’s presentation, Ms. Cheung stated that she took over these appeals as the original assessor has retired. She was aware that MPAC’s Case Management had suggested an adjournment of the hearing last January 2016 in order to conduct a study. She stated that she conducted her own analysis using the list of identified marijuana grow house operations licenced in 2011 and 2012 with properties located within the boundaries of 22 Division (with boundaries south of Eglinton down to the Lakeshore and east to the Humber and west to Peel) which is closest to the subject property (Exhibit 3). She considered the single family detached residential properties with licenced grow house operations located within 22 Division with sales of neighboring properties. Her analysis considered four properties (5 Donnybrook Lane, 1042 Kipling Avenue, 21 Abilene Drive and 33 Lynngrove Avenue) and is summarized in Exhibit 4. She did not visit any of the properties. Most do not have any sales of neighboring properties. However, there was a sale at the subject property in 2014 (to the current owner) for $1,440,000; a sale at 57 Prennan Avenue that presumably is in proximity to 1041 Kipling Avenue in 2010 for $965,000; a sale at 19 Abilene Drive next to 21 Abilene Drive in 2009 for $976,000 and a sale at 23 Abilene Drive in 2014 for $1,190,000. These sales do not show an impact on market value of marijuana grow operations on the sales of neighboring properties and Ms. Cheung asked that the assessment of $1,381,000 be confirmed for the 2015 and 2016 taxation years.

The Board’s Analysis

Current Value

25The initial task of the Board is to use the best evidence available to determine the current value of the property as required by s. 1 and s. 19.(1) and s. 44.(3)(a) of the Act.

26The best evidence the Board can receive of current value is an arm’s length and market tested sale of the subject property on the valuation day or close to it. There is a sale. However, the sale for $1,440,000 occurred in October 2015 which is well beyond the January 1, 2012 valuation date. The next best measure of current value is arm’s length and market tested sales of comparable properties located nearby, as close as possible to the valuation date of January 1, 2012. This measure acts as benchmark and a gauge of the accuracy for the assessed value of the subject property and comparable properties.

27To enable an estimate of value for the subject property to be derived from suggested comparable properties there must be sufficient elements of similarity, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc., so as to enable a direct comparison to be made between a suggested comparable property and the subject property.

28The Board has four sales to consider. None of the sales are located next to a marijuana grow house operation.

29Sale A – 52 Old Oak Road - is a 2,511 sq. ft. two-storey dwelling that underwent a D renovation in 2012. It is 695 sq. ft. smaller than the subject property and has a Quality 7.5 construction whereas the subject property has a Quality 8.0 construction. It has a finished basement area and an attached garage. It is located on a street nearby. The lot size at 5,375 sq. ft. is about half the size of the subject property. There is a time adjusted sale of $1,252,000 that occurred in November 2012. The CVA is $1,210,000. The Board finds this property to be inferior to the subject property given its smaller building and lot size and the quality of construction. In addition, the Board notes that while the closing of the sale was in November 2012, presumably the Agreement of Purchase of Sale was entered into well before the before the Personal Use and Production Licence was issued to the owner at 5 Donnybrook Lane.

30Sale B – 28 Oak Hampton Boulevard - is a 2,472 sq. ft. two-storey dwelling built in 2009 and has a Quality 8.0 construction. It is 734 sq. ft. smaller than the subject property. It has a finished basement area and an attached garage. The lot size at 4,760 sq. ft. is smaller than the subject property. It located 10 to 12 houses away from the subject property on the street behind Donnybrook Lane. There is a time adjusted sale of $1,243,234 for a sale that took place in August 2012. The CVA is $1,210,000. The Board finds this property to be inferior to the subject property given that it’s smaller building and lot size. In addition, the Board notes that the August 2012 sale occurred before the Personal Use and Production Licence was issued to the owner at 5 Donnybrook Lane.

31Sale C – 31 Nottingham Drive - is a 3,353 sq. ft. two-storey dwelling that underwent a D renovation in 2006. It is 143 sq. ft. larger than the subject property and has a Quality 8.0 construction. It has a finished basement area and an attached garage. The lot size at 7,500 sq. ft. is about three quarters of the size of the subject property but has 60 ft. of frontage. It is located in a different homogeneous neighborhood – north of Dundas Street West. There is a time adjusted sale of $1,564,055 for a sale that occurred in October 2011. The CVA is $1,708,000. The Board finds this property to be superior to the subject property. While it does share some similarities to the subject property, it has a larger frontage area and its location is in different homogenous area, above Dundas Street West, which Mr. Serafini referred to as a more affluent neighborhood than the subject property. Clearly, the November 2011 sale occurred well before the Personal Use and Production Licence was issued to the owner at 5 Donnybrook Lane. Also, this property is located well away from 5 Donnybrook Lane.

32Sale D – 10 Cudworth Place – is a 3,044 sq. ft. two-storey dwelling that was built in 2011. It is 162 sq. ft. smaller than the subject property and has a Quality 8.0 construction. It has a finished basement area and an attached garage. The lot size at 6,156,500 sq. ft. is 43% smaller than subject property. It is located in a different homogeneous neighborhood – north of Dundas Street West and is the further away from the subject property. There is a time adjusted sale of $1,805,153. The CVA is $1,515,000. The Board finds this property to be superior to the subject property. While it does share some similarities to the subject property, the Board notes its location in a different homogenous area above Dundas Street West which Mr. Serafini referred as being in a more affluent neighborhood than the subject property. Clearly, the April 2011 sale occurred well before the Personal Use and Production Licence was issued to the owner at 5 Donnybrook Lane. Also, this property is located well away from 5 Donnybrook Lane.

33The Board has considered Ms. Cheung’s study. In the opinion of the Board, no conclusions can be drawn based on this small sample as to the impact on market value of marijuana grow operations on the sales of neighboring properties. Firstly, the subject property sold in October 2015 at a time when the marijuana grow house operation next door at 5 Donnybrook Lane had ceased. The property at 1042 Kipling with a licence for 465 plants issued on July 28, 2011 only appears on the December 2011 Overview list and not on any of the other lists. Also, it appears based on the information before the Board that the licence was issued after the 2010 sale of 57 Prennan Avenue. Similarly, the property at 21 Abilene Drive with a licence for 472 plants issued on May 24, 2011 only appears on the December 2011 Overview list and not on any of the other lists. Also, it appears based on the information before the Board that the licence was issued after the 2009 sale of $976,000 for 19 Abilene Drive. As noted above, 21 Abilene Drive does not appear on subsequent lists and so based on the information before the Board, the Board cannot speculate that the buyer of 23 Abilene Drive which sold in 2014 for $1,190,000 was aware of a marijuana grow house operation next door.

34The Board finds that the subject property is a unique situation. The construction of the new dwelling occurred at a time that the owner next door obtained a valid Personal-Use Production Licence to grow marijuana for medical purposes with 5 Donnybrook Lane listed as his place of storage and production which was subsequently expanded in August 2013 to allow 317 plants with a maximum storage allotment of 14, 265 grams and 150 grams for personal use. The situation was so bad that the previous owner left the subject property shortly after moving into the newly built dwelling. It remained vacant until its eventual sale in October 2015 to the current owner. According to the evidence before the Board, the 2015 sale took place after the marijuana grow house operation had been shut down by the City of Toronto. The evidence further indicates that the owner of 5 Donnybrook Lane had intended to demolish the dwelling and build a new house. It was not meant to be. After a brief six month interlude, the marijuana grow house operation started up again. The current owner of the subject property, Mr. Aragona, stated that the marijuana grow house operation is still in full operation and started up about a month after he moved in with his family, which includes a four year old. The stench is horrid and unbearable. He stated that a large garbage bin was parked outside 5 Donnybrook Lane on the day of the hearing. There are visitors at all hours of the day. He has made complaints to 311 Toronto, the Police and the local Councilor regarding the problem. He is concerned about the condition and safety of the dwelling next door. For all intents and purposes, he considers it a commercial operation.

35The Board notes that the list of identified grow house operations (Exhibit 3) vary in terms of scale of operation. Some of the lists identify the number of plants at a specified location, by premise type. For premises identified as residences, they range from 0 to 1,565 plants. From the evidence presented to the Board, the marijuana grow house operation at 5 Donnybrook Lane appears to be a sizeable operation and is much more than a mere nuisance. It was previously shut down by the City for non-compliance with a zoning by-law.

36The Board finds that the best evidence of current value for the subject property is with reference to the sales at 52 Old Oak Road and 28 Oak Hampton Boulevard. The Board considers these properties to be inferior to the subject property. However, based on the evidence before the Board, it appears that these two sales occurred before the Personal Use and Production Licence was issued to the owner at 5 Donnybrook Lane and later expanded resulting in a sizeable marijuana grow house operation. The Board is of the opinion that the current value of the subject property should not be higher than the average of the time adjusted sales of the properties at 52 Old Oak Road and 28 Oak Hampton Boulevard. Also given the sheer scale of the marijuana grow house operation next door and its manifestly negative implications, the current value of the subject property should not be lower the 2012 CVA for 5 Donnybrook Lane. The Board asked Ms. Cheung to provide the 2012 CVA for 5 Donnybrook Lane and its property details. She advised the Board that the 2012 CVA is $801,000 and that the dwelling built in 1947 is situated on a similar sized pie shaped lot to that of the subject property. The Board sets the current value of the subject property at $1,024,000 which reflects the midpoint of the average time adjusted sales of the properties at 52 Old Oak Road and 28 Oak Hampton Boulevard of $1,247,000 (rounded) and the 2012 CVA of $801,000 for the neighboring property at 5 Donnybrook Lane.

Equity with Similar Lands in the Vicinity

37The Board must also consider the assessments of similar properties in the vicinity and determine whether the correct current value as established is inequitable relative to those assessments. If so, it should be adjusted to make it equitable, as required by s. 44.(3) of the Act.

38Ms. Cheung also submitted an Equity Analysis included as part of Exhibit 1 that considered 30 arm’s length sales of residential properties within 0.39 kilometers of the subject property that took place between January 2011 and December 2012. They produced a median ASR of 0.99, well within the IAAO standards of 0.90 and 1.10.

39The Board finds that the evidence does not support a finding of inequity or the conclusion that the current value of the property as determined above requires an equity reduction in accordance with s. 44.(3)(b) of the Act.

CONCLUSION

40For the foregoing reasons and as directed by s. 44.(3)(a) of the Act, the Board finds the current value of the subject property, as of the valuation day of January 1, 2012 to be $1,024,000 and finds that it does not require a further adjustment under s. 44.(3)(b) of the Act in order to make it equitable with similar lands in the vicinity.

41Accordingly, for the 2015 and 2016 taxation years, the assessment of the subject property is reduced from $1,381,000 to $1,024,000.