897948 Ontario Limited v. Municipal Property Assessment Corporation, 2016 CanLII 90728

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 19, 2016 FILE NO.: WR 143642

Assessed Person(s): 897948 Ontario Limited Appellant(s): 897948 Ontario Limited Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 13 Respondent(s): City of Pickering

Property Location(s): 1830 Sandstone Manor Municipality(ies): City of Pickering Roll Number(s): 1801-010-030-06850-0000 Appeal Number(s): 3143407 Taxation Year(s): 2016 Hearing Event No.: 635330

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

Heard: September 30, 2016 in Pickering, Ontario

APPEARANCES:

Parties	Counsel
897949 Ontario Limited	James Brook
MPAC	Jean-Paul Maurice
City of Pickering	No one appeared

DECISION OF THE BOARD DELIVERED BY ANTHONY LaREGINA

INTRODUCTION

1The subject property is a large industrial facility located at 1830 Sandstone Manor with a total gross floor area of 78,417 square feet of which 70,468 square feet is manufacturing space and 7,949 square feet is office space all situated on a 5.84 acre site. The manufacturing space has a ceiling height of 24.5 feet and the office area a height of 13 feet for an overall effective height of 23 feet. The plant was built in 1990 and the returned assessment for the subject property for January 1, 2016 was $5,593,000 in the Industrial (Full) class.

ISSUES

2At the commencement of the hearing, Jean-Paul Maurice the representative for MPAC stated that he conducted an inspection of the subject property on September 23, 2016 and concluded that the Current Value Assessment (“CVA”) should be reduced from $5,593,000 to $4,646,000. Mr. Maurice recommended the reduction based on the fact that the gross floor area was 78,417 square feet as opposed to 80,816 square feet. He further acknowledged that there are two acres of land which are influenced by Petticoat Creek which should be considered as excess land. Mr. Maurice therefore recommended that assessment should be apportioned as follows for tax purposes $4,543,406 Industrial (“IT”) and $102,594 Industrial (“IU”).

3Mr. Maurice then presented the sale of five comparable properties in support of current value and argued that based on a combination of the sales comparables presented by MPAC and the equity study presented by the Appellant the CVA of the subject property should be further reduced to $4,565,000 with $4,462,406 IT and $102,594 IU.

4James Brook, also presented the sales comparison approach in support of current value utilizing two of the comparable sales also presented by MPAC. Based on the sale of 680 Granite Court, Mr. Brook concluded that a reasonable current value per square foot for the subject property as of January 1, 2012 is $56. Based on 78,417 square feet Mr. Brook concluded that the current value for the subject property should be $4,391,352. He further argued that the current value should be adjusted by 16% to compensate for an ASR of 0.84 to a CVA of $3,688,736. Mr. Brook therefore requested that the Board reduce the CVA for the 2016 taxation year from $5,593,000 to $3,688,736.

ISSUE TO BE DECIDED

5The Board must determine the current value of the subject property and if the assessment of the subject property is equitable with that of similar properties in the vicinity.

DECISION

6The Board orders that the assessment be reduced from $5,593,000 to $4,391,352 rounded to $4,391,000 for the 2016 taxation year, apportioned as:

• $4,288,406 - IT
• $102,594 - IU

7The Board also finds that this assessment at current value is equitable with the assessments of similar lands in the vicinity; hence no further reduction is required to achieve equity.

REASONS FOR DECISION

Legislation

8Section 44.(3)(a) of the Assessment Act (“Act”) requires the Board to “determine the current value of the land.” Current value is defined in s. 1 as “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.” That is, for the 2013, 2014, 2015 and 2016 taxation years, the Board must determine what the subject property would have sold for in an arm’s length transaction on the January 1, 2012 valuation day set by the Act.

9Section 44.(3)(b) of the Act requires that the Board “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 - Evidence and Analysis

10Mr. Maurice introduced the sales of five comparable properties as outlined in Exhibit 1 page 2, and calculated the Sale to Assessment Rate (“SAR”) as follows for each property;

1. 680 Granite Court 1.15
2. 590 Granite Court 1.19
3. 890 Brock Road 1.21
4. 555 Beck Crescent 0.98
5. 460 Finley Avenue 1.03

11Mr. Maurice argued that the best comparables were 680 Granite Court and 590 Granite Court. He concluded that the median SAR between the two is 1.17, indicating that for properties similar to the subject property the current value should be 17% higher than the assessed value. In the case of the CVA for the subject property Mr. Maurice proposed to apply an additional 17% to the CVA of $4,646,000 to establish a current value of $5,435,820.

12On the other hand Mr. Brook took the position that the best comparables to the subject property are 680 Granite Court and 555 Beck Crescent as they are both standard industrial buildings as the subject property with the similar building areas, lot sizes, ceiling heights and age as per the chart below;

	Subject Property 1830 Sandstone Manor	Comparable 1 680 Granite Court	Comparable 4 555 Beck Crescent
Gross Floor Area, (square feet)	78,417	94,720	101,301
Height, Feet	23	27	27
Year Built	1990	1979	1987
Site Area, (Acres)	5.84	4.68	7.63
Current Value ($)	5,593,000	4,627,000	5,596,000
Sale Price ($)		5,300,000	5,478,000
Sale Price $/(square feet)		56	54

13Mr. Brook concluded that the best comparable of all the properties presented is 680 Granite Court as it is the closest in gross floor area and site area to subject property. Mr. Brook submitted that the subject property’s current value assessment should be established based on the sale price per square foot of 680 Granite Court which is $56 per square foot. Mr. Brook therefore requested that the current value of the subject property should be set at $4,391,352.

14The Board agrees with Mr. Brook that the current value of a property should be based on the sale value of similar properties in the vicinity as opposed to Mr. Maurice who has suggested that we set the current value based on the CVA adjusted upwards by the median SAR of two similar properties. This is a very abstract approach to establishing the current value of a property on the other hand the sale value is a clean and absolute value as it relates to the characteristics of that property as determined by a willing buyer and a willing seller.

15The Board is also in agreement with Mr. Brook that the two best comparables to the subject property are 680 Granite Court and 555 Beck Crescent and further agrees with Mr. Brook that the current value of the subject property should be set based on the sale value of 680 Granite Court at $56 per square foot as it is the most similar to the subject property.

16The Board will set the current value of the subject property at $4,391,352.

Equity Analysis

17Section 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 Sale Ratio (“ASR”) is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity.

18Mr. Brook presented the Sale of 10 industrial properties in the Pickering area in support of an equity argument resulting in a median ASR of 0.84.

19Mr. Brook submitted that the current value of $4,391,352 should be further adjusted by the ASR of 0.84 to a CVA of $3,688,736 in order to ensure that the assessment of the subject property is in line with the assessments of similar properties in the vicinity.

20Mr. Maurice also accepted the Equity Study as presented by the Appellant suggesting that the ASR of 0.84 is valid. Mr. Maurice submitted that the ASR of 0.84 should now be applied to his requested current value of $5,435,820 resulting in a CVA of $4,566,000.

21The Board rejects Mr. Maurice’s approach of establishing a SAR factor based on a median of two property sales and then applying the ASR factor to readjust the inflated current value back to a reasonable assessed value.

22With regards to the equity study presented by Mr. Brook the Board notes that of the two most comparable properties as suggested by Mr. Brook himself, 555 Beck Crescent was omitted from the equity study while the assessed value of 680 Granite Court was incorrectly stated at $5,609,000 as opposed to $4,627,000. The Board believes that if a property is relied upon to establish current value it must also be part of an equity analysis.

23It is clear from the evidence presented by both parties that the current value of the subject property at $4,391,352 is very much in line with the assessments of the most similar properties that is 680 Granite Court and 555 Beck Crescent. Furthermore, the accuracy of the equity study presented by Mr. Brook is highly questionable based on the errors and omissions. Finally, Mr. Brook presented the JS and JB Holdings decision. JS & JB Holdings Inc. v. Municipal Property Assessment Corp. Region 3 [2015] O.A.R.B.D. No. 279 where the panel accepted the ASR study but in that decision there were 36 comparable property sales not 10 and the range was much tighter as compared to the range of sales in Mr. Brook’s study which ranged between $467,000 and $12,380,000.

24Based on the evidence presented the Board will make no further adjustment to current value for the purpose of equity.

CONCLUSION

25Based on all of the evidence presented the Board determines the current value to be $4,391,352 rounded to $4,391,000 and finds this value to be fair and equitable.

26The Board reduces the subject property’s returned assessment from $5,593,000 to $4,391,000 for the 2016 taxation year, apportioned as $4,288,406 (IT) and $102,594 (IU).