Arthur Lai v. Municipal Property Assessment Corporation, 2016 CanLII 9986

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 26, 2016

FILE NO.: WR 138436

Assessed Person(s): Arthur Kin Chung Lai and Maggie Man Ching Lai

Appellant(s): Arthur Lai

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): 12 Park Lane Circle

Municipality(ies): City of Toronto

Roll Number(s): 1908-081-850-01500-0000

Appeal Number(s): 3110058

Taxation Year(s): 2015

Hearing Event No. 601029

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

Heard: January 21, 2016 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Arthur Kin Chung Lai and Maggie Man Ching Lai

Daniel Attard

MPAC

Carlo Bassi

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

INTRODUCTION

1The appeal before the Assessment Review Board (“Board”) is filed by the Assessed Person in respect to the returned assessment of $10,839,000 for the 2015 taxation year for the subject property at 12 Park Lane Circle, in the City of Toronto.

ISSUE

2Carlo Bassi, representative for MPAC, is of the view that the subject property is assessed fairly and equitably as compared to the sales of similar lands in the vicinity. Based on his analysis of the sales, Mr. Bassi takes the position that the returned assessment of $10,839,000 for the subject property should be confirmed for the 2015 taxation year.

3Daniel Attard, representative for the Assessed Person/Appellant is of the view that the subject property is assessed too high and that a fair and equitable value should be $10,130,000. He argued that this value is based on fifteen sales with a median Assessment to Sales Ratio (“ASR”) of 1.07. When the ASR is applied to the returned assessment of the subject property ($10,839,000 / 1.07) it results in a value of $10,130,000.

4The City of Toronto was not in attendance at the hearing.

5The Board has to decide:

• Whether the returned assessment of $10,839,000 for the 2015 taxation year for the subject property is at current value as at the valuation date January 1, 2012.

• Whether the value is equitable with the assessments of similar lands in the vicinity.

DECISION

6The Board, having determined the current value to be $10,839,000 and having found that an equity adjustment is not required, confirms the assessment of $10,839,000 for the subject property for the 2015 taxation year.

REASONS FOR DECISION

Background

7The subject property is a two storey custom built residential building, built in 2001, and located in the exclusive Bridal Path area in the City of Toronto. The subject property is described as having a total building area of 12,472 square feet (“sq. ft.”), a frontage of 120.40 feet, a depth of 779.61 feet for a total site area of 2.04 acres and a quality 10 rating (Exhibit 1, p.1).

The Legislation

8In determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Assessment Act (“Act”):

9Section 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.

10Section 19.(1) of the Act states:

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

11Section 19.2 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.

12Section 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.

13Section 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.

14In 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

15In support of his argument, Mr. Bassi presented Exhibit 1, which contains detailed inspection notes, sales analysis, time adjustment factor analysis, photographs and a map.

16In regard to the inspection notes (Exhibit 1, p. 6). Mr. Bassi testified that he inspected the subject property on November 27, 2015 and provided a very detailed account of the quality of construction, quality of materials and quality of finishes he found when he inspected the subject property. He summarized his findings as a:

Two storey custom structure contemporary design on a grand scale with granite façade including stone and metal accents throughout exterior. Extreme luxurious curb appeal. Extensively landscaped 2 acre gated property with circular motor court at front and tennis court at rear. Beautiful Ravine View. Wonderful property meeting all of The Bridle Path proper expectations. Quality is confirmed at 10.

17In regard to the time adjustment factor analysis contained in Exhibit 1, Mr. Bassi testified that a study of 420 sales which occurred in the subject property’s neighbourhood and adjacent neighbourhoods from July 2009 to December 2012 was done to determine the time adjustment factor to be applied to the sales presented by MPAC (Exhibit 1, Appendix A).

18In support of current value, Mr. Bassi presented Exhibit 1, Appendix A, a market analysis of five sales identified as Sale A, sold in 2011, Sale B, sold in 2012, Sale C, sold in 2010, Sale D, sold in 2011 and Sale E, sold in 2009. Mr. Bassi testified that due to the uniqueness of the subject property there are very limited sales in the immediate homogeneous area (C81). As a result, he was forced to expand the search for sales in other high-end homogeneous areas (C62, C65 and C59).

19Mr. Bassi also testified that the assessment value of the above comparable properties abutting a golf course is positively impacted by a 16% adjustment, for abutting a ravine (type 1) a positive 6% adjustment and abutting a ravine (type 3) a 4% adjustment.

20Mr. Bassi testified that the time adjusted sale prices of the above five sales he presented ranged from $10,411,225 to $18,380,599 with a median sale price of $14,466,500. This is compared to the returned assessment value of $10,839,000 for the subject property.

21In reviewing the above five sales presented by MPAC, the Board did not rely on Sales C, sold in 2010 and Sale E, sold in 2009. The reason being that the sale dates of these two comparable properties are too far removed from the valuation date of January 1, 2012 to provide any meaningful test of current value.

22The remaining three sales sold in 2011 and 2012 and located at 174 Teddington PA Avenue, at 114A Dunvegan Road and at 35 High Point Road have on average, a total site area of 1.06 acres, a total building area of 13,013 sq. ft., year built 2004, a quality 10 rating, a median adjusted sale price of $15,153,137 and a median adjusted sale price of $1,292.88 per sq. ft. This is compared to the subject property with a total site area of 2.02 acres, a total building area of 12,472 sq. ft., a quality 10 rating, built in 2001, and assessed at a value of $10,839,000 ($869.06 per sq. ft.).

23Although the above three comparable properties are on average similar in total building area, they are significantly smaller in total site area, Sales A and B are from different homogeneous areas, and there are other features that would need to be adjusted in order to make them similar to the subject property (finished basement, outdoor pool, tennis court, residence above detached garage, ravine and golf course abutment). Based on this analysis, the Board finds that these three comparable properties are not similar to the subject property and would require extensive amount of adjustments in order to make them similar. As shown above, these comparable properties sold in the open market at values significantly higher than the returned assessment of the subject property.

Appellant’s Position

24In presenting his case, Mr. Attard called Jill Bender as a witness and she testified to the evidence contained in Exhibit 3.

25Ms. Bender testified that she is in agreement with MPAC that the subject property and the above five comparable properties are unique and that a direct comparison on a rate per square foot basis is not a reliable approach for determining current value (Exhibit 3). Ms. Bender presented no sales of comparable properties in support of current value. Although, Mr. Attard in his submissions argued that the revised Equity Study was presented in support of current value.

The Board's Analysis and Decision

26In reviewing all of the evidence presented under current value, the Board rejects Mr. Attard’s argument that the Revised Equity Study presented by Ms. Bender was in support of current value. Ms. Bender testified that the analysis is a Revised Equity Study of sales taken from MPAC’s Equity Analysis, and her testimony is supported in an email to Mr. Bassi (Exhibit 3), in which she clearly stated “we have prepared the attached Revised Equity Study using only those properties from your original Equity Analysis with assessed values over $3.5 million.” Even if the report was in support of current value, the ASR of all relevant sales regardless of, and limiting to, the size, condition, quality and age must be included in the analysis; not only the sales cherry picked by Ms. Bender as is this situation.

27The Board finds that MPAC presented the best evidence with the three sales sold in 2011 and 2012, with a median adjusted sale price of $15,153,137 which is significantly higher than the returned assessment of $10,839,000 for the subject property. As no appeal is filed for a higher assessment value, the Board finds that the returned assessment of $10,839,000 for the subject property falls within the range of the above open market sales prices and is therefore, deemed reasonable.

28Based on the evidence, the Board determines the current value to be $10,839,000.

Equity

29In support of equity, Mr. Bassi presented Exhibit 2, an Equity Analysis of 30 comparable properties, sold in 2011 and 2012, and located within 1.06 kilometers of the subject property. These comparable properties are single-family dwellings that are similar to the subject property, having the same general nature, character and function.

30The analysis shows that these sales have a median ASR of 0.98 which falls within the International Association of Assessing Officers (IAAO) acceptable standards of an ASR of 0.90 - 1.10 and within MPAC’s acceptable standards of an ASR of 0.95 - 1.05. Based on this analysis, Mr. Bassi argues that an equity adjustment is not required.

31In support of equity, Ms. Bender testified that she is agreement with the approach MPAC has taken in the above Equity Analysis, and that her only concern is with the thirty properties selected. She testified that fifteen of the comparable properties should be excluded because they have assessed values under $3.5 million, whereas the subject property is assessed at $10,839,000. Ms. Bender is of the view that the assessed values of these fifteen comparable properties would suggest that in terms of their overall quality, they are not sufficiently similar in nature and character to be meaningfully compared with the subject property for the purposes of equity.

32Based on the above argument, Ms. Binder presented a Revised Equity Study using the remaining fifteen comparable properties from MPAC’s Equity analysis with assessed values over $3.5 million. Ms. Bender is of the view that the overall quality would suggest that these fifteen comparable properties would be sufficiently similar in nature and character to the subject property to achieve a more meaningful comparison.

33The analysis shows that these fifteen sales have a median ASR of 1.07, which falls outside MPAC’s range of acceptable standards and therefore, warrants a 7% adjustment. Ms. Bender testified that when the ASR of 1.07 is applied to the subject property it results in a value of ($10,839,000 / 1.07) $10,130,000.

34In response, Mr. Bassi argued that for equity adjustment, the ASR has to be less than 1.00 and falls outside the MPAC’s acceptable standards of 0.95 – 1.05. Mr. Bassi rejected the idea that the sales of the fifteen comparable properties with assessed values under $3.5 million are excluded by Ms. Bender. He argued that his findings are based on the median ASR, and that extreme outliers of significantly lower and higher ASR values cancel each other out in order to arrive at the median ASR.

35In response to Ms. Bender’s position that a smaller sampling of high-end homes, similar to the subject property in the Bridle Path area would provide a more accurate picture of how well MPAC’s model is predicting market values, Mr. Bassi identified a smaller sampling of sales from his equity study. He testified that of the thirty sales used in the above equity analysis, six sales are from the same homogeneous area (C81) as the subject property with a median assessment value of $9,530,500. These six sales identified on Exhibit 2 as Sales 10,13, 14, 16, 21 and 29 have an median ASR of 0.97, which also falls within the acceptable standards of both the IAAO and MPAC and therefore, does not support an equity adjustment.

36In reviewing all of the above evidence, the Board did not rely on Ms. Bender’s Revised Equity Study with a median ASR of 1.07, because the comparable properties used in the analysis are based on Ms. Bender’s opinion of the overall quality of these comparable properties, based on their assessed values. The Board finds that the report provided no evidence of quality and/or any other characteristics to draw any comparison to the subject property. For a finding of Equity, comparable properties need not be similar, but have to be of the same nature, character and function as the subject property, which is the information provided in Mr. Bassi’s Equity Analysis. This decision is support by Member J. Wyger’s decision in Fairbanks v. Municipal Property Assessment Corp. Region No. 9 [2008] O.A.R.B.D. No. 306, in which he stated that

The ASR measures how well the MPAC valuation model is reflecting sales values for all homes in a particular vicinity. They need not be similar. In fact, the Board takes the view that an ASR value close to 1.00 is even stronger evidence that the valuation model is accurate, where that model closely reflects sale values for homes in the area that are not similar to each other or the subject property. To discern a trend in the relation between sales values and assessed values, and make a supportable finding on the accuracy of the model requires that an average and/or median ASR be derived from many properties.

37The Board’s finding is also supported by Member Walker’s decision in Kwinter v. Municipal Property Assessment Corp. Region No. 9 [2015] O.A.R.B.D. No. 203, in which she stated that:

A comparison of the assessment to sales ratio (“ASR”) permits the Board to compare the assessed values determined by MPAC with values achieved in the marketplace. An ASR that is greater than 1.00 is an indication that MPAC may be producing values greater than those demonstrated in the marketplace, with an ASR of less than 1.00 an indication that MPAC may be producing values less than those demonstrated in the marketplace. A deviation of 0.05 in either direction is generally regarded as acceptable assessment practice. For equity purposes, the Board looks for evidence of less than 1.00, and does not consider a minor deviation to be determinative.

38In regard to the issue of smaller sampling, the Board agrees that there is no requirement in s. 44. (3)(a) and (b) of the Act that requires a specific number of sales of comparable properties to be used in an equity analysis. The fact that MPAC used 30 sales is not incorrect and especially as the onus to demonstrate inequity rests with the appellant. However, the Board is satisfied that Mr. Bassi addressed the issue raised by Ms. Bender, by identifying the sales of six comparable properties from the same homogeneous area (C81) that are of the same nature, character and function as the subject property. As stated above, these six sales are shown to have a median ASR of 0.97 which falls within the IAAO and MPAC’s acceptable standards. This finding is supported by Members Sharma and Spraggett’s decision in Kiselman v. Municipal Property Assessment Corp. Region No. 9 [2015] O.A.R.B.D. No. 266, in which they stated that “For purposes of establishing equity, properties do not need to be comparable; they need to be of similar nature and within a reasonable proximity.” The finding is also supported by Member Wyger’s decision in Municipal Property Assessment Corp. v. Koifman, Region No. 9 [2011] O.A.R.B.D. No.49, in which he stated that “There may be pockets or certain types of properties within that broader community that are under or over-assessed; a situation that can be revealed by a smaller sample size of similar properties within that pocket, or of that type”.

39Based on the above evidence, the Board finds that the evidence does not support the conclusion that the current value as determined above requires an equity reduction.

CONCLUSION

40Based on all of the evidence, the Board determined the current value to be $10,839,000, and finds this value to be fair and equitable. Therefore, the Board confirms the returned assessment of $10,839,000 for the 2015 taxation year.