Besada v. Municipal Property Assessment Corporation, 2017 CanLII 21106

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: April 12, 2017

FILE NO.: WR 144692

Assessed Person(s): Amir Besada and Iman Besada

Appellant(s): Amir Besada and Iman Besada

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 9

Respondent(s): City of Toronto

Property Location(s): 1 Bridle Heath Gate

Municipality(ies): City of Toronto

Roll Number(s): 1908-081-830-00100-0000

Appeal Number(s): 3129336 and 3149523

Taxation Year(s): 2015 and 2016

Hearing Event No. 638781

Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: December 6, 2016 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Amir Besada and Iman Besada

James Brook

MPAC

Carlo Bassi

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY BERNARD COWAN

INTRODUCTION

11 Bridal Heath Gate is a residence in a prestigious area of Toronto known as The Bridle Path, an enclave of exclusive executive homes. This property (“the subject”) is comprised of a 10,565 square foot (“sq. ft.”) structure built in 2015 on a 34,010 sq. ft ravine lot. Like most other properties in evidence for valuation purposes, the home has been determined by MPAC to be a quality class 10 building, the highest designation available for its ranking scale of 1-10 based upon features/construction.

2Assessed by MPAC for 2015 taxation at $4,080,000 for its land only, a supplementary (s. 34 of the Assessment Act) assessment of $6,300,000 effective May 1, 2015 is appealed, as is the 2016 full-year’s assessment of $10,380,000. The appellants seek a reduction of the total 2016 current value assessment (“CVA”) to no more than $9,933,000, with a corresponding reduction to the 2015 supplementary assessment, based on the median assessment per sq. ft. of structure for six sales used for comparative purposes, before applying an additional 7.4% reduction to each year’s outcome so as to be equitable with the assessments of similar properties in the vicinity.

3Ten sold properties are introduced by Carlo Bassi, MPAC’s representative, in support of the valuation. The appellant’s representative, James Brook, offers two additional property sales for my consideration for this purpose, while maintaining that I should disregard six of the 10 MPAC sales because of four transactions which did not occur in 2011 or 2012 (the mandated valuation date being January 1, 2012), of a considerable locational difference, or of a substantial comparative variance. Mr. Brook concedes that one of the two additional properties he has introduced merits no weight in my consideration, as its sale was for the site value only, leaving 11 sales considered by one or both parties for my comparative sales analysis.

4In addition to determining which of the 11 sales merit weight in my consideration of an appropriate CVA for the subject for the two taxation years, I must refer to the assessments of similar nearby properties, and if the current value for the subject is found to be inequitable, I am obligated to reduce that value so as to achieve equitable assessments for it.

DECISION

5The supplementary CVA effective May 1, 2015 is confirmed as $6,300,000.

6The CVA for the 2016 taxation year is confirmed as $10,380,000.

7No downward adjustment to either assessment is necessary to make the aforesaid assessments equitable with those of similar lands in the vicinity.

REASONS FOR DECISION

Current Value

8Section 19.(1) of the Assessment Act (“Act”) states:

The assessment of land shall be based on its current value.

9The Act establishes January 1, 2012 as the valuation date for 2015 and 2016 taxation, and defines current value 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.

10Accordingly, the marketplace is to be determinative of current value (“CV”).

11In conducting my analysis of sold properties, I reject the urging of Mr. Brook to limit my consideration to sales transactions in the so-called “shoulder years” of 2011 and 2012, without any time adjustment (“TA”), in lieu of adopting the TA values indicated by Mr. Bassi. I do so for two primary reasons: firstly, the disparity among the properties’ lot and building sizes and features is more likely to be mitigated by inclusion of a larger sample. Secondly, on the balance of probability, the best reasonable evidence as to the impact of time on values is more likely to result from relating individual sales to the mandated valuation date of January 1, 2012 than from reliance on 2011 and 2012 sales to offset the impact of changes in the marketplace over time. Mr. Bassi’s Exhibit 1 Valuation Report includes an analysis of 420 sales in the subject’s neighbourhood and others nearby that is clearly indicative of a rising marketplace over the period from July, 2009 to December, 2012. Mr. Brook’s eliciting of one or two possible errors in specific values therein during cross-examination of Mr. Bossi is insufficient to convince me to reject the TA factors in their entirety, as these clearly indicate an upward trend that is consistent with the Toronto marketplace.

12I reject three of the eleven sales transactions from my consideration; Sales A and E from Mr. Bassi’s Report and “Comparable 5” from Mr. Brook’s listing of sales transactions.

13Sale A in Mr. Bassi’s Report is rejected as its assessment and TA sale price (“TASP”) are substantially higher than those for any other property in evidence, and the influence of its age on its value is indeterminate. Sold in March 2011, and having a TASP exceeding $18 million, its higher value may reasonably be primarily due to being enhanced by being not only a ravine property, but one overlooking a golf course, both quantifiable by the evidence, and to it having two additional coach house residences on site with a combined total area of 4,740 sq. ft. Although Mr. Bassi’s testimony is that the values for these residences are incorporated into the total assessment at a lesser quality class rate than the main structure, he offers no indication of appropriate valuation adjustments to be applied so as to meaningfully compare it to the subject and the other properties in evidence. Likewise there is no evidence to quantify the influence of this property’s age on its 2011 sale value. Built in 1930, it is 75 or more years older than any other property in evidence. Renovated before its sale in 2011 so as to be designated by MPAC as having an “effective year built” of 1998, no further information is provided by Mr. Bassi to assist in my comparative analysis as to the extent of the renovations and their impact on the sale price and or depreciation aspects that may or may not be applicable.

14Sale E is rejected because its lot size of over 121,000 sq. ft., and is substantially larger than any of the other 10 properties. It exceeds the next largest site area in evidence by 39%.

15“Comparable” 5 in Mr. Brook’s Exhibit 5 also merits no weight, as its 2011 sale is acknowledged by the parties to have been based on land value, the new structure thereon not having been built until 2015.

16I also reject Mr. Brooks’ “Comparable” 1 from my consideration, as it is a property having a quality class designation 9.5, according to MPAC. As the highest quality class representing the best of features and construction is 10, it is reasonable to recognize that certain homes within this top quality class may be substantially superior to others in that class, and may attract sales values over a broader range than homes between a 9.5 and the lower end of a quality 10 home. Furthermore, there is no indication from Mr. Brook as to whether this property has any features or influences (ravines, pools, traffic or school impediments, etc.) that should attract value adjustments in order to be appropriately considered in my sales analysis.

17I have nevertheless included and given weight to two other quality class 9.5 properties in my analysis, as these have been chosen as suitable for my consideration by both parties, and I have evidence to adjust their values for their property-specific influences. I am loathe to reject these properties, in such a circumstance.

18Accordingly, eight of the 11 properties offered by Mr. Bassi and/or Mr. Brook for my consideration remain as the best evidence for inclusion in my determination of the CV for the subject.

19The evidence is that the subject and two of the eight properties are ravine properties. For my comparative analysis, I have adjusted the two ravine properties’ TASPs downward by 5%. This is the adjustment in the Sale C property’s assessment attributed by MPAC to the ravine influence for a lot of its size by its mass-appraisal technique, and is the only evidence as to the impact of this feature on this property’s value. My ravine adjustment for the Sale G property is a like 5%. I consider this as a more probable adjustment for the Sale G property than the 6% attributed to the subject’s assessment by MPAC because this property’s lot and building sizes are very similar to those of the Sale C property, whereas MPAC has recognized a higher ravine premium to the subject and others like it having considerably larger lot and house sizes. This ravine adjustment enables me to compare all eight sales as if there is no ravine influence, and to then derive a CV for the subject by adding the 6% to the adjusted TASP indicated by the eight property sales.

20Additionally, I have made adjustments to the TASPs based on uncontested evidentiary values to remove applicable pool and/or tennis court values (the subject has none), and to add-back adverse influences of traffic and proximity to schools.

21Schedule A hereto is my detailed Comparative Sales Analysis which sets out salient data and calculations respecting the eight comparable properties. As both Messrs. Bassi and Brook have utilized median values, not averages throughout their evidence and argument, I also adopt that reasonable approach. The essential elements of Schedule A are as follows:

Property Alpha/#

Year Built

Lot Size(sf)

Building Size (sf)

TASP( $)

Adjustment For

Adjusted TASP

Adjusted TASP Per sf ($)

B

2008

13,068

10,034

10,328,269

None

10,328,269

1,029.33

C/2

2005

17,200

6,559

5,911,268

Ravine;pool;school;

5,629,779

858.33

D/7

2007

30,897

6,254

5,909,943

traffic

6,939,513

1,109.61

F

2012

25,000

8,488

7,156,806

Pool

7,110,806

837.75

G/6

2008

15,865

6,656

6,351,232

Ravine

6,048,792

908.77

H/3

2011

14,000

7,066

6,684,322

Pool; school

7,187,748

1,017.23

I

2006

29,900

9,552

9,219,447

Pool

9,150,447

957.96

J

2005

87,120

10,722

14,622,893

Pool; tennis court

14,555,893

1,357.57

Median

987.60

22I consider it most appropriate in this particular matter to compare the adjusted TASPs on a per sq. ft. of building area basis. The substantial differences among the properties in both lot and building sizes, and the range of sales values for these properties, each unique in its own way according to the photographic evidence, leads to this approach being the best evidence for my comparative analysis. Six of the eight sold properties meriting weight for my determination of CV have a quality class 10 designation by MPAC. That is the highest quality recognized by MPAC, and accordingly leads me to conclude that the buildings contribute the dominant influence on value.

23I find the CV for the subject property to be $11,060,000. Schedule A indicates the median Adjusted TASP to be $987.60 per sq. ft. Applying this value to the subject’s 10,565 sf building area yields $10,434,000 for the subject without adjustment for being a ravine property. Adding the 6% premium that MPAC attributes to this property’s ravine indicates a CV of $11,060,000.

Equity With Similar Lands In The Vicinity

24Sections 44.(3)(a) and (b) of the Act states in part:

Same, 2009 and subsequent years

(3) 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.

25The burden of proof to demonstrate an inequity rests with the appellant. Mr. Brook has introduced an equity analysis (Exhibit 6) comprised of 60 ASRs. 30 of these were introduced by Mr. Bassi’s Equity Analysis of properties within 0.83 km of the subject (Exhibit 2), 24 additional nearby properties are as selected by Mr. Brook and the remaining 6 are the properties in Exhibit 6 upon which he based his argument respecting CV.¹ This exhibit indicates unadjusted and TA ASRs for the 60 properties as 0.926 and 0.9444 respectively, notwithstanding all 60 sales having transacted in 2011 or 2012.

26Mr. Bassi’s evidence utilizes TA ASRs only. His initial 30 TA ASRs (Exhibit 2) have a median of 0.98. He supplements his ASR analyses in response to Mr. Brook’s equity analysis by adding two additional lists of 60 and 120 properties (Exhibits 3 and 4), whereby he has expanded the vicinity to incorporate properties within 1.02 km and 1.3 km of the subject, respectively. The TA ASRs are 0.95 and 0.97.

27In paragraph 11 above, I indicated my preference for utilizing TASPs. Of course, this conclusion applies equally to my s. 44.(3)(b) reference here. The outcome in Mr. Brook’s Exhibit 6 demonstrates that the impact of 2011 sales on ASR’s is not sufficiently mitigated by the ASRs of the 2012 sales. The calculation of an ASR using what is essentially an assessment that is time adjusted to January 1, 2012 as the numerator and an unadjusted sale price as the denominator is an inconsistent approach akin to the proverbial comparison of apples to oranges. In the absence of TA ASRs, the next best evidence may be the restriction to only sales transacting near the valuation date, as Mr. Brook has done here; but in this instance, TASPs are available.

28Mr. Bassi advances MPAC’s frequent position by maintaining that equity for groups of homes in proximity to each other is statistically sound if the median falls between 0.95 - 1.05. He consequently argues that equity has been demonstrated, as the median ASRs in his 3 samples are between 0.95 - 0.98.

29Faced with Mr. Brook’s ASR analysis indicating a median TA ASR below 0.95, I have examined the detail more closely. It is conceded that properties may ordinarily be similar lands in the vicinity by virtue of being of the same general nature, character or function. It also follows that in certain instances the evidence may be that some properties are more similar to a particular property than other properties. I find this to be so in this instance.

30By including in Exhibit 6 the TA ASRs for the residences utilized by the parties to support the subject’s CV, the resultant median of 0.94 (rounded) determined by Mr. Brook is less than the three calculated by Mr. Bassi by up to 4% (0.98 less 0.94).

31Seeking a reasonable explanation, I conclude on the balance of probability that this variance results from including the more similar properties upon which argument was received respecting CV to the lists of those sold within a 0.83 km to 1.3 km radius of the subject. Two circumstances are evident on closer examination of Exhibit 4², being Mr. Bassi’s Equity Analysis of 120 ASRs. Firstly, the preponderance of the properties are under-assessed (68 of 100 below the 1.00 ideal ASR). Secondly, the vast majority of the properties are most likely different in general nature and/or character from the subject. In this regard, the subject and those more similar to it are all high-end, quality class 10 homes on large differing sites. The photos in evidence clearly demonstrate these all to be custom built unique residences. There are no specifics respecting the other properties, whose TASPs and assessments are in most instances substantially lower values, likely appealing to an entirely different buyer profile. Specifically, by my count, only 11 of the 120 properties on Exhibit 4 have assessments or TA sales that exceed $5 million.³

32Schedule B is my listing of the properties that I find to be the most similar properties to and in the vicinity of the subject for my s. 43(3)(b) reference. This list excludes Mr. Bassi’s Property B, as I concur with Mr. Brook that its location in the distant Forest Hill community is not suitable for my reference. I also exclude Properties E⁴ and 5 for the same reasons as addressed above.

33I have included Property A in Schedule B, notwithstanding its exclusion from Schedule A. Although omitted from my determination of CV due to lack of evidence to quantify appropriate adjustments for its age and additional building areas, there is no meaningful basis to exclude its ASR as a measure for inclusion in my evaluation of MPAC’s achievement in relating assessments to the marketplace.

34Also incorporated into Schedule B are three properties from Exhibit 4 that were sold in 2011 or 2012 for in excess of $5 million, but were not introduced as evidence for me to consider in my sales analysis to determine the subject’s CV. There is no basis for me not to include these in my reference, as their values are compatible with the criteria I have established for a property’s inclusion in my reference.

35I find that the CV of $11,060,000 established above is inequitable with the assessments of similar lands in the vicinity. To achieve an equitable assessment, I find that the correct median ASR to utilize for my s. 44.(3)(b) reference is 0.94, as set out in the attached Schedule B, which is based upon TA ASRs for the twelve properties included therein whose assessments or TASPs exceed $5 million.

36Applying the 0.94 median ASR to the subject’s CV that I have determined indicates that a reduction to about $10,396,000 would be appropriate to achieve an equitable outcome for the subject in relation to its peer group of upper-range of high-end, unique, custom properties in its distinctive neighbourhood. This differs only negligibly from the $10,380,000 CVA as returned, and demonstrates that the assessment as returned is equitable, as it incorporates a like under-assessment as that attributable to the other properties assessed for in excess of $5 million.

CONCLUSION

37I accordingly find that the assessment for the subject should be confirmed at $10,380,000 for the 2016 taxation year. Likewise, the supplementary $6,300,000 assessment effective May 1, 2015 is confirmed, neither appearing party having raised an issue with that date.

Footnotes

1. 1One of the 6 properties is “Comparable 5” as referenced in Paragraph 13. It should not be included here for the same reasons; but I have not modified the median ASR that Mr. Moore has calculated, as the impact will be relatively minimal.
2. 2Like circumstances apply to Mr. Bassi’s Equity analyses of 30 and 60 properties.
3. 3$5 million was arbitrarily chosen by me, as being below all TASPs in Schedule A by over $600,000.
4. 4Property E might arguably be included in Schedule B. However, its 0.65 TA ASR may be indicative of some extraordinary added sales value due to its lot size. In any event, if included, the median ASR would not change.