Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 4, 2017

FILE NO.: WR 144542

Assessed Person(s): Ruby Kakan and Sandeep Kakan

Appellant(s): Ruby Kakan and Sandeep Kakan

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 13

Respondent(s): City of Pickering

Property Location(s): 1500 Scenic Lane Drive

Municipality(ies): City of Pickering

Roll Number(s): 1801-030-011-18713-0000

Appeal Number(s): 3176255, 3176256 and 3176257

Taxation Year(s): 2014, 2015 and 2016

Hearing Event No.: 635332

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

Heard: November 1, 2016 in Pickering, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Ruby Kakan and Sandeep Kakan	Self-represented
MPAC	Carl Goodrich
City of Pickering	No one appeared

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

INTRODUCTION

1This appeal came before the Assessment Review Board (“Board”) to address s. 40 of the Assessment Act (“Act”), for taxation years 2012, 2013, 2014, 2015 and 2016. As the property was sold to the current owner in 2014, the appeals for the 2012 and 2013 taxation years are no longer at issue in this Hearing. Therefore, this appeal event shall only address the taxation years 2014, 2015 and 2016 inclusive.

2As part of a new subdivision, the subject property was newly built in 2012, having a total building area of 1,608 square feet (“sq. ft.”). The two storey house has an attached garage and is situated on a corner lot next to an industrial area. The subject property has an effective site area of 2,992 sq. ft.

3Carl Goodrich, appearing on behalf of MPAC, stated that the subject property is estimated to have a market value of $380,000 based on a Direct Sales Comparison approach using four comparable properties within relative proximity to the subject property. MPAC is asking the Board to confirm the recommended assessment of $373,000 for the respective taxation years as of the January 1, 2012 valuation date. Given the sale price of $420,000 in November 2013, MPAC believes the recommended assessment of $373,000 is reasonable and not over-assessed.

4Sandeep Kakan appeared as a self-represented Appellant. The pivot to the Appellant’s appeal turns on the issue of quality of construction of his house. The Appellant stated he has no dispute with the sales data presented by MPAC. It is the position of the Appellant that his property should be assessed in the $360,000 range. The Board notes that no sales evidence was provided to support the Appellant’s position.

5The Board must determine 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

6In the matter of the current value and for the reasons stated below and as directed by s. 44.(3)(a) of the Act, the Board finds that the current value of the subject property, as at the valuation day January 1, 2012, is confirmed at $373,000 for the taxation years 2014, 2015 and 2016.

7The Board finds that there is no evidence before it leading to the conclusion that the current value of the subject property requires a further adjustment in accordance with s. 44.(3)(b) of the Act.

8Accordingly the current value assessment of the subject property as at the valuation day, January 1, 2012, is confirmed at $373,000.

REASONS FOR DECISION

Current Value Analysis

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 “…the Board shall…determine the current value of the land…”

10Section 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…”.

11The 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.

12To 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.

13Furthermore, 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.

14Mr. Goodrich of MPAC provided the Board with four property sales as comparables which he argued are similar to the subject property and in the same vicinity. Properties A and D, (1708 Kalmar Avenue and 1527 Winville Road respectively), Exhibit 1, are most comparable to the subject property. Mr. Goodrich noted two main builders involved in the development of the subdivisions, namely Mattamy and Coughlan, with the Mattamy subdivision being the older of the two projects. The subject property is a Coughlan subdivision. The suggested comparable properties are evenly split between both builders, with Sales C and D as part of the Coughlan subdivision.

15MPAC noted that very few sales were available due to the relatively new subdivision. In their analysis, reliance upon mass appraisal modeling by MPAC was needed to assist in the determination of time adjusted sales (“TAS”) and equity. Mr. Goodrich stated that identical properties as the subject property were used in the modeling to determine the degree of structure depreciation as per the “Property Assessment Details”, Exhibit 2. All the properties showed the same unit of structure depreciation. The same methodology was applied to equity as well, demonstrating that, in terms of depreciation where influence of age and size of house are key, the subject property was in line with similar properties in its vicinity.

16Based on MPAC’s suggested comparables, Mr. Goodrich stated that MPAC estimates the market value of the subject property to be $380,000. Although higher than the proposed current value assessment of $373,000, MPAC is not seeking a higher assessment, but that the Board confirms $373,000 as returned as reasonable and therefore the correct current value for the taxation years 2014, 2015 and 2016.

17The Board places little weight on the sales of MPAC’s comparable Properties B (1720 Kalmar Avenue) and C (1545 Winville Road), as they are considered inferior to the subject property, with variations in lot size, total building area and garage size. Sales A and D are considered most comparable to the subject property in terms of lot sizes, effective year built and building total area, and therefore most suited as comparables to determining current value for the subject property.

Appellant’s Arguments

18Mr. Kakan argued that MPAC did not assign sufficient structure depreciation to his property in the MPAC “Property Assessment Details” document, Exhibit 2, page 3, to reflect the quality of construction issues that are of concern. MPAC clarified the criteria of setting depreciation and noted that properties built earlier than January 1, 2012 would have depreciation factored into their assessed values. The subject property was built in 2012 and therefore would only have one year depreciation. Properties built in subsequent years would have no depreciation. MPAC provided evidence in Exhibit 2, of identical houses as the subject property and in the same subdivision demonstrating the same depreciation.

19The Appellant raised issues of wear and tear, such as deteriorating windows, opining that he over paid for the house when purchased for $420,000 in November, 2013. Mr. Kakan submitted as evidence a pre-purchase “Confidential Inspection Report”, see Exhibit 6, detailing outstanding deficiencies needing attention. The Board notes that it cannot speculate on the value of the alleged deficiencies outlined in these documents. The Appellant failed to provide any costing of these alleged deficiencies from which the Board can make a determination of value. The author of the Confidential Inspection Report, was not present to be asked questions on the alleged deficiencies. For these reasons the Board gives no weight to this report in its determination of current value.

20The Appellant states that the 2014 Ice Storm impacted negatively on the windows of the house, believing such structure depreciation should be reflected in the assessed value of the property. Mr. Kakan filed Tarion forms, Exhibits 4 and 5, as evidence, detailing outstanding deficiencies on the subject property. The Board notes that when asked if the Appellant received compensation from the Tarion Warranty, Mr. Kakan replied that he did not apply for compensation. As referenced above, the Board cannot speculate as to the value of the deficiencies pertaining to the windows. Mr. Kakan provided no evidence to support his concerns about the quality of the windows, from which the Board could make a determination of value. For these reasons the Board gives no weight to the issues related to the windows in its determination of current value.

21As noted earlier, the Appellant provided no sales evidence to support his position that the subject property should be assessed at the $360,000 range. The Board also notes that the Appellant stated during his summation statement that he does not dispute the sales data provided by MPAC.

22Although the Appellant suggested a more appropriate value for the subject property of $360,000, the Board finds no basis to support such a conclusion.

23Therefore the Board’s best evidence toward the determination of current value relies on the four suggested comparable properties provided by MPAC.

For these reasons the Board confirms MPAC’s assessment of $373,000 as returned for the taxation years 2014, 2015 and 2016 as being reasonable.

Equity Analysis

24The 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.

25Section 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.”

26For purposes of establishing equity, properties do not need to be comparable, they only need to be of a similar nature and within a reasonable proximity. Mr. Goodrich provided a study of the Assessment to Sales Ratio (“ASR”) of 30 similar residential properties located within 1.29 kilometers of the subject property. MPAC maintains that 30 properties is sufficient to determine whether properties in the vicinity are assessed at, or close to, their current values.

27The study has a range of individual ASRs from 0.84 to 1.25 and a median ASR of 0.99. A value within five percentage points is usually considered an acceptable value. In this case the median ASR of 0.99 falls within the acceptable range between .95 – 1.05 and suggests that MPAC’s methodology may be producing assessments in line with sales in the vicinity. The Board therefore finds that no adjustment is required for equity in accordance with s. 44.(3)(b) of the Act.

28Mr. Kakan provided no argument or evidence under s. 44.(3)(b) to demonstrate inequity.

29Therefore the Board finds the current value assessment as returned to be equitable in comparison to similar properties in the vicinity of the subject property.

CONCLUSION

30Accordingly, 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.

31Accordingly, as at the valuation day, January 1, 2012, the Board confirms the current value assessment as returned, to be $373,000 for the taxation years 2014, 2015 and 2016.