Wilson v. Municipal Property Assessment Corporation, 2017 CanLII 29587

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

May 12, 2017

FILE NO.:

WR 146592

Assessed Person(s):

Ian Wilson and Marina Ana Seidl

Appellant(s):

Ian Wilson

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s):

City of Toronto

Property Location(s):

35 Mattice Road

Municipality(ies):

City of Toronto

Roll Number(s):

1919-021-090-00800-0000

Appeal Number(s):

3178072

Taxation Year(s):

2016

Hearing Event No.:

668673

Legislative Authority:

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

Heard:

April 19, 2017 in Toronto, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Ian Wilson

Self-represented

MPAC

Frank Lee

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY J.L. WALKER

INTRODUCTION

1Ian Wilson, the Appellant, purchased 35 Mattice Road for $735,000 in August 2013 and demolished the existing improvement. The assessment of $1,399,000 for the 2016 taxation year is based on a new single-family detached home of 2,880 square feet (“sq. ft.”), which was constructed at a cost of $474,000 and occupied by October 2014. Frank Lee, Property Valuation Analyst for the Municipal Property Assessment Corporation (“MPAC”) submits that the assessment as returned for the 2016 taxation year is the current and equitable value, and is supported by the range of values of four sales of other residential properties in the vicinity of the subject property.

2Mr. Wilson submits that cost approach establishes a value of $1,209,000. He further submits that the direct comparison approach yields a value of $1,237,770, based on the adjusted values of comparable homes built in the immediate neighbourhood, further discounted for objective and subjective differences between the two properties. He submits that MPAC’s assessed value is not fair or equitable when compared to his proposed range of values.

3The Assessment Review Board (“Board”) must determine the correct current value of the subject property for the 2016 taxation year, and then determine whether this value is equitable with the assessments of similar lands in the vicinity.

DECISION

4The Board determines that the current value of the subject property is $1,399,000 for the 2016 taxation year, and that no further reduction is required to achieve equity with similar lands in the vicinity. The assessment is confirmed at $1,399,000 for the 2016 taxation year.

REASONS FOR DECISION

The Legislation

5In making its determination, the Board is governed by the following provisions of the Assessment Act, R.S.O. 1990, c. A.31, as amended (“Act”):

6Section 19.(1) states that “…the assessment of land shall be based on its current value.” Section 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.”

7Section 19.2(1) of the Act establishes January 1, 2012 as the valuation day for the 2013 to 2016 taxation years.

8Section 44.(3) of the Act provides the test that must be applied upon an appeal on any ground against an assessment:

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.

9Under s. 40.(17), where value is the ground of an appeal, “…the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.”

10After hearing the evidence and submissions of the parties, the Board shall determine the matter pursuant to s. 40.(19) of the Act.

Current Value

11The Board determines that the most reasonable current value of the subject property is $1,399,000 based on the direct comparison approach to value. A cost approach to value is based on the idea that the current value of the property can be calculated by determining the cost new of the improvement less total depreciation plus land value. If correctly applied, the cost approach should provide an estimate of value consistent with the direct comparison approach.

12The Board agrees with Mr. Wilson that his detailed and uncontroverted evidence regarding the cost of construction, together with the land value, provide a starting point from which the 2016 assessment may be derived. The hard and soft construction costs of $474,000, added to the $735,000 value of the land from the 2013 sale total $1,209,000 (Exhibit 3). However, the calculations provided by the Appellant do not include any evidence of the depreciated cost of the improvement which he states reduce the value of the property to $1,145,000 (Exhibit 3). The Board does not have the jurisdiction to fill this gap in the evidence with its own opinion and estimate.

13Mr. Wilson states that part of the landscaping included in the costs had not been completed for a time after the new structure was built. Mr. Lee agreed that MPAC’s data was based on the building permit, rather than an inspection of the property, but advised that the Appellant declined a property inspection requested by MPAC upon completion of the construction, which would have confirmed the measurements of the improvement.

14The best evidence before the Board is the direct comparison approach, supported by the four comparable properties submitted by Mr. Lee (Exhibit 2).

Table 1

Address

CVA $

Sale $

Sale Date

Building Area Sq. Ft.

Site Area Sq. Ft.

Quality Code

35 Mattice Road

1,399,000

N/A

N/A

2,880

7,850

8.0

22 Tyre Avenue

1,276,000

1,425,846

02/2011

3,189

7,800

7.5

66 Avonhurst Road

1,276,000

1,422,874

06/2012

3,375

7,500

7.5

154 Royalavon Crescent

1,683,000

1,602,471

07/2012

3,550

7,000

8.5

36 Mattice Road

1,535,000

1,640,233

04/2011

3,668

8,000

8.0

15The four properties are re-built homes in the vicinity of the subject property, constructed in 2010 and 2011. Like the subject, each has 50 feet of frontage and two storeys. MPAC has applied time adjustments to the sales, based upon a study of 240 residential properties (Exhibit 2). The overall change in the market of 8.65% over a 24 month period was derived from a study of 240 sales from the subject property’s neighbourhood from January 2011 to December 2012. These time-adjusted sales yield a range of values of $1,425,846 - $1,640,233.

16Mr. Wilson submits that applying a sales value per square foot from these comparable properties demonstrates that his property has been over-assessed. While Mr. Lee agrees that this is one approach that the Board may take, he submits that examining the range of values is a better approach to the evidence before the Board, given the differences between the comparable properties.

17The Board agrees with Mr. Lee. Table 1 (above) demonstrates that the subject property, which has the smallest total building area, is valued below the lower end of the range ($1,425,846). The evidence demonstrated that sales values increase proportionate to total building area irrespective of total lot size or quality code. As properties with larger improvements will have a lesser value per square foot due to economies of scale, the Board does not find the value per square foot of the improvement to be the best approach to the evidence.

18The Board did not rely on the 14 comparable properties submitted by Mr. Wilson: one property was not the subject of a sale; 12 of the properties had much smaller homes (under 2,000 sq. ft.), with some sales occurring in 2009 and 2010; and one sale transacted in October 2014, 10 Mattice Road (Exhibit 3).

19Mr. Wilson has based his proposed value of $1,237,000 on this property ($430 per sq. ft.). It is also a re-build, has a smaller lot of 6,815 sq. ft., and a larger total building area of 3,540 sq. ft., but is otherwise a quite similar to the subject property. However, the value per sq. ft. that Mr. Wilson presents is based on the assessed value of the property, $1,522,000, and not the sale value of $1,835,000. If anything, this comparable demonstrates that property values have continued to rise in the area.

20The Board considered, but did not rely on this comparable. The thrust of the Act is that all property be based on its current value, supported by evidence found in the marketplace. The sale is too far removed from the legislated valuation date of January 1, 2012.

21Based on the evidence before it, the Board determines that the most reasonable current value is $1,399,000.

Equity

22The current value of the subject property can only be reduced if there is evidence that it is assessed at a higher level than the assessments of similar lands in the vicinity. In this case, the evidence does not demonstrate that a further adjustment is required.

23The best evidence of an inequitable current value is an Assessment to Sale Ratio (“ASR”) study of a sample of similar lands in the vicinity. The sample must be sufficiently large to be statistically meaningful. An ASR is calculated by dividing the assessed value by the sale value. A resulting median ratio of 1.00 or within 5% (0.95 – 1.05) demonstrates that current values are reflective of sale prices in the vicinity. If the resulting ratio is lower than 0.95, a downward adjustment must be made to a property’s current value.

24The only evidence before the Board with regard to equity was presented by Mr. Lee, a sample of 30 sales of residential properties (single family detached homes) located within 0.3 kilometers of the subject property that transacted between January 2011 and December 2012 (Exhibit 2). The 30 sales in this study have a median ASR of 1.00, indicating that no downward adjustment is required to the subject property’s current value.

CONCLUSION

25The Board determines that MPAC’s evidence demonstrates that the value of $1,399,000 is reasonable, and is not refuted by the Appellant’s evidence. The current value of the subject property is $1,399,000 for the 2016 taxation year, and no further reduction is required to achieve equity with similar lands in the vicinity. The assessment is confirmed at $1,399,000 for the 2016 taxation year.