Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 27, 2017

FILE NO.: WR 144793

Assessed Person(s): General Motors of Canada Limited

Appellant(s): General Motors of Canada Company

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region No. 27

Respondent(s): City of Windsor

Property Location(s): 1550 Kildare Road

Municipality(ies): City of Windsor

Roll Number(s): 3739-020-240-02000-0000

Appeal Number(s): 2024809, 2347213, 2694185, 2922688, 2949277 and 3028976

Taxation Year(s): 2009, 2010, 2011, 2012, 2013 and 2014

Hearing Event No.: 636170

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

Heard: October 24, 25, 26 and 27, 2016 in Windsor, Ontario

APPEARANCES:

Parties Counsel

General Motors of Canada Limited Stephen Longo

MPAC Chester Gryski

City of Windsor John O’Kane

DECISION OF THE BOARD DELIVERED BY ANTHONY LaREGINA AND SCOTT McANSH

INTRODUCTION

1General Motors Canada Limited (“GM”) used the property at 1550 Kildare Road in the City of Windsor (the “Plant”) for heavy manufacturing for nearly 90 years. The Plant was used to produce engines from its construction in the 1920s until it was reconfigured to produce four-speed transmissions in 1963. Transmissions were produced at the Plant until it ceased operations on July 28, 2010. The Plant then sat vacant until it was sold, with three other parcels, for $7,300,000 on June 6, 2014. The demolition of the Plant began shortly after it was sold.

2We are tasked with determining the appropriate assessment for the Plant for the 2009, 2010, 2011, 2012, 2013 and 2014 taxation years. GM argues that the Plant’s value for all taxation years is reflected in the sale price of $7,300,000, as adjusted. This turns on GM’s expert’s opinion that the only value for all taxation years is the land and the salvage value of the buildings. MPAC argues that the sale cannot be considered because of a restrictive covenant attached to the sale and because the sale took place too far removed from the January 1, 2008 valuation day. MPAC further argues that the appropriate way to value the Plant is the value of the land plus the depreciated reproduction cost of the buildings. The City of Windsor (the “City”) did not put forward a theory of value, but rather attacked the evidence presented by the Appellant and did not support the evidence presented by MPAC. The City was seeking to have the assessment confirmed.

DECISION

3For the reasons set out below, we find that the current value of the Plant is $8,584,000 for the 2009 and 2010 taxation years and $6,348,000 for the 2011, 2012, 2013 and 2014 taxation years. We also heard insufficient evidence to indicate that those current values are inequitable when compared to the assessments of similar lands in the vicinity. We therefore reduce the assessments as follows:

a. For the 2009 taxation year, we reduce the returned assessment of $19,464,000, with $19,271,120 in the large industrial property class and $192,880 in the commercial property class, to $8,584,000, with $8,536,350 in the large industrial property class and $47,650 in the commercial property class;

b. For the 2010 taxation year, we reduce the returned assessment of $18,283,000, with $18,103,317 in the large industrial property class and $179,683 in the commercial property class, to $8,584,000, with $8,536,350 in the large industrial property class and $47,650 in the commercial property class; and

c. For the 2011 and 2012 taxation years we reduce the returned assessment of $10,640,000, with $10,501,549 in the large industrial property class and $138,451 in the commercial property class, to $6,348,000, with $6,300,350 in the large industrial property class and $47,650 in the commercial property class.

d. For the 2013 and 2014 taxation years we reduce the returned assessment of $10,640,000, with $10,501,500 in the large industrial property class and $138,500 in commercial property class, to $6,348,000, with $6,300,350 in the large industrial property class and $47,650 in the commercial property class.

REASONS FOR DECISION

Legislation

4Section 36(1) of the Assessment Act (“Act”) requires assessments to be made annually and s. 36(2) requires that the assessment roll be returned to the municipality “not later than the second Tuesday following December 1 in the year in which the assessment is made.”

5Section 44(3)(a) of the Act requires us to “determine the current value of the land.” Current value is defined in section 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 each taxation year, we must determine what the Plant would have sold for in an arm’s length transaction on the valuation day set pursuant to s. 19.2 of the Act, which is January 1, 2008 for the 2009, 2010, 2011 and 2012 taxation years and January 1, 2012 for the 2013 and 2014 taxation years.

6Section 44(3)(b) of the Act requires that we “…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 that of similar lands in the vicinity…,” but only if such an adjustment would decrease the assessment.

Hearsay

7The City did not call any evidence, and focused its arguments on the admissibility of the opinion evidence put before us. We must address these arguments before turning to the valuation of the Plant, as we rely on that opinion evidence in reaching our conclusions on the substantive issues in this case.

8The City relied primarily on R. v. Abbey, 1982 CanLII 25 (SCC), [1982] 2 S.C.R. 24. That case involved an insanity defense to a charge of importing cocaine for the purposes of trafficking. Part of the defense was the testimony of a psychiatrist who relied on out of court statements in his report. Justice Dickson (as he then was), writing for the Court, found that the trial judge had erred in relying on the hearsay evidence in the psychiatrist’s report for the truth of its contents. The Court found, at 45, that the error was “treating as factual the hearsay evidence upon which the opinions of the psychiatrist were based.” The City also put forward White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, where the issue was the admissibility of expert reports on both basic factors, such as hearsay, and a weighing of the risks and benefits of admitting the evidence.

9Neither of these cases are helpful in our deliberations. Section 15 of the Statutory Powers Procedure Act, R. S. O. 1990, c. S. 22 sets out the admissibility of evidence before this Assessment Review Board (“Board”). The only inadmissible evidence is that set out in statute or privileged at common law, see section 15(2). Hearsay is admissible. As such, there is no danger in considering opinion evidence based upon hearsay because the hearsay is admissible in any event. We must, of course, be careful to look for the hallmarks of unreliable evidence. But there is no exclusionary rule that would make the decisions in Abbey or WBLI applicable to these proceedings. We therefore treat both expert reports presented to us as admissible evidence to be considered.

Current Value

10The use of the Plant changed over the course of the taxation years before us. In order to determine the appropriate assessment for each taxation year, we must look at what was taking place at the Plant at the close of the roll for each year. This is known as the state and condition date for each taxation year. The highest and best use of the Plant on those dates indicates the best approach to the valuation for that taxation year.

State and Condition

11Property is assessed each year as it was when the tax roll was returned to the municipality. The roll must be returned by the second Tuesday following December 1 of the previous year, so the state of the property on that date is determinative of the assessment. For the taxation years before us, the state and condition date is December 9, 2008 for the 2009 taxation year, December 15, 2009 for the 2010 taxation year, December 14, 2010 for the 2011 taxation year, December 13, 2011 for the 2012 taxation year, December 11, 2012 for the 2013 taxation year, and December 10, 2013 for the 2014 taxation year. The assessment for each year is determined by the status of the Plant on the state and condition date, see Resolute FP Canada Inc. v. Thunder Bay (City), 2015 CanLII 38435, (ON ARB) (“Resolute”) at para 24.

12The state and condition date rule in Ontario flows from the decision of the Ontario Court of Appeal in Williams v. Regimbal, 1935 CanLII 91 (ON CA), [1935] O.R. 199, which directed that changes that take place after the day the roll is returned should be ignored. The Divisional Court of Ontario confirmed that rule in Municipal Property Assessment Corp., v. Inmet Mining Corp., Region No. 32, (2002) 163 OAC 590, O. J. No. 3540 [“Inmet”]. In Inmet, the property before the Board had suspended its operations on the roll return date, and closed just over two months later. The Board held that the closure could not be considered for the year in which operations were suspended, which was confirmed by the Divisional Court. The Ontario Municipal Board (“OMB”) applied the rule in Gilbey Canada Inc. v. Regional Assessment Commissioner, Region No. 12 [1996], 33 O. M. B. R. No. 47; 323 [“Gilbey”] where the factory was announced to be closing in August 1990 and closed permanently on December 20, 1990, two days after the roll had closed. The OMB found that because it operated on the roll return date, it should be assessed as operating for the subsequent taxation year.

13GM argues that the state and condition date only applies to legal or physical changes to the Plant and that there were none here. We disagree. State and condition is not only concerned with the physical and legal status of a property. The jurisprudence is clear that use is also an issue to be considered fixed at the roll return date. That is apparent from the findings in Inmet and Gilbey, where the legal and physical status of the properties did not change, only their use changed, but the valuation implications were significant.

14GM announced the closure of the Plant on May 12, 2008, well before the 2009 state and condition date. But the Plant continued to produce transmissions until it closed on July 28, 2010, several months after the 2010 state and condition date. There is no doubt that the Plant was a vacant industrial building on the state and condition dates for the 2011, 2012, 2013 and 2014 taxation years. But on December 9, 2008 and December 15, 2009 it was a Plant producing four-speed transmissions, and should be assessed on the basis of that use.

Highest and Best Use

15The value of the Plant is impacted by how the market would perceive its most profitable use at any given time. This is the valuation principle known as highest and best use. A property is to be valued at what the market would view as the most productive use of the land because that is how it is most likely to transact. For assessment purposes the highest and best use of a property is tied to its state and condition. A highest and best use assessment is appropriate for each taxation year because the highest and best use of a property will change over time, see Toronto Airways Ltd. v. Municipal Property Assessment Corp., Region No. 14 [2014] O.A.R.B.D. No. 500, (WR 126007) (“Toronto Airways”) at para. 37.

16David Gibson was called by GM to provide opinion evidence on the valuation of the Plant. He opined that the highest and best use of the Plant for all taxation years was the scrap or salvage value of the buildings and the value of the land. We agree with that conclusion for the 2011, 2012, 2013 and 2014 taxation years because the Plant was a collection of vacant special purpose industrial buildings on the state and condition date for those taxation years. For the 2009 and 2010 taxation years the Plant was producing transmissions, but Mr. Gibson maintained his opinion that scrap was the highest and best use of the Plant for those taxation years.

17Mr. Gibson applied the usual factors to arrive at his highest and best use conclusion, which look at the uses that are physically possible, legally permissible, financially feasible and maximally productive. He acknowledged that the use the Plant was put to for the 2009 and 2010 taxation years was both physically possible and legally permissible, but concluded that it was not financially feasible or maximally productive. In reaching that conclusion he relied on a number of unrelated market trends, including the price of crude oil, the number of vehicles produced in North America, the Dow Jones securities index for automobiles and parts, the vacancy rates in Windsor and area, unemployment rates, and new house construction. He acknowledged in cross-examination that these trends were not directly related to the Plant. He further acknowledged in cross-examination that he had no access to the financial statements of the Plant during the years it was operational, and therefore could not conclusively comment on the financial feasibility of the operational plant for the 2009 and 2010 taxation years.

18Without specific market studies to show that a use other than the current use of a property is more financially feasible or productive, we cannot reasonably conclude that the use the Plant was put to was not its highest and best use. GM argues that we only have one expert opinion of highest and best use, that of Mr. Gibson. However, the use a property is put to at any given time is presumed to be its highest and best use. Parties seeking to prove a different highest and best use will require compelling evidence of how another legally permissible, physically possible, and financially feasible use is more productive than the current use, see Toronto Airways at para. 31. We did not find Mr. Gibson’s opinion of the highest and best use of the Plant for the 2009 and 2010 taxation years to be supported by the evidence before us.

19GM had the ability to time the closing of the Plant in the way it saw as most financially beneficial, and it continued to use the Plant to produce transmissions for the 2009 and 2010 taxation years. GM determined that a vacant site was more productive for the 2011, 2012, 2013 and 2014 taxation years, but for the 2009 and 2010 taxation years determined that it was more productive to produce transmissions. The market indicia presented by Mr. Gibson show why GM likely made the decision to close the Plant, but do not prove that a vacant site was a more productive use while the Plant was producing transmissions.

20We find that the highest and best use of the Plant for the 2009 and 2010 taxation years is as a transmission factory. We also find that the highest and best use of the Plant for the 2010, 2011, 2012 and 2013 taxation years is as scrap.

Cost Approach

21The valuation of an operating complex special purpose property is generally through the cost approach to value, see Resolute at para. 62. Thus, for the 2009 and 2010 taxation years, we accept the conclusion of Peter Haines, the valuation expert for MPAC, that the best approach to value is the cost approach.

22A cost approach to value estimates the cost of constructing a building of similar utility. This is generally accomplished by a detailed analysis of the existing structure and an estimate of the cost of building that structure today. This is known as the reproduction cost new. A deduction is made from that amount in acknowledgement that a person would not build the Plant in exactly the same manner now as in 1920. Rather, a modern Plant would likely be smaller and more efficiently built. This deduction is a form of functional obsolescence known as the excess capital costs. A second deduction is then required to reflect the reality that the existing buildings are old. This is known as physical depreciation. A further deduction is required in acknowledgement of the increased costs involved in running the existing Plant, when compared to a more modern design. This deduction is also a form of functional obsolescence and is known as excess operating costs. Finally, it is often appropriate to deduct an amount for decreases in value caused by forces outside of the Plant, known as external obsolescence. That is to reflect the fact that a Plant like this might not be built in the current economic climate. The value of the land is added to the depreciated building value to arrive at a total value for the property.

23The only cost value presented to us was the analysis conducted by Mr. Haines. We did not find his analysis to be thorough and have some concerns with various components of his cost analysis, which we discuss below. While we accept many of Mr. Haines’ conclusions, we do not accept them all, resulting in a different value conclusion than that put forward by Mr. Haines.

Reproduction Cost New

24For the January 1, 2008 valuation day Mr. Haines estimated the reproduction cost new of the Plant as $121,530,265. This was significantly higher than the reproduction cost new returned by MPAC of $98,931,784 for the 2009 and 2010 taxation years. When questioned on why he changed that value, Mr. Haines indicated it was based on changes in component costs calculated by third parties, but did not provide any specific details. Mr. Haines admitted that he did not inspect the Plant while it was in operation and did not inspect it with a view to the components for costing. While we do not have any details on how the returned costing was calculated, we prefer it to the radical change made years later without adequate justification. We therefore find that the reproduction cost new of the Plant for the 2009 and 2010 taxation years is $98,931,784.

Excess Capital Costs

25Mr. Haines applied a 50% reduction for excess capital cost, which he said was based on his experience. We would have preferred some analysis and data to support such an adjustment, but with no other evidence to rely upon, we accept a 50% deduction for excess capital cost. We therefore find that the excess capital cost for the 2009 and 2010 taxation years is $49,465,892.

Physical Depreciation

26Mr. Haines applied the depreciation tables in MPAC’s automated cost system to arrive at a physical depreciation deduction of 45% from the value after excess capital cost has been removed. This was based on an effective age of 34 years, assuming a 1975 start date based on renovations to the Plant. We heard no alternative assessments of the appropriate deduction for wear and tear on the Plant. We therefore find that the physical depreciation for the 2009 and 2010 taxation years is 45% of $49,465,892, or $22,259,651.

Excess Operating Costs

27The excess operating costs were not thoroughly assessed by Mr. Haines. He indicated that only GM could provide an accurate assessment. That assertion was not helpful. MPAC had procedural remedies to obtain the information required. Rather than provide an analysis, Mr. Haines opined that a 50% reduction for excess operating cost would be reasonable due to the “unique design and extreme inefficiencies” in the Plant. Again we are left with no alternative evidence to rely on, so we accept 50% as a reasonable reduction. We note that Mr. Haines applied that 50% reduction to the physically depreciated building with excess capital cost removed. We therefore find that the excess operating costs for the 2009 and 2010 taxation years is 50% of $27,206,241, or $13,603,121.

External Obsolescence

28For the January 1, 2008 valuation day, Mr. Haines applied an external obsolescence factor of 45% to the net value of the buildings. This was based on a study prepared by MPAC entitled “2008 Base Year CVA – Economic Obsolescence – Ontario Automotive Assembly.” That analysis relied on the use of installed capacity in the automotive sector as well as the production volume in that industry. The study also indicates that a 45% factor was applied to a number of automotive factories across Ontario. We accept that as a reasonable adjustment. We therefore find that the external obsolescence for the 2009 and 2010 taxation years is 45% of $13,603,121, or $6,121,404.

Yardwork

29The Plant has some structures outside of the buildings, which are referred to as yardwork. Mr. Haines applied similar costing to the yardwork and arrived at a value of $21,544, which was not challenged. We therefore find that the value of the yardwork for the 2009 and 2010 taxation years is $21,544.

Land Value

30The final step in a cost analysis is to determine the value of the land and add that to the depreciated value of the buildings and yardwork. MPAC generally values land based on land tables that are calculated with an algorithm applied to most sales of land, arriving at a value per acre that varies with the size of the parcel. The Plant sits on 35.76 acres and the land table value for the January 1, 2008 valuation day indicates a value of $30,211 per acre, or $1,080,345. Mr. Haines did not use that value in his analysis, and instead looked at four vacant land sales in Windsor to determine the land value, arriving at a value of $44,787 per acre for the January 1, 2008 valuation day. Those four parcels vary in size from 9.01 acres to 160 acres and, as such, are not reliable indicators of the value of a 35.76 acre site. We prefer the standard approach of the land table to Mr. Haines’ comparison to sites of such great variability. We therefore find that the land value for the 2009 and 2010 taxation years is $1,080,345.

31To determine the total value for the 2009 and 2010 taxation years, we apply the following calculation:

Reproduction Cost New $98,931,784

Excess Capital Costs ($49,465,892)

Physical Depreciation ($22,259,651)

Excess Operating Costs ($13,603,121)

Depreciated Building Value $13,603,120

Economic Obsolescence ($6,121,404)

Buildings $7,481,716

Yardworks $21,544

Land Value $1,080,345

Total Value $8,583,605

32We would round that value to $8,584,000. We accept that calculation as the best evidence of current value for the 2009 and 2010 taxation years.

Sale

33The Plant sold on June 6, 2014, along with three adjacent parcels, for $7,300,000. GM argues that this sale is the best evidence of value for all taxation years. MPAC says that we cannot rely on the sale due to a restrictive covenant that was added to the title of the Plant upon closing of the sale. MPAC also objects to the sale forming the basis of valuation for taxation years before the sale took place. For the reasons that follow, we accept the sale as the best indication of value for the 2011, 2012, 2013 and 2014 taxation years.

Encumbrance

34GM insisted on a condition in the sale that the Plant not be used for the storage of toxic waste or be used for residential, institutional or parkland purposes for a period 40 years. We heard from Holly Milewski, who is a GM employee overseeing GM’s Canadian real estate. She indicated that these are standard conditions that GM uses to protect itself from liability and ensure that the land is properly assessed before the use is changed from industrial to “softer” uses. Ms. Milewski indicated that GM will lift the restriction on residential, institutional or parkland uses if it is satisfied that the proper studies have been completed to ensure those uses are safe.

35GM argued that this limitation on the Plant was not a restrictive covenant because it did not comply with the minimum legal requirements for such a restriction to run with the land. Specifically, GM argued that a benefiting parcel was not clearly identified and, if it was identified, it was not adjacent to the Plant. In Galbraith v. Madawaska Club Ltd. 1961 CanLII 16 (SCC), [1961] S. C. R. 639 (“Galbraith”), Justice Judson found that when no benefiting land is clear on the deed, the covenant does not run with the land. However, GM specifically specified a property it owns in Oshawa as the benefited land in the covenant registered with Land Titles for the Plant. That requirement in Galbraith is met.

36GM also argued that the dominant land must be adjacent to the restricted land, but provided no specific legal authority for that proposition. While Justice Judson did set out, at page 651 of Galbraith, that a covenant “must touch and concern the dominant land,” that was not the main issue in that case. We note that Courts have found that benefited land must be reasonably close to the restricted land, 880682 Alberta Ltd. v. Molson Breweries Properties Ltd., 2002 ABQB 771. More importantly, Courts have also consistently held that to touch and concern land the covenant must be “for the benefit of or the enhancement of the value of the benefitted land,” 585582 B.C. Ltd. v. Anderson, 2015 BCCA 261 at para. 19.

37The benefited land in the covenant on the Plant is an automotive factory hundreds of kilometers away. It is not at all clear how that land benefits from the uses at the Plant being constrained. Ms. Milewski outlined how the covenant would benefit GM, but the test is if the covenant benefits the land specified in the covenant, and we heard no evidence on that point. We find that the restrictive covenant would not likely run with the land, but is rather a personal covenant between GM and the purchaser. However, the impact of that personal limitation is on the use of the land, which could impact value and therefore be an encumbrance, see Montreal Trust Co. v. Spendthrift Holdings Ltd., [1984] O. J. No. 296 (QL).

38MPAC argues that the restrictive covenant makes the sale ineligible for consideration due to the definition of “current value” in section 1(1) of the Act: “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.” MPAC suggests that because the sale is of the Plant, as encumbered, it does not indicate what the current value of the land would be.

39The Court of Appeal considered the definition of current value in Municipal Property Assessment Corp., v. BCE Place Ltd., 2010 ONCA 672, and specifically the phrase “if unencumbered.” The Court was clear that the addition of that phrase was a legislative response to the Court of Appeal decision in Ontario Regional Assessment Commissioner, Region No. 11 v. Nesse Holdings Ltd. et. al. (1986), 1986 CanLII 2497 (ON CA), 1986 CarswellOnt 2210, 54 OR (2d) 437, 18 O.M.B.R. 404 (“Nesse Holdings”). The purpose of the phrase “if unencumbered” was a signal that, when using the income approach, an assessor is to use market rents and not actual rents, see para. 23. The Court of Appeal did not address how to treat a sale with an encumbrance, but the legislation clearly defines what is to be done with certain types of encumbrances.

40Section 9 deals with a common class of encumbrances: easements and restrictive covenants. Section 9(3) states that a restrictive covenant running with the land is “deemed to be an easement” for the purposes of section 9. While the covenant here does not fall within the scope of section 9(3), that section provides some guidance on how encumbrances are to be addressed. Section 9(1) is the operative clause and states that easements are to be assessed “at the added value it gives to the land as the dominant tenement, and the assessment of the land that, as the servient tenement, is subject to the easement shall be reduced accordingly.” That is, adjustments can be made for encumbrances, and those that are tied to the land should be reflected in the assessment. An encumbered sale should not be outright ignored, but rather we must look at how the encumbrance changes the value of the land, and consider what the likely sale price would have been if unencumbered.

41Mr. Gibson opined that this restrictive covenant would have no impact on value because the representative of the purchaser, Daryl Dawson, testified that it did not impact the price the purchaser here would have paid for the Plant. Mr. Haines opined that the Plant would have sold for something more without the restrictive covenant, but did not offer an opinion on how much more it would have sold for.

42We accept Mr. Dawson’s evidence that the restrictive covenant did not impact the price of this sale. Further, we are skeptical that a restriction such as this would have a significant impact on value. The limitations in the covenant all amount to a requirement to comply with existing law. While permits can be sought for a waste dump, and legislative amendments can be sought to the zoning limitations, all of those actions require steps to be taken to make any of the restricted uses legal. We have not heard any evidence that the highest and best use of the Plant is as a waste dump or for residential, institutional or parkland uses. While those uses could become the highest and best use of the Plant at some future point in time, there is no reason to suspect that an additional limitation on those uses would impact value for the 2011, 2012, 2013 or 2014 taxation years. For those reasons we find that no adjustment to the sale price is required in relation to the restrictive covenant.

Time of Sale

43MPAC also raised concerns with the timing of the sale. MPAC argues that on the valuation days of January 1, 2008 and January 1, 2012 a purchaser would not know the future state of the property as scrap, so would not pay the amount that the ultimate purchaser did. GM noted that a sale of the property before the Board is the best indication of current value, see Tari v. Municipal Property Assessment Corp., 2016 CanLII 45378 (ON ARB) at para 23, and Khani v. Municipal Property Assessment Corp., 2016 CanLII 48798 (ON ARB) at para 26. We agree that a sale of the Plant is, by far, the best evidence of its current value.

44The Ontario Divisional Court looked at the timing of a sale in Massey Combines Corp. (Receiver of) v. Regional Assessment Commissioner, Region No. 20, (1994) 74 OAC 309, [1994] OJ No 1907 (“Massey Combines”). The Divisional Court found that the Board had erred in refusing to apply a sale of the property in 1989 to the 1986 and 1987 taxation years. The Court there cited Justice Galligan in Nesse Holdings, at 504: “the price paid in a recent free sale of the subject property itself, where... there are neither changes in the market nor to the property in the interval, must be very powerful evidence indeed as what the market value of the property is.”

45We are bound by the finding in Nesse Holdings and Massey Combines. The evidence before us is that the Plant sat vacant from July 28, 2010 through to the sale date of June 6, 2014. There was no change in the Plant over that time frame. We also did not hear any evidence that the market changed dramatically over that time period. The property adjacent to the Plant, at 1508 Walker Road, was built at the same time for the same purpose as the Plant, and was connected to the Plant by a covered bridge. It was sold by GM on November 17, 2005 for $2,250,000 and then resold on November 20, 2015 for $2,450,000. That is an increase of 9% over a decade, which is not a significant change in the market. As there was no significant change in the market or the Plant, we must apply the sale to the 2011, 2012, 2013 and 2014 taxation years.

Sale Adjustments

46The sale price of $7,300,000 included the Plant and three vacant parcels of land adjacent to the Plant, which were formerly used as parking lots for the Plant. Mr. Gibson adjusted the sale price by subtracting the assessed values of those three parcels for the January 1, 2012 valuation day, which have not been appealed. We agree that the value of those parcels must be removed from the sale price to reflect the sale price of the Pant itself. Given that MPAC assigned the assessed values to those parcels, and GM has not contested those assessments, we accept the assessments as the agreed value of those parcels.

47The former parking lot parcels are all much smaller than the Plant. They are 2.13, 2.99 and 5.11 acres. The 2.13 acre site was assessed at $208,000, the 2.99 acre site was assessed at $301,000, and the 5.11 acre site was assessed at $443,000. Removing those assessed values form the total sale price of $7,300,000 leaves $6,348,000 attributable to the Plant. We find that amount to be the best evidence of current value for the 2011, 2012, 2013 and 2014 taxation years.

Current Value Conclusion

48For the reasons set out above, we find that the current value of the Plant for the 2009 and 2010 taxation years is $8,584,000 and that the current value of the Plant for the 2011, 2012, 2013 and 2014 taxation years is $6,348,000. In each returned assessment there was a small portion, of approximately 11,063 square feet, in the commercial property class. Mr. Gibson opined that a value of $47,650 should be attributed to that commercial portion for all taxation years. Mr. Haines did not address apportionment in his report. We therefore accept Mr. Gibson’s uncontested opinion on commercial apportionment.

49As such, we find that the current value of the Plant for the 2009 and 2010 taxation years is $8,584,000, with $8,536,350 in the large industrial property class and $47,650 in the commercial property class. We also find that the current value of the Plant for the 2011, 2012, 2013 and 2014 taxation years is $6,348,000, with $6,300,350 in the large industrial property class and $47,650 in the commercial property class.

Equity

50Section 44(3)(b) of the Act requires that we have reference to the assessments of similar lands in the vicinity of the Plant and, if there is evidence of an inequity, lower the correct current values to an incorrect, but equitable, assessment. A differently constituted panel of this Board recently summarized the scope of section 44(3)(b) in 700 Mohawk Road East Inc. v. Municipal Property Assessment Corporation, 2016 CanLII 57995 (ON ARB) (“700 Mohawk Road East”) at para. 38:

Section 44(3) of the Act, applies the judicial concept of equity, in the sense that it seeks to remedy a wrong, or to assuage the unfair result of the application of the provisions of the Act. The strict written law in the Act requires land be assessed at its current value. If that current value can be shown to be inequitable when compared to the assessed values of similar properties in the vicinity, the Board is empowered to remedy that inequity by reducing the assessment to a value that is less than its current value.

51We agree that we should not exercise our limited equitable jurisdiction unless there is evidence of an inequity when reference is made to the assessments of similar lands in the vicinity. There is no limit on how a party may prove an inequity, as the Act “does not specify any particular methodology,” Municipal Property Assessment Corp., v. Schumacher, 2016 ONSC 3239 (Div. Crt.) at para. 18. However, the methodology must establish, on a balance of probabilities, that “all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred,” Re Empire Realty Co. Ltd. v. Toronto (Metro) Assessment Commr., 1968 CanLII 183 (ON CA), [1968] 2 OR 388.

52GM presented one assessment to support its argument that the current value is inequitable: the adjacent former GM factory at 1508 Walker Road. The assessments of that property are $2,147,000 for the January 1, 2008 valuation day and $2,059,000 for the January 1, 2012 valuation day. Mr. Gibson calculated these to have a ratio to the sales of that parcel of 100.56% for the January 1, 2008 valuation day and 96.44% for the January 1, 2012 valuation day. These ratios certainly do not indicate that 1508 Walker Road was assessed at some percentage of actual value substantially less than one hundred.

53GM presented us with a letter from MPAC’s counsel which indicates that the assessments of 1508 Walker Road are “a compromise value based on the sale.” GM argues that this demonstrates that only a current value based on the sale is equitable. We disagree. Section 44(3)(b) directs us to look at the assessments of similar properties. How those assessments are calculated will very rarely be relevant to an equity analysis. In 700 Mohawk Road East at para. 30, a differently constituted panel of this Board found that equity “is not a valuation methodology.” Basing an assessment on the sale is a reasonable and prudent valuation methodology for the neighbouring property, but we have addressed in our current value assessment why the subject sale is not the best evidence of the value of the Plant for all taxation years. The Plant had a different highest and best use for the 2009 and 2010 taxation years, which justifies the use of the different valuation methodology.

54MPAC has a statutory duty to assess land at its current value, s. 19(1) of the Act. How that duty is accomplished is within the discretion of MPAC. There is no requirement that MPAC apply the same methodology to all properties. Nor is there necessarily any unfairness if different methods are applied to different properties. The only assessments we have been presented with show that MPAC is assessing land in the vicinity near its current value. We are not convinced that there is any inequity when looking at the assessments of similar lands in the vicinity.

CONCLUSION

55The Plant was an operating transmission plant on the state and condition dates for the 2009 and 2010 taxation years. A complex special purpose property such as this is best valued using the cost approach to value. Our cost analysis leads to a current value of $8,584,000 for the 2009 and 2010 taxation years. The Plant closed and sat vacant on the state and condition dates for the 2011, 2012, 2013 and 2014 taxation years. The sale of the vacant Plant on June 6, 2014 is the best evidence of value for those taxation years. We find that the adjusted sale price of $6,348,000 is the current value of the Plant for the 2011, 2012, 2013 and 2014 taxation years. We further find that $47,650 should be apportioned to the commercial property class for each taxation year, with the remainder in the large industrial property class. We are not convinced that those current values are inequitable. We therefore reduce the assessments for the Plant as follows:

a. For the 2009 taxation year, we reduce the returned assessment of $19,464,000, with $19,271,120 in the large industrial property class and $192,880 in the commercial property class, to $8,584,000, with $8,536,350 in the large industrial property class and $47,650 in the commercial property class;

b. For the 2010 taxation year, we reduce the returned assessment of $18,283,000, with $18,103,317 in the large industrial property class and $179,683 in the commercial property class, to $8,584,000, with $8,536,350 in the large industrial property class and $47,650 in the commercial property class; and

c. For the 2011 and 2012 taxation years we reduce the returned assessment of $10,640,000, with $10,501,549 in the large industrial property class and $138,451 in the commercial property class, to $6,348,000, with $6,300,350 in the large industrial property class and $47,650 in the commercial property class.

d. For the 2013 and 2014 taxation years we reduce the returned assessment of $10,640,000, with $10,501,500 in the large industrial property class and $138,500 in the commercial property class, to $6,348,000, with $6,300,350 in the large industrial property class and $47,650 in the commercial property class.