Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 03, 2017 FILE NO.: WR 146892

Assessed Person(s): Jillian May Rogers, Ian Shelley Appellant(s): Jillian May Rogers, Ian Shelley Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 09 Respondent(s): City of Toronto Property Location(s): 104 Roxborough Street West Municipality(ies): City of Toronto Roll Number(s): 1904-052-530-04300-0000 Appeal Number(s): 3171497 Taxation Year(s): 2015 Hearing Event No.: 667280

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

Heard: May 15, 2017 in Toronto, Ontario

APPEARANCES:

Parties	Counsel/Representative
Ian Shelley, Jillian May Rogers	Ian Shelley
MPAC	Stephen Stadelmann
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1The property is a two and one half storey single family detached home with 3,369 square feet (“sq. ft.”) of total building area and a finished basement area. The total effective lot size is 4,470 sq. ft. It was originally constructed in 1907. It was purchased September 2012, and underwent a “D” renovation that was completed in 2014 and which included an addition at the back and an addition to the third floor. It has a quality class rating of 8.5. There is also a detached garage.

2Stephen Stadelmann, representing MPAC, is of the opinion that the current value of the property is correct and equitable at $2,673,000 and asks that the assessment as returned be confirmed for the 2015 taxation year. He maintains that MPAC had the statutory authority under s. 32(1) of the Assessment Act R.S.O. 1990, c. A.31 (“Act”) to increase the assessment for the 2015 taxation year.

3Ian Shelley, on behalf of the Appellants, takes issue with the manner in which the assessed value of $2,673,000 was returned. In July 2014, he received a Property Assessment Change Notice (“PACN”) following completion of the major renovation that indicated an assessed value of $2,156,000. In October 2014, he received a Property Assessment Notice (“PAN”) that increased the value to $2,673,000. Mr. Shelley takes the position that none of the facts had changed after the assessment for the major renovation, only the assessor’s opinion and, that s. 32(1.1) of the Act precludes a correction of any error in the assessment of the property from a change in opinion. He asks that the value be returned to the assessed value of $2,156,000.

4This appeal raises several issues. Did MPAC have the statutory authority to increase the assessment for the 2015 taxation year in the manner that it did? Does the assessment of $2,673,000 reflect the current value of the land; and should the assessment be adjusted to make it equitable with the assessments of similar lands in the vicinity?

DECISION

5For the reasons stated below, the Board finds that MPAC acted within its statutory authority to return the assessment for the 2015 taxation year in the amount of $2,673,000. Furthermore, as directed by s. 44.(3)(a) of the Act, the Board sets the current value of the property, as of the valuation day of January 1, 2012, at $2,673,000 and finds that there is no evidence leading to the conclusion that the current value, as determined above, is not equitable relative to the assessments of similar lands. It requires no further adjustment under s. 44.(3)(b) of the Act.

6Accordingly, for the 2015 taxation year, the assessment of the subject property is confirmed at $2,673,000.

REASONS FOR DECISION

The Legislation

7Section 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.

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

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

9Section 19.2(1) of the Act states:

19.2(1) Valuation days – 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.

10Section 32(1) of the Act states:

Correction of errors, etc., in assessment roll

32(1) Despite the delivery of any notice provided for under this Act, the assessment corporation at any time before the time fixed for the return of the assessment roll may correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly.

11Section 32.(1.1) of the Act states:

Same, factual error only

32.(1.1) Despite the delivery of any notice provided for under this Act, for 2009 and subsequent taxation years, the assessment corporation may, at any time during the taxation year, correct any error in the assessment or classification of a property that has resulted from incorrect factual information about the property, and not from a change in opinion as to current value, and the following rules apply:

1. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the correction, and the municipality shall, i. refund or credit to the owner the amount of any overpayment of taxes and any interest paid by the owner on the amount of the overpayment, or ii. levy and collect from the owner any additional taxes that have become payable as a result of the correction.
2. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the correction, and shall, i. refund or credit to the owner the amount of any overpayment of taxes and any interest paid by the owner on the amount of the overpayment, or ii. levy and collect from the owner any additional taxes that have become payable as a result of the correction.

12Section 36(1) of the Act states:

Time for annual assessment and return of roll assessment

36(1) Except as provided in section 32, 33 or 34, assessments of land under this Act shall be made annually at any time between January 1 and the second Tuesday following December 1.

13Section 36(2) of the Act states:

Return of the assessment roll

36(2) The assessment roll for a municipality and any area attached to the municipality under clause 56 (b) or subsection 58.1 (2) of the Education Act shall be returned to the clerk of the municipality, the assessment roll for a locality or a local roads area under the Local Roads Boards Act shall be returned to the secretary of the applicable board and the assessment roll for non-municipal territory shall be returned to the Minister, not later than the second Tuesday following December 1 in the year in which the assessment is made.

14Section 44(1) of the Act states:

Assessment may be open upon appeal

44 (1) Upon an appeal on any ground against an assessment, the Assessment Review Board or court, as the case may be, may reopen the whole question of the assessment so that omissions from, or errors in the assessment roll may be corrected, and the amount for which the assessment should be made, and the person or persons who should be assessed therefor may be placed upon the roll, and if necessary the assessment roll, even if returned as finally revised, may be opened so as to make it correct in accordance with the findings made on appeal.

15Section 44(3) of the Act states:

44(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.

THE BOARD’S ANALYSIS

MPAC’s Case

16Mr. Stadelmann outlined how the assessed value of $2,673,000 was returned for the 2015 taxation year.

17In 2014, a PACN (supplementary assessment) was issued following an inspection upon the completion of a major renovation and addition to the subject property. The 2012 current value assessment (“CVA”) was revised to $2,156,000. A copy of the PACN is included in the Appellant’s Exhibit 4. Mr. Stadelmann stated that errors were subsequently detected and corrected. The quality class rating was changed to 8.5 as appropriate for a fully renovated home with more than 3,000 sq. ft. Also, a negative 10% property specific adjustment to the previously un-renovated condition of the property was removed. An increase in the current value assessment from $2,156,000 to $2,673,000 was affected through an amendment to the roll, prior to the date fixed for the return of the assessment roll for the 2015 taxation year. A PAN that increased the value to $2,673,000 for the 2015-2016 property taxation years was issued (Exhibit 4).

18Mr. Stadelmann referred to Member Wyger’s decision in Reininghaus v. Municipal Property Assessment Corporation, Region No. 15, [2013] O.A.R.B.D. No. 65 (DM 118185, March 21, 2013) and the City of Mississauga in support of his position that the corrections made prior to the time fixed for the annual return of the assessment roll for the 2015 taxation year were permissible under s. 32(1) of the Act.

19Mr. Stadelmann assessed the current value of the property using the direct sales comparison approach and provided information on the two sales involving one property on the same street as the subject property and the sales of three properties in proximity to the subject property (Exhibit 2).

20Mr. Stadelmann submitted an Equity Analysis (Exhibit 2) that considered 30 arm’s length sales of residential properties within 0.21 kilometres of the subject property that took place between January 2011 and December 2012. They produced a median Assessment to Sales Ratio (“ASR”) of 0.97, which is within the acceptable standard of 0.95 to 1.05 required to establish that the level of assessments of similar properties is reflective of the level of sales prices in the vicinity.

21Mr. Stadelmann is of the opinion that the current value of the property is correct and equitable at $2,673,000 and asks that it be confirmed for the 2015 taxation year.

Appellant’s Case

22Ian Shelley takes issue with how the assessed value of $2,673,000 was returned.

23In July 2014, he received a PACN (Exhibit 4) following completion of the major renovation that indicated an assessed value of $2,156,000. On October 11, 2014, he received a PAN for the 2015 taxation year that increased the value to $2,673,000. He was perplexed as to the increased assessed value as nothing had changed after the assessment for the major renovation. He wrote to MPAC on several occasions (Exhibit 4) without receiving a satisfactory response. Mr. Stadelmann provided a detailed response for the recent assessment changes by e-mail on February 5, 2016, in response to the Request for Reconsideration (Exhibit 4). Mr. Shelley takes the position that none of the facts had changed after the assessment for the major renovation, only the assessor’s opinion and, that s. 32(1.1) of the Act precludes a correction of any error in the assessment from a change in opinion. He asks that the assessed value be returned to the assessed value of $2,156,000.

Did MPAC have the statutory authority to increase the assessment for the 2015 taxation year in the manner that it did?

24The Board concludes that MPAC acted within its statutory authority to return the assessment for the 2015 taxation year in the amount of $2,673,000.

25I concur with Member Wyger’s analysis in Reininghaus v. Municipal Property Assessment Corporation, Region No. 15, [2013] O.A.R.B.D. No. 65 (DM 118185, March 21, 2013) and the City of Mississauga where he states as follows at paragraphs 19 and 22:

…I find that the legislative intent of the addition of s. 32(1.1) was to set different conditions for corrections pre-roll return and post-roll return. It makes eminent sense to allow MPAC to correct an assessment for practically any reason prior to the roll being fixed. It makes equal sense that during the taxation year, such corrections as an increase in value be restricted to factual information, and not allowing the assessor to change his/her mind on the opinion of value. MPAC is stuck with the opinion of value, and cannot initiate a correction unless it is based on a factual error. If the homeowner initiates an inquiry into the correctness during the tax year using s.39.1 or s. 40, then the s.44 kicks in to reopen the whole question of the assessment. There are no restrictions in any of these sections on the assessment corporation seeking an increase in the assessment.”

…Section 36(1) provides that assessments “shall be made annually…” and s. 36(2) provides that the assessment roll shall be returned “not later than the second Tuesday following December 1 in the year in which the assessment is made…”. These sections establish for the “time fixed for the return of the assessment roll …” for the purposes of s. 32(1). The only reasonable understanding of these sections read together is that the reference in s. 32(1) is to the statutorily mandated annual return of the assessment roll in December of each year.”

26For the subject property, Mr. Stadelmann stated that errors were detected and corrected after the supplementary notice of assessment had been issued. The quality class rating was changed to 8.5 as appropriate for a fully renovated home with more than 3,000 sq. ft. Also, a negative 10% property specific adjustment to the previously un-renovated condition of the property was removed. An increase in the current value assessment from $2,156,000 to $2,673,000 for the 2015 taxation year was affected through an amendment to the roll, prior to the date fixed for the return of the assessment roll for the 2015 taxation year. A PAN that increased the value to $2,673,000 for the 2015-2016 taxation years was issued (Exhibit 4). MPAC had the broad power under s. 32(1) to “correct any defect, error, omission or misstatement in any assessment” available to it up to the time for the close of the annual return of the assessment roll. It does not matter that either the subjective correction to the quality class for the property or the removal of the negative 10% property specific adjustment may be characterized as a change of opinion. The corrections occurred prior to the time for the annual roll return of the assessment roll for the 2015 taxation year (in this instance, before the second Tuesday following December 1, 2014) and were therefore permissible under s. 32(1) of the Act.

27As noted in the PAN, under the Act an increase in assessed value is usually phased-in over four years, from 2013-2016 . In this case, the phased-in value for the 2015 taxation year is $2,457,191. The current value of $2,673,000 is fully phased-in for the 2016 taxation year.

28The Board will proceed to determine whether the value of $2,673,000 is the correct current value under the Act.

Current Value

29The initial task of the Board is to use the best evidence available to determine the current value of the property as required by s. 1 and s. 19.(1) and s. 44.(3)(a) of the Act.

30The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the subject property on the valuation day 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 located nearby, as close as possible to the valuation date of January 1, 2012. The measure acts as benchmark and a gauge of the accuracy for the assessed value of the subject property and comparable properties.

31To enable an estimate of value for the subject property to be derived from suggested comparable properties there must be sufficient elements of similarity, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc., so as to enable a direct comparison to be made between a suggested comparable property and the subject property.

32The Board considered the five sales (Exhibit 2) including two on the same street and same homogeneous neighbourhood D78 as the subject property.

33Property 4 – 54 Roxborough Street West in homogeneous neighborhood D78, a two and one half storey detached property originally built in 1909. It has a slightly smaller total building area (2,907 sq. ft.) and a slightly smaller effective site area (3,920.40 sq. ft.) than the subject property and a lower quality class rating of 7.0. It also has a detached garage. There was a sale in May 2012 for $1,900,000 (Time Adjusted Sale (“TAS”) $1,852,625). While this property shares similarities to the subject property in terms of lot size and building size, the Board finds it to be substantially inferior to the subject property in light of its age, condition and quality class rating.

34Property 5 - 54 Roxborough Street West in homogeneous neighbourhood D78. This property underwent a “D” renovation and a small addition for a new total building area of 3,083 sq. ft. that was completed in December 2013. Like the subject property it has a finished basement area. It has a quality class rating of 8.0. A PACN (supplementary assessment) was issued in March 2014 for a new value of $2,446,000. There was a sale in July 2014 for $3,200,000. Mr. Stadelmann stated that he time adjusted the sale price to arrive at an estimated time adjusted sale value of $2,622,000. While this property shares similarities in terms of lot size and building size and its renovated condition, the Board still finds it to be slightly inferior to the subject property.

35Mr. Stadelmann referred to three other sales of highly improved properties in a different homogeneous neighbourhood (D77) which is located fairly close by on the west side of Avenue Road.

36Property 1 - 25 Elgin Avenue is a two storey detached property originally built in 1878. It has a larger frontage (41. ft.) and effective site area (5,658. sq. ft.) and a slightly larger total building area (3,283 sq. ft.) than the subject property. It underwent a “C” renovation in 2010 and has a higher quality class rating of 8.5. Like the subject property it has a detached garage. There was a sale in April 2014 for $3,998,000 (TAS of $3,920,034). The Board finds this property to be significantly superior to the subject property

37Property 2 – 27 Bernard Avenue is a two and one half storey detached property originally built in 1890. It has a smaller frontage (25. ft.), a slightly larger total building area (3,259 sq. ft. and a much smaller effective site area (3,050 sq. ft.) than the subject property. It underwent a “C” renovation in 1992 and an addition in 1997 and has a lower quality class rating of 7.0. There was a sale in November 2011 for $2,275,000 (TAS of $2,321,166). The Board finds this property to be significantly inferior to the subject property.

38Property 3 – 28 Boswell is a new two storey detached property built in 2012. It has a smaller frontage (22 ft.), a slightly smaller total building area (2,993 sq. ft.) and a much smaller effective site area (2,046 sq. ft.) than the subject property. It has a detached garage and is located on a cul-de-sac. It has the same quality class rating of 8.5 as the subject property. There was a sale in May 2012 for $3,200,000 (TAS of $3,120,210). The Board finds this property to be slightly superior to the subject property given its newer construction and location on a cul-de-sac.

39Mr. Shelley did not have any sales to rely on. Rather, he maintains that the property should be assessed at $2,100,000.

40The Board finds the current value of the subject property to be within the range of the time-adjusted sale for Property 5 of $2,622,000 which the Board finds to be slightly inferior to the subject property and the time-adjusted sale for Property 3 of $3,120,210, which represents the lower end of the range of superior properties. The value as returned at $2,673,000 is at the lower end of the range and it appears reasonable in light of the evidence before the Board. The current value is set at $2,673,000.

Equity with Similar Lands in the Vicinity

41The Board must also consider the assessments of similar properties in the vicinity and determine whether the correct current value as established is inequitable relative to those assessments. If so, it should be adjusted to make it equitable, as required by s. 44.(3) of the Act.

42For purposes of establishing equity, properties do not need to be comparable; they need to be of a similar nature and within a reasonable proximity. The ASR from a reasonable sample of sold properties is usually the best indicator for that purpose. Mr. Stadelmann submitted an Equity Analysis (Exhibit 2) that considered 30 arm’s length sales of residential properties within 0.21 kilometres of the subject property that took place between January 2011 and December 2012. They produced a median ASR of 0.97, which is within the acceptable standard of 0.95 to 1.05 required to establish that the level of assessments of similar properties is reflective of the level of sales prices in the vicinity. Where the subject property’s current value assessment is also at its likely sale value, then there is no basis for a finding of inequity relative to those similar properties.

CONCLUSION

43The Board finds that MPAC acted within its statutory authority to return the assessment for the 2015 taxation year in the amount of $2,673,000.

44Furthermore, as directed by s. 44.(3)(a) of the Act, the Board sets the current value of the property, as of the valuation day of January 1, 2012, at $2,673,000 and finds that there is no evidence leading to the conclusion that the current value, as determined above, is not equitable relative to the assessments of similar lands. It requires no further adjustment under s. 44.(3)(b) of the Act.

45Accordingly, for the 2015 taxation year, the assessment of the subject property is confirmed at $2,673,000.