Rea v. Municipal Property Assessment Corporation, 2017 CanLII 51179

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 03, 2017

FILE NO.: WR 146894

Assessed Person(s): Anthony Rea and Bao-Huong Hoang

Appellant(s): Anthony Rea and Bao-Huong Hoang

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): 98 E Curzon Street

Municipality(ies): City of Toronto

Roll Number(s): 1904-083-010-08650-0000

Appeal Number(s): 3173459

Taxation Year(s): 2016

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	Representative
Anthony Rea and Bao-Huong Hoang	Anthony Rea
MPAC	Greg Tom
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1The subject property is a two storey freehold townhome built in 1988 as part of a small infill townhouse complex. It is an end unit with 1,410 square feet (“sq. ft.”) of total building area and 342 sq. ft. of finished basement area. There is a basement garage. The total lot size is 9,389.36 sq. ft. There have been no recent changes or additions to the property.

2Mr. Tom, representing MPAC, is of the opinion that the current value of the property is correct and equitable at $720,000 and asks that it be confirmed for the 2016 taxation year.

3Anthony Rea, on behalf of the appellants, takes the position that the property is inequitably assessed in relation to the most comparable properties being the other townhouse units in the townhouse complex. He attributes the higher assessed value to the greater effective frontage and depth for a greater effective site area than the other properties in the complex as a result of the common areas and laneway being attached to the property’s roll number. Mr. Rea is of the opinion that the subject property should be assessed at $642,000 which, in his opinion, is the average assessment in the complex for the 2012 Current Value Assessment (“CVA”) cycle.

4This appeal raises two issues: does the assessment of $720,000 reflect the current value of the land; and should the assessment be adjusted to make it equitable relative to the assessments of similar lands in the vicinity.

DECISION

5For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act (the “Act”), the Assessment Review Board (“Board”) finds that the current value of the property, as of the valuation day of January 1, 2012, is $750,000. The Board also finds that the evidence does not demonstrate that a reduction is required to make the assessment equitable relative to the assessments of similar lands in the vicinity. It requires no further adjustment under s. 44.(3)(b) of the Act. MPAC has not filed a notice seeking a higher assessment. Accordingly, for the 2016 taxation year, the assessment is confirmed at $720,000.

REASONS FOR DECISION

The Legislation

6The 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.

7Section 19.(1) of the Act states that the assessment of the land shall be based on its current value. Current value is defined in s. 1 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.

8Section 19.2(1)(3) of the Act provides that for the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

9In determining the value at which the land shall be assessed, s. 44.(3) of the Act requires that the Board (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.

10Section 40.(17) of the Act provides that, where value is the ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

11After hearing the evidence and the submissions of the parties, the Board shall determine the matter pursuant to s. 40.(19).

The Board’s Analysis

MPAC’s Case

12Mr. Tom described the subject property as being part of a small infill townhouse complex that consists of a total of 16 townhouse units divided into four blocks. He assessed the current value of the property using the direct sales comparison approach and provided information on five sales involving four properties (including the subject property) located in the same townhouse complex (Exhibit 2). There was only one sale in either shoulder year to the January 1, 2012 valuation date and this sale involved the subject property. It sold in December 2011 for $750,000 (or a time adjusted sale (t.a.s) value of $753,973). The CVA for the property as returned at $720,000 for the 2016 taxation year is lower than the sale value.

13Mr. Tom also submitted an Equity Analysis (Exhibit 3) that considered 30 arm’s length sales of residential properties within 0.2 kilometres of the subject property that took place between January 2011 and December 2012. They produced a median Assessment to Sales Ratio (“ASR”) of 0.99, 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.

14Mr. Tom is of the opinion that the current value of the property is correct and equitable at $720,000 and asks that it be confirmed for the 2016 taxation year.

Appellants’ Case

15Mr. Rea stated that the property was purchased in February 2015 for $859,000. He takes the position that the property is inequitably assessed in relation to the most comparable properties being the other townhouse units in the townhouse complex.

16Mr. Rea maintains that title ownership of the common areas and the laneway as the only major variable between the subject property and the other properties in the townhouse complex. He attributes the higher assessed value to the greater effective frontage and depth for a greater effective site area than the other properties in the complex as a result of the common areas and laneway being attached to his property’s roll number. In his opinion, this places the appellants in an inequitable position vis-à-vis the other owners in the complex from a tax payment standpoint. This also places the appellants in an inequitable position from a future sales standpoint. He maintains that the common lands are of no benefit, value or enjoyment to the appellants.

17Mr. Rea submitted a copy of the “Maintenance Agreement” dated September 23, 1988 (Exhibit 6) that is registered on title and the appellants became parties to as purchasers. The document references their title that includes a right of way in common with all those entitled thereto over, along and upon Parts 9, 10, 11 and 12 on Plan 63R 4106 (areas highlighted on the copy of the registered plan included in Exhibit 5). It also makes the appellants a party to the covenants made by the Maintenance Agreement.

18Mr. Rea is of the opinion that the subject property should be assessed at $642,000 which, in his opinion, is the average assessment in the complex for the 2012 CVA cycle.

Current Value

19The 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.

20The 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. In this case, there was a sale of the subject property in December 2011 for $750,000. MPAC’s assessed current value for the subject property is lower at $720,000.

21There were also four other sales in the townhouse complex in evidence (Exhibits 2 and 5). Mr. Tom stated that he did not consider these other sales as they were outside of the immediate shoulder years to the January 1, 2012 and no time adjusted factors were available.

22The Board considered the sales of 98 F Curzon Street, 98 H Curzon Street and 98 K Curzon Street in the townhouse complex. Two of the properties, 98 F Curzon Street and 98 H Curzon Street, share similarities to the subject property together with reciprocal rights of way and covenants subject to the Maintenance Agreement (Exhibits 2, 5 and 6). Exhibit 6 does not reference the unit at 98 K Curzon Street which is located in a newer block and a similar maintenance agreement is not in evidence before the Board. However, 98 K Curzon Street also shares similarities to the subject property and its location as evidenced in the photographs included in Exhibit 7 clearly suggest a right of way over the laneway. The Board will consider all three sales that occurred in August 2014, October 2010 and March 2013. The actual sales were considered as no time adjustment factors were available. The Board did not include the February 2015 sale of the subject property as it is considered too far removed from the January, 1 2012 valuation date:

• Sale C (Property 3) - 98 F Curzon Street is next door to the subject property and has the same total building area, finished basement area and a basement garage. It has an effective site area of 1,236 sq. ft. whereas the subject property has an effective site area of 9,389.36 sq. ft. which, according to Mr. Rea includes the common areas and laneway that are attached to his roll number. However, this property underwent a “C” renovation in 2013 and sold for $885,000 in August 2014. The Board finds it to be superior to the subject property.

• Sale E (Property 5) - 98 K Curzon Street is newer having been constructed in 1990 and is about 200 sq. ft. larger in total building area than the subject property but has no finished basement area. It has an effective site area of 1,397.63 sq. ft. whereas the subject property has an effective site area of 9,389.36 sq. ft. which, according to Mr. Rea includes the common areas and laneway that are attached to his roll number. It sold for $790,000 in March 2013. The Board finds it to be slightly superior to the subject property.

• Sale D (Property 4) - 98 H Curzon Street has the same total building area as the subject property as well as a finished basement area and a basement garage. It has an effective site area of 1,423.43 sq. ft. whereas the subject property has an effective site area of 9,389.36 sq. ft. which, according to Mr. Rea includes the common areas and laneway that are attached to his roll number. It sold for $617,000 in October 2010. The Board finds it to be comparable to the subject property.

23The Board recognizes that this is a small sample of sales. However, the sales of these townhouses in the complex took place in relative proximity to the January 1, 2012 valuation date. The sales also demonstrate a trend towards an increase in value over time. The renovated condition of 98 F Curzon Street appears to have had the greatest influence on value. The mid-point of the sales range of $617,000 and $885,000 is $751,000. These sales support the subject property’s sale value of $750,000 as its current value. The sale of the subject property is the closest sale to the January 1, 2012 valuation date.

Equity with Similar Lands in the Vicinity

24The 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.

25For 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. Tom submitted an Equity Analysis (Exhibit 3) that considered 30 arm’s length sales of residential properties (including the December 2011 sale of the subject property) within 0.2 kilometres of the subject property that took place between January 2011 and December 2012. They produced a median ASR of 0.99, which is within the acceptable standard of 0.95 to 1.05 required to establish that the level of current value assessments of similar properties are in line with the level of sales prices in the vicinity.

26Mr. Rea argues that the subject property is inequitably assessed in relation to the most directly comparable properties being the other townhouse units in the townhouse complex with reciprocal rights of way and covenants subject to a Maintenance Agreement. He attributes the higher assessed value of the subject property to the greater effective frontage and depth for a greater effective site area than the other properties in the complex as a result of the common areas and laneway being attached to his property’s roll number. In his opinion, this places the appellants in an inequitable position vis-à-vis the other owners in the complex.

27Mr. Rea submitted a copy of the Maintenance Agreement dated September 23, 1988 (Exhibit 6) that is registered on title and that the appellants became parties to as purchasers.

28The Board notes that subject property’s description is referred to in Exhibit 6 as follows: “Part of lots 5, 9 & 11 Plan 391 more particularly described as Part 2 (Two) on Plan 63R 4106 TOGETHER WITH a Right of Way in common with all those entitled thereto over, along and upon Parts 9, 10, 11 &12 Plan 63R 4106 Being on Lots 5, 9 & 11 of Plan 391.” “Right of Way” is defined in the Maintenance Agreement at Section 9 as meaning Parts 9 to 12 inclusive on Plan 63R 4106 (the areas highlighted on the copy of the registered plan included in Exhibit 5) and “Owner” means any person or persons who from time to time own any of Parts 1-8 inclusive, Plan 63R-4106. Upon reviewing Exhibit 6 and the legal description for properties included in the Comparable Property Report that is part of Exhibit 5, the Board concludes that the Maintenance Agreement in evidence before the Board applies to the owners of Units 98A, 98B, 98C, 98D, 98E, 98F, 98G and 98H located in the Curzon Street complex.

29By the terms of the Maintenance Agreement, each owner has a right of way over and a right to use and enjoy the right of way together with others so entitled. Each owner’s duties are also specified. These include electing a Maintenance Committee. Mr. Rea confirmed that a committee is in place and that an annual levy of about $800 is collected from each parcel’s owner(s) for shared expenses. By the terms of the Maintenance Agreement, owners are required to maintain at their own expense, the pavement, catch-basins, curbs, side-walks on the paved portion of the right of way and of any landscaping situate on the right of way and furnish maintenance at their own expense including the cleaning of the surface of the right of way pavement and the clearing of snow as required to permit the safe and unimpeded passage of vehicles.

30The equity evidence before the Board includes the ASRs for three sales of properties in the townhouse complex with reciprocal rights of way and covenants subject to the same Maintenance Agreement as the subject property (Exhibit 6). These properties are 98E Curzon Street (ASR of 0.96), 98 F Curzon Street (ASR of 0.73) and 78 H Curzon Street (ASR of 0.93). However, the Board finds that this is not a statistically significant indication that the subject property’s assessment is unfair or inequitable. The Board gives more weight to MPAC’s ASR study which produced a median ASR of 0.99, which is within the acceptable standard of 0.95 to 1.05 required to establish that the level of current value assessments of similar properties are in line with the level of sales prices in the vicinity.

31The Board notes Mr. Tom indicated that in similar situations there is a separate roll number for the laneway. MPAC may wish to investigate whether the laneway and/or common areas require a separate roll number to reflect the Maintenance Agreement and apportion the assessed value among all of the various parcel owners to which the right of way is appurtenant. The Board only had evidence before it with respect to a Maintenance Agreement that applied to eight owners (Units 98A, 98B, 98C, 98D, 98E, 98F, 98G and 98H) out of 16 owners of units located in the Curzon Street complex. Presumably, the other owners have reciprocal rights of way and covenants and are subject to similar maintenance agreements. The wording of the Maintenance Agreement introduced as Exhibit 6 appears to reflect apportionment. For instance, under Owners’ Duties in respect of the right of way and taxes, s. 3.1(c) provides that each owner shall pay municipal and other government taxes, levies or rates, of whatever kind and nature.

CONCLUSION

32The Board finds that the current value of the property, as of the valuation day of January 1, 2012, is $750,000. The Board also finds that the evidence does not demonstrate that a reduction is required to make the assessment equitable relative to the assessments of similar lands in the vicinity. It requires no further adjustment under s. 44.(3)(b) of the Act. MPAC has not filed a notice seeking a higher assessment. Accordingly, for the 2016 taxation year, the assessment is confirmed at $720,000