Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 2, 2017

FILE NO.: WR 144093

Assessed Person(s): Michael Stephen Purcell and Catherine Nye Purcell Ian Kojima and Anne Kojima Gail Heather Nielissen Michael Anthony Adams Julie Elizabeth Adams Jayant Khanderao Lele and Dorothy Joy Lele Mary Michelle Dowsley

Appellant(s): Bajus Consulting Inc., Michael Stephen Purcell and Catherine Nye Purcell

Respondent(s): Bajus Consulting Inc. Michael Stephen Purcell and Catherine Nye Purcell Ian Kojima and Anne Kojima Gail Heather Nielissen Michael Anthony Adams Julie Elizabeth Adams Jayant Khanderao Lele and Dorothy Joy Lele Mary Michelle Dowsley Municipal Property Assessment Corporation (“MPAC”) Region 5 City of Kingston

Property Location(s): 300, 302, 304 and 306 Wellington Street

Municipality(ies): City of Kingston

Roll Number(s): 1011-030-110-07730-0000, 1011-030-110-00720-0000, 1011-030-110-07710-000 and 1011-030-110-0700-0000

Appeal Number(s): 2951893, 3018429, 3133027, 3072991, 3145582, 3145565, 2951894, 3018328, 3073200, 3145630, 2951895, 3018119, 3073201, 3145627, 2951896, 3018329, 3073034 and 3145673

Taxation Year(s): 2013, 2014, 2015 and 2016

Hearing Event Nos.: 636698 and 646075

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

Heard: September 9, 2016 and November 16, 2016 in Kingston, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Bajus Consulting Inc.	Robert Maratta+
Michael Anthony Adams Julie Elizabeth Adams	Self-represented
Ian Kojima	Self-represented
Michael Stephen Purcell	Self-represented
MPAC	Rox-Anne Poulain
City of Kingston	No one appeared

DECISION OF THE BOARD DELIVERED BY J.L. WALKER

INTRODUCTION

The Brownfields Remediation Agreements

1The land on which the four subject properties municipally known as 300, 302, 304 and 306 Wellington Street in the City of Kingston (“City”) are situated is a former brownfields site.

2Bajus Consulting Inc. (“Bajus”) remediated the land and constructed four freehold townhouses/rowhouses in conjunction with the City under a Community Improvement Plan (“CIP”) adopted pursuant to s. 28 of the Planning Act, R.S.O. 1990, c. P. 13, the Brownfields Financial Tax Incentive Program (“BFTIP”), and the Tax Increment-Based Rehabilitation Grant Program (“TIRGP”) (“brownfields remediation agreements”) (see generally Exhibit 3, Agreement of Purchase and Sale 300 Wellington Street, Schedule “A” Purchase Price (“APS”)).

3The CIP provides a mechanism by which the City may direct funds and implement policy to a specifically defined project area to encourage rehabilitation initiatives and/or stimulate development. The purpose of the CIP in which the subject properties are located is to facilitate the implementation of the City’s Brownfields Program. The Program provides tax assistance and grants for the rehabilitation of environmentally compromised land and/or buildings.

4Under the BFTIP, the maximum tax assistance available is the lesser of the approved eligible costs of rehabilitating the real property or the amount of taxes cancelled during the rehabilitation and development periods.

5With respect to the TIRGP, the grant is paid annually in an amount equal to 80 per cent of the incremental increase in the municipal taxes generated by the remediation and redevelopment of the property (pre-development vs. post-development). The grant is payable for up to 10 years once the eligible costs, as determined by the City, have been repaid to the owner, whichever comes first.

6Bajus provided prospective buyers of the freehold townhouses/rowhouses with two options: a purchase price with the buyer assigning to Bajus any and all tax grants and/or savings arising from the CIP agreement, or a purchase price with Bajus assigning to the buyer any and all tax grants or savings arising from the CIP agreement. The predecessors in title elected to assign to Bajus any and all tax grants and/or savings arising from the brownfields agreements, which depend upon the assessed values of the subject properties, pursuant to s. 365.(1) of the Municipal Act, 2001, S.O. 2001, c. 25.

The Assessment Appeals

7Bajus filed appeals under s. 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended (“Act”) for each of the subject properties for the 2013 – 2016 taxation years on the basis that the assessment is too low. Michael Stephen Purcell, the owner of 300 Wellington Street, also filed s. 40 appeals for the 2015 – 2016 taxation years on the basis that the assessment is too high.

8MPAC agrees with Bajus that the assessments are too low, and makes the following recommendations for the subject properties (Table 1), based on a value of $335 per square foot (“sq. ft.”), time adjusted to the sales of 304 Wellington Street for $485,000 in July 2011 and $520,000 in July 2014, with a further adjustment made for equity.

Table 1

Subject Properties	Assessments Returned $ 2013 & 2014/2015/2016	Building Area Sq. ft.	Current Value $	Post-Equity Adjustment $
300 Wellington Street	239,000 / 449,000 / 416,000	1,515	507,000	416,000
302 Wellington Street	211,000 / 407,000 / 332,000	1,210	405,000	332,000
304 Wellington Street	239,000 / 439,000 / 400,000	1,458	489,000	400,000
306 Wellington Street	238,000 / 439,000 / 401,000	1,463	490,000	401,000

9Robert Maratta, Counsel for Bajus, agrees with the methodological approach and the values proposed by MPAC.

10Mr. Purcell, the owner of 300 Wellington Street, agrees with the current value proposed by MPAC, but submits that his property should be assessed at $199,000 based upon a greater adjustment for equity.

11Michael Anthony Adams, the owner of 304 Wellington Street, submits that the sales are unreliable indicators of current value as the second purchasers were not aware of the brownfields remediation agreements or flood damage that had occurred on the subject properties. All of the assessed owners in attendance question whether the brownfields remediation agreements between Bajus and the predecessors in title should run with the land.

ISSUE

12The Assessment Review Board (“Board”) must determine the current value of the subject properties, adjusting the assessment of the land if necessary to make it equitable with that of similar lands in the vicinity.

DECISION

13The Board determines that the best evidence before it of current value is the time adjusted value of building area of $335 per sq. ft., and that a further adjustment for equity is necessary to achieve equity with the assessments of similar lands in the vicinity. The Board amends the assessments for the 2013 – 2016 taxation years as follows:

Table 2

Subject Properties	Assessments Returned $ 2013 & 2014/2015/2016	Current Value $	Post-Equity Adjustment Value $
300 Wellington Street	239,000 / 449,000 / 416,000	507,000	416,000
302 Wellington Street	211,000 / 407,000 / 332,000	405,000	332,000
304 Wellington Street	239,000 / 439,000 / 400,000	489,000	400,000
306 Wellington Street	238,000 / 439,000 / 401,000	490,000	401,000

REASONS FOR DECISION

The Legislation

14In making its determination, the Board must have regard to the following sections of the Act:

15Section 19.(1) of the Act states:

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

16Section 1 of the Act defines “current value” as:

“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.

17Section 19.2(1) provides that for the 2013 - 2016 taxation years land is valued as of January 1, 2012.

18Section 40.(9) provides that:

40.(9) Where appeal concerns another person. – Where the appeal concerns the assessment of another person,

(a) the notice of appeal shall state a name and address where notices can be given to the person; and

(b) the appellant shall deliver or mail a copy of the notice of appeal to the person within the time limited by subsection (6), (7) or (8), as the case may be.

19Section 40.(17) provides that:

40.(17) Burden of proof. – For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

20Section 40.(19) provides that:

40.(19) Board to make determination. – After hearing the evidence and the submissions of the parties, the Board shall determine the matter.

21Section 44.(3) of the Act provides that:

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.

Preliminary Issues: Hearing 636698

22Prior to the September 9, 2016 hearing date, the parties exchanged numerous e-mails on the question of whether Mr. Purcell was representing the other assessed persons at this hearing, and the resulting problems with disclosure from MPAC (Exhibit 1). It was clarified that while Mr. Purcell did represent the other assessed persons at a previous hearing, this was no longer the case. Mr. Purcell submitted that the Board should render a summary judgment and apply the 2012 assessment to the taxation years in dispute as MPAC and Bajus had provided disclosure for the subject properties to himself rather than to each assessed person (Exhibit 2).

23Robert Tchegus, Counsel for Bajus, objected in writing to Mr. Purcell’s ongoing submissions via email which he opined potentially ran afoul of Rule 45(2) of the Board’s Rules of Practice and Procedure (“Rules”), which states:

45(2) Disclosure Prior to a Hearing

(2) In the Direct Hearing Stream, unless the Board orders otherwise, if a party intends to present documentary evidence at a hearing, at least 21 days before the hearing, the party must provide one copy of each document to each party.

(a) If documentary evidence is not exchanged at least 21 days before the hearing, the Board may refuse to accept the documents at the hearing.

(b) Material in response must be exchanged 14 days prior to the hearing and other parties may respond 7 days prior to the hearing.

24The Board reviewed Mr. Purcell’s written submissions and the attached email chain and determined that an adjournment to permit all parties to serve their documentary evidence pursuant Rule 45(2) was more appropriate under the circumstances.

25The Board further clarified that as Bajus had served notice of its intent to seek a higher assessment for the 2013 taxation year under Rule 30.(1), that notice was effectively served for each of the deemed taxation years 2014, 2015 and 2016.

Preliminary Issue: Hearing 646075

26At the commencement of the hearing, Rox-Anne Poulain, Senior Case Management Analyst for MPAC and Mr. Maratta objected to the admission of a document by Mr. Purcell (Exhibit 10) which they state went beyond its stated purpose (“Synopsis for Presentation”). The hearing recessed to provide an opportunity for a review of this document with one that had been previously disclosed by Mr. Purcell. Ms. Poulain and Mr. Maratta identified some material included in the synopsis that was new evidence, but agreed to proceed rather than further postpone the hearing.

27Mr. Purcell opined that under Rule 45 he was able to continue disclosure up to and including the date of the hearing. The Board does not agree with this assertion. Rule 45 sets out clear procedural deadlines for disclosure (21 days), response to disclosure (14 days), with other parties having the right to respond 7 days prior to the hearing. The intent of the disclosure rule is so that any party to a proceeding knows the case that it must answer.

Current Value

28It is clear that the present owners who appeared to respond to Bajus’ appeals are dissatisfied with the ongoing effect of the brownfields remediation agreements.

29Mr. Adams states that he was unaware of the brownfields remediation agreements and that major flooding had occurred in the properties after their construction. He submits that both of these factors would have had an impact on the price that he paid for the property and should be considered by the Board in its determination of current value.

30Ian Kojima, one of the original purchasers, states that the effect of the brownfields remediation agreements were not clear to him.

31The Board acknowledges the concerns of Mr. Adams, Mr. Kojima and Mr. Purcell, but must take its jurisdiction from the Act, which directs the Board to determine current value of the land, and to adjust this value where necessary to achieve equity with the value of similar lands in the vicinity. Demand for the subject properties has driven up their value and the Board must have regard to the valid sales that have transacted. If the assessed persons have concerns regarding the conveyance of the subject properties, they must seek their remedies elsewhere.

32The Board finds that the best evidence of current value before it is the sales value of $335 per sq. ft., based on the two time-adjusted sales of 304 Wellington Street, applied to the total building area of the subject properties.

33Each of the subject properties is a single family Freehold Townhouse/Rowhouse of three-storeys, built in 2007. There are some differences in lot dimensions and building areas as well as in layout:

• 300 Wellington has a total building area of 1,515 sq. ft. and an effective site area of 589 sq. ft. (19 ft. of frontage and a depth of 31 ft.)

• 302 Wellington has a total building area of 1,210 sq. ft. and an effective site area of 576 sq. ft. (18 ft. of frontage and a depth of 32 ft.)

• 304 Wellington has a total building area of 1,458 sq. ft. and an effective site area of 589 sq. ft. (19 ft. of frontage and a depth of 35 ft.)

• 306 Wellington has a total building area of 1,463 sq. ft. and an effective site area of 777 sq. ft. (21 ft. of frontage and a depth of 37 ft.).

34300, 304 and 306 Wellington Street each have two bedrooms, one full bathroom, two half bathrooms and an attached garage. 302 Wellington Street is the smallest of the four properties, having one bedroom, one full bathroom, one half-bathroom and an attached garage.

35Ms. Poulain submits that while MPAC typically would not use a rate per sq. ft. to value a property, it did in this case as the four properties are very similar and effectively are their own marketplace. For this reason, MPAC did not submit a comparable properties report. Mr. Maratta submits that in previous decisions, the Board has determined that a market can exist within a complex of properties having similar units: Todd v. Municipal Property Assessment Corp. Region 15, [2015] O.A.R.B.D. No. 238. The Board agrees. It is settled law that recent free sales of identical properties in the same neighbourhood are evidence of current value.

36Ms. Poulain relied upon the two time-adjusted sales of 304 Wellington Street for $485,000 in July 2011 and $520,000 in July 2014, from which she calculated a rate of $335 per sq. ft. (Exhibits 6-9). This rate is based upon a time-adjusted market value of $489,000 ($520,000-$485,000 = $35,000 increase over 35/36 months resulting in a rate of increase of approximately $1,000 per month).

37Mr. Purcell did not submit any comparable properties in support of current value, relying instead on different analyses of MPAC’s methodology. He questions the use of the 2014 sale of 304 Wellington Street when 306 Wellington Street also sold in July 2014 for $497,500, indicating a rate of increase of approximately $323 per month (Appellant’s calculations), from which he arrives at a time-adjusted market value of $488,800. He suggests that this figure is more consistent with market data collected by the Canadian Mortgage and Housing Corporation (“CMHC”) for Kingston and with data contained in Realty Source Market Reports. The Board prefers MPAC’s approach which measures the resale value of the same property within the same tax cycle which, in any event, leads (roughly) to a similar result.

38Mr. Purcell also questions the measurement of the subject properties, submitting that the measurements contained in the builder plans should be used, and that interior units have an advantage over units with an exterior wall which are thicker and subject to heat loss. The Board agrees with MPAC that the actual measurements of the subject properties are preferable to the approximate square footage stated in the builder’s sales materials. The Board does not agree that the use of actual measurements favours the owner’s interior units.

39Mr. Purcell proposes that the Board apply a rate of $323 per sq. ft. relying upon a time-adjusted value of $488,000 divided by a unit size of 1,510 sq. ft. which he states is the total building area of 304 Wellington Street. The property profile indicates that the unit’s measurement is 1,458 sq. ft., and, in any event, the Board does not agree that a single measurement should be used for all units when valuing property on a per square foot basis.

40Lastly, Mr. Purcell points out that in MPAC’s equity analysis, the time-adjusted value for 304 Wellington Street is $482,064, which he submits should be the basis for calculating the value per square foot. The Board does not agree that it can transpose this value which was derived from the sales of 30 residential properties specific to the equity analysis discussed below (properties of the same general nature, character or function).

41The Board agrees with the submissions of MPAC and Bajus that the best evidence of current value is the time-adjusted value of $335 per sq. ft. derived from the two sales of 304 Wellington Street, and finds that the current values of the subject properties are those calculated by MPAC and set out in Table 1. The Board does not agree that Mr. Purcell’s alternative analyses of MPAC’s data support a lower current value. In any event, at the conclusion of his submissions, Mr. Purcell stated that he agreed that current value was at or near the value proposed by MPAC, but disagreed with the adjustment for equity.

Equity

42The Act directs the Board to have reference to the value at which similar lands in the vicinity are assessed and to adjust the assessment of the land to make it equitable with that of similar lands in the vicinity where such an adjustment would result in a reduction to the assessment. The parties agree that an adjustment must be made to the current values of the subject properties, but disagree as to the quantum of the adjustment.

43Ms. Poulain presented MPAC’s equity analysis, a study of the assessment to sales ratios (“ASR”) of 30 residential properties within 0.6 kilometres of the subject properties. These residential properties have different property codes, but are residential properties with the same general nature, character or function as residential. The sales transacted between January 2011 and December 2012, and were subject to the same time-adjustment factors. To test assessment performance, MPAC considers two performance measures: the level of appraisal and the degree of equity among individual properties.

44MPAC’s equity analysis states that the median is generally the preferred measure to determine the level of appraisal as it is statistically little affected by very low or high ratios. An ASR of 1.00 indicates that the values returned by MPAC reflect the marketplace. An ASR less than 1.00 indicates that a reduction to current value may be required. For residential properties, MPAC states that the median ASR should fall between 0.95 and 1.05. The sales in the equity analysis demonstrate a median ASR of 0.82.

45Equity among individual properties is measured through the coefficient of dispersion, which measures the average percentage deviation of all the individual ratios from the median ratio. MPAC’s equity analysis states that a low coefficient of dispersion implies equitable assessments, and that the median ratio is the most representative of the sales sample. MPAC’s standard is that coefficient of dispersion for residential properties not exceed 15%; in the equity analysis it is 15.6%.

46Based on the application of these performance measures, MPAC concludes that an equity adjustment is warranted, and has applied the ASR of 0.82 to lead to the recommended values set out in Table 1.

47Mr. Purcell submits that the time-adjustments are flawed as they consist of sales beyond the subject properties’ homogenous neighbourhood A19, and that it can be demonstrated that MPAC’s Sales Ratio Trend Analysis is based on some assessments other than as of January 1, 2012. Under cross-examination, the Assessor, Paul McIntyre, stated that the 240 sales were within A19 and neighbourhoods immediately adjacent to it, and conceded that some of the assessed values were not as of 2012 but included revised assessments within the four-year cycle.

48The Board does consider the proximity of the 240 sales to be problematic as they are situated within or adjacent to the subject properties and their neighbourhood. The Board does not agree that it should substitute data from Realty Source Market reports, which are presented as percentages by area and do not include assessment or sales data.

49Mr. Purcell took several approaches to equity in his evidence. First, he submits that if regard is had only to those properties that transacted in A19 in MPAC’s time-adjustment study, the resulting ASR is lower, with an ASR of 0.52 for 302 Wellington Street and 0.58 for the other subject properties. It is not clear to the Board how Mr. Purcell arrived at these ASRs, as the ASR for these 101 properties he indicates are located in A19 is approximately 0.91. It is also unclear how he arrived at different ASRs for the adjacent subject properties.

50Mr. Purcell further suggests that an ASR of 0.50 can be derived be removing certain property codes from MPAC’s study. The Board does not agree that this is necessary as the 30 properties are all of the same general nature, character and function. Another approach proposed by Mr. Purcell is to restrict the equity analysis to the ASR of the subject properties, but the Board does not agree that this is a sufficient sample size.

51Mr. Purcell proposes a model measuring market inflation between assessment cycles for the A19 area and City-wide using information available from his realtor, resulting in an adjusted value ranging from $227,000 to $251,000 for low, medium and high inflation.

52Lastly, Mr. Purcell submits that sales of 101 Rideau in 2011 and 2014 suggest that an ASR of 0.41 be applied to his property, reducing the assessment to $199,000. In his oral submission, this was espoused as the best approach.

53The Board does not agree that equity can be based upon a comparison of two properties, and prefers MPAC’s time-adjusted analysis of 30 properties which provides a more meaningful statistical sample. An ASR for one property is evidence of whether that property is under or over-assessed and does not demonstrate a trend in similar property in the vicinity: see generally Fairbanks v. Municipal Property Assessment Corp., Region No. 09, [2008] O.A.R.B.D. No. 306.

54The Board determines that an adjustment is required to current value of the subject properties to achieve equity with the assessments of similar lands in the vicinity.

CONCLUSION

55The Board lacks the jurisdiction to address the issues the assessed persons raised regarding the conveyance of the subject properties.

56MPAC has met its onus in demonstrating that an increase to the assessment of the subject properties is warranted based upon the sales of the subject properties, and that an adjustment to achieve equity with similar lands in the vicinity is required, based upon its equity analysis. Mr. Adams and Mr. Kojima did not provide the Board with evidence that the Board should find otherwise. The Board is not persuaded by the alternative analyses presented by Mr. Purcell demonstrate that the value of his property should be lower than the purchase price in 2007.

57The Board determined that the amended values for the subject properties, based upon MPAC’s methodology, are those set out in Table 2.