George Sperou v. Municipal Property Assessment Corporation, 2017 CanLII 5179

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 01, 2017

FILE NO.: WR 144693

Assessed Person(s): George Sperou

Appellant(s): George Sperou

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

Respondent(s): City of Toronto

Property Location(s): 79 Gordon Road

Municipality(ies): City of Toronto

Roll Number(s): 1908-082-440-01000-0000

Appeal Number(s): 2972082, 3014955, 3079200 and 3148511

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

Hearing Event No.: 638781

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

Heard: December 06, 2016 in Toronto, Ontario

APPEARANCES:

Parties

Representative

George Sperou

Self-represented

MPAC

Carlo Bassi

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY BERNARD COWAN

INTRODUCTION

179 Gordon Road (“Gordon”) is a property with a 5,362 square foot (“sf”) home on a 60’x 175’ lot located in the upscale York Mills neighbourhood of Toronto, near Yonge Street and York Mills Road.

2Assessed by MPAC’s mass appraisal process as a Quality 9 home at $2,940,000, its representative, Carlo Bassi, supports the assessment of the subject property (“the subject”) with a comparison of it to eight sales of nearby homes. He has time adjusted (“TA”) each sale transaction, calculated its value on a per square foot (“psf”) basis, and further adjusted the result for corner lot, traffic and school proximity influences, yielding a median adjusted TA value of $592 psf. As the subject is assessed at $548 psf for the 2013-2016 taxation years, Mr. Bassi urges me to confirm the assessment.

3He supports his premise that the assessment is equitable with the assessments of similar lands in the vicinity of the subject by reference to an Equity Analysis that compares the ratio of 30 properties’ assessments to their TA sales, indicating their assessment to sales ratios (“ASRs).” The Analysis indicates a median ASR of 0.95; and because this is within MPAC’s range of ASRs between 0.95-1.05 that it considers to be an acceptable variance from the ideal of 1.00, Mr. Bassi maintains that the assessment is equitable.

4The owner of the subject, George Sperou, believes that Mr. Bassi’s comparative sales analysis is flawed, yielding an excessive psf value, for a variety of reasons. In particular, Mr. Sperou argues that it incorporates properties having substantially superior features than his home, never-occupied new and/or architect-designed homes that attract higher sale prices, and properties on Owen Boulevard (“Owen”) , which he considers to be “in a different (superior) league” compared to homes on his street. He accepts as appropriate for a comparative analysis only two of Mr. Bassi’s sales on Gordon and adds three of his own choosing. Further, Mr. Sperou disputes Mr. Bassi’s use of TAs to the sales and his use of the median TA sale price (“TASP”) psf, maintaining that I should instead utilize the average sale price psf¹. Using this approach, he calculates the average psf of the five sold homes on Gordon that he considers appropriate for comparison to be $476.20 psf before adjusting for corner lot differences. Applying a 2% corner lot adjustment leads to Mr. Sperou’s proposing a market-based value of about $2,502,000.²

5An equity reduction of 5% thereto, as proposed by Mr. Sperou to capture the effect of Mr. Bassi’s Equity Analysis having a median ASR of 0.95, reduces the assessment sought to $2,377,000. This is based on his argument that it is inequitable if an equity study having a median ASR of 0.94 grants, for example, a 6% reduction to an appealed property’s current value as determined by an Assessment Review Board (“Board”) tribunal, but no “equity” reduction if that MPAC study has a median ASR that falls between 0.95 and 1.00.

6I must determine which properties introduced for a comparative sales analysis by the two parties merit my consideration, and based thereon, the current value for the subject. I must then determine if that current value is inequitable with the assessments of similar properties in the vicinity of the subject. If so, I must reduce the current value, if necessary to achieve an equitable assessment for the subject.

Current Value

7Section 19.(1) of the Assessment Act (“Act”) states:

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

8The Act establishes January 1, 2012 as the valuation date for 2013 to 2016 taxation, and defines current value to mean:

“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.

9Accordingly, the marketplace is determinative of current value. Since neither the subject nor an identical property sold in proximity to the statutory valuation date, the next best evidence is sales of other relatively similar properties, as adjusted for variables in features, age, locational influences, etc. Both Mr. Bassi and Mr. Sperou have recognized that the size of a residence is a primary basis for comparison, and have accordingly based their evidence and argument for the assessment value sought on a psf of building analysis. I concur in this instance, particularly so because all properties attributed weight in my determination below of the subject’s current value have like or very similar lot dimensions to the subject.

Time Adjustments

10I find it most appropriate that the sales evidence incorporate TAs to more closely approximate, on the balance of probability, the value of a property at the January 1, 2012 valuation date.

11Mr. Bassi’s Valuation Report (Exhibit 1) includes a listing of 285 sales in and near the subject’s neighbourhood. Based thereon, the sale to assessment ratios have been determined and plotted on a chart on a monthly basis over time between August 2010 and December 2012, leading to a determination of monthly TA factors (“TAFs”) varying from the January 1, 2012 mandated valuation date.

12Mr. Sperou asks that I forego any TA as being unsupported. He asserts that house prices can fluctuate from time to time depending on time of year, interest rates (actual or anticipated) or other factors. He challenges MPAC’s use of TAFs as being a straight-line calculation.

13While there may be some specific logic to Mr. Sperou’s rationale, the fluctuations he refers to are anecdotal and possibly applicable to any individual sale; but he has not isolated any particular sale(s) in evidence for elimination of the TAF. The analysis in evidence from Mr. Bassi has utilized 285 sales, and his table of monthly median TAFs derived therefrom demonstrates a distinct upward trend. I conclude that incorporation of TA sales in this matter’s analysis is necessary and appropriate to more closely and accurately adjust for the influence of time on the comparative sales values than to ignore any TA and utilize actual sales not reflective of a rising market. Alternatively stated, on balance of probability, each property’s sale price psf will be more likely to be a closer approximation of value for my comparative sales analysis than making no rational TA whatsoever. Mr. Bassi’s approach is accordingly more reasonable, in my view.

Owen Boulevard Properties

14I concur with Mr. Sperou in finding that the properties on Owen attract higher values in the marketplace than those on Gordon, and accordingly merit no weight in my comparative sales analysis.

15Schedule A attached hereto is my Comparative Sales Analysis that incorporates data in Mr. Bassi’s evidence respecting the five sold properties on Gordon and the three on Owen. He properly adjusted the sales where appropriate for timing, absence of being a corner lot, the influence of traffic and proximity to a school. I have further adjusted his values to remove MPAC’s sales analysis-derived values from the properties having pools and the one having a third garage.

16Schedule A indicates the average and median TASPs psf of the five sales on Gordon to be $578, whereas those for the three sales on Owen are $632 and $651 respectively. Variances of this magnitude corroborate Mr. Sperou’s assertion that Owen is a street that generally has homes that attract higher values in the marketplace than those on Gordon. It would accordingly be inappropriate to include these three Owen sales in my comparative sales analysis.

The Board’s Determination of Current Value

17I find that the subject’s current value is correct at $2,940,000, or $548 psf, for the taxation years 2013-2016. This is based on my consideration of the evidence as described below and my analysis as set out in Schedule A.

18All five sales on Gordon included in Mr. Bassi’s Report merit inclusion in my analysis. I reject Mr. Sperou’s representation that I should exclude Property A from consideration because it is a newly built home, and accordingly attracts a higher value than a resale in the marketplace. I note from Schedule A that the TASP psf of Property A falls within the range of those for Sales B, C, D and F; and consequently conclude that his hypothesis respecting new vs. resale homes is unproven.

19I also reject from my analysis the inclusion of the properties at 52, 65, and 71 Gordon as set out in Mr. Sperou’s comparative sales analysis (Exhibit 6), because these properties were built in the last century; two 17 years prior to the subject and the third 10 years before it. Furthermore, Mr. Bassi advises that unlike all other properties in evidence that are classified by MPAC as Quality Class 9, two of the three are in the substantially lower Class 8 and the third is a Class 8.5 property. This group of three properties are older and of lesser quality than the subject and the other properties in evidence and consequently, on the balance of probability, do not merit weight in my analysis. The evidence is that their unadjusted sales psf are $512, $421 and $410 respectively. These values are considerably less than all other properties in evidence and indicative of recognition of their age and lesser quality in the marketplace.

20After deletion of the three properties described in the preceding paragraph, Mr. Sperou’s Exhibit 6 has only two remaining properties (100 and 191 Gordon) both of which are included in the five sales on Gordon set out by Mr. Bassi in his Report.

21Schedule A indicates that the subject’s assessment at $548 psf is reasonable and not excessive, because that value falls within the $526 to $614 range of adjusted TASP psf of the five properties, and is below the median and average of $578.

22Based on real estate sales listings for all properties in evidence respecting current value, as submitted by Mr. Sperou as Exhibit 4, he urges me to set the value of his home “hundreds of thousands of dollars” below some of these, which he considers to be superior to the subject. I have addressed Property A (187 Gordon) above insofar as it being newly built. Specifically, the listings for this property and for Property C (51 Gordon) reference some combination of features inclusive of: architect designed, snow sensor melting system, finest millwork, custom cabinetry, fiberglass slate roof, wine cellar, heated kitchen and master bedroom floors, etc.

23Mr. Bassi counters that the realty listings are relatively unsuitable to differentiate among these properties and by testifying that all of MPAC’s properties in his report, and the subject property have been determined by MPAC to have the essential requisite features to meet the quality standard of Class 9, all being custom built homes.

24I find it appropriate to incorporate all five of the properties on Gordon in my comparative sales analysis, rather than excluding 187 and 51 Gordon as well as Property D (53 Gordon) which is not in Mr. Sperou’s Exhibit 6 list, but which he concedes to be “not too far off” from comparability to the subject. I do so because I am unable to differentiate from their sales listings, in any quantifiable terms, the impact of the features among these custom built homes. The three listings for 187, 51 and 53 Gordon describe them respectively as “exquisite”, “exquisite” and “magnificent”, whereas the two remaining Gordon sales, 191 and 100 Gordon are described in their listings as “spectacular” and “exquisite.”

25Further, in paragraph 21 above, I have referenced features of the homes at 187 and 51 Gordon considered by Mr. Sperou as superior to his. Yet the listings for the three others include in their listings some combination of “top quality”, “heated floors”, “wainscotting”, “cedar roof”, “mahogany doors and wall”, etc.

26I find that these realty listings are not a reliable indicator of quantifiable relative differences among these custom homes in this marketplace. Rather, they appear to be more akin to subjective marketing hyperbole that has not proven to me to have motivated sale price differences. I am consequently not moved to adopt the exclusion of two or three of the five MPAC properties in MPAC’s evidence from my sales analysis, as advocated by Mr. Sperou.

27Nevertheless, in fairness to Mr. Sperou, were I to eliminate 187 and 51 Gordon that he argues are substantially superior to his property, the remaining three Gordon properties’ adjusted TAS psf would average $560 psf. This exercise does not indicate that the subject’s current value of $548 psf. is excessive. Nor would it be so if I restricted the determinative properties solely to the two properties (191 and 100 Gordon) that both Mr. Sperou and Mr. Bassi have included as “comparables”, as their adjusted TAS average $551 psf, which differs only marginally from the subject’s assessment.

28Simply stated, the evidence demonstrates that the subject is not excessively assessed at $2,940,000.

Equity with Other Properties’ Assessments

29Section 44.(3) of the Act states in part:

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.

30I find that Mr. Bassi’s Equity Analysis (Exhibit 2) is the best evidence for my s. 44.(3)(b) reference, as it compares the ASRs of the 30 properties in closest proximity to the subject (all within 0.36 km) that sold in 2011 or 2012, whereas Mr. Sperou introduced no equity argument or evidence specifically referencing comparative individual properties’ assessments.

31Rather, Mr. Sperou challenges MPAC’s interpretation of the outcome whereby it considers equity to have been achieved where the median ASR falls within its customary standard of 0.95 to 1.05 and is hence indicative that no downward adjustment to current value is appropriate. In such an instance, as in this matter, he argues that equity requires an assessment adjustment downward to the median ASR of 0.95 as per Exhibit 2. In his view, to fail to do so would, if the median ASR per MPAC were 0.94, result in a similar property having its current value reduced by 6% whereas his current value receives no reduction because (according to Exhibit 2) the 0.95 median ASR is “reflective of sales prices within the vicinity.”

32I find that Mr. Sperou has not met the burden of proof to demonstrate an inequity in the subject’s current value. This onus respecting s. 44.(3)(b) rests with him.

33Almost every sale transaction represents a unique dollar outcome based on numerous factors and personal influences; and each property has its own assessment value. An ASR Equity Analysis, as MPAC has introduced in this instance (and customarily performs for many assessment appeals), is an indication of the degree of equitable outcome among a group of properties near a particular property under appeal. To change every appealed property’s assessment to conform to a precise median ASR, as Mr. Sperou proposes for the subject, would create an extraordinary burden on all stakeholders and on the Board’s resources. Yet to do so would be contrary to the reasonable and logical presumption that if a property’s assessment is within a relatively narrow range of that of its nearby counterparts, its assessment is satisfactory and not inequitable. An ASR variance within 5% of the ideal of 1.00 has been established by MPAC as its standard; a narrower and more stringent measure of equity than the10% standard of the International Association of Assessing Officers (“IAAO”).

34Mr. Bassi’s Equity Analysis includes a test to measure the deviation of its results by calculating a Coefficient of Dispersion (“COD”) from the median ASR, whereby low COD’s are indicative of equitable assessments. MPAC and the IAAO consider that a COD no greater than 15 is indicative of a meaningful analysis. The COD for Mr. Bassi’s Analysis indicates a 6.1 COD, which supports the validity of the conclusion that the subject has been equitably assessed.

35My adoption of this Equity Analysis is not intended to be a blanket endorsement of all such reports. Some may be flawed. Some may merit limited weight if a party’s or parties’ evidence focuses on individual properties’ assessments in lieu of ASRs, or for other evidentiary or argued reasons.

36My conclusion, based on Mr. Bassi’s Equity Analysis, that an inequity in the subject’s assessment compared to those for similar properties has not been proven, is corroborated by my test referencing specific properties’ assessments. I did so, notwithstanding neither party based its representations thereon. Where not in documented evidence, the assessments were attested to by Mr. Bassi pursuant to my questioning.

37While all 30 properties in Exhibit 2 are similar to the subject, being of like nature, character and function, it stands to reason that some properties can be more similar than others. This is evident in this matter, where the five properties utilized by me in confirming the $2,940,000 assessment for the subject are, on probability, more similar to the subject than all others. These five properties are all on the subject property’s street, not on Owen that is a superior location, all are the same Quality Class 9, have identical frontage on Gordon and similar lot size, and all are of similar age, having been built between 2005 and 2011, with an average year built of 2008; the subject having been built in 2007.

38These five properties’ assessments, according to Mr. Bassi’s testimony, range from $2,791,000 to $3,052,000. I calculate the average to be $2,905,000. As the subject’s assessment falls within the range, and recognizing as indicated in Schedule A that the subject has a larger building area (a primary factor in value), it is not inequitable that the subject be assessed slightly higher than the average of the similar properties that formed the basis for my determination of current value. The subject’s assessment exceeds the average assessment by only about 1.2% (2,940,000/2,905,000).

39I also have conducted another test and it also corroborates my conclusion. Hypothetically, the subject might have had its current value set at $578 psf, being the median and average adjusted TASP of the five sold properties, as set out in Schedule A. And hypothetically, applying the median ASR of 0.95 to $578 and multiplying the result by the subject’s 5,362 sf of building area yields about $2,944,000. This indicates that, although I have rejected Mr. Sperou’s argument respecting interpretation of the ASR Equity Analysis, applying it to a hypothetical but nevertheless reasonable alternative market-demonstrated value does not alter the outcome.

Case Law Commentary

40I place no determinative weight on the case law “authority” introduced by Mr. Sperou to support the current value he seeks and a 5% equity adjustment thereto. That Decision (Board reference WR 78168 issued December 11, 2009) is with respect to his appeal for his home’s 2009 tax year appeal, and substantially mirrors the issues and arguments in this matter.

41The Board is not bound by its prior decisions that have not been addressed by the appeal process through the courts. As in this instance, the specific evidence, argument and emphasis/weight can differ. Certain issues have received a like outcome, and others have not. The consequential issues that I have determined differently are:

• I have utilized TASPs in lieu of actual sale prices. The evidence for the 2009 appeal included a property having a time adjustment increase when “…evidence is that the market was going down.” This is not the case in this matter, where I have welcomed time adjustments as being generally in accord with the reality of the rising marketplace indicated in the evidence. Furthermore, the prior tribunal foresaw the non-universality of its premise, when it acknowledged “… in this case, time adjustments are not considered as reliable evidence…” [emphasis added]
• I have not reduced the current value as assessed by the 5% median ASR per Mr. Bassi’s Equity Analysis. In the 2009 appeal, the current value was determined to be at a higher value than the assessment, and the median ASR of 0.96 was applied to that higher value. These two approaches to the utilization of ASRs differ, as this matter leads to confirmation of an assessment as being equitable if it falls within an accepted range, and the other is based on application of the median ASR where a higher than assessed current value is demonstrated by the evidence.

CONCLUSION

42For the reasons set out above, I find that the subject has been correctly assessed at the current value of $2,940,000. This is not demonstrated to be inequitable with the assessments of similar lands in the vicinity, and the assessment is accordingly confirmed as that value for the 2013-2016 taxation years.

“Bernard Cowan”

BERNARD COWAN

MEMBER

Assessment Review Board

A constituent tribunal of Environment and Land Tribunals Ontario

Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

SCHEDULE A

Footnotes

1. 1I have generally referenced both median and average values throughout respecting values in the marketplace. Together or individually in this decision, median or average values are not determinative of a different conclusion. The use of the median ASR is not in dispute, as there is no reference by either party to an average ASR.
2. 2Mr. Sperou applied the 2% adjustment to all five properties, although it should only apply to four. The difference is not material to my ultimate decision.