Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 26, 2017

FILE NO.: WR 148392

Assessed Person(s): 2375673 Ontario Inc.

Appellant(s): 2375684 Ontario Inc.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15

Respondent(s): City of Mississauga

Property Location(s): 280 Lakeshore Road West

Municipality(ies): City of Mississauga

Roll Number(s): 2105-090-006-12300-0000

Appeal Number(s): 3001925, 3082655 and 3154402

Taxation Year(s): 2014, 2015 and 2016

Hearing Event No.: 681801

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

Heard: August 29, 2017 in Mississauga, Ontario

APPEARANCES:

Parties	Counsel+/Representative
2375684 Ontario Inc.	D. Attard+
MPAC	S. Ferrante
City of Mississauga	No one appeared

DECISION OF THE BOARD DELIVERED BY S. LIGHT

ISSUE

1The subject property is located at 280 Lakeshore Road West and has a lot size of 14,481.64 square feet. It was improved with a service garage constructed in 1955 with a ground floor area of 4,048 square feet and 549 square feet of interior office area. The buildings were demolished in January 2016 pending redevelopment.

2MPAC returned the assessment for the subject property at $1,977,000 in the Commercial (Full) tax classification (“COM CT”) for the 2014, 2015 and 2016 taxation years. The representative for MPAC recommends that this value be reduced to $1,506,000 based on an inspection of the property and a sales analysis.

3The representative for the Appellant argued that the correct current value of the subject property is $1,200,000, being the price paid by the Appellant to purchase the subject property. The Appellant also submitted that an assessment at that current value would be inequitable and that an equitable assessment would be $1,104,000.

4The parties agree that the classification of the subject property should be changed from COM CT to Commercial Vacant Land (“VL CX”) for the 2016 taxation year only.

5The Assessment Review Board (“Board”) must determine whether the 2014, 2015 and 2016 assessments are correct and equitable.

DECISION

6For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act (“Act”) the Board finds that the current value of the subject property is $1,200,000.

7The Board finds that the equity analyses presented do not justify a reduction in current value pursuant to s. 44.(3)(b) of the Act.

8The assessment of the subject property is reduced accordingly for the 2014, 2015 and 2016 taxation years from $1,977,000 to $1,200,000.

9The classification of the subject property is changed from COM CT to VL CX for the 2016 taxation year.

REASONS FOR DECISION

Legislation

10Section 19.(1) of the Act states:

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

11Section 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.

12Section 19.2(1)2 states:

Valuation days

19.2 (1) 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.

13Section 44.(3) states:

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.

Current Value Analysis

14The sale price of a property near the valuation date is the best evidence of its current value. The evidence shows that the sales value of the subject property is within the range of the suggested comparables sales presented by MPAC. The sale of the subject property was negotiated in October 2011, close to the valuation date, and is a valid arm’s length sale between a willing buyer and a willing seller. The closing of the transaction was in June, 2013. The sale price was $1,200,000 and was purchased as part of a land assembly for a development proposal.

15The representative for MPAC, Sal Ferrante, argued that one sale does not make a market and therefore he needed to perform a sales analysis to determine current value on the basis of a number of sales he determined to be comparable. He was also concerned that the subject property had not been listed for sale on the Multiple Listing Service (“MLS®”) and therefore the purchase price may not be reliable for the purpose of determining current value. However, in his study he also relied on sales that had not been listed on the MLS®.

16Mr. Ferrante prepared a valuation report which he submitted to the Board as Exhibit 1. His report contains a sales analysis consisting of four suggested comparable sales, including the sale of the subject property. Mr. Ferrante also included in his valuation analysis two neighbouring properties, 266 and 274 Lakeshore Road, and an additional property, 1661 Lakeshore Road, which is located approximately 4 kilometres (“km”) from the subject property.

17The neighbouring properties used in Mr. Ferrante’s sales analysis, located at 266 and 274 Lakeshore Road, were purchased as part of the same land assembly as the subject property. All of the properties acquired for this land assembly were negotiated by the developer by approaching the owners and negotiating offers to purchase. The land assembly properties were not listed on the MLS® and the sellers were not related to the developer. The resulting sales were all arm’s length transactions negotiated between willing buyers and willing sellers.

18The neighbouring property at 274 Lakeshore Road is closest in size to the subject property at 14,667.72 square feet. It sold at a price of $74 per square foot, while the subject property sold at a sale price of $83 per square foot.

19The other neighbouring property at 266 Lakeshore Road is larger than the subject property at 17,423.90 square feet. Mr. Strobel, a witness for the Appellant and principal of the proposed development, testified that the developer paid the higher rate of $123 per square foot for this property, as it was needed to complete the land assembly.

20The property at 1661 Lake Shore Road sold through the MLS® at a sale price of $129 per square foot. The Board is not persuaded that this property is comparable to the subject property. The Board was not provided with an adequate explanation why Mr. Ferrante considered this property to be such a good indicator of the value of the subject property that it should be used in his analysis. Mr. Ferrante used a land residual sales analysis for this property to determine the sale price per square foot of this property. He did not employ this same methodology to the other suggested comparable sales in his study. By including this property in his analysis the median sale price of the comparable properties changes from $83 per square foot, which is the sale price of the subject property, to $104 per square foot. Since the Board is not persuaded that this would be a comparable sale, the Board finds that its use in his analysis unnecessarily skews the results of his study to a higher value.

21The Board finds that the sale of the subject property for $1,200,000 is the best evidence of its current value. The current value for the 2014, 2015, and 2016 taxation years is, therefore, $1,200,000.

Equity Analysis

22Mr. Ferrante included an equity study in his valuation report comprised of twenty eight sales in the City of Mississauga that transacted in 2011 and 2012 whose assessments were determined based exclusively on the cost approach to value methodology. That study found a mean assessment to sales ratio (“ASR’s”) of 1.00 and a median ASR of 0.98. The Board has a number of concerns with this study and does not accept the resulting ASR conclusions.

23Fourteen of these properties are designated as property code 471 being retail or office with residential units above or behind and comprised of less than 10,000 square feet of gross building area as is the suggested comparable located at 1661 Lakeshore Road West which is also in this study. Only one of these twenty eight properties is designated as property code 421 being specialty automotive shop as was the subject property at the time of its sale. The sale of any properties that MPAC assessed using another methodology were excluded from the study rendering the study incomplete and skewed to a certain types of property. The study also provides no information respecting the actual lot sizes of the properties in the study or their proximity to the subject property.

24Mr. Ferrante also included in his study the subject property and the comparable sale at 266 Lakeshore Road West. However, the sales of these properties were transacted in June and July 2013 respectively and therefore were outside the time period parameters he selected for his study. By adopting an inconsistent approach in selecting properties for his study, the results and the reliability of his conclusion is further compromised.

25Mr. Ferrante also did not explain why he considered the entire city of Mississauga as being the appropriate parameters for the vicinity of his study. While in some cases this could be an appropriate parameter, it is up to the proponent to justify the boundaries of the selected vicinity.

26Therefore, the Board considers the methodology employed by Mr. Ferrante in his equity analysis to be flawed and finds that the study is not helpful to the Board in determining whether or not the assessment of the subject property is equitable with similar properties in the vicinity.

27Mr. Andrew Attard submitted two equity studies, each containing the sales of thirty properties that sold in 2011 and 2012, to demonstrate that commercial properties in Mississauga have a median ASR of 0.93. He argues that the current value of the subject property should be reduced accordingly.

28Mr. Attard’s first study used a 6.66 km distance from the subject property and a $600,000 to $2,400,000 sale price as his parameters and for the second study he used a distance of 15.53 km and a $1,000,000 to $4,000,000 sale price as his parameters. The Board considers the parameters used in his first study to be the better approach since the sale prices of these properties are closer to the sale price of the subject property and they are also located closer to the subject property. The Board also notes that thirteen of these properties in the first study are located in or around the Port Credit area. However, insufficient information was provided to the Board to ascertain the general nature, character and function of each of these thirteen properties (aside from their being commercial) and correlate the ASR information presented in the study with the locations of the properties in the study. Also, no information about the lot sizes of the properties in the study was provided which might have been helpful.

29In conclusion, the Board would require more detailed information about the relative similarity of the properties in Mr. Attard’s analyses and their locations to be able to conclude whether a reduction in current value based on equity would be appropriate.

30Accordingly, the Board finds that the current value should not be adjusted for equity pursuant to s. 44.(3)(b) of the Act.

CONCLUSION

31The Board finds that the current value of the subject property as of January 1, 2012 is $1,200,000 and that this value should not be adjusted for equity pursuant to s. 44.(3)(b) of the Act.

32Accordingly, the assessments for the taxation years 2014, 2015 and 2016 are reduced from $1,977,000 to $1,200,000 and the property classification for the 2016 taxation year is changed from COM CT to VL CX.