Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 18, 2017

FILE NO.: WR 148542

Assessed Person(s): 2209449 Ontario Inc.

Appellant(s): 2209449 Ontario Inc.

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

Respondent(s): City of Mississauga

Property Location(s): 455 Gibraltar Drive

Municipality(ies): City of Mississauga

Roll Number(s): 2105-040-117-24820-0000

Appeal Number(s): 2950819, 3033933, 3084911 and 3152431

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

Hearing Event No.: 686864

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

Heard: September 08, 2017 in Mississauga, Ontario

APPEARANCES:

Parties Representative

2209449 Ontario Inc. Gurjit S. Grewal

MPAC Usha Prasad

City of Mississauga No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1The property, 455 Gibraltar Drive, is a standard industrial property. The assessment was returned with a total floor area of 117,575 square feet (sq. ft.) with a main building of 109,332 sq. ft. and 8,243 sq. ft. of attached office space and 9,614 sq. ft. of interior office space. It is situated on a lot of 7.01 acres. The building is occupied by Galaxy Home Furnishing who uses the building for warehousing and distribution purposes.

2The property is located in the City of Mississauga, just off of Kennedy Road and is approximately 700 metres from Highway 410. It is less than two kilometres from Highway 407 and almost 4.1 kilometres from Highways 403 and 401.

3The property is classified in the commercial property class and the assessment was returned at $10,187,000 (CT) for the 2013 to 2016 taxation years.

4Usha Prasad, representing MPAC, asks the Board to confirm the assessed value of $10,187,000 (CT) as correct and equitable for the subject property.

5Gurjit S. Grewal, representing the appellant, is of the opinion that the assessed value is too high and should be $7,640,000 (rounded).

6The Board must determine the correct current value of the land as at the January 1, 2012 valuation date, and whether the assessment should be adjusted to make it equitable relative to the assessments of similar lands in the vicinity.

DECISION

7The Board finds that the assessment as returned is based on its current value, and 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 Assessment Act (“Act”).

8The assessment is confirmed at $10,187,000 in the commercial property class (CT) for the 2013 to 2016 taxation years.

REASONS FOR DECISION

The Legislation

9Section 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.

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 19.2(1)(3) of the Act provides:

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.

Exception

(5) Subsection (1) does not apply in respect of the valuation of land for a taxation year after 2004 if the Minister prescribes a different day as of which land is valued for that year.

12Section 40.(17) of the Act provides:

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.

13Section 40.(19) of the Act provides:

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

14Section 44.(3) of the Act 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.

THE BOARD’S ANALYSIS

MPAC’s Case

15Usha Prasad called Gary Charles, a Property Valuation Analyst with MPAC, as a witness. Mr. Charles stated that he used the cost and direct comparison approaches in his Valuation Report.

16Mr. Charles stated that the subject property was originally returned at $10,187,000 or at a rate per square foot of $86.64 of total floor area, as per the subject property’s returned ACS cost valuation, Appendix A to the Valuation Report.

17Mr. Charles stated that he inspected the subject property (in attendance with Mr. Grewal) on August 24, 2017 pursuant to Board Order No. 142460 that directed the assessed person/appellant to permit the inspection of the subject property no later than August 31, 2017. He added that he is not the original Property Valuation Analyst assigned to this matter. The property was previously inspected by Chris Kaufman on March 17, 2015.

18Following Mr. Charles’ inspection and review, the ACS costing was revised as set out in the revised summary report (Appendix B). The specific adjustments to the ACS cost valuation are summarized at pages 10 and 11 of the Valuation Report. The adjustments included a change in the total floor area to 120,641 sq. ft. He noted that 3,025 sq. ft. of floor area that used to be included under the interior office area is now included under the total floor area. Also, in 2014, a truck loading dock area was added and this area of 41 sq. ft. was also incorporated into the total floor area. More specifically, the noted adjustments resulted in a recalculated 2012 CVA from the original $10,187,000 to the revised $10,622,000 or a rate per square foot of $88.15 of gross floor area. He confirmed that MPAC is not seeking a higher assessment than that as originally returned at this hearing.

19Mr. Charles stated that the subject property’s land value was returned at $4,768,060 based on MPAC’s land tables or $679,000 per acre. A vacant land sales analysis involving three properties with sales that occurred in 2011 or 2012 is detailed in Appendix C and calculated a median of $933,000 per acre and a range of $858,034 to $1,004,515. The subject property’s land value at $679,000 per acre is lower. Therefore, no reduction is justified for the land value as returned. If, anything, the subject property’s land value is undervalued.

20To support the accuracy of MPAC’s valuation through the cost approach, Mr. Charles used the direct comparison approach to value. In his opinion, the variables that have the greatest impact on value include location, building size, building height, building age and lot size. Due to the limited availability of sales involving buildings of the subject property’s size, he reviewed industrial property sales in both Mississauga and neighbouring Brampton prior to and after the January 1, 2012 valuation date. Adjustments were made for differences between the subject property and sold properties for lot size, ceiling height, year built and economies of scale. For instance, he used properties built within 10 years of the subject property’s 1996 year of build, within an average 10 feet of the subject property’s 34 foot ceiling and with lot sizes of at least five acres. Otherwise, too many adjustments would have been required. Details are summarized in Appendix D. The range of values of the sales comparables after all adjustments is $87.89 to $97.50 per square foot and median value per square foot of $91.66. The subject property was originally returned at a rate per square foot of $86.64 (with an original total floor area of 117,575 sq. ft.) and this value is below the median adjusted sale value per square foot of $91.66. The revised rate per square foot of $88.05 (based on the revised total floor area of 120,641 sq. ft. and a revised value of $10,622,000) also falls within the range of values as noted above and is below the median adjusted sale value per square foot of $91.66.

21Mr. Charles stated that he considered other sales including those sales comparables provided by the appellant’s representative. Other than the property at 2 Walker Drive which is also included in Appendix D, he did not use them as they fell outside of the primary variables of comparison that he considered in his analysis:

• 5195 Maingate Drive - it was built in four stages and has an average age of build of 1979. It sold for $3,750,000 because of its age and poor inspected condition. Also, its average ceiling height is 17.5 feet.
• 2472 Slough Street - it should not have been included as it is an industrial condominium and was sold as part of a portfolio. The lot has been severed and it is not possible to determine the height and lot size due to the severance.
• 3069 Wolfedate Road - the majority of the building was built in 1969 with a portion built in 1982. It also has 20 feet ceilings.
• 2463 Royal Windsor Drive - the sale price of $3,900,000 reflects its poor inspected condition. It was also built in stages starting in 1979 and has multiple ceiling heights.
• 2 Colony Court - it was built in 1980.

22Again, he is of the opinion that the variables that have the biggest impact on value are on location, building size, building height, building age and lot size and that the three selected properties included in his Valuation Report are the best sales comparables.

23Mr. Charles stated that an equitable adjustment of the current value is not in issue.

24Ms. Prasad asks the Board to confirm the assessed value as originally returned at $10,187,000 in the commercial property class for the 2013 to 2016 taxation years.

Appellant’s Case

25Mr. Grewal provided the Board with six sales comparables including four located in Mississauga and two in Brampton in support of his estimated CVA of $7,640,023 or a rate per square foot of $64.98. Details are summarized in a chart entered into evidence. He stated that he made adjustments for ceiling height and lot size only. There was no land adjustment for 2472 Slough St. as he did not know the lot size.

26Under cross-examination Mr. Grewal stated that:

• he did not make an adjustment for age of building as, in his years of experience, he does not consider age as a factor;
• he did not back up his analysis with facts;
• he did not know the age of the buildings for his sales comparables as he obtained his information from MLS listings;
• he maintained that 2472 Slough Street was an independent building and not an industrial condominium notwithstanding the low ceiling height;
• he included sales in Brampton in his analysis because MPAC did in its report; and
• he was acting as both an advocate and as a witness.

27Mr. Grewal did not raise an equitable adjustment pursuant to s. 44(3)(b) of the Act as an issue.

Current Value

28The initial task of the Board is to use the best evidence available to determine the correct current value of the property as required by s. 1, s. 19.(1) and s. 44.(3)(a) of the Act.

29The Board concludes from all of the evidence that the subject property’s current value is correct at its returned value $10,187,000 in the commercial property class (CT) for the 2013 to 2016 taxation years.

30The Board finds MPAC’s evidence to be more persuasive. Mr. Charles inspected the subject property and provided detailed evidence with respect to the ACS costing valuation at the hearing. The subject was originally returned at a rate per square foot of $86.64 (with an original total floor area of 117,575 sq. ft.). He also provided detailed evidence regarding the adjustments to the ACS costing valuation that resulted in a recalculated value from the original $10,187,000 (with a revised total floor area of 120,641 sq. ft.) and a slightly higher rate per square foot of $88.05. There is no persuasive evidence before the Board to demonstrate that the costing elements or Mr. Charles’ analysis is wrong.

31To support the accuracy of MPAC’s valuation through the cost approach, Mr. Charles used the direct comparison approach to value. The Board finds that MPAC’s three sales are most comparable to the subject property in terms of lot size, building size, height and building age and are located within a reasonable vicinity to the subject property. In support of this finding, the Board notes that the adjustments made in Mr. Charles’ analysis were evidence based.

32The range of values of the three sales comparables after all adjustments is $87.89 to $97.50 per square foot and the median value per square foot of $91.66. The subject was originally returned at a rate per square foot of $86.64 (with an original total floor area of 117,575 sq. ft.) and this value is below the median adjusted sale value per square foot of $91.66. The revised rate per square foot of $88.05 (based on the revised total floor area of 120,641 sq. ft. and a revised value of $10,622,000) is also below the median adjusted sale value per square foot of $91.66.

33The Board does not find that the appellant’s proposed property sales are comparable, other than 2 Walker Drive. The Board finds that 2472 Slough Street should not have been included as, based on MPAC’s evidence it is an industrial condominium and was sold as part of a portfolio sale. Also, as noted by Mr. Charles, the lot has been severed and it is not possible to determine the height and lot size due to the severance. As for the remaining four properties, the Board finds them to be too dissimilar in terms of age, condition and height relative to the subject property. Mr. Grewal stated that in his experience, he did not consider the age of a building as a factor and did not make an adjustment for it. However, as demonstrated by MPAC’s evidence, the lower sales prices for 5195 Maingate Drive and 2463 Royal Windsor Drive reflect the age and poor condition of the properties.

34Therefore, the Board concludes from all of the evidence that the subject property’s current value is correct at its returned value $10,187,000 (CT) for the 2013 to 2016 taxation years.

Equity with Similar Lands in the Vicinity

35The 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)(b) of the Act.

36For purposes of establishing equity, properties do not need to be comparable; they need to be of a similar nature and within the vicinity of the subject property. The Assessment to Sale Ratio (“ASR”) from a reasonable sample of sold properties is usually the best indicator for that purpose.

37Mr. Grewal did not raise an equitable adjustment pursuant to s. 44(3)(b) of the Act as an issue.

38As Mr. Charles stated that equity is not in issue, he did not address the Equity Analysis included in his Valuation Report in his testimony at the hearing. The Board has reviewed it and notes that it references 24 sales of industrial properties in the vicinity of Mississauga that occurred between January 10, 2011 and December 17, 2012. The report states that the median for the time adjusted ASRs was 1.04 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 sale prices in the vicinity.

39Mr. Charles concluded that similar properties in the vicinity have been assessed at their current values and are equitable.

40Based on the evidence before it, the Board finds that there is no inequity in the subject property’s assessment relative to the properties in MPAC’s Equity Analysis.

CONCLUSION

41The Board finds that the assessment as returned is based on its current value, and 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.

42The assessment is confirmed at $10,187,000 in the commercial property class (CT) for the 2013 to 2016 taxation years.