Rubicon Holdings Limited v. Municipal Property Assessment Corporation, 2017 CanLII 9878

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 24, 2017

FILE NO.: WR 144493

Assessed Person(s): Rubicon Holdings Limited

Appellant(s): Rubicon Holdings Limited

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 18

Respondent(s): City of St. Catharines

Property Location(s): 610 Read Road

Municipality(ies): City of St. Catharines

Roll Number(s): 2629-050-045-61101-0000

Appeal Number(s): 2953952, 3024088 and 3089020

Taxation Year(s): 2013, 2014 and 2015

Hearing Event No.: 646274

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

Heard: November 18, 2016 in St. Catharines, Ontario

APPEARANCES:

Parties Counsel+/Representative

Rubicon Holdings Limited Leslie Bomza

MPAC Lorelle Rempel

City of St. Catharines No one appeared

DECISION OF THE BOARD DELIVERED BY MARILYN SHARMA

INTRODUCTION

1The subject property was sold in March 2015 for a price of $667,500.

2Subsequent to the sale, MPAC conducted an inspection of the property and found that it required various repairs. MPAC made an offer to the new owner whereby the assessment was reduced from $955,000 to $673,000.

3The new owner agreed with the offer and signed minutes of settlement for the assessment of the property pertaining to the taxation year 2016 at $673,000.

4Appeal 3156043 for the taxation year 2016 is therefore no longer part of this appeal.

5The subject property is located at the northwest end of the City of St. Catharines within one kilometer of the Welland Canal.

6The property consists of two attached structures with a combined floor area of 17,888 square feet.

7The buildings are located on 1.38 acres of land.

8According to the Board’s records, the property is zoned in the commercial tax class for the 2013 taxation year and in the industrial tax class for the 2014 and 2015 taxation years. However, the Assessor in her submission at the hearing (Exhibit 1) states in two places the following:

a. “The property has been placed in the industrial (IT) tax class.”

b. “The correct property classification is IND (IT)”.

9The building was constructed in 1986.

10The assessment of the subject property for the taxation years 2013, 2014 and 2015 is $955,000.

11Based on the settlement reached between the new owner and MPAC, the Appellant, Rubicon Holdings Limited represented by Leslie Bomza, was offered the identical reduction of the assessment from $955,000 to $673,000 for the taxation years 2013, 2014 and 2015. The Appellant refused the offer. However, MPAC informed the Assessment Review Board (“Board”) that the offer remains effective.

ISSUE

12The issue before the Board is to determine whether the subject property is over assessed.

DECISION

13The Board finds that the current value of the property under appeal for the 2013, 2014 and 2015 taxation years is $698,000 (rounded).

14The Board finds no adjustment is required for equity purposes under s. 44.(3)(b) of the Assessment Act (“Act”).

15At the start of the hearing the assessor indicated that MPAC had made an offer to the Appellant to reduce the assessment from $955,000 to $673,000 and while the offer was rejected, it still remains in effect. The Board accepts MPAC’s recommendation and reduces the assessment from $955,000 to $673,000.

16The assessor stated in her submission (Exhibit 1) that “the correct property classification is IND IT”.

17Accordingly, the classification of the subject property for 2013 is changed from the commercial to the industrial class and the assessment of the subject property for the taxation years 2013, 2014 and 2015 is reduced from $955,000 to $673,000 in the industrial tax class.

REASONS FOR DECISION

The Legislation

18For the 2013, 2014 and 2015 taxation years, in determining the value at which land shall be assessed, the Board must have regard to the following provisions of the Act:

19Section 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.

20Section 19.(1) of the Act states:

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

21Section 19.2(1)3 of the Act 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. 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.

22Section 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.

23Section 40.(17) of the Act states:

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.

24Section 40.(19) of the Act states:

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

Analysis

25Under the Act the Board is required to do three things:

(1) Find the current value of the property;

(2) Make reference to the value at which similar lands in the vicinity are assessed;

(3) Adjust the assessment of the subject property if the adjustment would result in a reduction in the assessment.

Current Value

26The best measure of current value is an arm’s length and market tested sale of the subject property on the valuation date of January 1, 2012, or close to it. If no such transaction took place, a further measure of current value is the arm’s length and market tested sales of comparable properties in the same vicinity and market. This measure acts as a benchmark and gauge of the correctness of the assessed value of the subject property. The onus for establishing the correctness of the current value lies with MPAC.

MPAC’s Evidence

27MPAC provided two suggested comparable properties as shown in Table 1.

Table 1 MPAC’s Suggested Comparable Properties

Address	Bldg. Area (sq. ft.)	Site Area	Year Built	Sale Amt.	Sale Date
610 Read Road, St. Catharines (subject property)	17,888	1.38	1986	667,500	March, 2015
3 Northrup Crescent	11,780	0.80	2001	435,000	August 2012
1 Spring Street	6,777	0.88	1976	225,000	April, 2011

28The Assessor is of the view that the above two suggested comparable properties in the vicinity of the subject property are the most comparable to the subject property under appeal because:

i. They are both zoned industrial/commercial and are located within close proximity to the subject property;

ii. They are both close to the Welland Canal;

iii. They are of similar lot size.

29The Assessor informed the Board that in MPAC’s opinion the suggested comparable property at 3 Northrup Crescent is relatively similar to the subject property as it is of similar construction material and zoning.

30The Assessor also stated that the other suggested comparable property at 1 Spring Street is of similar zoning to the subject property.

31The Assessor stated that the subject lot is larger than the lots of both of MPAC’s suggested comparable properties and in order to make a comparison, she made an adjustment to the sale prices of her comparable properties to compensate for the difference in lot sizes. These adjustments are based on the values assigned to land values in the area in MPAC’s database.

32The Assessor indicated that a sale of the subject property occurred in March 2015 and advised the Board that MPAC is satisfied that the sale was an arm’s length sale between a willing seller and a willing buyer.

33The Assessor stated that MPAC conducted an inspection of the subject property on August 12, 2016 and found that various repairs to the buildings were required and the “Cost to Cure” was established at $200,000. As a result of the cost to remedy the repairs, MPAC agreed to reduce the assessment of the subject property from $955,000 to $673,173.

Appellant’s Evidence

34The Appellant submitted a statement of issues in which the following points were made:

i. The subject property is older than the suggested comparable properties submitted by MPAC and has had no renovations;

ii. The subject property has been vacant for approximately one year at the time of sale;

iii. It has been difficult to keep the property rented due to the challenging economic conditions;

iv. Because of its location on the “other side” of the Welland Canal shipping and receiving are costly and time-consuming;

v. The building was in a poor state of repair.

35The Appellant argued that MPAC’s suggested comparable properties should not be considered because:

i. The suggested comparable property at 1 Spring Street is located on the side of the Welland Canal where it is not subjected to the same logistics issues as the subject property and is of a different use.

ii. The suggested comparable property at 3 Northrup Road is located on the same side of the Welland Canal as the subject property but it is fifteen (15) years newer and in much better condition.

iii. The property at 3 Northrup Road is better designed for trucks and industrial uses having large turn-around radius.

iv. The property at 3 Northrup Road is almost half the size of the subject property and purchasers often pay a premium per square foot for smaller properties.

36The Appellant informed the Board that she consulted several professionals to determine the appropriate market value for the subject property in 2012 and was given a range of values between $550,000 and $600,000.

37The Appellant stated that based on the above she believes that the assessed value of the subject property for the taxation year 2012 should be $575,000.

Analysis of Evidence

Analysis of MPAC’s Evidence

38The Board considered the argument by MPAC that the two suggested comparable properties are similar to the property under appeal because both are zoned industrial, are within close proximity to the subject property and are of similar size. The Board accepts that the two properties submitted by MPAC are sufficiently comparable to the subject property.

39The Board accepts the adjustments made by the Assessor to the land values of the comparable properties to compensate for the differences in the lot sizes between the subject property and that of the two suggested comparable properties.

40The Board noted the comment made by the Assessor that the subject property was sold in March 2015 and although the Appellant stated that the sale was an arm’s length sale, neither the seller nor the buyer was willing to provide the documentation to substantiate the claim.

41The Board accepts the Assessor’s evidence that MPAC conducted an inspection of the property and that at the time of the inspection, MPAC found that the building was in need of various repairs. The Assessor stated that the cost to remedy the repairs was estimated to be $200,000 and MPAC offered to reduce the assessed value by this amount. This offer was rejected by the Appellant.

Analysis of Appellant’s Evidence

42The Board considered the various issues outlined by the Appellant in support of her claim that the properties submitted by MPAC are not similar to the subject property. The Board dismisses the claims for the following reasons:

i. In regards to the Appellant’s claim that the subject building is an older building, the Board notes that one of the Assessor’s suggested comparable property is 10 years older than the subject property while the other is 15 years newer. The Board agrees with the Assessor’s comment that in the context of industrial properties and in particular in the circumstance of establishing current value of the subject property, this is of little impact.

ii. The Appellant’s claim that she had difficulty in keeping the property rented due to challenging economic conditions is understandable but has no relevance in establishing the current value assessment of the property.

iii. The Appellant’s claim that the location of the property on the other side of the Welland Canal makes shipping and receiving costly and time-consuming and this has a negative impact on the value. The Board places no weight on this since it is not supported by credible expert evidence or analysis.

iv. The Appellant’s claim that the building was in a poor state of repair has been established and it was accorded due consideration in the reduction of the assessment.

43The Board considered the Appellant’s argument that the property at 3 Northrup Road is smaller than her property by almost one-half, it is 15 years newer, in better condition, better designed for trucks and industrial uses and buyers usually pay a premium for such property and as a result, it is not comparable to her property. The Board is unable to place weight on these assertions because no evidence was presented to corroborate or support any of the arguments and to demonstrate whether it has an impact on value and the extent of such impact.

44The Board considered the statement made by the Appellant that she consulted several professionals to determine the appropriate market value for the subject property in 2012 and was given a range of values between $550,000 and $600,000. The Board rejects this statement since none of the professionals was present to be cross-examined.

Board’s Analysis

45The Board has determined that the two properties submitted by MPAC are reasonably similar to the subject property and therefore sufficiently comparable for determining the current value of the subject property.

46The Board finds that the sale of the subject property in March 2015 is too far removed from the valuation date of January 1, 2012 and therefore rejects the comparable property from consideration.

47The Board finds that the claims or arguments advanced by the Appellant are unsubstantiated due to a lack of evidence.

48Accordingly the Board concludes that the two suggested comparable properties submitted by MPAC at 3 Northrup Crescent and 1 Spring Street are similar to the property under appeal and can be considered in its deliberations to determine value.

Determination of Current Value

49The Board agrees that the best method to determine the current value of the subject property is based on the sales of similar properties in the neighborhood.

50The Board applies the revised sale price per square foot (taking into account the adjustment for the differences in lot sizes) and finds that the average adjusted sale price per square foot of the two properties located at 3 Northrup Crescent and 1 Spring Street is $39.

51When the average sale price per square foot of $39 is applied to the building area of the subject property, the Board finds that the revised current value of the subject property is $697,632 or $698,000 (rounded).

52The Board finds that the current value of the subject property is $698,000.

Equity with Similar Lands in the Vicinity

53The Board is required under s. 44.(3) sub-paragraph (b) of the Act, to 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.

54No evidence was presented to support the requirement under s. 44.(3) sub-paragraph (b) of the Act. The Board therefore makes no adjustment for equity under s. 44.(3) (b) of the Act.

CONCLUSION

55The Board finds that the current value of the property under appeal for the 2013, 2014 and 2015 taxation years is $698,000 (rounded).

56The Board finds no adjustment is required for equity purposes under s. 44.(3)(b) of the Act.

57At the start of the hearing the assessor indicated that MPAC had made an offer to the Appellant to reduce the assessment from $955,000 to $673,000 and while the offer was rejected, it still remains in effect. The Board accepts the recommendation and reduces the assessment from $955,000 to $673,000. The assessor also stated that the correct classification of the subject property is in the industrial property class.

58Accordingly, the classification of the subject property for 2013 is changed from the commercial to the industrial class and the assessment of the subject property for the taxation years 2013, 2014 and 2015 is reduced from $955,000 to $673,000 in the industrial tax class.