MacLennan v. Municipal Property Assessment Corporation, 2018 CanLII 102692

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: October 23, 2018 FILE NO.: WR 155947 Assessed Person(s): Darren Joseph MacLennan Appellant(s): Dareen MacLennan Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09 Respondent(s): City of Toronto Property Location(s): 3 Edyth Court Municipality(ies): City of Toronto Roll Number(s): 1919-051-740-03500-0000 Appeal Number(s): 3265385 and 3294602 Taxation Year(s): 2017 and 2018 Hearing Event No.: 701875 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended Heard: September 21, 2018 in Toronto, Ontario

APPEARANCES:

Parties Representative

Darren MacLennan Self-represented

MPAC Chantelle MacMillan

City of Toronto No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1Darren MacLellan (the “Appellant”) is the owner of 3 Edyth Court (the “Subject Property”), which is located in the City of Toronto.

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act“), the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016.

3MPAC has assessed the current value of the Subject Property at $1,472,000 for the 2017 taxation year and at $1,295,000 for the 2018 taxation year.

4The Appellant has filed an appeal for taxation year 2017 and was deemed to have filed an appeal for the 2018 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is his position that MPAC’s assessment of current value is too high and that the correct current value is $950,000. At this hearing, MPAC takes the position that its assessed value should be changed to $1,295,000 for both taxation years.

5Pursuant to s. 40.(11) of the Act, the City of Toronto is a party to this proceeding. However, no one appeared at the hearing on its behalf.

6Section 44.(3)(b) of the Act directs the Board to reduce the current value of the Subject Property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute of the municipal tax burden according to the value of the property possessed by each ratepayer. MPAC takes the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value for the 2017 and 2018 taxation years is $1,026,000. Therefore, the Board reduces the returned assessment from $1,472,000 to $1,026,000 for the 2017 taxation year and reduces the returned assessment from $1,295,000 to $1,026,000 for the 2018 taxation year. Pursuant to s. 44.(3)(b) of the Act, an equitable reduction of this value is not required.

RELEVANT LEGISLATION

8Section 1 of the Act states:

1. “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.

9Section 19.(1) of the Act states:

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

10Section 19.2(1) of the Act states:

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

11Section 40.(17) of the Act states:

Burden of Proof

40.(17) 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.

12Section 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.

ISSUES

13The issue to be determined on this appeal is the correct current value of the Subject Property for the 2017 and 2018 taxation years.

Description of the Subject Property

14The Subject Property is a two-storey residential dwelling with three self-contained units, located at 3 Edyth Court, in the City of Toronto. The Subject Property was built in 1987, with a total building area of 2,348 square feet (“sq. ft.”), and a total lot size of 8,960 sq. ft.

DISCUSSION, ANALYSIS AND FINDINGS

MPAC’s Evidence

15Chantelle MacMillan is the Advocate for MPAC and Edward Mui is the Witness for MPAC. Ms. MacMillan called on Mr. Mui and he gave an overview of his related work experience. Mr. Mui states that he is a Property Valuation Analyst with MPAC and has been working for almost 18 years in the areas of assessment and valuation. Mr. Mui states that he has been assessing properties in the Subject Property’s area for the past three years, and appears before the Board in the role as a Valuation Analyst presenting evidence on behalf of MPAC.

16Mr. Mui presents a Valuation Report, dated April 27, 2018, which he prepared and testifies to the information contained in the report.

17Mr. Mui states that the Subject Property was inspected on April 6, 2018 and he confirmed that the building measurements, data, and classification of the Subject Property are correct.

18Mr. Mui testifies that the Subject Property has one self-contained unit on the first floor, one self-contained unit on the second floor, and a basement unit. He also states that the Subject Property had undergone minor renovation in 2007 (in the kitchen, bathroom, and basement area) and as a result MPAC assigns a Renovation B code and an effective year built 1987 to the Subject Property. Mr. Mui explains that Renovation Codes C and D are assigned to properties depending on the extensiveness of the work done (e.g. major renovations and cases where the property is gutted and re-built).

19Mr. Mui presents an analysis of the sales of 10 suggested comparable properties to show that these sales when adjusted for time and differences in frontage to the Subject Property results in a median adjusted sale price of $1,427,645 (average of $1,416,834). Mr. Mui testifies that these suggested comparable sales were presented by the Appellant during the Request for Reconsideration (“RfR”).

20In support of current value, Mr. Mui presents a market analysis of five sales which occurred in the homogeneous area identified as A96 (the Subject Property’s A99). These suggested comparable properties are located at 5 Hilo Road, sold in 2016 for $1,155,000 (time adjusted $1,080,469); 26 Park Boulevard, sold in 2015 of $889,000 (time adjusted $933,583); 39 Twenty Fifth Street, sold in 2015 for $1,015,000 (time adjusted $1,065,902); 55B Long Branch Avenue, sold in 2016 for $1,026,000 (time adjusted $950,359); and 22 Park Boulevard, sold in 2015 for $865,000 (time adjusted $908,379).

21The analysis shows that the sale prices ranges from $865,000 to $1,155,000. On average, these suggested comparable properties have a total building area of 2,348 sq. ft., a frontage of 48.58 feet, a total lot size of 0.132 acres, year built 1952 (effective year built 1987), quality rating of 6 and sold at a median sale price of $1,026,000.

22On cross-examination Mr. Mui testifies that suggested comparable properties with a corner lot (lot located on the intersection of two streets) receive a negative two per cent adjustment and suggested comparable properties with proximity to multi-residential property receive a negative four per cent adjustment. Mr. Mui also states that there were no sales in the Subject Property’s homogeneous area and that he expanded the search to the neighbouring homogeneous area.

23On cross-examination, Mr. Mui testifies that residential properties with up to six self-contained units are assessed by MPAC, using the Direct Comparable Approach, and multi-residential properties with seven or more units are assessed using the Income Approach.

24Mr. Mui also presents the sales of four vacant residential lots located in the homogeneous neighbourhood A96 (the Subject Property is in A99) at 11 Walnut Crescent, sold in 2015 for $710,000; 6 Shamrock Avenue, sold in 2015 for $450,000; 154 Stanley Avenue, sold in 2015 for $315,000; and 78 Thirty Ninth Street, sold in 2015 for $212,539. These four sales are time adjusted and reflect a median sale price of $11,532 per front foot (average sale price of $11,811 per front foot) and an average frontage of 37.5 feet.

25Using the median sale price of $11,532 per front foot of the vacant lots, Mr. Mui further adjusts the time adjusted sale prices of the above five suggested comparable presented in support of current value at 5 Hilo Road; 26 Park Boulevard; 39 Twenty Fifth Street; 55B Long Branch Avenue; and 22 Park Boulevard for differences in frontage to the Subject Property to make them similar. Mr. Mui takes the difference in frontage x $11,532 per foot for each of the five suggested comparable properties and adds the extra frontage cost to the time adjusted sale price. Based on this adjustment, the median sale price is $1,319,905 or $1,319,000 rounded (average $1,350,028 or $1,350,000 rounded).

26Mr. Mui testifies that the use of the sales of vacant lots used to adjust the frontage of developed residential properties like the five sales presented in support of current value is unique to the appeals at hand, and not generally used by MPAC.

27Mr. Mui testifies that during the RfR process for 2017 taxation year, a recommendation was made to reduce the return assessment to $1,295,000, representing a 12 per cent market adjustment reduction of the original assessment of $1,472,000. Mr. Mui states that MPAC is honouring that recommendation of the current value of $1,295,000 and is asking that Board to take that recommended current value into consideration for the 2017 and 2018 taxation years.

MPAC’s Submissions

28Relying on its evidence MPAC submits that the current value is $1,319,000.

29MPAC presented the following three cases to assist the Board in its determination of current value; and to specifically support arguments of renovation, adjustments and estimates of value:

I. Johnson v. Municipal Property Assessment Corp., Region 09, [2018] O.A.R.B.D. No. 203 (“Johnson”);

II. Murray v. Municipal Property Assessment Corp. Region No. 09 [2018] O.A.R.B.D. No. 66 (“Murray”); and

III. Markson v. Municipal Property Assessment Corp., Region, [2018] O.A.R.B.D. No. 190 (“Markson”).

Appellant’s Evidence

30The Appellant represents himself. The Appellant testifies that the main issue surrounding these appeals is the frontage.

31The Appellant argues that the renovation B code assigned to the Subject Property is unjustified. The Appellant argues that MPAC’s website refers to major renovations, which is different than the general maintenance he claims the Subject Property had undergone.

32In support of current value, the Appellant presents two estimates of market value for the Subject Property.

33The first estimate is from Jody Thompson, Sales Representative, Remax Professional Inc., in which she stated that the purpose of the appraisal is to estimate the market value of the Subject Property described in this appraisal report (Comparable Market Analysis). She indicated that the analysis is based on locational analysis of the neighbourhood, the market for such properties using Multiple Listing Service (“MLS®”), other public records as are available, her knowledge of current market conditions in the Toronto real estate market, and factors unique to the Subject Property. Based on her analysis, Ms. Thompson estimates the market value to be between $950,000 and $1,000,000 as of April 30, 2016.

34The second estimate is from Shelley Porritt, Broker of Record, Royal LePage, dated July 10, 2017. Ms. Porritt indicated in her letter that she relied on six sales of Triplex and Duplex with basement apartment (MLS® listings attached to the letter) and based on her analysis she is of the opinion she estimates the value to be in the range of $800,000 and $850,000 for the Subject Property.

35In reference to the sales of 10 suggested comparable properties presented by MPAC. The Appellant testifies that he presented the sales of these 10 suggested comparable properties during the RfR process, to show that the frontage adjustment value of $11,532 per foot based on vacant residential land with 50 feet and 25 feet is unjustifiable. He testifies that the sales of these 10 suggested comparable properties were not presented in support of current value.

36To demonstrate the above argument, the Appellant references (amongst other similar references) two suggested comparable properties which are generally similar, except for the difference in frontage that sold in the open market. He states that the property at 457 Valermo Drive with a 50 feet frontage, sold in 2015 at a time adjusted sale price of $809,294; and 42 Symons Street with a 25 feet frontage, sold in 2015 at a time adjusted sale price of $824,901, resulting in a difference in sale price of $15,607. This is compared to MPAC’s adjusted (time and frontage) sale price of $1,155,254 for 457 Valermo Drive and the adjusted sale price of $1,459,161 for the 42 Symons Street, with a difference in value of $303,907, significantly higher than the difference in the sale prices in the open market.

37The Appellant argues that the Subject Property should be considered a corner lot, because the Subject Property’s street wraps around the corner which he considers an intersection of two streets. He also argues that the Subject Property should also be given a negative adjustment for proximity to the neighbouring property across the street from the Subject Property at 2591 Lakeshore Boulevard, because that property is zoned as a commercial property, even though it is currently used as a multi-residential property.

38The Appellant testifies that he is in agreement with MPAC’s suggested comparable properties presented in support of current value, except for the suggested comparable property at 5 Hilo Road, which he does not believe is the most comparable property to the Subject Property.

39The Appellant raises issues as to why MPAC did not use the Income Approach to determine current value, as opposed to the Direct Comparison Approach. He argues that the Subject Property is an income property and that is true of the suggested comparable properties. He argues that buyers consider potential income of a property before purchasing it. Therefore, he is of the view that the Income Approach is better suited for determining current value. The Appellant presents no income data and this was just an oral argument.

Appellant’s Submissions

40Relying on the above evidence, the Appellant is of the view that the correct current value is $950,000.

Board’s Findings on Current Value

41Under s. 44.(3)(a) of the Act, the Board must first determine “the current value of the land.” The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the property on the valuation date or close to it.

42In regard to MPAC’s use of the sales of vacant lot to determine the frontage adjustment for the sales presented in support of current value, the Board rejects MPAC’s approach. The Board accepts the Appellant’s argument that the adjustment value is unjustifiable. The Board finds that sales of vacant lot properties (Property Type 100) are not similar to sales of properties improved with residential structures (Property Type 333). MPAC also admits that this practice is not generally used. The Board did not rely on the Murray case which states that “The only property that the Board is prepared to consider is MPAC’s Sale D at 8 Pheasant Lane. However, several minor adjustments are required to make it comparable to the Subject Property.” In this case, the Board found that the adjustment for frontage was not based on similar type properties and the adjustment values are major.

43In regard to the Appellant’s argument that the assessed value of the Subject Property should be determined based on the Income Approach to value. The Board agrees that Income Approach is another methodology of determining value, however, the Appellant presents no evidence to show what the assessed value of the Subject Property should be, based on the Income Approach to value.

44In regard to the Appellant’s argument that the renovation B code assigned to the Subject Property is unjustified, because MPAC’s website refers to major renovations which he claims is different than general maintenance of the Subject Property. The Board puts no weight on the Appellant’s argument, because renovation codes are assigned by MPAC and not the Board. The Board also finds that the Johnson case supports this finding because the Member stated that “The Board could not determine whether or not the renovation was for general maintenance/upkeep, because there were no official documents presented into evidence to evaluate the degree of renovation, the date of all renovations, the cost associated with it and the impact on the assessed value.”

45In regard to the Appellant’s issue of a negative two per cent adjustment for the Subject Property being a corner lot and a negative four per cent adjustment for close proximity to a commercially zoning property at 2591 Lakeshore Boulevard. The role of the Board is not to determine adjustments. The Board relies on the sales evidence of suggested comparable properties before us and the degree of similarity they are to the Subject Property.

46In regard to the Appellant’s two estimates of current value for the Subject Property from Jody Thompson (Remax) and Shelley Porritt (Royal LePage). The Board does not rely on these two estimates, because Ms. Thompson’s estimate included no sales evidence and no appraisal report as referred to in her letter; and Ms. Porritt’s estimate included on MLS® listing which contained insufficient information (actual building size, actual age, quality etc.) necessary to assist the Board in its determination of current value. As well, Ms. Thompson and Ms. Porritt were not in attendance to be cross-examined. This finding is supported in the Markson case in which the Member stated that in order “To enable an estimate of value for the Subject Property to be derived from suggested comparable properties, there must be sufficient elements of similarity in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc. so as to enable a direct comparison to be made.”

47Instead, the Board relies on the sales of suggested comparable properties presented in support of current value. In reviewing the sales presented in support of current value the Board finds the best evidence to be the five sales presented by MPAC: 5 Hilo Road, sold in 2016 for $1,155,000 (time adjusted $1,080,469); 26 Park Boulevard, sold in 2015 of $889,000 (time adjusted $933,583); 39 Twenty Fifth Street, sold in 2015 for $1,015,000 (time adjusted $1,065,902); 55B Long Branch Avenue, sold in 2016 for $1,026,000 (time adjusted $950,359); and 22 Park Boulevard, sold in 2015 for $865,000 (time adjusted $908,379) with median sale price of $1,026,000.

48Based on all of the above evidence, the Board finds the current value to be the median sale value of $1,026,000.

DECISION

49The Board finds the current value of the Subject Property is $1,026,000 for the 2017 and 2018 taxation years. Therefore, the Board reduces the returned assessment from $1,472,000 to $1,026,000 for the 2017 taxation year and reduces the returned assessment from $1,295,000 to $1,026,000 for the 2018 taxation year.