Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 22, 2018

FILE NO.: WR 154442

Assessed Person(s): Anthony Cerullo

Appellant(s): Anthony Cerullo

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 9

Respondent(s): City of Toronto

Property Location(s): 49 Saguenay Avenue

Municipality(ies): City of Toronto

Roll Number(s): 1908-061-330-00300-0000

Appeal Number(s): 3266160 and 3300260 (deemed 2018 appeal)

Taxation Year(s): 2017 and 2018 (deemed appeal)

Hearing Event No.: 701288

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

Heard: July 18, 2018 in Toronto, Ontario.

APPEARANCES:

Parties	Representative
Anthony Cerullo	Self-represented
MPAC	Jeffrey Batcher
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

1This is an appeal of the assessed value of 49 Saguenay Avenue (“subject property”). The Appellant, Anthony Cerullo, argues that the assessment, as of the January 1, 2016 valuation day, should be $1,100,000.

2MPAC’s representative, Jeffrey Batcher, argues that the assessment as returned of $1,497,000 for the 2017 taxation year and $1,461,000 for the 2018 taxation year should be reduced to $1,442,000 based on his sales analysis and further reduced to $1,335,000 based on his equity analysis.

3For the reasons stated below and pursuant to s. 44(3)(a) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), I find that the current value of the subject property, as of the January 1, 2016 valuation day, is $1,427,000. The evidence demonstrates that, pursuant to s. 44.(3)(b), a reduction is required to make the assessment equitable with that of similar properties in the vicinity. I therefore reduce the assessment for the 2017 taxation year from $1,497,000 to $1,321,000 and for the 2018 taxation year from $1,461,000 to $1,321,000 in the Residential property class.

LEGISLATION

4Section 44.(3)(a) of the Act, requires the Assessment Review Board (“Board”) to “determine the current value of the land”. Current value is defined in s. 1 as “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”. That is, I must determine what the subject property would have sold for in an arm’s length transaction on the valuation day, set pursuant to s. 19.3 of the Act, which, in this case is January 1, 2016 for the 2017 and 2018 taxation years.

5Once I have determined the current value, s. 44.(3)(b) requires that I “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” but only if that adjustment would result in a reduction of the assessment.

CURRENT VALUE

Description of the Subject Property

6The parties agree that the subject property is a lot measuring 44 feet wide and 120 feet deep for a total of 5,280 square feet (“sq. ft.”). There is a residence that is currently uninhabitable due to unfinished renovations. The residence was originally a bungalow with a second floor room measuring 160 sq. ft. above the attached garage. In 2003, a work permit was obtained and a second storey was added above the original bungalow area. However, by 2006 renovation work ceased.

7The parties agree that the interior of the residence consists of framing and subfloors and that there is no plumbing, electrical, drywall or insulation. Mr. Batcher testified that MPAC visited the subject property in December 2017 and again in March 2018 and found that the subject property remained in the same state and condition.

8MPAC’s data shows the residence, as it was before the renovation began had 1,386 sq. ft. of living area and a basement measuring 1,186 sq. ft. with 8 feet high ceilings. Mr. Cerullo, using architectural drawings, calculated that the area before renovations began should be 1,165 sq. ft. of building area with 1,005 sq. ft. of basement area and the basement ceiling height is 6 feet 6 inches.

Evidence and Finding of Current Value

9The best evidence of the current value of a residential property is an open market sale of that property on or near the valuation day. When that evidence is not available, open market sales of similar properties on or near the valuation day are the next best evidence.

10Mr. Batcher testified that the subject property is located in an area that was predominantly one or two-storey homes built in the 1940s and 1950s and the current area trend is to demolish existing homes and replace them. He argues that a purchaser would not continue the renovations that were begun in 2003 and ceased in 2006 but would likely demolish the residence and rebuild. He argues that the best measure of the subject property’s current value is to compare it to properties that were purchased for the lot value alone, in other words, existing residences that were demolished and replaced after a sale.

11Mr. Batcher presented 10 sales which occurred within a year of the valuation day and are located in the vicinity of the subject property. The residences of these sales were either demolished or are in the process of being demolished and replaced with new residences. Additional relevant data of these sales is summarized in Table 1 below.

Table 1

	Lot Width /Depth (feet)	Lot Area (sq. ft.)	Sale Date	Sale Price $	Time Adjusted Sale Price $
49 Saguenay Avenue	44 x 120	5,280
30 Otter Crescent	43 x 124	5,322	December 2016	1,799,000	1,529,096
101 Otter Crescent	44.5 x 184	8,188	August 2015	1,350,000	1,450,162
105 Otter Crescent	43 x 184	7,912	July 2015	1,395,000	1,523,622
105 Otter Crescent	43 x 184	7,912	February 2016	1,480,000	1,446,692
10 Glen Rush Boulevard	40 x 140	5,600	January 2016	1,397,000	1,386,360
440 Glengrove Avenue West	44 x 134	5,896	June 2016	1,560,000	1,438,558
22 Shelborne Avenue	49 x 117	5,733	October 2015	1,431,000	1,488,101
9 Shelborne Avenue	47 x 113	5,318	March 2016	1,435,000	1,381,970
176 Caribou Road	51.25 x 117	5,996	September 2016	1,600,000	1,415,346
178 Caribou Road	51 x 117	5,967	September 2016	1,600,000	1,415,346

12Mr. Cerullo believes that 176 Caribou Road and 178 Caribou Road had sales that preceded the sale in MPAC’s data but provided no evidence to support this. He also expressed concerns whether the September 2016 sales are open market sales, arguing that there was only one purchaser for both properties, that the purchaser sought approval to sever the two lots into three lots and that the sale prices are artificially high. Mr. Batcher argued there is no evidence that they are not valid open market sales, that there were two separate sales by two separate sellers and that having the same buyer for both parties does not make the sales invalid. I agree with Mr. Batcher. With regard to the sale prices being artificially high, this is not reflected in the evidence presented by the parties. In reviewing the time-adjusted sale prices for sale properties, I find that 176 Caribou Road and 178 Caribou Road are both at or lower than the median sale values. Accordingly, I see no reason to exclude these sales from my analysis.

13Mr. Cerullo argued that some of MPAC’s sale properties have much larger lot sizes and, therefore, are not directly comparable to the subject property. I agree and have restricted my selection of comparable sales to those with lot sizes that are no more than 15% larger in width or total area. Accordingly, I have disregarded both sales of 101 Otter Crescent and 105 Otter Crescent based on their lot sizes.

14Mr. Cerullo also argued that certain streets are superior to others in his neighbourhood. However, based on the evidence presented, the sale prices do not show that properties on certain streets consistently sell for more than properties on other streets in this area.

15The remainder of Mr. Batcher’s sale properties is directly comparable to the subject property, in particular because all of the buildings were demolished after a sale and replaced. The evidence is that the subject property is uninhabitable, it is little more than a shell and that renovations ceased in 2006. Based on the evidence presented by the parties with regard to the trend of demolishing and replacing homes in this neighbourhood and the length of time since the renovations ceased, I believe it is likely that a prospective purchaser would demolish the building and begin anew.

16Mr. Cerullo presented data on 12 properties in the vicinity of the subject property. He argued that these properties are more comparable to his property than MPAC’s sales. However, nine of the properties do not have sales, only assessed values. Mr. Cerullo is relying on the assessments of similar properties to support his suggested current value of $1,100,000. In particular, he relied on the assessed value of his next door neighbour’s home which is assessed for less than his property despite it having a larger building area (but only in relation to the pre-renovated state of the subject property) and having completed renovations. Relying on assessments for current value is problematic because the correctness of the assessments has not been tested by open market sales. The Act is clear that current value is the amount a property would sell for between a willing seller and a willing buyer. Therefore, open market sales are the best determination of current value.

17Mr. Cerullo’s three sale properties are summarized in Table 2 below.

Table 2

	Lot Width /Depth (feet)	Lot Area (sq. ft.)	Building Data	Year Built	Sale Date	Sale Price
49 Saguenay Avenue	44 x 120	5,280	1,165 to 1,386 sq. ft. Uninhabitable	1950
119 Caribou Road	50 x 117	5,850	1,450 sq. ft. 1.5 storey	1952	March 2017	2,255,000
125 Caribou Road	50 x 117	5,850	1,331 sq. ft. 1 storey Corner lot	1952	December 2014	1,058,800
186 Caribou Road	51.25 x 117	5,996	1,737 1 storey Abuts commercial Abuts Educational Institution	1953	May 2014	1,100,000

18Mr. Cerullo argued that sellers tend to spend quite a bit of money staging their homes before they sell in order to get the highest sale price and argued that most sellers are hoping or expecting to sell to someone who wants to live in the existing residence, not replace it. He also argued that some of these homes were in good condition and did not need replacing. While these arguments may be correct, they do not assist me in determining the current value of the subject property.

19I have disregarded Mr. Cerullo’s sale of 186 Caribou Road as the sale occurred too far from the valuation day and the property is too dissimilar to be directly comparable to the subject property.

20Mr. Cerullo’s remaining two sale properties are not directly comparable to the subject property because they are habitable. Mr. Cerullo’s evidence is that they were occupied by the purchasers after the sales occurred. However, they are similar in building area, age and lot area. While the sales occurred farther from the valuation day than Mr. Batcher’s sales, they are close enough to consider here. MPAC presented time adjustment factors (“TAF”) for the period January 2015 to December 2016. Using the closest TAF to the sale date may not result in a precise value but it will provide an estimate of a likely sale value. The time adjusted sale price estimate for 119 Caribou Road is $1,916,750 ($2,255,000 x 0.85 TAF for December 2016). The time adjusted sale price estimate for 125 Caribou Road is $1,285,383 ($1,058,800 x 1.214 TAF for January 2015).

21Of the nine most comparable sale properties (MPACs seven vacant lot sales and the Appellants two sales), the median time adjusted sale price is $1,426,952, or $1,427,000, rounded. This is the current value of the subject property.

EQUITY

22Mr. Batcher submitted an equity analysis report which looked at the level of assessment of 30 residential properties that sold within 0.84 kilometres of the subject property. He found that the median level of assessment was 0.926 of its time adjusted sale price. This indicates that MPAC is tending to under-assess properties in the vicinity of the subject property in relation to the sale values.

23Mr. Cerullo reviewed a number of the sale properties, noting whether or not the assessed values were comparable to the sale values. Although he noted that MPAC is not consistently assessing properties near their sale values, he made no conclusions with regard to equitable assessment.

24I accept Mr. Batcher’s equity analysis and his conclusion that MPAC is under-assessing residential properties in the vicinity of the subject property. Applying the factor of 0.926 to the current value of $1,427,000 results in a value of $1,321,000, rounded.

CONCLUSION

25I find that the current value for the 2017 and the deemed 2018 taxation years is $1,427,000 and that an adjustment is warranted for the purpose of equity. Accordingly, the assessment as returned is reduced from $1,497,000 for the 2017 taxation year and $1,461,000 for the 2018 taxation year to $1,321,000.