Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 31, 2018

FILE NO.: WR 156093

Assessed Person(s): M.M.

Appellant(s): M.M.

Respondent(s): City of Toronto

Property Location(s): Withheld

Municipality(ies): City of Toronto

Roll Number(s): Withheld

Appeal Number(s): 3288424

Taxation Year(s): 2017

Hearing Event No.: 703699

Legislative Authority: Section 323.(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c. 11. Sched. A

Heard: September 28, 2018 in Toronto, Ontario

APPEARANCES:

Parties

M.M.

Counsel⁺/Representative

Self-represented

Parties

City of Toronto

Counsel⁺/Representative

J. Boyczuk⁺ and L. Verastegui

DECISION OF THE BOARD DELIVERED BY MARGARITA OKHAVATI

INTRODUCTION

1M. M., (the “Applicant”) is a 59-year old divorced woman who lives with her 37-year old daughter and 27-year old son in a four-bedroom and two-bathroom semi-detached house. The subject property has a site area of 3,333 square feet (“sq. ft.”), building area of 2,158 sq. ft. and a finished basement of 919 sq. ft. The subject property was purchased on January 5, 1992 for $257,500. In 2017, the subject property was assessed for $1,239,000.

2The Applicant filed this application with the City of Toronto (the “City”) seeking a cancellation, reduction or refund of property taxes for the 2017 taxation year on the basis of sickness or extreme poverty pursuant to s. 323(1)(e) of the City of Toronto Act, 2006, S.O. 2006, c.11, Sched. A. (the “Act”).

ISSUE

3The issue before the Assessment Review Board (the “Board”) is to determine whether the property taxes of the Applicant for the 2017 taxation year should be cancelled, reduced or refunded as a result of the Applicant’s inability to pay due to sickness or extreme poverty under the Act.

DECISION

4Based on the evidence before it, the Board determines that the Applicant’s 2017 property taxes should not be cancelled, reduced or refunded notwithstanding her and her son’s sickness. The Board therefore dismisses this application.

REASONS FOR DECISION

Legislation

5Section 323(1)(e) of the Act provides:

Upon application to the city treasurer made in accordance with this section, the City may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if,

(e) the applicant is unable to pay taxes because of sickness or extreme poverty;

6The Act outlines a two-part test. In order for the Applicant to qualify for relief under this section of the Act, the Board must first determine whether the Applicant is able to pay her taxes. If the Applicant was able to pay the 2017 taxes, then the application fails. If the Applicant proves that she is unable to pay the taxes, the Board must then determine the reason the Applicant is unable to do so. Relief can only be granted if the Applicant is unable to pay based on either sickness or extreme poverty.

EVIDENCE AND ANALYSIS

Applicant’s Evidence and Position

Ability to Pay

7In determining whether the Applicant has the ability to pay her taxes, the Board has to consider the evidence presented by the Applicant regarding her financial situation, which is not limited to her income and expenses. The Applicant submitted that in 2017, she was living in extreme poverty and was unable to pay her property taxes.

8The Applicant testified that her 37-year-old daughter worked as a baby sitter in 2017 however, presently she is unemployed and is looking for a job. She stated further that in January 2017, there was a fire in her bedroom and when the inspectors from the Fire Department went to inspect the fire, they found out that the building did not meet the fire code and that two basement apartments were built without permit in 2007. She stated that the inspectors notified the Applicant that she could not rent out the basement apartments because they were not livable and gave her a notice of violation. The Applicant testified that the basement had two bedrooms, two bathrooms and two kitchens. She was advised that she could renovate the house and the basement by eliminating one kitchen in the basement.

9The Applicant stated that she received $475 for six months ($2,850) from Metro Toronto Housing plus three additional payments of $1,200 ($3,600) for a total of $6,450 to help her with the renovations. In addition, Home Depot donated construction material and the neighborhood community helped with the construction. She stated that the renovations finished in August 2018.

Applicant’s Financial Evidence

10The Applicant submitted a copy of the Form 1 – Financial Information and also provided evidence at the hearing regarding her monthly income and expenses, assets and liabilities as detailed hereunder:

Income Total $ 4,191.25/month (3 adults combined)

Expenses Total $ 4,828.90/month

Net Total $ - 769.47/month

Assets Assessed value of the house in 2017 $ 1,239,000

Assets Total $ 1,239,000

Liabilities Mortgage $ 441,852.00

Line of Credit $ 25,888.88

Credit/Debit Cards $ 978.72

Checking Account $ 810.47

Liabilities Total $ 469,530.07

NET WORTH TOTAL $+769,470.00

11Based on the information set out above, the net worth of the Applicant is $769,470.

Sickness

12The Applicant testified that her 27-year old son is Autistic and needs constant care. She submitted a letter from the Outreach Development Services of Springboard, which states that the Applicant’s son S.G. has been receiving Person Directed Planning support at home from Springboard Services since June 2016. The Applicant also testified that she suffers from back pain related to a Degenerative Disc, Scoliosis, and Post Traumatic Disorder. Regarding her sickness, she submitted a letter from her physician. The Board notes from the documents that both Applicant and her son are also the recipients of the Ontario Disability Support Program. The Applicant submitted that she was unable to pay her 2017 property taxes because of sickness.

Applicant’s Final Remarks

13“I thought the best situation will be to sell the house however, this is the only home my son knows of. His father lives close by and helps deliver groceries. I might rent out the apartments in the basement and pay my expenses”.

City’s Evidence and Position

14Luis Verastegui, Representative for the City, advised the Board that the Applicant has not paid property taxes for 2013, 2014, 2016 and 2017 taxation years. The property taxes for 2015 taxation year was appealed and cancelled by the Board. Relief from the 2016 property taxes was also sought, but was denied by the Board.

15Mr. Verastegui presented the following three comparable sales which occurred in 2017 in the neighborhood of the subject property.

• 20 Concord Ave. $1,553,000
• 213 Boxton Road $1,566,000
• 165 Delaware Ave. $1,580,000

16Mr. Verastegui stated that the average and the median of the above three sales are $805/sq. ft. and $769/sq. ft. respectively. Therefore, he estimated the range of the market value of the subject property to be between $1,660,000 and $1,738,000.

Submissions

17Jennifer Boyczuk, Counsel for the City, submits that the City is not taking any position with respect to this application. However, she made the following observations:

• The Applicant has considerable equity in the house. The outstanding mortgage in 2017 is $441,852 and the assessment of the subject property is $1,239,000. The equity is $797,148, and if we consider the market value of the subject property, the equity will be even greater.
• The Applicant pays $100 a month to an organization for support. She has both land line telephone and cell phone plus cable and internet. Although these are not big expenses, they are however, discretionary expenses.
• The Applicant was granted temporary relief by the Board in 2015.

Board’s Analysis

18The intent of the legislation is to provide relief for property owners who cannot pay their property taxes in full or in part due to sickness or extreme poverty in a given taxation year. If the Applicant proves an inability to pay the taxes, they must then prove the reason why they cannot, and only then can relief be granted.

19There is no dispute that the Applicant and her son are sick. The Applicant presented two letters from her and her son’s physicians, which corroborate their sickness. The Board also notes that the Applicant and her son are the recipients of disability benefits. The Board finds that sickness exists. The main question to be determined is if the Applicant had the ability to pay her 2017 taxes.

20An ability to pay requires individuals to demonstrate that, after having called upon every resource available to them, and having explored every reasonable opportunity to mitigate any financial stresses, there are no means to pay some or all of their property taxes.

21The Board has considered the oral testimony of the Applicant, and has reviewed all of the evidence pertaining to her financial situation, to determine whether the Applicant is able to pay her 2017 property taxes.

22The Board finds that the Applicant had the ability to pay her 2017 taxes.

23The Board notes from the Applicant’s Financial Statement that there is $797,148.00 equity in the house. The Board agrees with the Counsel for the City that this is substantial amount of equity and the Applicant should have leveraged on this in order to minimize the tax burden. There is no evidence before the Board to show that the Applicant has explored any option in accessing the equity in her home before making this application. These applications are of last resort and the Applicant must have depleted all resources before making such application.

24Furthermore, the documents show that every month the Applicant has paid the mortgage on the house for the amount of $1,851. The Board finds that the taxes of $601 per month should have been paid first. An ability to pay the mortgage shows some ability to pay her taxes.

25As mentioned above, the Applicant appealed the 2015 property taxes and the Board cancelled the whole amount owing.

26The general principle behind s. 357(1)(d.1) is to provide temporary relief as a last resort to a property owner who does not have the ability to pay their taxes but can demonstrate that their property ownership can be sustained with temporary relief, J. (G.) v. Ottawa (City), 2009 CanLII 94017 (ON ARB).

27The Board supports the principle enunciated in J.(G.) v. Ottawa that the provisions providing for the relief under the Act is intended to be a short- term remedy in most cases. The Board has already granted relief to the Applicant for the 2015 taxation year. No alternative methods to alleviate the situation have been employed by the Applicant to meet her tax obligations other than to seek relief from the City. Relief is not granted automatically every year.

28Moreover, the Board also takes the view that the incomes of all adults in a household capable of contributing to the costs should be considered when a person pleads an inability to pay. In this respect, the Applicant testified that her 37-year old daughter worked as a baby sitter in 2017 but currently is unemployed and looking for a job. This application is for the 2017 taxation year and the evidence is that the daughter was employed in that taxation year. That shows some ability to pay.

CONCLUSION

29Based on the reasons stated above, the Board finds that the Applicant had the ability to pay all of her 2017 property taxes. The Board therefore, dismisses the Applicant’s application for relief under the Act.