Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 28, 2018 FILE NO.: WR 156593 Assessed Person(s): Xiao Ning Yang and Xiao Jing Hiang Appellant(s): Xiao Ning Yang and Xiao Jing Hiang Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 15 Respondent(s): Town of Oakville Property Location(s): 422 Levanna Lane Municipality(ies): Town of Oakville Roll Number(s): 2401-010-031-01075-000 Appeal Number(s): 3270723 and 3305260 Taxation Year(s): 2017 and 2018 Hearing Event No.: 707070 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended Heard: October 29, 2018 in Oakville, Ontario

APPEARANCES:

Parties	Representative
Xiao Ning Yang	Self-represented
MPAC	Raj Rakhra
Town of Oakville	Susan Price

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

BACKGROUND

1Xiao Ning Yang (the "Appellant") is the owner of a two storey semi-detached family home located at 422 Levanna Lane (the "Subject Property") in the Town of Oakville (the "Town"). It is situated on a 3,390.63 square foot (sq. ft.) lot with 29.53 feet of frontage. It has 1,170 sq. ft. of total building area and was built in 1993. MPAC has assigned it a quality class rating of 6.5. There is also an attached garage.

2MPAC returned the assessment for the Subject Property at $541,000 for the 2017 taxation year and at $524,000 for the 2018 taxation year.

3Mr. Yang appealed the assessment for the 2017 and 2018 taxation years to the Assessment Review Board (the "Board"), pursuant to s. 40 of the Assessment Act (the "Act"). It is his position that the Subject Property is assessed too high. He raises a concern as to the accuracy in the effective lot size measurement as they appeared on the AboutMyProperty.ca website for the Subject Property and the assessment process. He estimates the current value of the Subject Property to be $450,000 based on the initial smaller lot size of 2,932.62 sq. ft.

4Mr. Yang does not take a position on whether the Subject Property is inequitably assessed in relation to similar properties.

5Pursuant to the Act, the burden of proof as to the correctness of the current value of the Subject Property rests with MPAC. For the period of 2017-2020, the Subject Property is valued as of January 1, 2016. MPAC's representative, Raj Rakhra, recommends a current value of $496,000 based on the direct comparison approach.

6Mr. Rakhra also conducted an equity study and determined that an equity adjustment is not required. It is his position that the assessment should be reduced from $541,000 to the recommended value of $496,000 for the 2017 taxation year and from $524,000 to the recommended value of $496,000 for the 2018 taxation year.

7The Town's representative, Susan Price, recommends a current value of $476,000 based on the direct comparison approach. She did not take a position on whether the Subject Property is inequitably assessed in relation to similar properties.

ISSUES

8The issues to be determined on this appeal are:

a) What is the correct current value of the Subject Property as of the January 1, 2016 valuation date;

b) Whether there should be an equitable reduction of the current value as determined by the Board and, if so, what should the amount of this reduction be.

DECISION

9The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $470,000. Furthermore, the Board finds that the evidence before it does not support the conclusion that an equitable adjustment is required under s. 44.(3)(b) of the Act.

10Therefore, the assessment of the Subject Property located at 422 Levanna Lane is reduced from $541,000 to $470,000 for the 2017 taxation year and from $524,000 to $470,000 for the 2018 taxation year.

RELEVANT LEGISLATION

11Section 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.

12Section 19.1(1) of the Act states:

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

13Section 19.2(1) 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. 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 the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

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

14Section 40.(17) of the Act states:

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.

15Section 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.

Analysis and Findings

What is the correct current value of the property as of the January 1, 2016 valuation date?

MPAC's Evidence and Submissions

16Mr. Rakhra relies on a Valuation Report of the Subject Property.

17The key property details for the four proposed comparable properties presented by MPAC are set out below in Table A. All sales have been time adjusted to the legislated valuation date. Sales 2, 3 and 4 have also been adjusted to account for differences with the Subject Property including variable adjustments for abutting a green space and abutting commercial but not for differences in total building area.

Table A

Property	Site Area (acres or sq. ft.) (effective)	Frontage (ft.) (effective)	Depth (ft.) (effective)	Year Built (effective)	Building Area (sq. ft.)	Other	Sale (Time Adjusted Sale "TAS")	Adjusted TAS
422 Levanna lane (Subject Property)	3,390.63	29.53	114.9	1993	1,170
429 Levanna Lane (Sale 1)	0.08	29.53	118.11	1992	1,356		530,500 (566,490) (07/16/2015)
354 Howell Road (Sale 2)	0.07	24.61	120.93	1992	1,336	-Abuts green space (+4%)	673,000 (600,000) (11/30/2015)	576,193
2403 Susquehanna Court Drive (Sale 3)	0.09	18.85	112.80	1992	1,362	-Abuts green space (+4%) -Abuts commercial (-2%)	630,000 (567,701) (10/25/2016)	555,892
462 Levanna Lane (Sale 4)	0.07	29.53	114.83	1993 (2003)	1,356	-Abuts green space (+4%) -Abuts utility box -B reno (2014)	665,000 (618,556) (07/22/2016)	593,813

18Mr. Rakhra considers all four sales to be superior to the Subject Property. He derived the recommended value of $496,000 (rounded) by taking the average adjusted time adjusted sale value per square foot of $423.77 and multiplying it by the Subject Property's total building area of 1,170 square feet.

19Mr. Rakhra also addressed the issue with respect to the site area. He states that the effective and the actual depths for the Subject Property were incorrectly recorded as 99.31 feet ("ft.") in the report and on the AboutMyProperty.ca website. The discrepancy came to light during the request for reconsideration process. He states that the correct lot depth is 114.9 ft. and this was confirmed by MPAC's Land Parcel Unit upon reviewing the Subject Property's land survey. The site area was recalculated as 3,390.63 sq. ft.

20Mr. Rakhra states that he and Ms. Price also inspected the Subject Property in accordance with an Order of the Board. There is a ditch at the back of the Subject Property that 'ponds' in the rain. The catch basin is not located on the Subject Property. He states that the Subject Property was dry on the day of inspection. He adds that there is no variable adjustment for this type of issue.

Town's Evidence and Submissions

21Ms. Price relies on the sales of two proposed comparable properties located at 429 Levanna Lane and 423 Levanna Lane. She states that she did not consider the property at 462 Levanna Lane as it abuts a green space (and receives a positive 4% variable adjustment) and the Subject Property does not.

22She also notes that according to a real estate broker's sales listing included in the Town's disclosure that the Subject Property has a professionally finished basement.

23Key property details for the two proposed comparable properties are set out below in Table B.

Table B

Property	Site Area (sq. ft.) (effective)	Frontage (ft.) (effective)	Depth (ft.) (effective)	Year Built (effective)	Building Area (sq. ft.)	Sale (Time Adjusted Sale "TAS")
422 Levanna Lane (Subject Property)	3,390.63	29.53	114.9	1993	1,170
429 Levanna Lane (Sale 1)	3,579.19	29.53	118.11	1992	1,356	530,500 (566,490) (07/16/2015)
423 Levanna Lane (Sale 2)	2,815.56	29.53	118.11	1993	1,543	580,000 (597,000) (10/21/2015)

24Ms. Price states that Sales 1 and 2 have larger total building areas than the Subject Property but are otherwise comparable. She determined her estimate of current value of $470,000 by taking the average time adjusted sales value per square foot of $402 and multiplying it by the Subject Property's total building area of 1,170 sq. ft. She adds that she did not account for the Subject Property's finished basement area. MPAC's records for the Subject Property do not reflect a finished basement area.

Appellant's Evidence and Submissions

25Mr. Yang explains how he discovered the discrepancy in effective depth on MPAC's AboutMyProperty.ca. He adds that the Town's disclosure also refers to an effective depth of 99.31 ft. Also, MPAC's offer of $524,000 under the request for reconsideration process was based on an effective frontage of 99.31 ft. While he does not dispute the survey results that confirm a recalculated total building area of 3,390.63 sq. ft., he asserts that the assessment should still be based on the lot size of 2,932.62 sq. ft. as presumably, the assessment as returned for the 2017 and 2018 taxation years is based on this total lot size.

26He also expresses his concern regarding MPAC's use of multiple regression analysis to determine current value. He suggests that the model should be changed and that the land under the dwelling and garage should be deducted from the total site area. He also suggests using a property's purchase price for assessment purposes.

27Mr. Yang does not refer to any suggested comparable properties in support of his opinion of current value. His opinion of current value of $450,000 is based on a smaller total lot size of 2,932.62 sq. ft.

Board's Analysis and Findings

28Under 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 Subject Property on the valuation date or close to it.

29On the issue of the Subject Property's site area, the Board is satisfied, based on the land survey and the recalculation provided by the Land Parcel Unit, that the site area is 3,390 sq. ft. The effective and actual frontage is 29.53 ft. and the effective and actual depth is 114.9 ft. MPAC and the Town's disclosure and MPAC's AboutMy Property.ca website erroneously state the Subject Property's depth as 99.31 ft. Mr. Rakhra states that notice to correct this factual error will be provided to Mr. Yang shortly and in advance of the return of the assessment roll for 2019.

30The Board has five property sales comparables to consider in determining the Subject Property's current value. There are three properties located on Levanna Lane like the Subject Property. Both MPAC and the Town rely on 429 Levanna Lane. Mr. Yang did not provide any sales comparables in support of his estimate of current value.

31The Board finds the sales comparables located at 429 Levanna Lane and 423 Levanna Lane to be the best evidence of current value. Both properties are located in close proximity to the Subject Property and are similar in age, quality of construction, effective frontage and depth. They are not subject to any variable adjustments. However, both have slightly larger total building areas with an average of 1,449 sq. ft. According to a real estate broker's listing, the Subject Property has a finished basement area whereas 429 Levanna Lane and 423 Levanna Lane do not. The Board finds that this additional living space offsets the differences in total building area to some extent. The properties at 429 Levanna Lane and 423 Levanna Lane also had sales in October and July 2015, respectively, that are fairly close to the January 1, 2016 valuation date.

32The Board does not consider the property located at 462 Levanna Lane to be comparable to the Subject Property given that it abuts a green space and receives a positive 4% variable adjustment whereas the Subject Property does no. It also underwent a "B" renovation in 2014 that changed its effective year of build to 2003.

33The Board does not consider the property located at 354 Howell Road to be comparable to the Subject Property given that it abuts a green space and receives a positive 4% variable adjustment whereas the Subject Property does not.

34The Board does not consider the property located at 403 Susquehanna Court to be comparable to the Subject Property given that it abuts a green space and receives a positive 4% variable adjustment and that is abuts commercial and receives a negative 2% variable adjustment whereas the Subject Property does not.

35The average time adjusted sale value per square foot for the two properties located at 429 Levanna Lane and 423 Levanna Lane is $402. Applying this value to the Subject Property's total building area of 1,170 sq. ft. results in a value of $470,340, which rounds to $470,000.

36The Board has also noted Mr. Yang's concerns regarding MPAC's use of multiple regression analysis for purposes of determining current value. However, MPAC applies the same model in assessing all residential properties in the Province of Ontario.

37The Board finds the current value of the Subject Property as of the January 1, 2016 valuation date to be $470,000.

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what should the amount of this reduction be?

MPAC's Evidence and Submissions

38Mr. Rakhra relies on an "Equity Analysis Report" that considers the time adjusted sales of 30 properties that occurred between January 1, 2015 and December 31, 2016 located within 3.5 kilometres of the Subject Property.

39In his Report, Mr. Rakhra states that the level of appraisal is established by determining the median Assessment to Sale Ratio ("ASR") in the sales sample. For purposes of the equity test, MPAC takes the position that equity is achieved if the median ASR falls between 0.95 and 1.05. In this case, the median ASR is 1.025 and falls within the target level.

40Mr. Rakhra asserts that based on his analysis, similar properties in the vicinity have been assessed at or near their current values and that an equity adjustment is not required.

41Mr. Rakhra concludes that the assessment should be reduced from $541,000 to the recommended value of $496,000 for the 2017 taxation year and from $524,000 to the recommended value of $496,000 for the 2018 taxation year.

Town's Evidence and Submissions

42Ms. Price did not take a position on whether the Subject Property is inequitably assessed in relation to similar properties.

Appellant's Evidence and Submissions

43Mr. Yang did not take a position on whether the Subject Property is inequitably assessed in relation to similar properties.

Board's Analysis and Findings

44Section 44.(3)(b) of the Act directs that after determining current value, the Board shall 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."

45The purpose of equitable adjustment has been described as the equitable distribution of the tax burden according to the assessed value of property owned by taxpayers as follows by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) at page 2:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

46In addressing equity in assessment, the Court, at page 6, also noted that:

an assessment made at the actual value of lands and buildings … would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred [emphasis added].

47The term "vicinity" is not defined in the Act, but refers to the appropriate geographical area that will yield a meaningful number of comparables (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (Ont. C.A.) at page 6).

48The test set out in s. 44.(3)(b) of the Act, requires that the Board refer to similar lands in the vicinity. Use as a point of similarity, may be, but is not necessarily determinative of similarity. In determining whether other lands are similar, the Ontario Divisional Court, in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., 2017 ONSC 1299 (Can LII), applied the decision of the Ontario Divisional Court in Trizec Equities Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182. The Court stated at paragraph 23:

… All points of comparison must be considered. The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.

49The ASR analysis of a reasonable sample of sold properties is one method used to determine if properties in the vicinity are assessed below their current value. If other properties are assessed substantially below their current value, then a reduction is required to make the assessment of the Subject Property equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the sale price.

50Mr. Rakhra relies on an Equity Analysis Report that considers the time adjusted sales of 30 properties located within 3.5 kilometres of the Subject Property. In this case, the median ASR of 1.025 falls within the acceptable range of 0.95 to 1.05. He asserts that no equity adjustment is required.

51The Board finds that the evidence does not support the conclusion that an equitable adjustment is required.

CONCLUSION

52The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $470,000. Furthermore, the Board finds that the evidence before it does not support the conclusion that an equitable adjustment is required under s.44.(3)(b) of the Act.

53Therefore, the assessment of the Subject Property located at 422 Levanna Lane is reduced from $541,000 to $470,000 for the 2017 taxation year and from $524,000 to $470,000 for the 2018 taxation year.