DeMerchant v. Municipal Property Assessment Corporation, 2018 CanLII 118871

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 04, 2018

FILE NO.: WR 153095

Assessed Person(s): Elizabeth DeMerchant, Sean Gosnell

Appellant(s): Elizabeth DeMerchant, Sean Gosnell

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): 8 Whitney Avenue

Municipality(ies): City of Toronto

Roll Number(s): 1904-101-470-02800-0000

Appeal Number(s): 3233703 and 3296006

Taxation Year(s): 2017 and 2018

Hearing Event No. 696667

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

Heard: April 23, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Elizabeth DeMerchant, Sean Gosnell	Self-represented
MPAC	Chris Vallier
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property, located at 8 Avenue, had a current value assessment of $3,323,000 for the 2017 taxation year. As a result of the Request for Reconsideration (“RfR”) process, MPAC reduced the assessment to $3,148,000, and amended the roll return value for the 2017 and 2018 taxation years to that amount.

2Elizabeth Demerchant and Sean Gosnell (“Appellants”) believe this amended value is still too high and filed an appeal with the Board on that basis. They believe the correct assessment of the subject property would best be determined by comparing it to nearby properties and making an adjustment for a nuisance that is created by the presence of Rosedale United Church (the ‘church’) on the adjacent property.

3The Board must decide two things in this appeal. Firstly, the current value of the subject property must be determined. Having reference to the assessments of similar properties in the vicinity, the Board must also determine if the current value found needs to be reduced for the purpose of equitable assessment.

DECISION

4The Board finds the current value of the subject property is $3,150,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

5As MPAC is not seeking an increase in the assessment returned, the assessment of 8 Whitney Avenue for the 2017 and 2018 taxation years is confirmed at $3,148,000, in the Residential property class.

LEGISLATION

6In making its determination of these appeals, the Board must consider the relevant sections of the Act.

7Section 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.

8Section 19.(1) of the Act states:

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

9Section 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.

What is the Current Value of the Subject Property?

MPAC’s Evidence and Position

10MPAC prepared a valuation report where 14 properties in the immediate and surrounding neighbourhood were compared with the subject property. These 14 proposed comparable properties were sold in 2015, 2016 or 2017. The comparison of the subject property to other properties that have sold is called the Direct Comparison Approach to value. This is the method used most by MPAC for single family dwellings.

11The sale prices for each of the properties in MPAC’s comparative sample were adjusted to make them reflect what the property would have sold for if that sale had occurred on January 1, 2016 (the valuation day stipulated in the Act for the 2017 and 2018 taxation years.) This allows MPAC to compare all of the properties as if they sold on the same day.

Appellant’s Evidence and Position

12The Appellants believe the subject property is uniquely impacted by the operations and activities of the adjacent church. Through the RfR process, MPAC agreed. However, the Appellants believe the reduction applied by MPAC, of 10% for the ‘abuts church property’ variable, is not enough, and that the reduction should result in a value that is less than MPAC’s recommendation of $3,148,000.

13The Appellants submitted that the subject property could appropriately be compared to 10 Whitney Avenue, the neighbouring property. 10 Whitney Avenue is a similar sized house of similar quality of construction. It has 3,794 square feet of living area; 636 square feet less than the subject property. It also has an in-ground pool. The Appellants submitted that the value of the subject property can be established by simply taking the sale price of the property at 10 Whitney Avenue and reducing that amount by a percentage to account for the reduction in value of the subject property reflected by the neighbouring church and its impact on the subject property.

14To support their case for a lower current value, the Appellants submitted a comparison of the subject property to 15 properties in the vicinity. Each of the 15 properties was compared to the subject property according to 2016 assessment, lot size, living area, quality of construction, and effective age as determined by MPAC. Using these criteria, the most comparable of all of the properties in the sample to the subject property is 10 Whitney Avenue. It has a slightly larger lot that the subject, a smaller living area, and an effective year built of 1997; eight years older than the subject property. 10 Whitney Avenue, like the subject property, has a quality of construction rating of 7.5, with a 2016 CVA of $3,293,000.

Board’s Analysis

15The issue in dispute is relatively narrow in this case. The parties agree that a reduction for the presence of the church next door is appropriate. They disagree on both the ‘starting’ assessment value, before the reduction is applied; and the amount of the reduction.

16The Appellants cited 10 Whitney Avenue as the best comparable property. It sold in September 2015 for $3,150,000. They submit that 10 Whitney Avenue has a similarly sized lot, a smaller dwelling, and an in-ground swimming pool. They submitted that the value of the pool and the building size serve to cancel one-another out in direct comparison, so that the 2015 sale value of $3,150,000 at 10 Whitney Avenue can be used as a reliable indicator of the subject property’s value at 8 Whitney Avenue. They stipulated that this would indicate a value of $2,741,000 for the subject property, when the 13% adjustment for the presence of the adjacent church is applied. They proposed a value of $2,800,000.

17The Appellant’s also cited their experience during the previous current value assessment cycle which lead to a hearing on the same property in 2014. At that time, the Board found the current value of the subject property to be $2,497,000. They submit this finding was made by the Board by comparing the subject property to 10 Whitney Avenue and making an adjustment for differences between them to arrive at that value.

18The Appellants provided the Board with a number of photographs to illustrate the physical impact of the adjacent church, its offices, and manse. In addition, there are a number of community groups that use the church property, including a day care facility. The activity on the church property continues most every day. The physical closeness between the subject property and the Church is evident form the photographs and, while the Church appears to be a good neighbour by keeping things neat and tidy, the potential nuisance created by this activity is reasonably apparent by the photos and the testimony. MPAC agreed.

19The Act stipulates that the assessment of land shall be based on its current value. Current value is defined in the Act 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, meaning that, in order to accept evidence of data in determining current value, it is best to use evidence that is based on sales.

20It is widely held by the Board that the best evidence of current value is a sale of the subject property on the valuation day. Where no such sale occurs, sales of comparable properties with proximity to the valuation day is the next best evidence. In this case, sales are simply not comparable enough unless they share these conditions.

21The issue at hand is the starting value of the subject property, prior to the application of a reduction in value to account for the presence of the adjoining church. MPAC submits this starting value is in the $3,500,000 range. The Appellants believe the starting point should be $3,150,000, the sale price of the comparable property next door at 10 Whitney Avenue.

22MPAC’s evidence of current value was a comparison of the subject property to 14 other properties that sold on dates with proximity to the January 1, 2016 valuation day. A good number of these sales occurred near to the valuation day, and the Board finds them to be adequately representative of the market without time adjustment. The time adjusted sale values presented in MPAC’s report are unusually volatile. Some sales are estimated by this method to be as much as $500,000 different from the actual sale values. Because the sales occurred as close to the valuation day as they have, the Board prefers the actual sale amounts as indicators of current value of the subject property by comparison.

23The Appellant’s chose to ignore one significant input into the value of property and that is building size. They stipulated that their comparison of 17 properties was superior to MPAC’s approach because they added three properties to MPAC’s list that had similar ‘curb appeal’; a term they did not define, with an average living area of 3,440 square feet; almost 1,000 square feet smaller than the subject property.

24The Appellants also submitted that a 10% reduction in the sale in September of 2015 of 10 Whitney Avenue is appropriate to reflect the impacts of the adjacent church. This ignores the fact that this sale would have constituted a market sale, with the sale price including any adjustment for the presence of the church. The Board acknowledges the testimony of both parties that 10 Whitney Avenue is impacted less than the subject property by the presence of the church; however, no adjustment whatsoever was made by the Appellants for the large difference between the two properties for dwelling size.

25The Board agrees with the parties, and a previous panel of the is Board, that 10 Whitney Avenue is a suitable starting point to arrive at a value of the subject property. 10 Whitney Avenue sold for $3,150,000 in September 2015.

26To equate this value to 8 Whitney Avenue, the Board has to adjust for:

• The presence of an in ground pool at 10 Whitney Avenue;
• The greater impact experienced by the subject property from the adjacent church, which is acknowledged by the parties; and
• The 636 square feet more living area at the subject property.

27The first two of the three differing conditions would suggest a higher value for 10 Whitney Avenue and the third suggests a higher value for 8 Whitney Avenue. MPAC has considered these three conditions to offset one-another, arriving at a value of the subject property of $3,148,000.

28To make a direct comparison between 10 Whitney Avenue and the subject property, a baseline value has to be established. MPAC submitted that the sale value of 10 Whitney Avenue, if used to determine current value, would include a 3% reduction for impact by the church. By adding 3% to the sale amount of $3,150,000, the baseline before all adjustments is $ $3,244,500. To arrive at a value of the subject property from the baseline value, a total of 13% is removed, for a value of $2,822,671.

29This derived value does not acoount for either the larger square footage at the subject property, or the presence of the swimming pool at 10 Whitney Avenue. A per square foot value can be determined for 10 Whitney Avenue by dividing the derived value by its 3,794 square feet of living area. This results in $743.98 per square foot. When applied to the square footage of the subject property, the result is $3,295,844.

30The value produced in this way accounts fo the differences between the two properties, except for the presence of the swimming pool at 10 Whitney Avenue.

The Board heard no evidence from either party as to the value of the swimming pool. The evidence suggests a value for the pool of approximately $146,000, for the two properties to be similarly valued otherwise. On abalnce of propbabilities, the Board finds that this is the likely maximum value of such a feature, and finds, as a result, the current value of the subject property is reasonably equivalent to the sale value of the property at 10 Whitney Avenue.

31The Board finds that the current value of the subject property is $3,150,000.

Is a reduction in the current value necessary to achieve equitable assessment when reference is made to the assessments of similar properties in the vicinity?

32MPAC submitted an equity analysis that compared the time adjusted sale value of single family dwellings in the vicinity of the subject property to their corresponding 2016 assessments. The analysis included 30 such properties in the vicinity of the subject property.

33This analysis resulted in a median assessment to sale ratio (“ASR”) of 1.007 and a mean of 1.01. MPAC submitted that since the median ASR was slightly over 1.0 and fell within its range of reliability to determine equitable assessment (0.95 to 1.05), similar properties in the vicinity of the subject property are being assessed equitably and as a result, no reduction in value form the current value determined in necessary to meet the requirements of the Act.

34The Appellants did not refute MPAC’s findings on the question of equitable assessment.

Board’s Analysis

35The concept of reducing the current value determined to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.

36The Appellant, who has the burden of proof on the equitable assessment issue, did not submit any evidence on this point.

37MPAC’s equity analysis indicates that, in accordance with standards set by the International Association of Assessing Officers (IAAO) and MPAC, similar properties in the vicinity to the subject property are being assessed at a level close to their sale values and that no downward adjustment to the current value determined is necessary for the purposes of equitable or fair assessment. The Board finds that the equity analysis prepared by MPAC is the best evidence of whether or not the current value determined requires a reduction to be equitable and fair, and that no adjustment is required in this case.

CONCLUSION

38The Board finds the current value of the subject property is $3,150,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

39As MPAC is not seeking an increase in the assessment returned, the assessment of 8 Whitney Avenue for the 2017 and 2018 taxation years is confirmed at $3,148,000, in the Residential property class.