Cegledi v. Municipal Property Assessment Corporation, 2018 CanLII 118872

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

December 03, 2018

FILE NO.:

WR 153142

Assessed Person(s):

Sherry McMullen and Jeno Cegledi

Appellant(s):

Jeno Cegledi and Sherry McMullen

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 2

Respondent(s):

City of Brockville

Property Location(s):

55 Water Street East, Unit 211

Municipality(ies):

City of Brockville

Roll Number(s):

0802-020-035-00412-0000

Appeal Number(s):

3286076 and 3288844

Taxation Year(s):

2017 and 2018

Hearing Event No.

697168

Legislative Authority:

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

Heard:

April 30, 2018 by telephone conference call

APPEARANCES:

Parties

Representative

Jeno Cegledi

Self-represented

MPAC

Amy Raycroft

City of Brockville

No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property located at 211-55 Water Street has a current value assessment of $378,000 for the 2017 taxation year. The Appellant, Jeno Cegledi, believed this assessment was too high and filed an appeal. He believes the assessment should be between $317,000 and $329,00, reflecting a range determine by the price he paid for the subject property in 2015 and an opinion of value provided in 2018 by a local real estate broker.

2Prior to the hearing, MPAC reviewed its position and provided the Appellant and the Board with a recommended reduction in the assessment to $375,000, to reflect the value of some deficiencies found when the subject property was compared in more detail to other properties in the building that sold.

3The Board must decide three things in this appeal. Firstly, the Board has to make a determination as to the validity of the sale of the subject property in April of 2015, as an indicator of its current value as of January 1, 2016; the valuation day stipulated in the Assessment Act, R.S.O. 1990, c. A.31, (“Act”).

4Once the Board determines the nature of that sale, the current value of the subject property must be determined. Having reference to the assessments of similar properties in the vicinity, the Board must then determine if the current value found needs to be reduced for the purpose of equitable assessment.

DECISION

5The Board finds the current value of the subject property is $318,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

6Accordingly, the assessment of 211-55 Water Street for the 2017 and 2018 taxation years is reduced from $378,000 to $318,000, in the Residential property class.

LEGISLATION

7In making its determination of these appeals, the Board must consider the relevant sections of the Act.

8Section 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.

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 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.

Is the April 2015 Sale of the Subject Property an indication of its Current Value as of January 1, 2016?

11There is no dispute between the parties with respect to the sale of the subject property on April 1, 2015. It sold for $317,500 on that day and was purchased by the Appellants. The property was sold at that time by the Estate of the previous owner.

12The Appellant testified that the property had been for sale for several months at the time of its purchase. It was listed long enough that its asking price was reduced from $369,900 originally, to $334,900 before it was sold. He submitted that this means it was exposed to the market and that it is reasonable to assume that the price negotiated and paid represents the market value of the property at that time.

13MPAC did not consider the sale of the subject property to be valid because it was an estate sale. MPAC’s testimony was that estate sales are reviewed in great detail before they are considered to be determinative with respect to current value. This is because estate sales can take on emotional or other factors that can lead to a sale that does not necessarily reflect the market or the current value of the subject property.

Board’s Analysis

14It is widely held by this Board that the best evidence of the current value of a property is a sale of that property at or near the valuation day applicable to the taxation year under appeal. The subject property sold within eight months of the valuation day.

15The 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 (Emphasis added).

16The question before the Board is whether or not the subject sale meets this definition of current value. While MPAC had its suspicions about the amount of this sale being under duress, there is no evidence to support such a position. Unrefuted testimony at the hearing was that the listing lasted from 6 to 12 months and that during that time, the asking price was reduced. There is no evidence to suggest that the transaction was not between a willing buyer and a willing seller. The Board finds the sale of the subject property to be an indication of its current value.

17MPAC’s chief concern about the sale is its vale. It is between $52,500 and $77,500 less than two other sales of similar units, in the same building, that occurred in 2015 and 2016. The Board prefers these two sales as comparisons with the subject property owing to the proximity of their sale dates to the valuation day, eliminating the need for time adjustments.

18The Board heard from the Appellant about the characteristics of the subject property. When it was purchased, it had not been updated, renovated or improved since it was built in 1977. Both parties indicated that all of the other properties in evidence had some level of improvement over that time. The subject property is also adjacent to the elevators that serve the building. As the subject property is on the second floor, the elevators pass the unit nearly every time they are used. Lastly, there is a ‘common’ room on the second floor, near to the subject property. This common room is available to residents to host gatherings that are too large for their own unit. The common room also has a public washroom connected.

19The Appellant submitted that the condition and location of the subject property results in the lower value, and hence the value of the sale is the correct current value.

20MPAC did not dispute the facts pertaining to the subject property’s condition and location. It relies however on the valuation study that compares the sale values of 11 other units in the building that sold between January 2012 and June 2017. The average sale price of these 11 units is $383,727; approximately $66,000 higher than the sale value of the subject property.

What is the Current value of the Subject property?

21The Board has the subject sale of $317,500. The evidence suggests this is below the average sale value of other similar units in the same building. There are four significant differences between the subject property and the other comparable units used by MPAC in its valuation:

• The adjacent elevators;

• The presence of a public washroom adjacent;

• The presence of an adjacent community room used by residents of the building; and

• The absence of any updates, upgrades or renovations to the subject property since its construction in 1977.

22The subject sale is approximately 17% less than the average sale value of 11 other units in the same building. While the Board did not hear any specifics about what these four differences would reflect in value, the Board finds that the 17% lower price for the subject property is reasonable to account for these characteristics, noting that the presence of the elevators, a washroom, and a common room are ongoing characteristics that are very likely to continue over the life of the building.

23The Board finds that the current value of the subject property is $317,500 ($318,000 rounded).

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?

24The Appellant did not make a submission on the question of equity of assessment.

25MPAC submitted equity analyses that compared the time adjusted sale value of single family dwellings in the vicinity of the subject property with their 2016 current value assessments. Comparisons of such assessments and time adjusted sale values are a common means of determining if similar properties in the vicinity are equitable assessed.

26MPAC’s equity analysis included the Time Adjusted Sales (“TAS”) values and the 2016 CVA of 30 similar properties in the vicinity of the subject property. The comparison of these assessments to sale values is called the Assessment to Sale Ratio (“ASR”). The range of ASRs in the sample was from 0.951 to 1.601, with a mean of 1.08.

27The mean ASR means that properties that are similar to the subject property, in the same vicinity are assessed at approximately 108% of their current value as determined through sales. Section 44.(3) (b) of the Act requires the Board to adjust the assessment only when the evidence shows that similar properties in the vicinity are assessed below their current value.

28The Appellant did not refute the findings of either the City of Brockville or MPAC on the question of equitable assessment.

Board’s Analysis

29The 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 (Emphasis added).

30The Appellant, who has the burden of proof on the equitable assessment issue, did not submit any evidence on this point.

31MPAC’s equity analysis indicates that, in accordance with standards set by the IAAO and MPAC, similar properties in the vicinity to the subject property are being assessed at a level higher than their sale values. 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

32The Board finds the current value of the subject property is $318,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

33Accordingly, the assessment of 211–55 Water Street for the 2017 and 2018 taxation years is reduced from $378,000 to $318,000 in the Residential property class.