Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 12, 2018

FILE NO.: WR 157292

Assessed Person(s): Stay at Home Renovations Services Inc.

Appellant(s): Stay at Home Renovations Services Inc.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 31

Respondent(s): City of Sault Ste. Marie

Property Location(s): 631 Shafer Avenue

Municipality(ies): City of Sault Ste. Marie

Roll Number(s): 5761-050-002-074000-0000

Appeal Number(s): 3319757

Taxation Year(s): 2018

Hearing Event No.: 708173

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

Heard: November 20, 2018 in Sault Ste. Marie, Ontario

APPEARANCES:

Parties	Representative
Stay at Home Renovations Inc.	Mark Menean
MPAC	Richard Thomas
City of Sault Ste. Marie	No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

BACKGROUND

1Stay at Home Renovations Services Inc. (the “Appellant”) is the owner of a single storey detached family home located at 631 Shafer Avenue (the “Subject Property”) in the City of Sault Ste. Marie. It is situated on a 0.11 acre (ac.) lot with 40 feet (ft.) of effective frontage. It has 1,195 square feet (“sq. ft.”) of total building area. It was purpose built in 2017 to be fully accessible. It has no basement area; only a heated crawl space. MPAC has assigned it a quality class rating of 5.5.

2MPAC returned the assessment for the Subject Property at $213,000 for the 2018 taxation year.

3Mark Menean, on behalf of the Appellant, appealed the assessment for the 2018 taxation year to the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). It is his position that the Subject Property is assessed too high given the very poor condition and state of repair of two neighbouring properties. He estimates the Subject Property’s current value is $150,000 to $155,000.

4Pursuant 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, Richard Thomas’ opinion of current value is $199,000 based on the direct comparison approach and an inspection that lowered the quality class rating to 5.5.

5Mr. Thomas also conducted an equity study and determined that an equity adjustment is not required. He concludes that the assessment should be reduced from $213,000 to $199,000 for the 2018 taxation year.

6Mr. Menean did not take a position as to whether the Subject Property is inequitably assessed in relation to similar properties.

ISSUES

7The 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

8The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date is $173,000. 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.

9Therefore, the assessment of the property located at 631 Shafer Avenue is reduced from $213,000 to $173,000 for the 2018 taxation year.

RELEVANT LEGISLATION

10Section 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.

11Section 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.

12Section 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 period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

13Section 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.

14Section 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

15Mr. Thomas relies on a “Valuation Report” of the Subject Property. He states that he inspected the property on January 23, 2017 as part of the request for reconsideration process. The quality class rating was reduced from 6.0 to 5.5 based on the quality of the construction materials and the Subject Property’s overall assessment was lowered from $213,000 to $199,000.

16The Subject Property is one of two newer structures on Shafer Avenue.

17The key property details for the seven proposed comparable properties with sales presented by MPAC are set out below in Table A. All sales have been time adjusted to the legislated valuation date and have a quality of construction rating of 5.5.

Table A

Property	Site Area (ac./sq. ft.) (effective)	Frontage (ft.) (effective)	Year Built (effective)	Building Area (sq. ft.)	Other	Sale (Time Adjusted) (Sale Date)	2016 Assessment
631 Shafer Avenue (Subject Property)	0.11	40	2017	1,195	-Crawl space only -2 bathrooms/bedrooms
857 Peoples Road (Sale 1)	0.09	40	2012	981	-2 bathrooms -Finished basement area: 855 sq. ft. -Abuts heavy traffic (-4%) -Abuts mass transit route (-4%) -Detached garage	$184,500 ($189,296) (05/18/2012)	$182,000
148 Kehoe Avenue (Sale 2)	0.12	40	2007	881	-2 bathrooms -Finished basement area: 705 sq. ft. -Electric heat -Detached double garage	$160,000 ($156,894) (12/10/2014)	$164,000
152 Walnut Street (Sale 3)	0.14	50	1987	946	-1 bathroom -Light traffic (-0 %) -Abuts mass transit (-4%) -Electric heat -Attached garage	$140,000 ($139,415) (10/22/2015)	$126,000
19 Hillside Drive (Sale 4)	0.18	60	1975	932	-1 bathroom -Finished basement area: 296	$166,500 ($165,912) (04/15/2013)	$159,000
31 Hillside Drive (Sale 5)	0.18	68.42	1975	936	-1.5 bathrooms -Finished basement area: 632	$180,000 ($180,363) (08/15/2016)	$169,000
26 Lidstone Avenue (Sale 6)	0.42	107.26	1975 (1979)	870	-2 bathrooms -Finished basement area: 352 -Electric heat	$224,000 ($222,732) (09/30/2013)	$186,000
1078 Peoples Road (Sale 7)	0.19	60	1976	883	-1 bathroom -Medium traffic (-0%) -Abuts mass transit (-4%) -Electric heat -Carport	$135,000 ($134,206)	$144,000

18Mr. Thomas considers Sales 1, 2 and 6 as similar to the Subject Property with Sale 1 being the best comparable. He considers Sales 3, 4, 5 and 7 as inferior to the Subject Property.

19Mr. Thomas states that there are no variable adjustments for noise associated with trains switching nearby or for the poor condition of neighbouring properties on Shafer Avenue.

20Mr. Thomas’ opinion of current value is $199,000 as recalculated based on a lower quality of construction rating of 5.5.

Appellant’s Evidence and Submissions

21Mr. Menean states that the Subject Property is located in an established neighbourhood in the Stelton area around the steel plant. He described it as a walkable area that is located close to stores and a bus route. Many residents live on fixed incomes.

22Mr. Menean states that he purchased the lot with a dilapidated structure on it for $16,000 in 2016. He removed the structure and cleaned up the lot at a cost of about $5,000. In his opinion, he thought the lot was worth about $20,000 to $25,000. He states that the 2008 assessment was $21,000, the 2012 assessment was $32,500 and the 2016 assessment was $56,000 (prior to the land being improved with a new structure). He asserts that the land was over assessed and referred to the sale of 685 Shafer Avenue for $25,000 in August 2016. He asserts further that the Subject Property’s unimproved land value would still be worth $25,000.

23Mr. Menean states that he is a builder and that he took out a $100,000 building permit to purpose build the Subject Property as an affordable and accessible one-storey dwelling. It was not designed for a family and he did not include a basement which he describes as expensive to build. Instead, the Subject Property has an insulated crawlspace. It is currently rented out to a person with a disability through the Sault Ste. Marie Community Living.

24In his opinion, the current value of the Subject Property is $150,000 to $155,000.

25Mr. Thomas referred to three properties on Shafer Avenue and one property on Glasgow in support of his opinion of current value. Key property details are set out below in Table B.

Table B

Property	Site Area (ac./sq. ft.) (effective)	Frontage (ft.) (effective)	Year Built (effective)	Building Area (sq. ft.)	Other	Sale	2016 Assessment
631 Shafer Avenue (Subject Property)	0.11/4,800	40	2017	1,195	-Crawl space only -2 bathrooms/2 bedrooms
773 Shafer Road	5,280	44	2004	1,148	-1 bathroom/3 bedrooms -Basement area finished		$157,000
717 Shafer Avenue	0.11/4,800	40	1979	876	-2 bathrooms/3 bedrooms -Finished basement area: 503 sq. ft. -Electric heat -Big garage		$152,000
685 Shafer Avenue	5,045	40	2016	1,113	-2 bathrooms/4 bedrooms -Quality 6 -Finished basement area: 788 sq. ft. -Detached garage		$249,000
108 Glasgow Avenue	5,118	40	2015 or 2016	1,200	- Crawl space only -1 bathroom/3 bedrooms -1.5 car heated garage -Park across the street	Listed for sale in August 2018 $179,900	$170,000

26Mr. Menean states that 773 Shafer Avenue has a similar look and is subject to the same building codes except that the Subject Property has more insulation. He asserts that it is superior to the Subject Property given that it has a finished basement area.

27Mr. Menean states that 717 Shafer Avenue was recently listed for sale for about $159,000. It is an older but solid home, built on the same sized lot as the Subject Property. It also has a finished basement area and a big garage whereas the Subject Property does not.

28Mr. Menean states that 685 Shafer Avenue is a new build like the Subject Property. However, it has a full finished basement and a big detached garage that he estimates would cost at least $23,000 and $68,000, respectively, more to build.

29Mr. Menean asserts that the property at 108 Glasgow Avenue has the same concept as the Subject Property as a one-storey dwelling with a crawl space. It was built around 2016. It has a 1.5 space heated garage that in his opinion adds about $20,000 in value whereas the Subject Property does not. In addition, it has a solid property next door whereas the Subject Property does not. It was listed for sale in August 2018 for $179,900. Also, the property at 108 Glasgow Avenue is located across from a park.

30Mr. Menean states that he built the property located at 148 Kehoe Street (MPAC’s Sale 2). It has a finished basement and it cost more to build that the Subject Property. He described it as a nice small family home with a desirable big double garage. He states that it now costs about $25,000 to $30,000 to build a garage. He considers it as a good comparable. In his opinion, the garage and finished basement area offset differences in building area.

31Mr. Menean also considers 857 Peoples Road (MPAC’s Sale 1) as a good comparable. He acknowledges that Peoples Road is a noisy street. However, he asserts that Shafer Avenue is noisy too with the noise from switching trains.

32Mr. Menean asserts that properties such as MPAC’s Sales 5 and 6 with much larger frontages than the Subject Property are premium properties. He considers this a huge positive. He asserts that MPAC’s Sale 6 with its larger frontage of 107 ft. should be removed from consideration as it is an estate lot and not comparable to the Subject Property.

33He asserts that the majority of the properties on Shafer Avenue sell for less than their assessed values. He asserts further that the deteriorated condition of the property next door at 635 Shafer Avenue and the vacant dilapidated property across the street at 654 Shafer Avenue affect everyone else’s property values.

34At the request of the Board, Mr. Thomas provided key property details as set out in Table C for recent sales on Shafer Avenue. Mr. Thomas noted that he did review sales on Shafer Avenue. However, in his opinion, none are good comparables.

Table C

Property	Year Built (effective)	Building Area (sq. ft.)	Other	TAS	2016 Current Value Assessment (CVA)
631 Shafer Avenue (Subject Property)	2017	1,195	-Crawl space only -2 bathrooms/2 bedrooms
666 Shafer Avenue	1947 (1979)	610	-Quality 4.5 -Wartime housing -No basement -2 sales	$94,905 (03/12) $108,936 (05/13)	$98,000
636 Shafer Avenue	1973 (1977)	1,281	-Full basement -2 bedrooms -Basement garage -Electric heat -Estate sale	$146,952 (07/14)	$175,000
600 Shafer Avenue	1979	1,019	-Quality 6 -1 bathroom -Finished basement area: 416 sq. ft. -Electric heat -Carport	$145,011 (05/16)	$151,000
671 Shafer Avenue	1949	959	-Quality 6 -1 bathroom -Electric heat Finished basement:731 sq. ft. -Attached garage	$118,968	$135,000
609 Shafer Avenue			-dilapidated house removed -its abuts a commercial space -now a workshop/detached garage	$55,000	$90,000
640 Shafer Avenue				$131,940	$118,000

Board’s Analysis and Findings

35Under 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.

36There are six properties on Shafer Avenue with sales. The Board finds these properties are not comparable to the Subject Property in one or more respects, either in age of build, quality of construction, building size, number of bathrooms, finished basement area, or a garage. Five of the seven sales are lower than their respective 2016 assessments. The Board finds that there is insufficient evidence to conclude the differential is attributable to the poor condition of some properties located on Shafer Avenue as asserted by Mr. Menean.

37Mr. Menean also referred to the properties located at 773 Shafer Avenue, 717 Shafer Avenue, and 685 Shafer Avenue. However, none of these properties have recent sales.

38The Board has seven properties with sales to consider in determining the Subject Property’s current value.

39The Board finds 857 Peoples Road (MPAC’s Sale 1) to be comparable to the Subject Property. It is similar in quality of construction and lot size and also has two bathrooms. It is older having been built in 2012 and has a smaller building area at 981 sq. ft. However, it has a full finished basement area and a detached garage whereas the Subject Property does not. This property receives several adjustments for noise and for its location on a mass transit route. Mr. Menean acknowledges this and also asserts that Shafer Avenue is also noisy with the noise from switching trains. It has a TAS of $189,296.

40The Board finds that the property located at 148 Kehoe Street (MPAC’s Sale 2) to be comparable to the Subject Property. It is similar in quality of construction and lot size and also has two bathrooms. It is older having been built in 2007 and has a smaller building area at 881 sq. ft. However, this is offset by a full finished basement area and a detached double garage which the Subject Property does not have. It has a TAS of $156,894.

41The Board finds that the property located at 152 Walnut Street (MPAC’s Sale 3) to be inferior to the Subject Property. It is similar in quality of construction and lot size. It has two bedrooms but just one bathroom. It is much older having been built in 1987 and has a smaller building area at 932 sq. ft. There is an attached garage but no finished basement area. It has a TAS of $139,415. The Subject Property’s current value should be higher.

42The Board finds the properties located at 19 Hillside Drive, 31 Hillside Drive and 1078 Peoples Road (MPAC’s Sales 4, 5 and 7), not to be comparable to the Subject Property. They are much older having been constructed in 1975 and 1976 and have smaller building area at 932 sq. ft., 936 sq. ft. and 883 sq. ft. respectively. Sales 4 and 5 have some finished basement area whereas the Subject Property does not. However, all have much larger frontages at 60 ft., 68.42 ft. and 60 ft. respectively and larger overall site areas at 0.18 acres and 0.19 acres.

43The Board finds the property located at 26 Lidstone Avenue (MPAC Sale 6) not to be comparable to the Subject Property. It is much older with an effective year of build of 1979 and has a smaller building area at 870 sq. ft. It has some finished basement area whereas the Subject Property does not. However, it has a much larger frontage at 107.26 ft. and larger site area at 0.42 ac.

44Mr. Menean also referred to the property at 108 Glasgow Avenue in support of his opinion of current value. He produced a Multiple Listing Service® (MLS®) sale listing for $179,900 for the property. It is not known whether the property sold at its listing price. From the evidence before the Board, is does appear to have been built along the same concept as the Subject Property as a one-storey dwelling with a crawl space. It was built around 2015 or 2016 and is very similar in terms of age of build with the Subject Property and in building size at 1,200 sq. ft. The site area is also similar at 5,118 sq. ft. However, it has three bedrooms and one bathroom. It also has a 1.5 space heated garage that in Mr. Menean’s opinion as a builder adds about $20,000 in value.

45The Board agrees that the Subject Property is a purpose built accessible property with two bathrooms and two bedrooms. Based on the sales evidence, the Board finds that the Subject Property’s current value likely lies in the sales range for MPAC Sales 2 and 1 of $156,894 to $189,296. While it is not known whether 180 Glasgow Avenue sold at its listed price of $179,900, the Board notes that its listed price falls within this sales range. The Board sets the current value at the midpoint of the range at $173,095 or $173,000 (rounded).

46The Board finds the current value of the Subject Property as of the January 1, 2016 valuation date to be $173,000.

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(b) of the Act, and, if so, what should the amount of this reduction be?

MPAC’s Evidence and Submissions

47Mr. Thomas relies on an “Equity Analysis Report” that considers the time adjusted sales of 26 single family detached properties that occurred between January 1, 2012 and December 31, 2016 located within 1.37 kilometres of the Subject Property.

48In his Report, Mr. Thomas 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 0.951 and falls within the target level of appraisal.

49Mr. Thomas 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.

50Mr. Thomas concludes that the assessment should be reduced from $213,000 to $199,000 for the 2018 taxation year.

Appellant’s Evidence and Submissions

51Mr. Menean did not take a positon on whether the Subject Property is inequitably assessed in relation to similar properties.

Board’s Analysis and Findings

52Section 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.”

53The 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.

54In 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].

55The 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).

56The 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., 2010 ONSC 1299, 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.

57The 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.

58Mr. Thomas relies on an Equity Analysis Report that considers the time adjusted sales of 26 properties located within 1.37 kilometres of the Subject Property. In this case, the median ASR of 0.951 falls within the acceptable range and does not support an equitable adjustment.

59The Board finds that evidence does support the conclusion that an equitable adjustment is required.

CONCLUSION

60The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date is $173,000. 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.

61Therefore, the assessment of the property located at 631 Shafer Avenue is reduced from $213,000 to $173,000 for the 2018 taxation year.