Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 24, 2018

FILE NO.: WR 155946

Assessed Person(s): Afsaneh Borhanpanah, Mohammed Hassan Naghdi

Appellant(s): Afsaneh Borhanpanah, Mohammed Hassan Naghdi

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

Respondent(s): City of Toronto

Property Location(s): 14 Westmount Park Road

Municipality(ies): City of Toronto

Roll Number(s): 1919-024-240-11000-0000

Appeal Number(s): 3285755

Taxation Year(s): 2018

Hearing Event No.: 703668

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

Heard: September 24, 2018 by telephone conference call

APPEARANCES:

Parties

Representative

Afsaneh Borhanpanah, Mohammed Hassan Naghdi

Daniel Attard, Darcy Walker

MPAC

Frank Lee

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY ANTHONY LaREGINA

Background

1Afsaneh Borhanpanah and Mohammad Hassan Naghdi (the “Appellants”) are the owners of 14 Westmount Park Road (the “subject property”), which is a 1.24 acre parcel of land classified as residential single family detached. The property has a total actual frontage of 100 feet and an actual depth of 542 feet.

2The subject property has a residence with an actual and effective year built of 1988 and quality of construction of 8.5. The residence has a total building area of 5,838 square feet with 2,913 square feet on the main level and 2,925 square feet on the second level. The basement has a total building area of 2,837 square feet of which 2,291 square feet is finished space. The residence has four bedrooms, five bathrooms, two fireplaces, and is listed as average condition. The property also has an attached garage with 720 square feet of building area and an 800 square foot pool both built in 1988.

3Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act“), the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”).

4MPAC’s has assessed the current value of the subject property at $3,042,000.

5The Appellants have filed an appeal for the 2018 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessment of current value is too high and that the correct current value is $2,843,000. At this hearing, MPAC takes the position that its assessed value is correct.

6Pursuant to s. 40.(11) of the Act, the City of Toronto is a party to this proceeding. However, it did not advise the Board of its position and no one appeared at the hearing on behalf of the City.

7Section 44.(3)(b) of the Act directs the Board to reduce the current value of the subject property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute the municipal tax burden according to the value of the property possessed by each ratepayer.

8MPAC takes the position that an equitable reduction is not required. The Appellants have asserted that an equitable reduction of 5% is required based on equity evidence presented by MPAC.

9At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value for the 2018 tax year is $2,859,187 rounded to $2,859,000. Pursuant to s. 44.(3)(b) of the Act, an equitable reduction of this value is not required.

10The Board reduces the assessment from $3,042,000 to $2,859,000 for the 2018 taxation year.

Relevant Legislation

11The Act states:

1. “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.

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

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows…

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

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.

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.

Issue

12The issue to be determined on this appeal is the correct current value of the subject property for the 2018 taxation year.

Discussion and Analysis for Current Value

MPAC’s Evidence

13Frank Lee, representing MPAC, prepared both a Valuation and Equity Report respecting the subject property, dated June 20, 2018, which he submitted into evidence.

14Mr. Lee identified the sale of the subject property which occurred on March 6, 2015 in support of current value. The uncontested sale value of the subject property was $2,859,157.

15Mr. Lee also introduced a price change over time analysis of 306 sales of similar properties in the vicinity of the subject property which occurred between January 2015 and December 2016. As part of the analysis MPAC plotted the sales trend based on the 306 sales which produced the best fit line showing a market increase of 29.3% over the two year period. The trend line was then used to generate the time adjustment factors by month, which are applied to the actual sale value of comparable properties to establish a time adjusted sale value as of the valuation day of January 1, 2016.

16Mr. Lee argued that the best evidence of the current value of the subject property is the sale of the subject property which occurred within one year of the valuation day. Mr. Lee time adjusted the $2,859,157 sale value of the subject property which occurred in March 2015 by a time adjustment factor of 1.118 resulting in a time adjusted sale value of $3,196,000 reflecting a January 1, 2016 valuation.

17During cross-examination Daniel Attard questioned Mr. Lee on the graph in relation to the points plotted and the best fit line which demonstrated only a 10% increase as of the valuation day and not 11.8% as indicated by the time adjustment factor. In addition Mr. Attard also challenged Mr. Lee on the fact that the line intersected the valuation day at 0.05 instead of 0 and that the entire graph demonstrated an increase of less than 29.3% as stated in his report. Mr. Lee took the position that the plotted graph is showing the best fit line based on the time adjusted factors and therefore may not be 100% accurate.

MPAC’s Submissions

18Relying on its evidence, MPAC’s submits that the correct current value for the 2018 taxation year is $3,186,000 which is based on the time adjusted sale value of the subject property.

Appellant’s Evidence

19Mr. Attard representing the Appellants argued that the best evidence of current value is the sale of the subject property at $2,859,187 which occurred March 15, 2015.

20Darcy Walker, appearing on behalf of the Appellants, presents a time adjustment study based on two properties which sold for values of over two million dollars, 10 Blair Anthol Crescent and 166 The Kingsway. This study demonstrated a 0.52% increase in value per month.

21Applying this factor to the sale value of the subject property of $2,859,187 Ms. Walker demonstrated that the current value should be $2,993,000.

Appellants’ Submissions

22Relying on Ms. Walker’s evidence, Mr. Attard submits that the correct current value for the 2018 taxation year is $2,993,000.

23Mr. Attard argues that the accuracy of the time adjustments presented by MPAC is in question. Furthermore the property sales used in establishing the time adjustments factors are for the most part substantially smaller than the subject property and sold for values less than 1 million dollars. Mr. Attard argues that while they only have two sales in support of time adjustments they are of homes over 2 million dollars and therefore better reflect market value increases for the larger size homes like the subject property. For these reasons the Appellants request that the Board accept the time adjustment factor of 0.52% per month as being a reasonable increase in value for the subject property and not accept the time adjustment study as presented by MPAC.

Board’s Findings of Current Value

24The Board has reviewed and analysed the evidence presented in support of current value and is in agreement with both parties that the best evidence of current value is the sale of the subject property which transacted March 2015 at a value of $2,859,187.

25The Board also finds that based on the sale occurring within 12 months of the valuation day, January 1, 2016, there is no needs to time adjust this value. The Board considers 12 months on either side of the valuation day as a reasonable timeframe where no time adjustments are required.

26The Board finds the current value of the subject property to be 2,859,000 rounded for the 2018 taxation year.

Discussion and Analysis for Equity

27Section 44.(3)(b) 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.”

28The Assessment to Sales Ratio (“ASR”) of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If any other property is assessed below its current value, a reduction in the assessment below current value is required to make the assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time adjusted sale price.

MPAC’s Evidence and Submissions

29Mr. Lee presented an equity analysis of 30 residential sales that occurred from January 1, 2015 to December 31, 2016, all located within 0.5 kilometres of the subject property, resulting in a median ASR of 0.95. Mr. Lee submits that MPAC standards indicate that for residential property, the median ASR should fall between 0.95 and 1.05. If the median ratio falls within this range, this reveals that the assessments are reflective of sales prices in the vicinity and therefore no further adjustment is required. In this case the median ASR falls inside of the range at 0.95 therefore, Mr. Lee has recommended no adjustment to the current value. MPAC is not seeking an increase in assessment and therefore requests that the Board confirm the returned assessment of $3,042,000 for the 2018 taxation year.

Appellants Evidence and Submissions

30Ms. Walker provided an equity study of 30 properties which sold in 2015 and 2016 within 0.44 kilometres of the subject property demonstrating that the Median ASR is 0.94. Mr. Attard withdrew his equity study after MPAC demonstrated during cross-examination that the assessed value of the subject property used in the study was incorrect and that sale of properties 16 and 20 also used in the study were invalid sales.

31Mr. Attard therefore accepts MPAC’s equity study and requests that the Board make a 5% equity adjustment based on the median ASR of 0.95 citing that the value is at the very bottom of the acceptable range of 0.95 to 1.05 and therefore the decision should go in favour of the Appellant. Mr. Attard requests that the current value of $2,993,000 be further reduced by 5% to $2,843,000 to reflect the assessment of similar lands in the vicinity.

BOARD’S FINDINGS OF EQUITY

32The Board has reviewed the evidence on equity and finds that the equity study presented by MPAC to be a valid study showing a Median ASR of 0.95 which falls within the acceptable range of 0.95 to 1.05. In addition the Board has also determined that the mean ASR of the same 30 properties is 0.9503 which is above the lower limit of 0.95 and very consistent with the median ASR of 0.95 and therefore the Board will make no further adjustment for assessment of similar lands in the vicinity.

DECISION

33The correct current value assessment of the subject property is $2,859,000 for the 2018 taxation year. The Board will therefore reduce the assessment from $3,042,000 to $2,859,000 for the 2018 taxation year.