Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 24, 2018

FILE NO.: WR 154798

Assessed Person(s): Minchao Liu, Baoyu Liu

Appellant(s): Minchao Liu, Baoyu Liu

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 14

Respondent(s): Town of Richmond Hill

Property Location(s): 421 Centre Street East

Municipality(ies): Town of Richmond Hill

Roll Number: 1938-020-030-03600-0000

Appeal Number(s): 3262065 and 3302929

Taxation Year(s): 2017 and 2018

Hearing Event No.: 701687

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

Heard: August 02, 2018, by telephone conference call

APPEARANCES:

Parties	Representative
Minchao Liu	Self-represented
MPAC	Julie Landon
Town of Richmond Hill	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

BACKGROUND

1Minchao Liu and Baoyu Liu (the “Appellants”) are the owners of 421 Centre Street East (the “Subject Property”), which is a single family detached one-storey home on a 0.15 acre lot in Richmond Hill, not located on water. They purchased the home in July, 2014, for $701,000, and argue that the increase in current value that MPAC proposes, to the amount of $1,054,000, in just two years, is erroneous. The Appellants submit that the value for their home at the beginning of 2017 was $693,000.

2Pursuant to the provisions of the Assessment Act (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 January 1, 2016, the valuation date.

3MPAC has assessed the value of the Subject Property, as of January 1, 2016, at $774,000.

4Consequently, the Board must determine the value of the Subject Property on January 1, 2016 for the 2017 to 2018 taxation years (“current value”).

5The Appellants have filed appeals for taxation years 2017 to 2018 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 $693.000. At this hearing, MPAC takes the position that the current value is an amount between $984,000 and $1,054,000.

6It is important to note that neither MPAC nor the Town of Richmond Hill have made an application under the Board’s rules to increase the assessment beyond the current assessed value of $774,000.

7Pursuant to s. 40(11) of the Act, the Town of Richmond Hill is a party to this proceeding. However, the Town did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the Town’s behalf.

8Section 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. Neither party made an oral presentation on the issue of equity. In its materials filed in support of the assessment, MPAC takes the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required.

9At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value of the Subject Property for the 2017 to 2018 tax years is $984,000. An equitable reduction of this value is required, and the equitable assessment is $858,112.

Relevant Legislation and Rules

10The Act:

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.

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.

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.

ISSUES

11The issues to be determined on this appeal are:

(1) What is the correct current value of the Subject Property for the taxation years 2017 to 2018?

(2) Should there be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, by how much?

Discussion, Analysis and Findings

Issue No. 1: What is the correct current value of the Subject Property for the taxation years 2017 to 2018?

MPAC’s Evidence

12Julie Landon represented MPAC, and gave the evidence on behalf of MPAC. She filed a Valuation Report dated March 26, 2018, and an Equity Analysis Report. Ms. Landon described the Subject Property as a one-storey home on Centre Street East in Richmond Hill, comprised of 962 square feet (“sq. ft.”) situated on a lot area of 0.149 acres or 6900 sq. ft. The home, built in 1955 and updated in 1983, has a finished basement of 840 sq. ft., three bedrooms, two bathrooms, and forced air heating. It has municipal services.

13Ms. Landon explained that the preferred method of valuing residential properties is by using direct sales comparisons. Because the valuation day for the current assessment cycle is January 1, 2016, she has provided information in connection with her Sales Trend Ratio Analysis study which seeks to bring the sales values of the proposed comparable properties to their estimated value on the valuation day. For this purpose, Ms. Landon traced the market trends for 30 months from Jun, 2014 through to mid-December, 2016. She calculated the changes in values month-by-month based on 275 residential and vacant land sales in the area.

14Ms. Landon selected seven residential properties in the neighbourhood which were sold between July, 2014 (the Subject Property itself) and October, 2016. The homes are all single family detached one storey homes built in 1955 and updated between 1983 and 1991. All the proposed comparable homes have finished basements, and three of the properties have detached garages. The lot sizes range between 0.13 acres and 0.16 acres. Because the homes are very similar in age and site area sizes, the chart below sets out only the sales information, building areas, finished basement areas, and any special locational considerations including traffic patterns if relevant.

TABLE 1 MPAC’s PROPOSED COMPARABLE SALES

Property	Build Area (sq. ft.)	Finished Basement Area (sq.ft.)	Sales Date	Sales Price	Time-adjusted Price	Location Factors Noted	Out-buildings
Subject	962	840				Traffic Pattern Light	None
1 - 417 Centre E	892	669	09/16	$1,270,000	$1,096,594	Traffic Pattern Light; corner lot	Detached garage
2 - 421 Centre E (Subject)	962	840	07/14	$7701,500	$1,054,673	Traffic Pattern Light	None
3 - 7 Beaverton N	1015	710	04/15	$828,000	$983,525	None
4 - 7 Beaverton N	1015	710	08/16	$1,160,000	$1,017,966	None
5 - 20 Rockport Cres.	1012	809	10/15	$897,000	$940,753	Abuts public walkway	Detached garage
6 - 386 Centre E	1008	662	04/15	$733,000	$870,681	Traffic pattern light	Detached garage
7 - 438 Centre E	1,106	300	10/16	$1,100,000	$934,790	Traffic pattern light	Shed

15Ms. Landon gave evidence about the comparability of the seven proposed sales, and pointed out that Sales 3, 4 and 6 were all homes on slightly smaller lots than the Subject Property while the homes themselves were similar. These properties sold for time-adjusted prices of $983,525, $1,017,966 and $870,681 respectively.

MPAC’s Submissions

16Relying on its evidence, MPAC’s submits that the correct current value for the taxation years 2017 to 2018 is between $983,000 and $1,054.000. However, the assessment returned was lower than this, and Ms. Landon asks the Board to confirm the assessment in the amount of $774,000.

Appellant’s Evidence

17Minchao Liu represented the Appellants. He submitted a copy of the documentary evidence he had previously disclosed to MPAC, which included a list of MPAC’s proposed comparable home sales, and some of the properties used by MPAC in its Sales Ratio Trend Analysis.

18In his evidence, and during cross examination of Ms. Landon, it became apparent that some of the data contained on the MPAC website called “About My Property” is out of date. Mr. Liu found this prejudicial and raised the very good argument that, if the Appellant could not have access to up-to-date data on this website, MPAC had the clear advantage in preparing its case.

19It soon became apparent that one of the comparable homes the Appellants wished to rely on – 417 Centre Street East – was listed on the MPAC website showing an assessed value which was out of date. Even though the proof of value relies on sales evidence, Mr. Liu is correct that outdated information may mislead an Appellant.

20Mr. Liu proposed that the best comparable sale was 417 Centre Street East, which appeared on “About My Property” to have been assessed at $693,000. Ms. Landon advised that this information was out of date and that the current assessment for 417 Centre Street East was $752,000.

21Relying on MPAC’s Assessment to Sale ratio chart found in their Valuation Report, Mr. Liu pulled out four home sales occurring in 2014 quite close in time to his own purchase. Like his home, these additional four sales were of properties with similar-sized lots to his and generally similar-sized homes. These homes sold in June, July, and August, 2014, for amounts ranging between $708,000 and $730,000. Their assessed values for the current cycle were between $723,000 and $740,000, or fairly close together. He did not understand why his property was assessed at a higher value at $774,000 when these homes were essentially all the same. Mr. Liu testified that the four sales he highlighted from MPAC’s time adjustment study were largely located on less busy streets, yet their assessments were lower than his. These properties included 392 Allen Court, 83 Cartier Crescent, 77 Cartier Crescent and 435 Bent Crescent. Details of the selling prices are set out below.

Appellants’ Submissions

22Relying on his evidence, the Appellant submits that the correct current value for taxation years 2017 to 2018 is $693,000.

Board’s Analysis of Current Value (Issue 1)

23The best evidence of current value is the amount paid by a willing buyer to a willing seller in an arm’s length sale occurring near the valuation day. When that kind of evidence is not available, the best evidence is the sale prices of similar properties in the neighbourhood. By adjusting for differences in size, age, topography, and sale dates, it is possible to estimate value. This is the technique used by MPAC in respect of residential sales and it makes the most sense in this appeal. MPAC proposed seven comparable property sales with which the Appellant agreed for the most part. They both agreed that the neighbouring home at 417 Centre Street East was a good comparable sale due to the similarities between the homes. This property sold for the time adjusted price of $1,096,594 in September 2016.

24The comparable sales proposed by MPAC were quite similar to the Subject Property and gave a good range of values. The four comparable sales chosen by the Appellant and included in Appendix A of his Submission seemed also to be comparable sales with the same frontage (50 feet) and depth between 110 to 130 feet, and with buildings ranging between 1,013 sq. ft. in size to 1,254 sq. ft. All of these four sales took place in 2014, and the sold prices reproduced in the Appendix are not time-adjusted. If we use MPAC’s time-adjustment formula, the four properties would have the following values as of January 1, 2016:

TABLE 2: APPELLANT’S PROPOSED SALES

Address	Date of Sale	Sale Price	Time Adj. Factor	Time-adjusted Sale Price
392 Allen Crt.	02/07/2014	$715,000	1.503	$1,074,645
83 Cartier Cres.	18/06/2014	$708,000	1.569	$1,110,852
77 Cartier Cres.	29/08/2014	$730,000	1.443	$1,053,390
435 Bent Cres.	20/06/2014	$720,800	1.569	$1,130,935

25In order to determine the current value of the subject property, I must determine which of the proposed comparable sales produced by both parties are the most similar to the subject property. Of all the comparable properties contained in Table 1 above, 417 Centre Street East is the closest in size and location, but has a detached garage, which the Subject Property does not. The remaining properties are also fairly close in size, some with garages and some without. The presence of the garage does not make a noticeable difference in sale values, as observed when comparing 7 Beaverton North, a property lacking a garage, which sold in 2016 for $1,017,966 (time-adjusted) or 386 Centre Street which sold in 2015 for $870,681 (time-adjusted) with a detached garage.

26While MPAC’s range of values captures the evidence presented by the selected comparable sales, it does not assist in narrowing the value to one amount. Given that there is not enough evidence to set these values apart, the Board will use the mean of MPAC’s seven choices and the Appellant’s four proposed sales. The mean value of the 11 sales as of January 1, 2016, is $1,024,437 or $1,024,000 rounded. That is the current value of the Subject Property.

Issue No. 2: Whether there should be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be.

MPAC’s Evidence

27MPAC provided an Equity Analysis Report based on 30 sales of residential properties located within half a kilometer of the Subject Property. The equity analysis showed that there was a distinct pattern of under-assessing residential properties in this area. Ms. Landon found that the median Assessment to sales ratio was 0.838, which is clearly outside the result preferred by MPAC (a level of appraisal based on the median Assessment to Sales Ratio or “ASR” of the 30 sales of similar property in the vicinity of 0.95 to 1.05). This ratio is also outside the preferred level of appraisal of the International Association of Assessing Officers, which supports a level of appraisal between 0.90 and 1.10. However, MPAC concluded that applying an equitable reduction to the current value of the land would result in a value higher than the current assessment.

MPAC’s Submissions

28Relying on its evidence, MPAC’s submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is not required.

Appellant’s Evidence

29The Appellants did not present any evidence on the issue of equity.

Board’s Analysis on Equity (Issue 2)

30MPAC’s study shows that other property in the vicinity is assessed on average below its sale value. It would, therefore, also be fair to assess the Subject Property below its current value. To determine whether or not an equity adjustment is required, I multiply the current value of the subject property ($1,024,000) by the median ASR of the 30 properties MPAC used in its equity analysis study (0.838). The result is $858,112. That is the equitable assessment of the Subject Property.

DECISION

31The correct current value of the Subject Property is $1,024,000 for the 2017 to 2018 taxation years. Equity requires that the assessment be reduced to $858,112.

32However, no party gave notice under Rule 40 of the Board’s Rules of Practice and Procedure of an intention to seek a higher assessment. Given that lack of procedural compliance, I will not increase the Appellants’ assessment. The Appellants’ assessment is therefore confirmed at $774,000 for the 2017 and 2018 taxation years.