Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 28, 2018

FILE NO.: WR 151242

Assessed Person(s): Xiang Lin and Qin Yang

Appellant(s): Xiang Lin

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

Respondent(s): City of Toronto

Property Location(s): 116 Shawnee Circle

Municipality(ies): City of Toronto

Roll Number(s): 1908-115-013-02500-0000

Appeal Number(s): 3212321

Taxation Year(s): 2017

Hearing Event No. 694271

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

Heard: February 23, 2018 in Toronto, Ontario

APPEARANCES:

Parties Representative

Xiang Lin and Qin Yang Self-represented

MPAC Tyler Nastich

City of Toronto No one appeared

MEMORANDUM OF AN ORAL DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA ON FEBRUARY 23, 2018

BACKGROUND

1Xiang (Shawn) Lin (the "Appellant") is the owner along with his wife Qin Yang of 116 Shawnee Circle (the "Subject Property") in the City of Toronto. It is a two-storey single family semi-detached home located on a lot with a total effective area of 3,528 square feet ("sq. ft.") and 28 feet ("ft.") of effective frontage. It has a 1,527 sq. ft. of total building area. The property was built in 1973 and MPAC has assigned it a quality of construction rating of 6. The house was purchased in 2012.

2For the 2017 taxation year under appeal, MPAC returned the assessment for the Subject Property at $651,000.

3The Appellant has appealed the assessment for the 2017 taxation year to the Assessment Review Board (the "Board"), pursuant to s. 40 of the Assessment Act ("Act"). It is the Appellant's position that MPAC's assessment is unfair. His current value assessment ("CVA") has increased from $400,000 in the 2012 CVA cycle to $651,000 in the 2016 CVA cycle which represents a 62.75% increase whereas neighbouring properties had increases of approximately 40%. He asserts that, as a result, he is paying proportionally much more in property taxes than his neighbours. While the Appellant declined to specify a value, he asserts that the assessment should be based on the average percentage change in CVAs from 2012 to 2016 in the neighborhood rather than on MPAC's mass appraisal method.

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, Tyler Nastich estimates the current value of the Subject Property to be $764,000, based on the direct comparison approach of six sales comparables. He determined an equitable assessment of $706,000, which is higher than the assessment as returned. Using its mass appraisal method, MPAC's model generated the 2016 CVA of $651,000, which is lower. It is his positon that the assessment as returned of $651,000 should be confirmed for the 2017 taxation year.

5Pursuant to s. 40(11) of the Act, the Municipality is a party to this proceeding. However, no one from the Municipality appeared at the hearing.

DECISION

6For the reasons that follow, the Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $757,000. 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.

7The current value of $757,000 as determined under s. 44(3)(a) of the Act is higher than the assessment as returned of $651,000. MPAC is not seeking an increase in the assessment. Accordingly, the assessment of the Subject Property is confirmed at $651,000 for the 2017 taxation year.

ISSUES

8The issue(s) to be determined on this appeal are:

1. What is the correct current value of the Subject Property as of the January 1, 2016 valuation date;

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.

Issue No. 1: What is the correct current value of the Subject Property as of the January 1, 2016 valuation date?

Findings on Issue 1

9The initial task of the Board is to use the best evidence available to determine the current value of the property as required by s. 1, s. 19.(1) and s. 44.(3)(a) of the Act.

10The 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 day or close to it. There was a sale of the Subject Property in 2012 but it is too far removed from the January 1, 2016 valuation date for to be considered. If, as in this case, no such transaction took place, the next best measure of current value is arm's length and market-tested sales of comparable properties located nearby, as close as possible to the valuation date of January 1, 2016. The measure acts as a benchmark and a gauge of the accuracy for the assessed value of the subject property and comparable properties. The direct sales comparison approach is accepted and well recognized by the Board as a valuation methodology.

11The Appellant went through the Request for Reconsideration ("RfR") process last cycle and the 2012 CVA was set at $400,000 which he states reflects the sale price of his property that occurred in 2012. The assessed value as returned of $651,000 for the 2016 CVA represents a change of 62.75% as compared to other comparable properties in his neighbourhood, especially the six properties relied on by MPAC with a range of increases of 43.64% to 47.03%. He stated that the 2012 CVAs for the six MPAC comparables were higher than that of the Subject Property. The Appellant stated that he believes his sale price to have been the lowest in the neighbourhood. Perhaps so, but one sale does not a market make. He also referred to various documents from the City of Toronto demonstrating the calculation of property taxes for various residential properties with different assessed values to demonstrate his point that property taxes are dependent on the assessment value. As a result of the 62.75 % increase in the assessed value of the Subject Property from 2012 to 2016, he asserts that he will now be paying proportionally more in property taxes than his neighbours. He has suggested an approach based on a percentage increase in CVAs from 2012 to 2016 to determine current value. The six comparables relied by MPAC have a range of increases of roughly 40%.

12As noted, determining current value based on the direct sales comparison approach is a well-recognized and accepted approach by this Board. In this instance, the Board finds the sales evidence to be the most persuasive approach in determining current value.

13To enable an estimate of value for the Subject Property to be derived from suggested comparable properties, there must be sufficient elements of similarity, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc. so as to enable a direct comparison to be made between a suggested comparable property and the Subject Property.

14The Board has considered the six properties with sales that took place in the shoulder years to the January 1, 2016 valuation date, during the period of March 2015 to November 2016.

15The six properties are all located in the same homogenous area as the Subject Property. Two properties are located on Shawnee Circle like the Subject Property. All are two-storey, semi-detached properties and are very similar in terms of age (built in either 1972 or 1973 vs. 1973 for the Subject Property), effective site area (0.08 or 0.09 acres vs. 0.08 for the Subject Property), total building area (average 1,453 sq. ft. vs. 1,527 for the Subject Property) and the same quality of construction rating of 6. MPAC has no record on any additions or renovations for these properties.

16The Board finds these properties to be reasonably comparable to the Subject Property with a mix of sales having taken place in the shoulder years of 2015 and 2016 to the January 1, 2016 valuation date. All sales have been time adjusted.

17The six sales have an average total building area is 1,453 sq. ft. They have time adjusted sales that range from $669,408 to $763,512 for an average time adjusted sale value of $720,866. The average time adjusted sale price per sq. ft. is $496. Applying this sale value per sq. ft. to the subject property results in a current value of $757,392 or $757,000 (rounded). Therefore, the Board finds that current value of the Subject Property is $757,000.

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 should the amount of this reduction be.

Findings on Issue 2

18Section 44.(3)(b)of the Act states that "...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 land."

19The purpose of equitable adjustment has been described 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 application of 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.

20In 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]".

21The term "vicinity" is not defined in the Act, but refers to the appropriate geographical area that will yield meaningful comparables (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (Ont. C.A.) at page 6).

22The test set out in s. 44(3)(b) of the Act, requires that the Board refer to similar lands in the vicinity. In determining whether other lands are similar, the Ontario Divisional Court, in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., [2017] O.J. No. 1010 ONSC 1299, 276 A.C.W.S. (3d) 220, 2017 ONSC 1299, 62 M.P.L.R. (5th) 253, 2017 CarswellOnt 2861, 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, 27 O.A.C. 203, 37 M.P.L.R. 175, 8 A.C.W.S. (3d) 399. 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.

23Considering an ASR analysis using a reasonable sample of property sales is one method to establish equity.

24Mr. Nastich referred to an Equity Analysis Report that considered the time adjusted sales of 30 residential semi-detached properties that occurred within the period of January 1, 2015 to December 31, 2016 and that are located within a radius of one kilometre from the Subject Property. The Board finds these properties to be similar lands in their use as residential properties in the vicinity.

25In this instance, the sales sample produced a median ASR of 0.925 which is outside the range of 0.95 to 1.05 used by MPAC indicating that similar properties in the vicinity are assessed at values that are lower than their current values.

26In order to determine the equitable value, the Board multiplies the current value as determined above ($757,000) by the median ASR (0.925) which results in the value of $700,000 (rounded).

27This value is still higher than the assessment as returned at $651,000 by MPAC using the mass appraisal method. MPAC is not seeking a higher assessment.

28Another method to establish equity is to consider the assessed values of individual properties in the vicinity which the Board finds to be similar. Applying this method, the Board has also compared the assessed value of the Subject Property, as returned at $651,000 to the CVAs of the six properties in evidence, which the Board considers to be similar. The assessed values of these properties range from $636,000 to $652,000. The main difference between these properties and the Subject Property appears to be total building area. The Subject Property has 1,527 sq. ft. of total building area whereas the similar properties with lower assessed values have smaller total building areas and are slightly older. The property at 289 Shawnee Circle, in particular, is assessed at $652,000 which is almost identical to the assessment as returned of $651,000 for the Subject Property. Total building areas are virtually identical and they also share the same year of construction.

29For these reasons, the Board finds that the evidence before it does not lead to the conclusion that an equitable adjustment is required.

CONCLUSION

30Therefore, the Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $757,000. 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.

31The current value of $757,000 as determined under s. 44(3)(a) of the Act is higher than the assessment as returned of $651,000. MPAC is not seeking an increase in the assessment. Accordingly, the assessment of the Subject Property is confirmed at $651,000 for the 2017 taxation year.