2261355 Ontario Corp. v. Municipal Property Assessment Corporation, 2018 CanLII 3052

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: January 25, 2018

FILE NO.: WR 146092

Assessed Person(s): 2261355 Ontario Corp.

Appellant(s): 2260355 Ontario Corp. and Saidaltaf Patel

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

Respondent(s): City of Toronto

Property Location(s): 1139 Morningside Avenue Unit 38

Municipality(ies): City of Toronto

Roll Number(s): 1901-122-160-00288-0000

Appeal Number(s): 3115528 and 3146065 (Deemed 2016)

Taxation Year(s): 2015 and 2016 ( and Deemed 2016)

Hearing Event No. 656064

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

Heard: Februrary 15, 2017, in Toronto, Ontario

APPEARANCES:

Parties	Representative
2261355 Ontario Corp. and Saidaltaf Patel	Self-represented
MPAC	Olga Roudnitski and Damian Bernacik
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

REASONS

Background

12261355 Ontario Corp. is the owner of Unit 38 at 1139 Morningside Avenue, Toronto, which is a unit of a commercial condominium complex consisting of 44 units distributed among four one-storey buildings (the “Subject Property”). It is comprised of a 652 square foot (“sq. ft.”) main level, as well as a basement storage space of 648 sq. ft. Both levels share the main building entrance as access. Built in 2010 and purchased by the present owner from the builder in the same year, the Subject Property is located in a mixed use area of industrial, retail, office, farmlands, parks and residential properties.

2Pursuant to the Assessment Act (“the Act”), MPAC is required to determine the value of the Subject Property on the valuation date, which, in this case, is January 1, 2012 (the “Current Value Assessment” or “CVA”). For the 2015 and 2016 taxation years under appeal, MPAC has assessed the subject property as having a CVA, of $375,000 and $299,000 respectively.

32261355 Ontario Corp. and Saidaltaf Patel (the Appellants) have appealed these assessments to the Assessment Review Board (the “Board”), pursuant to s.40 of the Act. It is their position that MPAC’s assessments of the CVA’s are too high and that the correct value for both taxation years is $226,000. MPAC now takes the position that the correct CVA for both taxation years is $284,000.

4Section 44(3)(b) of the Act, directs the Board to reduce the CVA 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 the Appellant or MPAC asserted that an equitable reduction of the CVA is required.

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

6At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the CVA of the Subject Property is $299,000, and that an equitable reduction of the CVA is not required.

Relevant Legislation

7The 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.

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.

Issues

8The issues to be determined on this appeal are:

1. What is the correct 2012 CVA of the Subject Property; and

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

Discussion, Analysis and Findings

Issue No. 1: What is the correct CVA of the Subject Property

MPAC’S Evidence

9MPAC was represented by Damian Bernacik, who called Olga Roudnitski, a Property Valuation Analyst, as his witness.

10MPAC provided a Property Valuation Report ("Report"), of the subject property, prepared by Olga Roudnitski. The Report provided an analysis which used the Comparative Sales Approach for six sales that occurred sometime between 2010 and 2012, located within the vicinity of the subject property and purportedly comparable to the subject, despite none of them having any storage space. Ms. Roudnitski also relied on additional builder sales to derive an estimate of value for storage space.

11MPAC also submitted as case law, a decision of the ARB

MPAC’s Submissions

12Ms. Roudnitski stated during the hearing that MPAC made a downward adjustment in the assessment from the 2015 to 2016 taxation years, upon a review of a request for reconsideration by the property's owner, resulting in a an adjustment from $375,000 to $299,000 for the 2016 taxation year.

13Table 1 below illustrates MPAC’s suggested comparables and the Sales Rate per square foot used by Ms. Roudnitski to determine the CVA of the Subject Property. She indicated that these comparables are, with the exception of storage space, in most aspects closely compared to the Subject Property’s main unit level.

TABLE 1 - MPAC’S COMPARABLES

Comparable	Shell Area	Sale Price	Sale Rate PSF
3351 Markham Road #123	748	$315,000	$400
3351 Markham Road #133	722	$338,000	$468
3341 Markham Road #122	705	$306,000	$434
6055 Steeles Avenue #103	633	$250,000	$395
3351 Markham Road #106	693	$285,000	$411
3272 Midland Avenue #B115	652	$275,000
AVERAGE			$418
MEDIAN			$406

14Given the difficulty of obtaining properties with storage space within the vicinity of the subject property, MPAC has included builder sales of units with storage space.

TABLE 2

BUILDER SALES

Units – No Storage		Units – With Storage
Builder Sale Price	Sale Rate PSF	Builder Sale Price	Sale Rate PSF
391,972	$365	$459,144	$427
384,081	$357	$456,370	$424
408,711	$380	$471,816	$438
408,712	$380	$455,076	$423
	$371	AVERAGE	$428
	$372	MEDIAN	$425
		14% Premium

15Ms. Roudnitski indicated that sales with storage space tend to sell at a premium to that of sales without storage space. Comparing units with and without storage, she expressed her view there exists a 14% premium for storage space in units similar to the Subject Property.

16Factoring in the 14% premium for storage space, Ms. Roudnitski applied the median sale rate per sf of the comparable sales of $406 per sq. ft to the subject’s total shell area of 652 sq. ft. and adjusted it upward by 14% for the storage space, to arrive at $302,000 (rounded) as the estimate for CVA of the Subject Property.

17Based on the analysis in the valuation report factoring in the suggested comparables and the adjustments for the storage space component, it is Ms. Roudnitski’s opinion that the property's CVA is between the original sale value of $284,000 (rounded) and $302,000. Based on the market evidence presented, MPAC submits that the correct CVA for both taxation years is $284,000.

18MPAC disagrees with the Appellants’ assertion that two factors negatively impact the value of the Subject Property: (i) ease of access to the Subject Property from the main abutting streets: and (ii) lack of parking. MPAC submits that the Appellants have adduced no evidence to support this assertion.

19MPAC disagrees with the Appellant's sales evidence, arguing the sales were far removed from the valuation date of January 1, 2012, as well as questioning the credibility of the multiple listing service (“MLS”) listings as valid evidence.

Appellant’s Evidence

20The Appellant, Mr. Patel represented both himself and 2261355 Ontario Corporation during the Hearing.

21A written report was submitted detailing sales listing data for seven properties, which was obtained from the Toronto Real Estate Board’s MLS. Of these seven properties, only one listing was still active as of the date the report was produced. The listings for the other six properties had expired.

Appellants’ Submissions

22The Appellant is of the opinion that the correct CVA for the Subject Property is $226,000 for both taxation years. Mr. Patel stated he would be prepared to accept the higher value of $302,000 suggested by MPAC, providing there is a downward adjustment in the amount of $76,000, similar to the reduction in the request for reconsideration decision, thereby arriving at $226,000 as the current value for the subject property.

23The Appellant asserts that the properties used in MPAC’s comparable sale analysis have better access from the main streets next to the complex.

24Mr. Patel expressed his views on a number of factors that he asserted would negatively affect the value of the Subject Property, namely: its location as an end unit because there was no immediate parking for customers to access the premises easily; City trees obstructed the view of the front of the unit, thereby reducing visibility to the customer; and absence of a loading door thereby placing the property at a disadvantage in the marketplace.

Findings

25The best indicator of current value is an arm’s length and market tested sale of the Subject Property on the valuation day, January 1, 2012 or close to it. If, as in this case, no such transaction took place, the next best measure of current value is an arm’s length and market tested sale of comparable properties in the same vicinity and market on or close to the valuation day. To enable an estimate of value for the Subject Property to be derived from a comparable property, there must be sufficient elements of similarity, in terms of location and physical factors such as total building area, building type, land area, age of construction, ceiling height and physical condition so that a direct comparison can be made between the comparable property and the Subject Property.

26In considering MPAC’s evidence, the Board finds that all of the six suggested comparable properties are very similar in shell structure, size and age, more or less, to that of the Subject Property. Two of these suggested properties are considered corner units which have been adjusted to reflect this feature. The Board finds that these suggested properties are comparable for purposes of determining the CVA of the Subject Property for both taxation years.

27When valuing a commercial condominium unit, the Board relies on market sales for determining current value and normally gives little or no weight to builder sales, as they are not considered to be market driven sales in the context of the Act’s definition of current value. However, in this case, the Board finds as reasonable MPAC’s methodology for selecting builder sales to isolate and quantify the impact of storage space on the value of the Subject Property. Based on the data provided in MPAC’s comparable sales analysis, the Board finds that it is reasonable to expect market sales of units with storage space to sell at least 14% more than units without storage,.

28Regarding the Appellant’s submissions, the Board finds that it can give little weight to the MLS property listings, as they are not executed sales and therefore offer limited insight into determining current value as defined in s. 19.(1) of the Act. Furthermore, these properties are too far removed from the valuation date of January 1, 2012, mostly occurring in the MLS listings for 2014 through 2015.

29The Appellant provided opinion evidence on other factors that negatively influence the value of the Subject Property. Reference was made to the impact of a City tree obstructing the visibility of the front of the premises. The Board notes that when asked if the Appellant had contacted the City to address the issue of the tree, the Appellant responded that he had not. Furthermore, the Appellant provided no quantitative evidence to support his assertion that the tree impacts negatively on the value of the Subject Property.

30The Appellant made reference to the basement storage space not having a separate entrance, thereby making it difficult to access as well as to lease the Subject Property. The Board finds that the Appellant purchased the Subject Property in the same year as it was constructed, knowing full well that the basement storage space shared the only entrance of the building with the main level unit. The Board also finds that the Appellant did acknowledge that the basement storage space is leasable as is, and that no evidence was provided to support the Appellant's assertion that the basement would be difficult to lease.

31The Appellant also argued that the Subject Property does not have a loading door, unlike all the other units of this building, asserting that, in comparison, this factor would negatively impact the value of the Subject Property. The Board recalls the oral testimony from MPAC’s witness, stating that a loading door has value for industrial properties, not necessarily for commercial retail properties as in this case. The Board observes that no evidence was provided by either party to substantiate their positions on the significance of a loading door. The Board cannot speculate on this matter and, therefore, makes no finding on this issue.

32The Appellant referred to the properties referenced in MPAC’s comparable sales analysis, arguing these properties have better access from the main streets next to the complex, and that the Subject Property has no parking, thus making it difficult for customers to become aware of the presence of the Subject Property. MPAC disagreed with the Appellants’ view. The Board notes that no evidence was provided by either party to establish the impact, if any, of these alleged negative influences on value. For this reason, the Board makes no finding on this issue.

33The Board finds that the Appellant has provided no evidence of actual sales of comparable properties, on or near the valuation date of January 1, 2012 to support his position respecting the correct CVA of the Subject Property. The Board has found that the Appellant has not established that the other concerns raised will have an impact on the value of the Subject Property.

34For these reasons the Board finds that MPAC’s comparable sales analysis is the best evidence available from which the Board can make a determination of current value for the Subject Property.

35The Board finds that the evidence adduced by MPAC does not support their submission that the CVA should be the lower range value of $284,000 for the 2015 taxation year. In this regard, MPAC submits that the CVA for the 2016 taxation year should be $299,000, however the Board finds there is no evidence indicating that the condition of the Subject Property has changed between these two taxation years. The Board finds that the evidence, utilizing both valuation methods, indicates that the CVA of the Subject Property is $299,000 for both taxation years. Therefore only the CVA for the 2015 taxation year needs to be amended.

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

36The Act requires the Board to address the issue of an equity reduction of the CVA by having reference to the assessment of similar lands in the vicinity of the subject property. The Appellant has the burden of proving that the CVA is not equitable relative to similar lands in the vicinity of the subject property.

37The Board notes that neither party addressed the issue of equity in their submissions and no evidence was provided on this issue. Accordingly, there is no basis on which the Board can find that an equitable reduction is required.

DECISION

38The Current Value Assessment of the Subject Property is reduced from $375,000 to $299,000 for the 2015 taxation year, and remains at $299,000 for the 2016 year.

39An equitable reduction of the Current Value Assessment of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.