Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: April 13, 2018
Assessed Person(s): Rafeah Haque, Shahnawaz Haque
Appellant(s): Shahnawaz Haque
Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15
Respondent(s): City of Mississauga
Property Location(s): 398 Silverthorne Crescent
Municipality(ies): City of Mississauga
Roll Number(s): 2105-040-096-10151-0000
Appeal Number(s): 3256564
Taxation Year(s): 2017
Hearing Event No. 691864
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard: December 21, 2017 by telephone conference call
APPEARANCES:
Parties
Representative
Shahnawaz Haque
Self-represented
MPAC
Mark Di Leo and Dayna Griffin
City of Mississauga
No one Appeared
DECISION OF THE BOARD DELIVERED BY DAN WEAGANT
INTRODUCTION
1Shahnawaz Haque appealed the 2017 assessment of the subject property because he believed the value returned by MPAC was too high. He acknowledged that MPAC had made an adjustment to the assessment to reflect the poor condition of the property, but believes the adjustment downward was not enough and that the returned value was still too high. He submits that the assessment of the subject property should be no higher than $550,000.
2MPAC returned a value of $661,000 for the subject property after adjustments for the property’s poor condition and believes this result is both reasonable and equitable when it is compared to the assessment of similar properties in the vicinity.
3The parties agree that the assessment of the subject property should be less than direct comparables in the area due to its poor condition. The only dispute is the amount of the reduction that should apply.
4The Assessment Review Board (the “Board”) must decide two things in this appeal. Firstly the Board must determine, based on the evidence at the hearing, the current value of the subject property for the 2017 taxation year. Having reference to the assessments of similar properties in the vicinity, the Board must also decide if the current value determined needs to be reduced for the purpose of equitable assessment.
DECISION
5The Board finds that the current value of the subject property is $661,000. The Board also finds that the evidence before it does not support a reduction in the current value for the assessment to be equitable with the assessments of similar properties in the vicinity.
6Accordingly, the Board finds that the assessment of the subject property, at 398 Silverthorne Crescent for the 2017 taxation year is confirmed at $661,000 in the Residential property class.
LEGISLATION
7In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act (“Act”).
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.
9Section 19.(1) of the Act states:
19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.
10Section 40.(1) of the Act states:
40.(1) Appeal to Assessment Review Board. Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board,
(a) on the basis that,
(i) the current value of the person’s land or another person’s land is incorrect,
(ii) he person or another person was wrongly placed on or omitted from the assessment roll,
(iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support,
(iv) he classification of the person’s land or another person’s land is incorrect, or
(v) or land, portions of which are in different classes of real property, the determination of the share of the value of the land that is attributable to each class is incorrect; or
(b) on such other basis as the Minister may prescribe.
11Section 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.
What is the Current Value of the subject property?
MPAC’s Evidence
12Mark Di Leo is an Assessor with MPAC and provided a valuation report to show how he arrived at the current value returned on the roll for 2017. He was joined by Dayna Griffin, also of MPAC. Ms. Griffin did not take an active role in the hearing, but provided assistance to Mr. Di Leo.
13The valuation report compared the subject property with five properties that sold between July 2015 and May 2016. All five properties are located within 1.4 kilometres of the subject property. They are all two storey dwellings with lot and building sizes that are very similar to the subject property.
14When comparing these five properties to the subject property, Mr. Di Leo applied a Time Adjustment Factor (“TAF”) to each. The TAF is used to adjust the sale price so that it more closely reflects the value at which the properties would have sold on the valuation day of January 1, 2016. The TAFs used by Mr. Di Leo were derived from a ‘time changes over time’ study that used 455 sales of residential properties in the area that took place between November 2013 and December 2015. This study creates a trend line to show how prices for residential sales in the area change over that time period. A TAF for each month in the time period is applied to sales in that month to arrive at a ‘Time Adjusted Sale’ (“TAS”) value.
15Table A summarizes the characteristics of the subject property and each of the five comparable properties used by Mr. Di Leo.
TABLE A
Subject Property
Sale 1 – 771 Esprit Crescent
Sale 2 – 5089 Guildwood Way
Sale 3 – 95 Glenn Hawthorn Blvd
Sale 4 – 399 Everton Drive
Sale 5 – 731 Winterton Way
Lot Area (Acres)
0.11
0.1
0.11
0.1
0.1
0.11
Living Area (sq. ft.)
2,474
2,459
2,469
2,471
2,474
2,500
Condition
Poor
Average
Average
Average
Average
Average
Year Built
1986
1988
1988
1988
1986
1990
Sale Price ($)/Date
N/A
$820,000/ May 2016
795,000/ Sept. 2015
780,000/Oct. 2015
745,000/July 2015
740,000/ Sept 2015
TAS Price ($)
N/A
769,643
820,952
800,257
780,967
764,156
TAS/Sq. ft.($)
N/A
312.99
332.50
323.86
315.67
305.66
2016 CVA ($)
661,000
736,000
744,000
742,000
744,000
745,000
2016 CVA / sq. ft.
267.18
299.31
301.34
300.28
300.73
298.00
Assessment to TAS Ratio
N/A
0.96
0.91
0.93
0.95
0.97
16All five of the comparable properties had sale dates within five months of the valuation day. Mr. Di Leo testified that this tight time range makes the time adjustment values reliable for comparison. He also noted that the five comparables are very similar to the subject property in all respects, except the condition description, which accounts for the returned value of the subject property being lower.
17To quantify the reduction for the property’s poor condition, Mr. Di Leo applied a standardized reduction of $73,000. This standardized amount was drawn from a model created by MPAC from multiple properties in a similarly poor condition in the Mississauga area. He then applied this $73,000 reduction to all five TAS values of the comparable properties and calculated a per sq. ft. value for each comparable, taking the reduction into account. When the average per sq. ft. value determined of $284.15 was applied to the 2,474 square feet (“sq. ft.”) of the subject dwelling, the result was $703,000 (rounded). Mr. Di Leo submitted that the returned value of the subject property was well below this value and indicates that the value returned is both reasonable and fair.
18Mr. Haque did not submit any evidence related to the question of current value. His case was dependent on the comparison of the returned value of the subject property to the assessments of other properties in the vicinity.
When reference is made to the assessments of similar properties in the vicinity, should the current value determined be reduced to make the assessment equitable?
Appellant’s Evidence
19Mr. Haque testified that the assessment of the property was reduced for the 2012 current value assessment (“CVA”) to reflect the poor condition of the property. He submitted that the reduction for the 2016 CVA was not adequate and specifically it did not address:
The absence of any finished basement area;
Cracks present in the foundation and masonry components of the dwelling;
The lack of comparison with properties in the immediate vicinity of the subject property.
20To support his position, Mr. Haque compared the returned value of the subject property with the assessments of five properties on the same and adjoining streets. These properties were all different from the ones included in MPAC’s valuation report. His submissions are summarized in Table B.
TABLE B
Subject Property – 398 Silverthorne Cres.
441 Silverthorne
434 Everton
410 Silverthorne
428 Everton
437 Silverthorne
2016 CVA
$661,000
$733,000
$739,000
$752,000
$738,000
$754,000
Living Area (sq. ft.)
2,474
2,738
2,563
2,680
2,774
2,738
Lot Area
.11 acres
.17 acres
.10 acres
.09 acres
.11 acres
.10 acres
Other Considerations
Basement apartment
Basement Apartment
Pool; Basement Apartment
Condition
poor
good
good
good
good
good
21Mr. Haque did not provide any sale values to compare to the assessments presented for his five comparable properties, and testified that his evidence of the presence of basement apartments was derived from his personal knowledge of the area.
22Mr. Haque noted that all five of his comparable properties have dwellings that are larger than the subject dwelling and that when adjustments are made for this fact, the comparable reduction in value of the subject property is not sufficient.
23Finally, Mr. Haque testified that the increase in his assessment from the 2012 CVA to the 2016 CVA was $169,000, or 34.3%. By contrast, he compared the assessment increase to four properties in the area. These four properties were provided in addition to the properties summarized in Table B:
409 Silverthorne – increase of $158,000 or 27.2%
378 Silverthorne – increase of $161,000 or 27.5%
402 Silverthorne – increase of $154,000 or 26.5%
424 Everton – increase of $158,000 or 27.2 %
24By this calculation, Mr. Haque believes his property should have a 2012 CVA to 2016 CVA increase of approximately the same amount, with a further reduction for the poor condition and smaller dwelling.
MPAC’s Evidence
25In response to Mr. Haque’s submissions on the equity of assessment, Mr. Di Leo submitted an equity analysis report. He analyzed the sales of thirty similar properties in the vicinity by comparing the assessments of each to their TAS values. This comparison is known as an Assessment to Sale Ratio (“ASR”). The ASRs in Mr. Di Leo’s sample ranged from 0.874 to 1.227. Mr. Di Leo explained that the purpose of this analysis is to compare the assessment to TAS values of the thirty properties to determine if similar properties in the vicinity of the subject property are being assessed accurately when compared to their sale values, or Current Values, as defined by the Act.
26In order to assess the reliability of this method, the International Association of Assessing Officers (“IAAO”) suggests two statistical methods. The first is to compare the median ASR in the sample to the number 1.0. Median ASRs below 1.0 indicate under-assessment, while median ASRs above 1.0 indicate over-assessment. The IAAO also stipulates that when an median ASR is between 0.90 and 1.10 for residential properties, the result is that properties in the vicinity are being assessed equitably. Mr. Di Leo further explained that MPAC uses a more restrictive test and considers a median ASR of between 0.95 and 1.05 to indicate that assessments are equitable within the sample used.
27The second statistical test for reliability of the ASR method to determine equity is the co-efficient of dispersion (“COD”). This is a relationship expressed as a percentage to indicate the average difference of all the ASRs in the sample as compared to the median ASR. The IAAO stipulates that for residential properties, a COD of not more that 15% indicates reliability.
28Mr. Di Leo pointed out that his sample generates a median ASR of 0.952 and a COD of 5.3%; both within the range determined by the IAAO and MPAC to consider the findings of the report to be reliable. He submitted that these results indicate similar properties in the vicinity are being assessed very near their current value and that as a result, no adjustment for the purposes of equitable assessment is necessary this case.
THE BOARD’S ANALYSIS
What is the Current Value of the subject property?
29Mr. Di Leo’s valuation report provides a summary of a methodical and time-tested approach to determining current value using the direct comparison approach. Mr. Haque found fault with the valuation report on only one point; the amount of value applied as a reduction to reflect the poor condition of the subject property.
30Mr. Di Leo testified that MPAC uses a standardized value to reflect the ‘poor’ condition of a property when compared to a property that is considered to be of ‘average’ condition. That value is $73,000 for this part of Mississauga.
31Mr. Haque believes the amount of the reduction needs to be higher, but he neither refuted Mr. Di Leo’s evidence, nor did he advance any alternate value for the Board to consider. When the $73,000 is added to the returned value of the subject property, the total is $734,000. This amount is well below the range of values demonstrated by Mr. Di Leo’s sales analysis of five, very comparable properties in the immediate area of the property under appeal. Those time adjusted sale prices ranged from $764,000 to $820,952 indicating that the subject property has an assessment that is over $100,000 lower than is demonstrated by the sales of very similar properties.
32While Mr. Haque testified that some of the comparable properties in Mr. Di Leo’s valuation report had basement apartments, he lacked specifics of this and failed to provide any evidence to support what further reduction in value should be made to the subject property as a result.
33The Board finds that the best evidence of current value is that of MPAC. The results of Mr. Di Leo’s valuation study were not refuted by the appellant and no alternative method of determining current value was advanced. The Board finds that the current value of the subject property is $661,000.
When reference is made to the assessments of similar properties in the vicinity, should the current value determined be reduced to make it equitable?
34Mr. Haque chose to challenge the equity of the returned value in two ways. First he selected five properties in the vicinity, with 2016 current value assessments ranging from $733,000 to $754,000. He noted that the five similar properties all had a larger building area than the subject property. He also submitted, without documentary evidence, that these five properties are all superior to the subject property.
35The Board noted that when the poor condition adjustment advanced by MPAC is added to the current value, the amount is $734,000, which is $1,000 above the lowest of the five properties in Mr. Haque’s sample. Four of the five properties still had values above that of the subject property without the $73,000 poor condition adjustment.
36Secondly, Mr. Haque compared the changes in value of selected properties from their 2012 valuation days to their 2016 valuation days. Mr. Haque argued that four of his neighbours had increases in this timeframe of between 26.5% and 27.5%, whereas his property rose by 34.3%. He submitted that his increase from 2012 to 2016 should be in the range of the increase of his neighbours. This logic is fundamentally flawed as a means of determining equitable assessment because:
The comparison makes broad assumptions of similarity, which is a statutory requirement for the Board to consider when determining equity of assessment;
There is no evidence to show how or why the differences in increases occurred;
The ‘starting point’ 2012 value in the comparison has no relevance to the value on the 2016 valuation day; and
In this case, the comparison ignores the fact that the subject property had a reduced value in 2012 to reflect the poor condition so any equivalent rise in value applied to the subject property would mathematically result in a higher percentage increase, without necessarily being unfair.
37In order to reduce the amount of the current value for the purposes of equity or fairness, the Board has to reduce a correct finding to one that is incorrect. In order to so, the Board must have sufficient evidence to suggest the current value determined should be reduced to be fair. Mr. Di Leo prepared an equity analysis that compares the assessments of thirty similar properties in the vicinity. His findings are consistent with the standards of reputable outside authority, and concludes that no reduction in the current value determined is required to make the assessment of the subject property equitable with the assessments of similar properties in the vicinity.
38The Board agrees with Mr. Di Leo as his analysis was based on established, recognized practice in determining equitable assessment. Mr. Haque’s approach did not provide the Board with an equally compelling means to correct the current value determined for the purposes of equity.
CONCLUSION
39The Board finds that the current value of the subject property is $661,000. The Board also finds the evidence before it does not support a reduction in the current value for the assessment to be equitable with the assessments of similar properties in the vicinity.
40Accordingly, the Board finds that the assessment of the subject property, at 398 Silverthorne Crescent for the 2017 taxation year is confirmed at $661,000 in the Residential property class.
“Dan Weagant”
DAN WEAGANT
MEMBER
Assessment Review Board
A constituent tribunal of Environment and Land Tribunals Ontario
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248```