Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 09, 2018 FILE NO.: WR 150593

Assessed Person(s): Ricardo Cortes, Natalia Puno Appellant(s): Ricardo Cortes, Natalia Puno Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 14 Respondent(s): City of Markham

Property Location(s): 126 Steeles Avenue East Municipality(ies): City of Markham Roll Number(s): 1936-010-070-00700-0000 Appeal Number(s): 3172578 Taxation Year(s): 2017 Hearing Event No. 691171

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

Heard: January 15, 2018 in Markham, Ontario

APPEARANCES:

Parties	Representative
Ricardo Cortes	Self-represented
MPAC	Tong Li and Tania Papaikonomou
City of Markham	No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1For the 2017 taxation year, MPAC returned an assessment of $966,000 on the property at 126 Steeles Avenue East, based on the current value determined as of January 1, 2016; the valuation day stipulated in the Assessment Act (“Act”). MPAC undertook the direct comparison approach in determining the current value of the subject property. This approach is based on the sale values of comparable properties in the same geographic area as the subject property.

2The Appellant, Ricardo Cortes argued that since he has no intention of selling his property, MPAC’s determination of value, based on the sales of other properties is flawed and creates a returned assessment that is too high. He believes his assessment should be in the range of $750,000 to $800,000.

3The Assessment Review Board (“Board”) must decide two things in this appeal. Firstly, the current value of the subject property must be determined for the 2017 taxation year, based on the evidence at the hearing. Having reference to the assessments of similar properties in the vicinity, the Board must also determine if the current value found needs to be reduced for the purpose of equitable assessment.

DECISION

4The Board finds that the current value of the subject property for the 2017 taxation year is $853,000. The Board also finds that no reduction of this value is necessary to achieve an equitable assessment.

5Accordingly, the assessment of the property at 126 Steeles Avenue East in the Residential property class, for the 2017 taxation year is reduced from $966,000 to $853,000.

LEGISLATION

6In making its determination of these appeals, the Board must consider the relevant sections of the Act.

7Section 1 of the Act states:

“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.

8Section 19.(1) of the Act states:

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

9Section 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 and Position:

10MPAC’s Assessor, Tong Li carried out a valuation of the subject property using the direct comparison approach to value, whereby similar properties in the area that have sold in proximity to the statutory valuation day are used to approximate the current value of the property under appeal. Differences in characteristics between the comparable properties and the subject property are considered and appropriate adjustments to value are made to arrive at a value that MPAC considers reasonable.

11Because market conditions and sale prices change over time, and because the comparable properties were not sold on the valuation day of January 1, 2016, MPAC applies Time Adjustment Factors (“TAF’s”) to adjust the sale value of each of the comparable properties to show their likely sale value as if they were sold on January 1, 2016. The TAFs in this case are derived from 272 sales of residential properties in the market area, between January 2015 and December 2016.

12Mr. Li used the sales of six properties in his analysis that he found to be the most comparable to the subject property. The range of the Time Adjusted Sale (“TAS”) values of these three comparables is $1,082,689 to $1,445,322. The details of the characteristics of MPAC’s comparable properties are summarized in Table A.

TABLE A

Feature	Subject Property 126 Steeles Avenue East	Sale 1 – 84 Steeles Avenue East	Sale 2 – 95 Grandview Avenue	Sale 3 – 11 Brightbay Crescent	Sale 4 – 102 Highland Park Boulevard	Sale 5 – 35 Jewell Street	Sale 6 – 67 Grandview Avenue
Lot Area (acres)	0.14	0.16	0.14	0.14	0.16	0.15	0.15
Living Area (sq. ft.)	884	925	937	1,140	945	1,073	1,112
Basement Area – total (sq. ft.)	1,156	956	937	1,140	945	1,073	1,112
Basement Area – Finished (sq. ft.)	552	764	796	900	620	338	702
Quality of Construction Rating	6.5	6	6	6.5	6	6	6
Sale Price /Date	N/A	$1,350,000 / Feb 2017	$811,800 / March 2014	$783,000/ May 2013	$850,000/ May 2013	$1,090,000/Jan 2016	$1,054,000/Sept 2015
TAS Price	N/A	$1,128,932	$1,115,641	$1,331,397	$1,445,322	$1,082,689	$1,095,934
2016 CVA	966,000	$1,079,000	$1,037,000	$1,119,000	$1,102,000	$531,000*	$1,078,000
Year Built	1961	1952	1951	1961	1950	1954	1963
Secondary Structures	Attached Garage	N/A	Detached Garage	Basement Garage	N/A	Attached Garage	Detached Garage

*Returned value after dwelling demolished

13MPAC’s position is that the range of value indicated by the six comparable properties is $1,031,973 to $1,119,958 and that when differences between these comparable properties and the subject property are accounted for, the value of the subject property should reasonably fall within this range. Accordingly, MPAC’s opinion of current value for the subject property is $1,079,138. Mr. Li concluded that MPAC was not seeking an increase in assessment as a result of these findings, but rather that they serve to support the returned value.

Appellant’s Evidence and Position

14Mr. Cortes did not submit any documentary evidence nor did he provide any testimony or submissions with respect to current value. His evidence and submissions related to the fairness of his assessment when compared to the assessments of his neighbours, which is an argument in favour of a reduction in value to make the assessment fair and equitable. These submissions are summarized below in the section dealing with equity of assessment.

Board’s Analysis

15When reviewing the comparable properties used by MPAC, the Board disregards Properties 1 and 2. Both of these properties have a basement apartment, whereas the subject property does not. In addition, the Board disregards Properties 3 and 4 as both of these properties were sold more than 30 months before the valuation date. As a result, the TAS values for Properties 3 and 4 are not considered reliable enough for comparison to the subject property.

16The Board finds that the most comparable properties for the purposes of determining current value of the subject property are Properties 5 and 6 advanced by MPAC. These properties were sold within 3 months of the valuation day and the Board considers these TAS values to be the most reliable. Both Properties 5 and 6 have a partially finished basement. Property 5 has an attached garage of similar size as the subject property and Property 6 has a detached garage.

17The TAS value of property 5 is $1,082,689. The TAS value of Property 6 is $1,095,934. Properties 5 and 6 differ from the subject property as follows:

• Dwellings on Properties 5 and 6 are larger than the subject property;
• Properties 5 and 6 are on corner lots;
• Property 6 is on a road with what is considered a ‘light traffic pattern’ by MPAC; and
• The subject property is on a road with what is considered a ‘heavy traffic pattern’.

18Mr. Li testified that the standard adjustment to assessment for a corner lot is -2% and the adjustments for heavy and light traffic patterns are -6% and -2% respectively. Accordingly, the Board adjusts the TAS values of Properties 5 and 6 as follows:

• Property 5 – add 2% for the corner lot variable resulting in a value of $1,104,342;
• Property 6 – add 2% for the corner lot variable and 2% for the light traffic variable resulting in a value of $1,139,771.

19Before making a direct comparison with the subject property the Board applies the 6% reduction for the heavy traffic condition at the subject property to the adjusted values for Properties 5 and 6, resulting in comparative values of $1,038,081 and $1,071,385 respectively.

20These adjusted values represent values per square foot of $967.46 for Property 5 and $963.46 for Property 6. By applying the resulting average value per square foot of $965.46 to the subject property’s building area of 884 square feet, the result is $853,466, or $853,000 rounded. The Board considers this result to be reflective of the market sales in the area, with reasonable adjustments and is therefore the current value of the subject property.

Is a reduction in the current value necessary to achieve equitable assessment when reference is made to the assessments of similar properties in the vicinity?

Appellant’s Evidence and Position:

21Mr. Cortes submitted five properties to make his case for a reduction of the assessment of the subject property for the reason of equity when compared with the assessments of similar properties in the vicinity. He provided the following detail:

Property	Building area	2016 CVA	2016 CVA/ square foot
128 Steeles Avenue	1,206 square feet	$ 1,034,000	$ 857.38
130 Steeles Avenue	1,153 square feet	$ 885,000	$ 767.56
132 Steeles Avenue	1,156 square feet	$ 1,010,000	$ 873.70
136 Steeles Avenue	1,218 square feet	$ 1,040,000	$ 853.86
125 Highland Park Boulevard	1,341 square feet	$ 1,179,000	$ 879.19

22The average assessment per square foot is $846.34, with a median of $ 857.38. Mr. Cortes submitted that when these values are applied to the 884 square foot dwelling on his property, the correct assessment should be between $748,165 and $757,923.

MPAC’s Evidence and Position

23Mr. Li submitted an equity study that included the TAS values of 30 properties in the vicinity of the subject property, and the 2016 current value assessment (“CVA”) of these 30 properties. All 30 properties are within the same neighbourhood as the subject property. The comparison of these assessments to the corresponding sale values is called the Assessment to Sale Ratio (“ASR”). Mr. Li submitted that the range of ASRs in his sample was from 0.762 to 1.076, with a median of 0.995. He explained that this is a statistical exercise to make a determination of equity of assessment. As a result, two parameters are used to confirm that the findings are not erroneous. The first is the co-efficient of dispersion (“CoD”), which is the average difference between any one ASR and the resultant, median ASR in the study. According to Mr. Li, the lower the CoD, the more accurate the findings of the study are considered to be. In this case the CoD is 5.9 which is considered to conform to the International Association of Assessing Officers (“IAAO”) suggested maximum of 15.

24Mr. Li testified that the second parameter used to test the reliability of the equity analysis is the proximity of the median ASR to 1.00. The subject study indicates that the median ASR of the 30 properties in the study is 0.995, meaning that generally speaking, properties that are similar to the subject property, in the same vicinity are assessed at approximately 100% of their current value as determined through sales. Mr. Li testified that a median ASR that is anywhere between 0.95 and 1.05 (as indicated by the IAAO and MPAC) suggests that similar properties in the vicinity are generally assessed at their current value, and that there is no requirement to reduce the current value determined to make the assessment equitable.

Board’s Analysis

25The concept of reducing the current value determined to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.

26The Appellant’s case focused on the equity of the returned value of the subject property as compared to the assessments of four properties nearby on Steeles Avenue and one property on Highland Park Boulevard. This comparison focused on only one half of the equation needed to determine whether or not a specific assessment is fair and equitable. The other half, the sale value (or current value as defined in the Act), is missing from Mr. Cortes’ comparison. Without a sale to compare an assessment to, it is impossible to determine if a specific assessment is fair when compared to its market value, which is the fundamental aspect of determining whether or not an adjustment to the assessment is required under s 44(3) (b) of the Act.

27In contrast, MPAC’s equity study compared the TAS values of 30 similar residential properties to their 2016 CVA. These 30 properties were all in the vicinity of the subject property.

28The Board finds that the best evidence of equitable assessment is that of MPAC. The equity study concludes that the subject property does not require a downward adjustment to the subject property’s assessment for it to be equitable. This conclusion is supported by the data in the study which conforms to the standards of the IAAO and MPAC. These findings were not refuted by the Appellant.

29The Board finds that there is no evidence to support a reduction of the current value determined for the assessment of the subject property to be equitable, when reference is made to the assessments of similar properties in the vicinity.

CONCLUSION

30The Board finds that the current value of the subject property for the 2017 taxation year is $853,000. The Board also finds that no reduction of this value is necessary to achieve an equitable assessment.

31Accordingly, the assessment of the property at 126 Steeles Avenue East in the Residential property class, for the 2017 taxation year is reduced from $966,000 to $853,000.