Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 17, 2018

FILE NO.: WR 151099

Assessed Person(s): Helene Vassos

Appellant(s): Helene Vassos

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

Respondent(s): City of Toronto

Property Location(s): 12 Barbara Crescent

Municipality(ies): City of Toronto

Roll Number(s): 1906-024-460-07400-0000

Appeal Number(s): 3260388

Taxation Year(s): 2017

Hearing Event No.: 689882

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

Heard: December 12, 2017 by teleconference call

APPEARANCES:

Parties	Counsel+/Representative
Helene Vassos	Dion Vassos+
MPAC	Andre Campbell
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1The subject property is a single-family detached dwelling built in 1945, with an effective year built of 1986 and construction quality of 7.0. It has a lot with 40 feet of effective frontage, 190 feet of effective depth, an effective site area of 0.09 acres with a building total area of 2,877 square feet (“sq. ft.”). The basement area is 963 sq. ft. of which 220 sq. ft. is finished. The subject property was renovated in 1994, and was given a renovation code “C” by MPAC. The subject property receives a 5% positive adjustment for abutting a ravine type 1 and in addition it benefits from an 8% negative adjustment carried over from previous appeal decisions. The parties could not provide the Assessment Review Board (“Board”) with the reason for the 8% negative adjustment.

2For the 2017 taxation year, the current value assessment (“CVA”) was returned at $1,327,000. Andre Campbell, MPAC’s assessor requested that the Board confirm this assessment based on the three comparable property sales within the vicinity of the subject property.

3Dion Vassos, representing the Appellant submits that the assessment is too high. According to him, MPAC’s assessment of properties closest to the subject property is higher than their sales price. He submitted that the correct CVA for the subject property should be $1,153,000.

ISSUE

4The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 taxation year?

ii.) Is the current value as determined by the Board equitable in reference to the assessments of similar lands in the vicinity?

DECISION

5The Board confirms the current value as returned for the 2017 taxation year at $1,327,000.

6The Board determines that this assessment at current value is equitable with the assessments of similar lands in the vicinity; hence no further reduction is required to achieve equity.

REASONS FOR DECISION

Current Value – Evidence & Analysis

7In accordance with s. 44.(3)(a) the first mandate of the Board is to determine “the current value of the land.” Section 1 of the Assessment Act (“Act”) defines current value as “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.” That is, for the 2017 taxation year, the Board must determine what the subject property would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by the Act.

8Section 19.2(1) of the Act prescribes the valuation days, which provides:

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 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.

Exception

(5) Subsection (1) does not apply in respect of the valuation of land for a taxation year after 2004 if the Minister prescribes a different day as of which land is valued for that year.

9Section 40.(17) of the Act places “the burden of proof as to the correctness of current value on MPAC.”

MPAC’s Evidence

10Mr. Campbell presented the Board with three comparable property sales in proximity to the subject property. Details of the three comparable property sales are summarized in Table 1 below:

Table 1

Address	Assessment ($)	Sale Date Sale Amt. ($)	Time / Adjusted Sale ($)	Building/Size ("sq. ft.")	Lot Size ("A")	Year Built/Effective Year Built	Construction Quality
Subject Property 12 Barbara Crescent	1,327,000	N/A	N/A	2,877	0.09	1945/1986	7.0
Sale 1 6 Barbara Crescent	1,551,000	Sept. 2015 (1,465,000)	1,524,244	3,296	0.19	1943/2001	7.0
Sale 2 18 Davies Crescent	1,494,000	Feb. 2016 (1,550,000)	1,524,603	2,759	0.11	2014	7.5
Sale 3 736 O’Connor Drive	1,518,000	August 2016 (1,645,000)	1,518,524	2,463	0.46	1940/1991	7.0

11The three properties abut ravine type 1. Sales 2 and 3 benefit from a 14% negative adjustment for heavy traffic pattern. Mr. Campbell submits that there are differences between the subject property and the three sales, as some of the comparable sales have superior features when compared to the subject property and this has been accounted for in the lower assessed value of the subject property. He further submits that the median Time Adjusted Sale (“TAS”) price for the three properties is $1,524,244 and the average is $1,522,457. He concludes that the assessment of the subject property is below what properties in the vicinity are selling for in the market, consequently he submits that the assessment of the subject property is fair and requests that the Board confirms the assessment as returned.

Appellant’s Evidence

12Mr. Vassos commenced his evidence with a history of the assessment of the subject property. He submits that MPAC has historically been incorrectly assessing the subject property, and that from the last assessment cycle to the present, a 25% increase is unreasonable and unsupported based on the current valuation of similar properties in the vicinity. Furthermore, that the assessed value of the subject property is “inappropriate and brings this assessment process into disrepute.”

13He testified that in 2009, the City of Toronto (“City”) advised the residents of Barbara Crescent, that “a 60 meter section of the sewer buried in front of their homes approximately 40 meters beneath Barbara Crescent was cracked and chipping.” The City further advised the residents that the sewer had failed and would collapse and in order to resolve this issue, an emergency ravine had to be constructed at the rear portion of the properties. He presented the Board with several articles to corroborate his evidence. He further testified that when this issue became public, the City no longer granted building permits, for homes on Barbara Crescent, due to the fear of a sink hole developing. Furthermore, he submits that this affected the re-sale value of all the properties on the ravine including the subject property. He concluded that MPAC did not take all these into consideration in its assessment of the subject property.

14Mr. Vassos further presented five properties which he believes are comparable with the location of the subject property. These properties have assessments ranging from $880,000 to $992,000, with building total areas ranging from 1,452 to 1,968 sq. ft. He submits that from the assessments of these comparable properties, the assessed value of the subject property is not in line with its actual value.

15He also suggested that the subject property is also subject to the same heavy traffic pattern as MPAC’s Sale 2 and 3.

16Regarding MPAC’s Sale 1, which is 6 Barbara Crescent, on the same street as the subject property, Mr. Vassos called a witness, John Papadopoulos, a builder, who was hired to renovate this property.

Evidence of John Papadopoulos

17Mr. Papadopoulos testified that he is a home builder and the owner of Summit Construction Group Inc. and he has built approximately 35 to 40 homes. He testified that he built 6 Barbara Crescent between 2003 and 2004 and that plans were submitted to renovate this home, however, this changed due to the dilapidated condition of the foundation. Furthermore, that under the Ontario Building Code, the definition of a renovated home is maintaining 50% of the existing walls above grade. In the case of 6 Barbara Crescent, he had to re-build 100% of the walls, the floors and the whole floor on the main floor was practically destroyed. He testified that at least 30% more money (approximately $230,000 to $240,000) was utilized, which was more than what was planned for the renovation. He concluded that 6 Barbara Crescent is a new home and not a renovated home, and that a new home is worth $300,000 more than a renovated home.

18During cross-examination, he admitted that at least 20% of the old foundation for 6 Barbara Crescent still exists and he has no knowledge of whether it was listed as a custom built home or a new home. He further admitted that it did not receive a new home warranty because for Tarion, a renovated home cannot have any part of the old foundation to qualify as a new home. Furthermore, he admitted during cross-examination that it was not necessary to apply for a new home building permit. All that was required was for an Engineer from the City to inspect the property and if the walls are dilapidated the City would approve it to be built and since the scope of work turned to a new build, no new permit was filed. He concluded his evidence by stating that as a professional builder, 6 Barbara Crescent is a new home despite the fact that it is still sitting on 20% of its old foundation.

19Sequel to Mr. Papadopoulos evidence, Mr. Vassos submits that 6 Barbara Crescent was assessed by MPAC as a renovated property rather than a new home; hence, it is under assessed. He argues that its sale price of $1,465,000, demonstrates that the assessed value is low, since it should have been assessed as a new home. He submits that this property should have been assessed at $1,800,000. That it’s TAS of $1,524,244, which is approximately $300,000 lower than the “proposed” assessment of $1,800,000 is as a result of the construction of the ravine and fears by potential purchasers. In the same manner, regarding the subject property, he submits that MPAC has neglected to consider this stigma therefore the assessed value of the subject property should be at least $200,000 less resulting to a CVA of approximately $1,150,000. He concludes that this shows a pattern of incorrect assessment in the area of the subject property.

Current Value - Analysis

20The Appellant presented evidence which corroborates his testimony that on an emergency basis, the City had to construct a ravine at the rear portion of the properties on Barbara Crescent, where the subject property is located. He submits that this had an impact on the resale value of houses on this street. The parties had no knowledge of any adjustment made to properties on this street due to the construction. During cross-examination Mr. Vassos admitted that the construction ended between 2013 and 2014. Mr. Campbell advised the Board that in the 2013 taxation year, the subject property was under appeal before the Board and from the notes of the assessor on that file, the construction of the ravine was not an issue in that appeal. Mr. Vassos could not confirm this, stating that he was not involved in the 2013 appeal. Mr. Vassos urged the Board to quantify the impact of the construction based on five properties he identified in MPAC’s equity analysis, which are closest to the subject property and 6 Barbara Crescent, which have a higher assessment than their actual sale price, and the difference between the TAS price and the assessed value is approximately $200,000 - $300,000. Mr. Vassos submits that this amount should also be deducted from the subject property’s CVA.

21Mr. Vassos evidence regarding quantifying the stigma associated with the construction of the ravine is speculative, especially when he did not provide the Board with evidence of any adjustment made to the valuation of the homes on this street due to this stigma. He also testified that the construction ended between 2013 and 2014. This appeal is under a new cycle. Mr. Vassos submission that the impact from the construction affected the sales prices of the houses on this street lacks market evidence as revealed in the sale of 6 Barbara Crescent. Furthermore, the Board cannot arbitrarily assign a negative or positive adjustment to value without quantitative evidence.

22Mr. Vassos analysis of the assessment of Sale 1 - 6 Barbara Crescent is also speculative. The parties did not question the validity of this sale and further confirmed that it was an open market sale. Mr. Vassos conclusion that the assessment of Sale 1 should have been $1,800,000 is not supported by substantial evidence. Mr. Papadopoulos admitted during cross-examination that 20% of the old foundation is still present and he has no knowledge of this home being listed as a new build and most importantly, he made no reference to the open market sale of this property. The Board cannot ignore a market sale and resort to utilizing an arbitrary amount to determine the current value of the subject property. According to s. 40 of the Act, any person can appeal the incorrect current value of another person’s land. Mr. Vassos can appeal the current value of 6 Barbara Crescent. The subject property is currently under appeal and not 6 Barbara Crescent.

23Mr. Vassos further suggested that the subject property is subject to the same heavy traffic pattern as Sale 2 and 3. Relevant evidence in this regard was not before the Board. Sale 1 - 6 Barbara Crescent on the same street as the subject property does not have such designation.

24The best evidence of current value is the sale of the subject property on or near the valuation date of January 1, 2016. When no such sale occurs, as in this appeal, the Board looks to the recent sale of other similar properties in the vicinity to determine current value. The Board prefers sales of comparable properties within 12 months on either side of the valuation date of January 1, 2016, although the Board can also go as far back as 18 months on either side of the valuation date of January 1, 2016. The caution being that the further sale is from the valuation date, the less likely it reflects the market value on the valuation date.

25All the sales presented by MPAC are within the shoulder years of the January 1, 2016 valuation date, which is one year before and after the valuation day.

26Mr. Vassos presented assessments of five properties and the only recent sale of one of the properties occurred in April 2011, which sold for $827,500, this sale is too far removed from the valuation date of January 1, 2016. Mr. Vassos also identified five properties in MPAC’s equity analysis, which shall be addressed under the equity section of this decision, however, the Board also considered these five properties for its current value analysis. Mr. Vassos did not present the property details of these sales to enable the Board make a determination on their comparability to the subject property.

27In determining the current value for the subject property, the Board reviewed and used the three comparable property sales presented by MPAC. The Board reviewed the characteristics of each of the comparable sales and agrees with MPAC that the three comparable sales have some superior features compared to the subject property. Sale 1 is regarded as relative comparable to the subject property although it has some superior features such as its building size, effective site area and effective year built. Sale 2 is superior, being 28 years newer than the subject property, using the subject property’s effective year built of 1986. Sale 3 has the largest effective site area. The median TAS price of the three sales is $1,524,244 and the average is $1,522,457. The assessment of the subject property should be adjusted to account for the superior features of these three sales. Mr. Campbell submits that there were no adjustments made for these features, however, this has been taken into consideration in the lower assessed value of the subject property, when compared to its market value based on these three sales.

28The subject property’s current value range is below the relatively comparable Sale 1 and below the midpoint of the range. The high end of the range of Sale 2 which sold at a TAS of $1,524,603, has superior features such as a larger effective site area, its 28 years newer than the subject property. Sale 1, located three doors away from the subject property, subject to the same construction issue as provided by the Appellant has a TAS of $1,524,244. Sale 1 is regarded as relatively comparable to the subject property in terms of its lot size, its variable of abutting a ravine type 1 and construction quality. The building size of Sale 1 is larger than the subject property. This places the subject property below Sale 1. Given that Sale 1 is relatively comparable to the subject property although has superior features to the subject property, the Board agrees with MPAC that the subject property’s assessment falls below these sales.

29On the balance of probabilities, the current value of the subject property should be lower than the three sales presented by MPAC based on the superior features that the three sales have of which adjustments have not being made by MPAC. It is therefore reasonable to conclude that Sale 1, three doors away from the subject property, which has an adjusted sale of $1,524,244, with some superior features, is relatively comparable to the subject property. The current value of the subject property should fall slightly below this sale due to the superior features of Sale 1.

30Furthermore, the Assessment to Sales Ratio (“ASR”) of each of the three sales are 1.02, 0.98 and 1.00. The median ASR is 1.00 and the average ASR is 1.00. This measures how MPAC’s valuation methodology is reflecting sales within this vicinity. It further depicts that the subject property’s assessment should similarly reflects the market. However, MPAC has assessed it below the market. The Board therefore confirms the CVA as returned at $1,327,000.

Equity Analysis

31Section 44.(3)(b) mandates and directs that after determining current value, 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 the land.”

32The ASR is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the TAS price.

MPAC’s Evidence and Position

33Mr. Campbell presented an equity analysis of 30 residential sales within 5.3 kilometers of the subject property from January 2015 to December 2016, with a median ASR of 1.014. He submits that this is in line with the International Association of Assessing Officers (“IAAO”) standards, which state that the median ratio should fall between 0.90 and 1.10. If the median ratio falls within this range, this reveals that the CVA’s are reflective of sales prices in the vicinity. Mr. Campbell further submits that similar real properties in the vicinity have been assessed accurately and uniformly.

34Mr. Campbell argues that if the median ASR is multiplied by the subject property’s returned CVA of $1,327,000, the equitable assessment will be $1,345,000. This make the equitable assessment higher than the CVA, hence no equity adjustment is permitted under the Act.

Appellant’s Position

35Mr. Vassos used five of Mr. Campbell’s 30 properties and Sale 1 (6 Barbara Crescent), for his equity argument. Mr. Vassos identified these properties as being closest to the subject property and submits that for all these five properties, their assessed values are higher than their TAS price, without any reason and justification. He submits that there is a difference of approximately $200,000 to $300,000, in the TAS price and the assessed value for each of these five properties, including Sale 1, using his arbitrary selected assessed value of Sale 1 at $1,800,000. He submits that this difference should be applied to the subject property and the correct CVA should be $1,153,000, making this a fair and equitable value. Using Mr. Vassos’ argument, Mr. Campbell calculated the median ASR for the five properties identified by Mr. Vassos including Sale 1 as 1.19, and the average as 1.17, Mr. Vassos did not object to Mr. Campbell’s calculation.

Equity Analysis

36Mr. Vassos’ equity argument is based on six sales. The purpose of s. 44.(3)(b) of the Act is to ensure that the municipal tax burden is shared fairly and equally among similarly situated taxpayers. Six properties do not establish a trend in assessment to determine if equity has been achieved. MPAC’s evidence shows that 30 other residential properties are assessed at or near the CVA. Furthermore, using either the median or average ASR for these six properties against the current value as determined by the Board and suggested by Mr. Vassos, would provide a current value higher than the retuned assessment. This further justifies no reduction based on equity.

37The evidence does not lead the Board to the conclusion that the current value as determined by the Board should be further reduced to make it equitable with the assessments of similar lands in the vicinity.

CONCLUSION

38Based on all of the evidence, the Board determines the current value to be $1,327,000 and finds this value to be fair and equitable. Consequently, the Board confirms the returned assessment of the subject property as $1,327,000 for the 2017 taxation year.