Murray v. Municipal Property Assessment Corporation, 2018 CanLII 40406

Assessment Review Board

Issue Date: April 30, 2018 File No.: WR 147442 Assessed Person(s): Alastair McDonald Murray and Jennifer Emily Murray Appellant(s): Jennifer Murray and Alastair Murray Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 09, City of Toronto Property Location(s): 433 The Kingsway Municipality(ies): City of Toronto Roll Number(s): 1919-022-285-02700-0000 Appeal Number(s): 3186855 Taxation Year(s): 2016 Hearing Event No.: 680968 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended Heard: June 16, 2017 in Toronto, Ontario

Appearances

Parties	Representative
Jennifer McDonald and Alastair McDonald	Surin Toor
MPAC	Edward Mui and Frank Lee
City of Toronto	No one appeared

Decision of the Board Delivered by Warren Morris

Introduction

1The subject property is a 5,510 square foot, single family detached dwelling on a irregularly shaped lot assessed by MPAC as having an effective frontage of 119 feet and an effective depth of 242 feet abutting a golf course, located in the Islington-Kingsway area of west Toronto, formerly Etobicoke. The subject property is municipally known as 433 The Kingsway. The property was built in 2014 and has four bedrooms and six bathrooms.

2This appeal is for the 2016 taxation year, for which the valuation date is January 1, 2012. MPAC had returned a current value assessment ("CVA") for the subject property of $4,777,000. Alastair McDonald Murray and Jennifer Emily Murray ("Appellants") believe the assessment was too high, largely because the subject property was purchased in December 2016 for $4,500,000 and that the subject property appreciated considerably since the valuation date of January 1, 2012. The Appellants believe the correct assessment should be approximately $3,500,000. Both MPAC and the Appellant's representative presented evidence of property sales to support their positions.

3At the completion of the hearing, the Board reserved its decision.

Issue

4The issues are to determine the current value of the property, and to ensure that the current value is equitable relative to the assessed values of similar properties in the vicinity. More specifically, the Board must determine whether the sale of the subject property in December 2016 should be considered, and if so, how much weight should be given to the sale of the subject property.

Decision

5The Assessment Review Board ("Board") finds that the current value of the subject property is $3,881,000.

6Further the Board finds that there is no evidence before it leading to the conclusion that the current value, as determined above, requires an adjustment in accordance with s. 44.(3)(b) of the Assessment Act ("Act").

7Accordingly, the assessment of the subject property for the 2016 taxation years is $3,881,000.

Reasons for Decision

The Legislation

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

Assessment based on current value. – The assessment of land shall be based on its current value.

9Section 1 of the Act defines "current value" as:

"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.

10Section 19.2(1)3 of the Act states:

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.

11Section 44.(3) of the Act states:

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.

MPAC's Evidence

12MPAC presented exhibits into evidence which included a Valuation Report, Market Analysis, Price Changes over Time, and an Equity Analysis. In its evidence, MPAC relied on five properties that MPAC asserts are comparable to the subject property. A description of these properties and sales information are summarized in the following Chart 1:

Chart 1

Sale	Address	Sale Date	Sale Price/ Time Adj.	Effective Frontage (feet)	Site Area (sq. ft.)	Building Area (sq. ft.)	Year Built	Quality	Other Comments
Subject	433 The Kingsway	Dec. 2016	$4,500,000	119	28,798	5,510	2014	9.5	Indoor pool; private elevator, abuts golf course;
A	29 Blyth Hill Rd	Oct 2012	$6,300,000/ $6,197,568	86	17,200	6,559	2005	9.5	Abuts ravine
B	16 St Margarets Dr	Nov 2011	$5,720,000/ $5,734,966	94	14,570	6,859	2008	9.5	Abuts ravine, green space
C	65 Highland Cres	Nov 2011	$6,288,889/ $6,305,344	95	15,865	6,656	2008	10	Abuts ravine
D	8 Pheasant Lane	Nov 2011	$4,975,000/ $4,988,017	95	18,335	5,246	2004	10
E	57 Edenbook Hill	Dec 2012	$7,460,000 / $7,313,673	103	47,045	5,919	2001	10	Abuts golf course

13Frank Lee, MPAC Assessor, testified that good comparable sales were hard to come by, and as such he was required to look across the city for sales of similar properties. Mr. Lee acknowledged that Sales A, B and C were not in the same neighbourhood as the subject property. Mr. Lee testified that he believes that Sale D is the most comparable to the subject property given its close proximity, and relatively similar characteristics (slightly inferior square footage, lot size, and age, but slightly higher quality).

14Although Mr. Lee testified that he had no reason to believe that the sale of the subject property in December 2016 was invalid, he did not take this sale into consideration due to the sale taking place more than four years from the valuation date. He did indicate that MPAC would review this sale in determining the assessed value for the following assessment cycle. He further testified that the difference in assessed values from 2012 to 2016 was approximately 25% on average.

15Based on the $4,988,000 time adjusted value of Sale D, as well as the other comparable sales, Mr. Lee believes that the returned assessment of $4,777,000 is reasonable and, therefore, correct.

Appellant's Evidence

16The Appellant representative, Surin Toor, presented four properties that the Appellant asserts are comparable to the subject property. A description of these properties and sales information are summarized in the following Chart 2:

Chart 2

Sale	Address	Sale Date	Sale Price/	Effective Frontage (feet)	Site Area (sq. ft.)	Building Area (sq. ft.)	Year Built
Subject	433 The Kingsway	Dec. 2016	$4,500,000	119	28,798	5,510	2014
1	431 The Kingsway	May 2011	$2,119,500	80	25,440	3,665	1952
2	423 The Kingsway	April 2010	$2,327,300	106	30,624	3,753	1952
3	427 The Kingsway	Nov 2010	$2,112,500	80	24,331	4,158	1988
4	415 The Kingsway	March 2011	$2,237,000	95	28,975	4,235	1952

17Mr. Toor argued that the best evidence is the sale of the subject property itself. He testified that the sale of the subject property in 2016 was a fair market transaction because it was exposed to the market without any irregularities such as a vendor mortgage or a desperate seller. He presented two listing documents. The first listing showed the subject property listed in September of 2015 for 197 days at a price of $5,398,000 with no sale. The second listing showed the subject property listed in July 2016 for 106 days at a price of $4,995,000 and sold for $4,500,000.

18Mr. Toor then presented a three page document titled Etobicoke Repeat Sales Analysis, which contained a chart of 91 properties that had sold in the years 2010 to 2012, and were then resold during the years 2015 or 2016. The chart sets out the number of months between the sales of the same property and the difference in price between the two dates, followed by a calculation of the average percentage monthly increase between the two sales. The analysis concluded that the average monthly increase ranged from 0.40% to 1.31% per month with the average and median being 0.67% and 0.65% per month respectively. Applying the median of 0.65% over 48 months, Mr. Toor calculated that the average price change over the four year period between 2012 and 2016 was 31.2%. Therefore, he concluded that the market value of the subject property as of January 2012 should be approximately $3,429,878 ($4,500,000 / 1.312). Mr. Toor argued in the alternative, that even time adjusting the sale price by MPAC's estimate of a 25% increase over the four year period, the value of the subject property in 2012 should be no more than $3,600,000.

Current Value

19The 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 no such transaction took place near the valuation date, the next best measure of current value is arm's length and market tested sales 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 building area, lot frontage/area, age and quality of construction, so as to enable a direct comparison to be made between the comparable property and the subject property. In the Board's view, for residential properties, the key element to establish similarity is location, followed by building size then lot size, with the remaining elements also being of being of some importance.

20As stated previously, the best evidence is the sale of the subject property itself and in this case there was such a sale. The Board generally considers only sales that took place within a year or two from the valuation date, since sales close to the valuation date represent the market at that time. The Board is left with the question of how much weight should be given to the sale of the subject property 59 months after the valuation date, and whether such a sale is a better or worse indicator of value than the comparable sales presented.

21The Board is satisfied that the sale of the subject property, albeit 59 months after the valuation date, in this instance is still the best evidence of current value. The only adjustment to the sale price would be for time. The sale of the subject property is identical in location, size, age and quality to itself. There was no evidence of improvements made to the structure. There was no evidence from MPAC to indicate that the sale of the subject property was anything but an arm's length transaction representing a fair market value at the time of sale. The Board is satisfied that the sale of the subject property was a fair market transaction and is prepared to give this sale the most weight.

22The Board is satisfied that a time adjustment to the 2016 sale of the subject property, is warranted to arrive at a 2012 value. The evidence presented by the parties to support how the market values increased between 2012 and 2016 is less than satisfactory. On the one hand, MPAC estimates that there was a general 25% increase in residential property value, although it provided no evidence to support this figure. On the other hand, the Appellant's evidence and analysis leads the Appellant to conclude that there was a 31.2% increase over the four years. However, the Board notes that his analysis included predominantly sales of homes under $1 million, no homes over $2 million, and no information on how many homes were purchased for the purpose of renovating and reselling. Despite the Board's reservations about the quality of the time adjustment evidence, the Board finds that a reasonable approach is to apply the midpoint between the two methods submitted by the parties, that being 28.1% (midpoint between 25% and 31.2%). Therefore, the sale of the subject property, time adjusted, points to a value of $3,512,880 ($4,000,000/1.281), as of January 1, 2012.

23Three of MPAC's comparable sales (Sales A, B and C) took place within a year of the valuation date, however none of these properties are located anywhere near the subject property. Homes located in neighbourhoods east of Yonge Street are not reasonably comparable to home is the Islington-Kingsway neighbourhood. Further, all three properties are considerably larger than the subject property. For these reasons, the Board has not given any consideration to Sales A, B and C. Finally, MPAC Sale E, although located in the vicinity of the subject property, appears to be an unreliable sale given that it sold for almost double the estimated value of the subject property. For this reason, it was not considered by the Board.

24The four sales presented by the Appellant's representative contained homes that were considerably (23% to 33%) smaller than the subject property. Further all of the Appellant's comparable sales were older homes - three being 62 years older than the newly built subject property. Consequently, the Board finds that these homes are not comparable and are therefore given no consideration.

25The only property that the Board is prepared to consider is MPAC's Sale D at 8 Pheasant Lane. However, several minor adjustments are required to make it comparable to the subject property. Sale D is slightly inferior to the subject property with respect to building size, lot size, frontage and age. Conversely, Sale D is superior to the subject property in terms of quality (MPAC rating of 10 instead of 9.5) and less of a negative influence from traffic patterns. Sale D is located in a neighbourhood in close proximity to, but not the same as, the subject property. Overall, Sale D is only somewhat comparable, and will, therefore, be given some, but considerably less weight than the time adjusted sale of the subject property itself.

26By giving the time adjusted sale of the subject property ($3,512,880, as determined in paragraph 22 above) three times the weight of the time adjusted Sale D ($4,988,017, as determined in Chart 1 above), the Board calculates the current value of the subject property to be $3,881,000 (rounded).

27In summary, the Board's finds that the sale of the subject property is the best evidence of market value and, therefore, the Board gives the most weight to the sale of the subject property. Some weight has also been given to MPAC's Sale D. For the reasons stated above, the Board finds the current value to be $3,881,000.

Equity

28The Act requires the Board to address the issue of equity 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.

29The Appellant did not present any evidence related to equity. However MPAC presented an Equity Analysis that compares the assessment and time adjusted sales of 30 similar properties in the vicinity of the subject property, all sales which took place in 2011 or 2012. When taking the assessments as a percentage of sales value, known as the Assessment Sales Ratio ("ASR"), MPAC determined a median ASR to be 1.02, which indicates that similar properties in the vicinity are generally over assessed by approximately 2%. Consequently, MPAC concluded that an equity adjustment is not warranted.

30The Board considered MPAC's Equity Analysis. For such circumstances, there is no opportunity for an equity adjustment to the current value, as the Act states that an equity adjustment should be made "…if such an adjustment would result in a reduction of the assessment of the land" [emphasis added]. Therefore, the Board is satisfied that an equity adjustment is not warranted.

Conclusion

31The current value assessment of the subject property for the 2016 taxation year is reduced from $4,777,000 to $3,881,000.