Light v. Municipal Property Assessment Corporation, Region 14, 2018 CanLII 45231

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 17, 2018

FILE NO.: WR 150642

Assessed Person(s): Earnest Light, Lucia Light

Appellant(s): Earnest Light, Lucia Light

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 14

Respondent(s): City of Markham

Property Location(s): 56 Lambert Road

Municipality(ies): City of Markham

Roll Number(s): 1936-020-112-31176-0000

Appeal Number(s): 3208232 and 3302432 (deemed 2018 appeal)

Taxation Year(s): 2017 and 2018 (deemed appeal)

Hearing Event No. 691172

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

Earnest Light, Lucia Light

Self-represented

MPAC

Tania Papaikonomou

City of Markham

No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property has a returned value for the 2017 taxation year of $1,043,000. The owners of the property, Earnest and Lucia Light (“Lights”) believe this current value assessment (“CVA”) is too high and does not adequately take into account the shortcomings of the property. These shortcomings include an irregularly shaped lot, a unique lot location and some building deficiencies that arose from a previous renovation/addition that was not completed properly.

2The Lights also have issues with the way MPAC applies value adjustments to the subject property based on its selected comparable properties.

3MPAC believes that the current value of the subject property is actually higher than the value returned on the assessment roll, given the more in-depth valuation undertaken as a result of the appeal filed by the Lights. Tania Papaikonomou, the Assessor representing MPAC conducted a valuation study using other residential properties in the area to arrive at a value of $1,071,000. Ms. Papaikonomou stressed that MPAC was not seeking an increased assessment, but that this calculated value was meant only to support the returned value, which she sought to have confirmed by the Assessment Review Board (“Board”).

4The 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

5The Board finds that the current value of the subject property for the 2017 taxation year is $1,052,000. The Board also finds that a reduction of this value is necessary to achieve equitable assessment with that of similar properties in the vicinity.

6Accordingly, the assessment of the property at 56 Lambert Road, for the 2017 and deemed 2018 taxation years is reduced from $1,043,000 to $998,000, 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”).

8Section 1 of the Assessment 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.

9Section 19.(1) of the Assessment Act states:

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

10Section 44.(3) of the Assessment 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

11Ms. Papaikonomou 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 January 1, 2016 statutory valuation day are used to approximate the current value of the property under appeal. She stated that 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 is considered reasonable.

12Because market conditions and sale prices change over time, and because the comparable properties were not sold on the valuation day of January 1, 2016, Time Adjustment Factors (“TAF”) are applied 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 266 sales of residential properties in the market area, between May 2013 and October 2016. By plotting these 266 sales, MPAC assigned a TAF that represents the adjustment in value necessary to reflect the change in a specific sale price so that it can be compared with the subject property and other sales as though they all sold on the statutory valuation day of January 1, 2016.

13Ms. Papaikonomou used the sales of ten properties in her analysis that she found to be comparable to the subject property. The range of the Time Adjusted Sale (“TAS”) values of these ten comparables is $967,000 to $1,743,547. The details of the characteristics of Ms. Papaikonomou’s comparable properties are summarized in Table A.

TABLE A

Lot Area (acres)

Notes

Living Area (sq. ft.)

Sale Price ($)/Date

TAS Price ($)

TAS Price/sq. ft.

2016 CVA ($Mil)

2016 CVA/ sq. ft.

Subject Property

0.15

2,083

N/A

N/A

N/A

1.043

500.72

Sale 1

0.13

2,406

1,015,000/ June 2015

1,104,371

459.01

1.106

459.68

Sale 2

0.14

Abuts green space

2,940

1,160,000/Oct 2015

1,192,158

405.50

1.258

427.89

Sale 3

0.11

Abuts hydro corridor

2,476

815,000/ Jan 2015

967,192

390.63

.937

378.43

Sale 4

0.12

2,227

1,261,000 /July 2016

1,147,502

515.27

1.042

467.89

Sale 5

0.22

1,879

850,000/ Sept 2014

1,071,621

570.31

1.083

576.37

Sale 6

0.18

Pool

1,896

1,150,000/Nov 2016

1,001,425

528.18

1.063

560.65

Sale 7

0.16

2,235

1,178,000/Sept 2015

1,227,675

549.30

1.027

459.51

Sale 8 -

0.17

1,799

766,000/May 2013

1,316,409

731.74

1.100

611.45

Sale 9 -

0.17

2,247

1,916,000/July 2016

1,743,547

775.94

1.132

503.78

Sale 10 -

0.29

1,879

1,378,00/June 2017

1,108,808

590.11

1.160

617.35

14Ms. Papaikonomou submitted that the most comparable properties in her sample are Sales 3, 4, 5, 6 and 7, which she considers to be similar to the subject property. In Ms. Papaikonomou’s opinion, sales 2 and 9 are superior in value and Sales 8 and 10 are inferior in value when compared to the subject property.

Appellant’s Evidence and Position

15The Lights disagree with MPAC’s current value for a number of reasons. They submit that:

• The subject lot is a corner lot;

• The subject lot is irregular in shape which affects its utility and its effective lot area is less than what MPAC deems it to be;

• External factors including noise from Highway 407 ETR, exposure to a hydro corridor and proximity to a soccer field affect the value of the property.

16The Lights submitted further that the foregoing conditions result in a total value reduction of some 30.8% resulting in a current value of $721,756. In addition, they submitted that a previous renovation/addition gone wrong has created a foundation deficiency that should serve to further reduce the current value above. They submit that MPAC has not considered any of these conditions in determining the current value of the subject property.

Board’s Analysis

17When reviewing the comparable properties used by MPAC, the Board finds that the most comparable are Sales 4, 6 and 7. These properties are all on cul de sacs like the subject property and have:

• a similar building size

• quality of construction code 7

• a 480 sq. ft. garage

• sale dates in reasonable proximity to the valuation date

• similar lot size

• similar basement finished areas

18The only anomaly among these three properties is a swimming pool at Sale 6. Ms. Papaikonomou testified that in this area of Markham, an in ground pool carries a value of $46,000 for assessment purposes, resulting in a TAS value of Sale 6 for comparison purposes of $955,425.

19The Board disregards the remaining comparable properties for the following reasons:

• Sale 1 has a larger structure, no finished basement area and has a quality construction code of 7.5, higher than the subject property;

• Sale 2 has a larger structure, no finished basement area, a parkland variable, and a quality construction code of 7.5, higher than the subject property;

• Sale 3 has a larger structure, a hydro corridor variable, a walkout basement;

• Sale 5 has a sale date that is too far removed from the valuation day;

• Sale 8 has a utility variable applied, and a sale date that is too far removed from the valuation day;

• Sale 9 has a larger structure and an in ground pool and a green space variable applied; and

• Sale 10 abuts a railway, has proximity to a golf course and a sale date that is too far removed from the valuation day.

20Sales 4, 6 and 7 have TAF sale values ranging from $955,425 (Sale 6, with the downward pool adjustment) to $1,227,675 for Sale 7, with a median value of $1,147,502 (Sale 4). In order to account for the differences in total living area among the three comparable properties and the subject property, the Board determined the per square foot value of each:

• Sale 4 - $515.27

• Sale 6 - $503.31

• Sale 7 - $549.30

21The median value per square foot value of the three comparables is $515.27, and when applied to the square footage of the subject property, of 2,083, the result is $1,073,000 (rounded).

22Rather than attempting to determine the current value of the subject property by comparison, the Lights chose to approach the issue by firstly accepting the returned value, then discounting that value by applying adjustments to the returned value based on MPAC’s standard adjustments for factors they believe exist at the property.

23Firstly, the Lights believe the subject property is a corner lot and as a result, is eligible for a two per-cent reduction in accordance with MPAC’s standards. Their opinion as to whether or not the lot is a corner lot is derived from the City of Markham’s zoning by-law which considers the subject lot to be a corner lot owing to its frontage on Lambert Road on both the front yard and the side yard.

24Ms. Papaikonomou sees it differently from MPAC’s perspective. MPAC only applies their corner lot designation and its associated two per-cent downward adjustment when the subject lot has a flanking street; that is, when the lot has frontage on two streets. That is not the case here according to Ms. Papaikonomou and accordingly, the two per-cent adjustment has not been applied.

25While MPAC considers this a lot on the ‘entry to a cul-de-sac’, the Board finds that a corner lot adjustment should be applied. There are no neighbouring lots to the west of the subject property. The only ‘neighbour’ to the west is the continued road allowance of Lambert Road, which at that point widens to a cul-de-sac. This requires the west side of the subject property to adhere to the Town’s zoning by-law, which stipulates an ‘exterior side yard’ in this location which has a significantly larger setback requirement than a simple interior side yard that the subject property would have if it was adjoining another lot on the west side. The Board applies a negative two per-cent adjustment to the current value determined as a result.

26Secondly, the Lights believe the zoning setbacks from their irregularly shaped lot means that the usable lot size is much smaller. The Board finds that the metrics impacted by the exterior side yard owing to the corner lot condition is the reason for the usable space on the lot being smaller than it would be otherwise. The two per-cent reduction applied for the corner lot is seen by the Board as being the most appropriate measure to address the resultant smaller usable lot. No additional reduction in value is warranted.

27With respect to the arguments advanced by the Lights regarding a sports field, hydro corridor and highway 407, the Board finds that these features are neither abutting the subject property, nor are they in proximity to it. For a feature to abut a property, it needs to share a property boundary. While the subject property is abutting open space, there is an intervening wooded area between the subject property and a soccer field that the Lights suggest impacts their enjoyment of their property. The Board has no objective evidence of what the impact is on the value of the property for this condition.

28With respect to the hydro corridor, there is an intervening and substantial public open space use between the subject property and the hydro corridor to the north. The Board finds that the corridor is neither in proximity to nor abutting the subject property. Therefore no adjustment is warranted.

29With respect to highway 407, both the adjacent open space, and hydro corridor lie between the subject property and the highway. The Board accepts MPAC’s unrefuted position that sales do not reflect any kind of adjustment for the presence of the highway in the Lambert Road area. MPAC does not apply any adjustment to the neighborhood for this purpose. The Board finds this to be fair and consistent and no reduction is applied to value for this reason in this case.

30Finally, the Lights submitted a quote from a contractor indicating that the cost of repairing the previous renovation’s errors would amount to $103,200.00 plus harmonized sales tax. While the Board does not question the Lights’ intentions in submitting the quote, there is no detail as to how the contractor arrived at the specific value, or what the specific impact on the property’s current value is as a result of the building deficiency. Furthermore, the contractor was not present to answer questions as to the scope of the work proposed or any alternative methods. The Board does not consider the quote submitted to be of adequate detail to support any adjustment for value.

31The Board finds that the best evidence of the current value of the subject property is its comparison with Sales 4, 6 and 7 advanced by MPAC and reduced by two per-cent for the corner lot adjustment for a value of $1,052,000 (rounded).

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

32The Lights did not advance any specific argument with respect to the equity question. Their submissions related entirely to the approach taken by MPAC and the finding of current value by MPAC.

MPAC’s Evidence and Position

33Ms. Papaikonomou submitted an equity study that included the TAS values of 30 properties in the vicinity of the subject property, and the 2016 CVA of these 30 properties. The comparison of these assessments to sale values is called the Assessment to Sale Ratio (“ASR”). Ms. Papaikonomou submitted that the range of ASRs in the sample was from 0.649 to 1.081, with a median of 0.949. She 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 reliable. 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. The lower the CoD, the more accurate the findings of the study are considered. In this case the CoD is 9.4 which is considered to conform to the International Association of Assessing Officers’ (“IAAO”) suggested maximum of 15.

34The 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 0.949, meaning that generally speaking, properties that are similar to the subject property, in the same vicinity are assessed at just below 95 per-cent of their current value as determined through sales. Ms. Papaikonomou testified that a median ASR that is anywhere between 0.95 and 1.05 (as indicated by the IAAO and MPAC) suggests that properties 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

35The 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 finding of current value, 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.

36The Board notes that 13 of the 30 properties in MPAC’s equity analysis had ASRs below the 0.95 to 1.05 range that MPAC relies on for accuracy, while only four of the 30 properties had an ASR above that range. The Board recognizes that rounding of the median ASR to 0.95 might appear reasonable, but the Board is satisfied that the equity study provided by MPAC shows that, however marginally, assessments are below MPAC’s range where no adjustment is required.

37Accordingly, the Board finds that the evidence requires a reduction in the current value determined, to make the assessment of the subject property equitable with the assessments of similar properties in the vicinity. The median ASR of 0.949 is therefore applied to the current value determined herein of $1,052,000 for an assessment of $998,000 (rounded).

CONCLUSION

38The Board finds that the current value of the subject property for the 2017 taxation year is $1,052,000. The Board also finds that a reduction of this value is necessary to achieve equitable assessment with that of similar properties in the vicinity.

39Accordingly, the assessment of the property at 56 Lambert Road, for the 2017 and deemed 2018 taxation years is reduced from $1,043,000 to $998,000, in the Residential property class.

2018 DEEMED APPEAL

40An appeal for the 2017 taxation year is presently before the Board. Section 40.(26) of the Assessment Act provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2017 appeal before March 31, 2018. For that reason, this decision also applies to the 2018 taxation year.

41Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

(26) For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.