Shahrokh Zangeneh v. Municipal Property Assessment Corporation, 2018 CanLII 47889

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: May 24, 2018

FILE NO.: WR 152295

Assessed Person(s): Angela Kim Bernhofs and Shahrokh Zangeneh

Appellant(s): Shahrokh Zangeneh

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15

Respondent(s): Town of Oakville

Property Location(s): 232 Lakewood Drive

Municipality(ies): Town of Oakville

Roll Number(s): 2401-030-140-19900-0000

Appeal Number(s): 3255517 and 3306511 (deemed 2018 appeal)

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

Hearing Event No.: 694864

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

Heard: March 19, 2018 in Oakville, Ontario

APPEARANCES:

Parties	Representative
Shahrokh Zangeneh	Robert Baranowski
MPAC	Terence Johnston
Town of Oakville	Susan Price

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1The Appellant appealed the assessment of the subject property for the 2017 taxation year. Robert Baranowski representing the Appellant argues that the assessment is too high. The subject property was assessed at $2,195,000 for the 2017 taxation year. MPAC requests that the Current Value Assessment (“CVA”) as returned be confirmed. The Appellant requests a current value of $1,008,000 or $1,511,000.

2At the commencement of the hearing, the parties agreed that there is no issue regarding equity. MPAC had provided as part of its evidence an equity analysis report. The Assessment Review Board (“Board”) is mandated by the Assessment Act (“Act”) to consider if the determined current value is equitable with the assessment of similar lands in the vicinity.

3The subject property is assessed by MPAC as a single-family detached on water, located in Central Oakville. According to MPAC, this area is bounded by Dorval Drive to the west, Speers Road to the North, 16 mile creek to the east and Lake Ontario to the South, as result it is considered as a waterfront property. The parties agree that it is a waterfront property.

4The subject property’s building was originally built in 1959; it has an effective year built of 1966. The property has a lot with 105 feet of effective frontage, 166 feet of effective depth, an effective site area of 0.39 acres, a building total area of 2,212 square feet (“sq. ft.”) and construction quality of 6.5. It has a basement area of 957 sq. ft. of which 797 sq. ft. is finished.

ISSUES

5The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 and deemed 2018 taxation years?

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

DECISION

6The Board finds the current value of the subject property for the 2017 and deemed 2018 taxation years to be $2,044,000 (rounded).

7The Board reduces the assessment as returned for the 2017 and deemed 2018 taxation years from $2,195,000 to $2,044,000 (rounded) and further determines this to be equitable with the assessment of similar lands in the vicinity.

REASONS FOR DECISION

Current Value – Evidence and Analysis

8In 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 and deemed 2018 taxation years, 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.

9Section 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.

10Section 40.(17) of the Act places “the burden of proof as to the correctness of current value on MPAC.”

MPAC’s Evidence

11Terence Johnston, MPAC’s assessor testified that the subject property benefits from a 15% negative adjustment, which MPAC applied to its assessment to bring it in line with the sales of properties in its area. He presented the Board with the sales of three waterfront properties not in the same homogenous neighbourhood as the subject property, testifying that there are very few sales of waterfront properties in the area and MPAC had to expand its search beyond the homogenous neighbourhood. The Time Adjusted Sale (“TAS”) prices for the three properties range from $1,603,440 to $2,306,054 with sale dates from November 2014 to September 2016. The building total area of the three properties range from 1,779 sq. ft. to 2,208 sq. ft., with effective year built from 1977 to 1993. Only Sale 3 property building has the same construction quality as the subject property’s building. Sale 1 and Sale 2 buildings have construction qualities of 7.0 and 7.5 respectively. The effective lot sizes of the three sales properties range from 0.2 to 0.31 acres. Sale 2 property has an indoor pool and benefits from an adjustment for medium traffic pattern. Mr. Johnston testified that no adjustments were made for traffic, lot sizes or the pool since all the sale comparables have features that balance out with the subject property.

12He further testified that Sale 1 and 3 properties are considered inferior to the subject property due to their smaller lot size and location, since the subject property is closer to downtown Oakville, which commands a higher value. He considered Sale 2 property as similar to the subject property in its building and lot sizes and it has a TAS price of $2,306,054. Mr. Johnston concluded that the returned CVA of the subject property is considered reasonable.

Appellant’s Evidence

13Mr. Baranowski presented the Board with two sales. He used Sale 1—215 Lakewood Drive, a single-family detached not on water to arrive at what he determined as the correct current value of the subject property. He used Sale 2—22 Holyrood Avenue as a reference property to show the Board, that MPAC is providing a higher CVA for the subject property, when compared to the sale of this reference property, which has more superior features such as building size of 4,236 sq. ft., year built of 1999, construction quality of 7.5 and it sold in January 2016 at $2,900,000, which is not far removed from the returned value of the subject property.

14Mr. Baranowski testified that the Sale 1 property is in the same homogenous neighbourhood as the subject property, on the same street, it is similar in lot size, year built, construction quality and building size as the subject property. This property sold on March 2015 for $1,080,000. It has an effective lot size of 0.3 acres; the property building was originally built in 1954, with construction quality 6.5 and building total area of 2,461 sq. ft. As part of his evidence in Exhibit 2, Mr. Baranowski provided MPAC’s “Market Valuation Report” for residential properties in Oakville. He used the time adjustment factor 1.0382 in this document to time adjust Sale 1 to a TAS price of $1,121,000 (rounded). He used the TAS value rate per square foot of $455.50 of this sale and applied it to the building total area of the subject property to provide a current value of $1,008,000 (rounded) for the subject property. He submits that based on the sale of this identical property, the Board should determine the current value of the subject property as $1,008,000.

15In the alternative, Mr. Baranowski submits that in order to add a value of being on water to property Sale 1, to make it more comparable to the subject property, he applied the waterfront adjustment per foot for the subject property, as provided by MPAC in the Appellant’s evidence as $6,529.66 per foot. He applied this rate to the effective frontage of Sale 1, which is 77 sq. ft. and he obtained a value of $503,000 (rounded). He added this amount to the current value he provided to the Board at $1,008,000 which will provide a revised current value of $1,511,000. He further submits that the Board can also determine the current value of the subject property as $1,511,000.

16Mr. Baranowski further referred to MPAC document “Market Valuation Report” for residential properties in Oakville, which shows various levels of adjustments provided by MPAC for various homogenous neighbourhoods in Oakville. He submits that for A 35 in which one of the comparables used by MPAC is located, there is no adjustment, while the subject property benefits from -12% for its location.

Municipality’s Evidence

17Susan Price commenced her evidence by stating that in order to find sales of waterfront properties, the Town had to expand its vicinity to other homogenous neighbourhood. She presented as part of her evidence in Exhibit 3 an aerial photograph of the subject property’s street, which clearly shows the subject property as a waterfront property and 215 Lakewood Drive (Appellant’s Sale 1) on the other side of the street and not on water. She submits that 215 Lakewood Drive is not a waterfront property and would not be marketed as a waterfront property. She presented the Board with two property sales, which she submits are comparable with the subject property. The first sale is the same as MPAC’s Sale 3. Property Sale 2 sold in June 2015, with an effective site area of 0.58 and building total area of 5,968 sq. ft., with construction quality of 8.5.

18Ms. Price submits that these two property sales are comparable to the subject property and that the effective site area of the subject property at 0.39 falls in between the effective lot areas of her two comparables at 0.31 and 0.58 and based on common sense and what is reasonable, the Board should confirm the assessment as retuned at $2,195,000.

Board’s Analysis

19The 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 a sale is from the valuation date, the less likely it reflects the market value on the valuation date.

20The parties agreed that the subject property is a waterfront property. In order to determine the correct current value of the subject property, the Board will look to the recent sales of other similar waterfront properties in the vicinity. The Act does not define vicinity, the Board looks for a handful of similar properties closest to the subject property and if there are no similar properties, the Board can expand to other streets or areas in order to find recent sales of waterfront properties to compare to the subject property. In this regard, the Board accepts the evidence of MPAC and the Town that there are few sales of waterfront properties in the homogenous neighbourhood of the subject property and they had to expand their search to other homogenous neighbourhood in order to find sales of waterfront properties similar to the subject property.

21The Board agrees with MPAC and the Town that the Appellant’s Sale 1—215 Lakewood Drive is not a waterfront property. Mr. Baranowski does not dispute this fact. In his evidence, he calculated a waterfront premium to add to the effective frontage of Sale 1 in order to present an alternative current value for the subject property. The Board disagrees with Mr. Baranowski’s approach. The Board looks to the recent sales of similar properties in or around the valuation date to determine the correct current value for the subject property. The Appellant’s Sale 1 is not a waterfront property and it obviously did not sell as a waterfront property. Mr. Baranowski’s calculation of adding a waterfront premium based on MPAC’s valuation of the subject property to Sale 1 to make it comparable to the subject property is not sufficient to make this property comparable to the subject property. A prudent purchaser will not buy Sale 1 as a waterfront property and agree to add a waterfront premium to it to make it a waterfront property. For this reason, the Board disregards the Appellant’s Sale 1 as it is not similar to the subject property. Mr. Baranowski’s reference property was not used to establish current value, but to show the Board that MPAC incorrectly assessed the subject property.

22The Town’s Sale 2 property is also not comparable to the subject property, in lot and building size and construction quality.

23In determining the correct current value for the subject property, the Board reviewed and used the three comparable property sales presented by MPAC, including Sale 1 of the Town, which is the same as MPAC’s Sale 3. The Board determines that MPAC’s Sales 1 and 3 properties are relatively comparable to the subject property in terms of effective lot size and building size. The subject property has the largest effective lot size. Sale 1 building is 15 years newer than the subject property building, with construction quality of 7.0; this is accounted for in its building size, which is 433 sq. ft. smaller than the subject property, with an unfinished basement and three bedrooms compared to the subject property that has a finished basement and six bedrooms. Sale 3 property has an effective lot size of 0.31 acres and building size of 2,192 sq. ft., which is similar to the subject property. The building has the same construction quality of 6.5 as the subject property’s building. MPAC’s Sale 2 property is considered superior to the subject property although it has a smaller lot size of 0.2, it has a building size of 2,208 sq. ft., which is also similar to the subject property. However, the building has a higher quality of construction of 7.5, with an indoor pool, of which MPAC provided no adjustment.

24Therefore the current value range of the subject property is illustrated in figure 1 below:

Figure 1

Sale1 and 3 Relatively comparables → $1,603,440 and 1,782,625 →

Subject Property’s Current value range $2,044,339.5

Sale 2 Superior Comparable ← $2,306,054 →

25The subject property’s current value range is closer to the superior comparable property and not at the midpoint of the range. The high end of the relatively comparable sold at $1,782,625. This sale has a smaller lot and building size compared to the subject property. It has 1 ½ storey compared to the subject property’s two-storey structure. It has three bedrooms while the subject property has six bedrooms. The subject property’s current value range is lower than the superior Sale 2 property as this sale is 27 years newer than the subject property using the subject property’s effective year built of 1966, with a higher quality of construction of 7.5 and an indoor pool.

26The Board determines that the correct current value of the subject property is $2,044,000 (rounded).

Equity Analysis

27Section 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.”

28The Assessment to Sales Ratio (“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.

29The parties advised the Board at the commencement of the hearing that equity was not an issue at the hearing. The evidence before the Board shows that the current value as determined is equitable with the assessment of similar properties in the vicinity and no further adjustment is required.

CONCLUSION

30Based on all of the evidence, the Board determines that the correct current value of the subject property to be $2,044,000 (rounded). This requires no further equitable adjustment. Consequently, the Board reduces the returned assessment of the subject property from $2,195,000 to $2,044,000 for the 2017 and the deemed 2018 taxation years.

2018 DEEMED APPEAL

31An 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.

32Section 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.