Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 23, 2018

FILE NO.: WR 145993

Assessed Person(s): 2024609 Ontario Limited

Appellant(s): 2024609 Ontario Limited

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

Respondent(s): City of Mississauga

Property Location(s): 1 Glen Hawthorne Boulevard

Municipality(ies): City of Mississauga

Roll Number(s): 2105-040-163-01505-0000

Appeal Number(s): 2985598, 3031231, 3083446 and 3153983

Taxation Year(s): 2013, 2014, 2015, and 2016

Hearing Event No.: 670266

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

Heard: March 09, 2017 in Toronto, Ontario

APPEARANCES:

Parties	Representative
2024609 Ontario Limited	Roman Andrzejewski
MPAC	John Traitses
City of Mississauga	No one appeared

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

BACKGROUND

12024609 Ontario Limited is the owner of 1 Glen Hawthorne Boulevard (the “subject property”), located in Mississauga, which is designated as commercial within the Commercial New Construction (“XT”) property class. It is a one storey retail shopping centre comprised of five tenanted retail units with a total Gross Leasable Area (“GLA”) of 10,100 square feet (“sq. ft.”), excluding basement storage. The building has an effective year built of 2009.

2Pursuant to the Assessment Act (“Act”), MPAC is required to determine the value of the subject property on the valuation date, which, in this case, is January 1, 2012, the current value assessment (“CVA”). For the 2013 through 2016 taxation years under appeal, MPAC has assessed the subject property as having a CVA, of $ 3,905,000.

3The Appellant, represented by Roman Andrzejewski, has appealed the assessments for these taxation years to the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is the Appellant’s position that MPAC’s CVA is too high and that the correct value for the 2013 to 2016 taxation years is $1,717,200.

4Section 44.(3)(b) of the Act, directs the Board to reduce the CVA of the subject property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute the municipal tax burden according to the value of the property possessed by each ratepayer. Neither party addressed the issue of an equitable reduction in their submissions and no evidence was provided on this issue. Therefore, in this proceeding, this ground for appeal is not in issue.

5Pursuant to s. 40(11) of the Act, the Municipality of Mississauga (“City”) is a party to this proceeding. However, no one from the City appeared at the hearing.

6At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the CVA of the subject property is $3,905,000.

Relevant Legislation and Rules

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 19.2(1) of the Act states:

19.2(1) Valuation days. – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

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.

10Section 40.(17) of the Act states:

40.(17) Burden of proof. – For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

11Section 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.

Issue

12The issue to be determined on this appeal is what is the correct 2012 CVA of the subject property.

DISCUSSION, ANALYSIS AND FINDINGS

MPAC’s Evidence

13John Traitses represented MPAC. A Property Valuation Analyst, Mr. Traitses also testified as witness on behalf of MPAC.

14Mr. Traitses prepared a Property Valuation Report (“Report”), with respect to the subject property, which he submitted as evidence. This Report determines that the correct CVA for both taxation years is $4,036,000, as of the January 1, 2012 valuation date. This conclusion is based on the application of the Income Approach to Value method for determining current value.

15Mr. Traitses indicated that Neighbourhood Shopping Centres are assessed using the Income Approach as these centres are largely tenanted retail operations generating rental income for the property owner. He indicated that the Direct Sales Comparison is not a suitable method primarily due to the fact that each property differs in terms of income generated, which is considered a major determinant of a property’s current value. Nevertheless, he utilized this method to establish a range of sale price per square foot (“psf”) values as a secondary approach to demonstrate the accuracy of the Income Approach results. Lastly, he chose not to apply the Cost Approach method, indicating that there is no certainty that the income of a property would equal the cost to build, thus compromising the potential value of the property, as it may be higher or lower.

16Mr. Traitses‘ Valuation Report includes the income information provided by the tenants for 2011. Based on this data, MPAC assessed the 2012 CVA for the subject property to be $3,905,000 or a psf of $387.

17Mr. Traitses further adjusted its calculations upon notice of a revision in the gross leasable area (“GLA”), increasing from 9,541 sq. ft. to 10,100 sq. ft., thereby arriving at a revised CVA of $4,036,000. Notwithstanding this increase in the CVA in light of the GLA adjustment, Mr. Traitses concludes that the CVA as returned by MPAC, of $3,905,000, is reasonable.

18Mr. Traitses also applied the Direct Sales method to test the accuracy of its findings using the Income Approach, using five suggested sales of similar properties, all neighbourhood shopping centres. Adjustments for differing sale timelines (Time Adjusted Sale – “TAS”) were made to ensure consistency in establishing sales amounts at a specific point in time, namely January 1, 2012. Basing property similarity on location; lot size; building quality; character of construction and building age, Mr. Traitses determined the median price psf as $430. He stated that this analysis confirms his determination of current value using the Income Approach.

19Mr. Traitses also reviewed the Appellant’s suggested comparable properties as the basis for determining current value for the subject property. These properties include office buildings, industrial properties, and an older plaza property. He comments on each of these properties and concludes they are not comparable to the subject property, noting that: office buildings are not the same as neighbourhood shopping centres; the vacancy non-recoverables and capitalization rates for these properties are different; that the industrial properties are valued using the cost approach; and that the older plaza property (40 years) has a substantially lower income stream and, in terms of age, is not comparable to the 2009 newly built subject property.

MPAC’s Submissions

20MPAC relies on Mr. Traitses’ evidence in support of MPAC’s submission that the CVA is $3,905,000.

21MPAC disputes the Appellant’s assertion that the rents used in the income analysis are overstated. MPAC relies on Mr. Traitses’ testimony that the psf rents for four of the five units are similar to the value determined in Mr. Traitses’ analysis.

Appellant’s Evidence

22Roman Andrzejewski, a paralegal associated with After Tax Paralegal Services Professional Corporation, represented the Appellant and testified on behalf of the Appellant.

23Mr. Andrzejewski provided into evidence four suggested comparables, in support of his position, which included an analysis of each suggested comparable. Based on this analysis of his proposed comparable properties, he concludes that the subject property is over assessed at $409 psf. In contrast, using an average value of $177 psf yields a total property value for the subject property of $1,688,580). Using a median value of $183 psf yields a total property value for the subject property of $1,745,820). The Appellant recommends averaging these two values to arrive at a current value for the subject property of $1,717,200.

Appellants’ Submissions

24The Appellant submits that the correct CVA for the taxation years under appeal is $1,717,200.

25The Appellant maintains that MPAC has incorrectly assessed the current value for the subject property, noting that no improvements were made to the property between the assessment cycles January 1, 2008 and January 1, 2012, and therefore asserting there is no justification for a higher assessed value.

26The Appellant asserts that the owner of the property has knowingly submitted to MPAC rental information that is inflated. The Appellant disputes MPAC’s income analysis, stating that the inflated rental income data from tenant submission documents (TIP), invalidates the use of this method to determine current value. The Appellant argues that the comparable sales approach in this instance better serves towards determining the current value for the subject property.

Findings on Issue No. 1

27With respect to the Appellant’s submission referring to the absence of improvements to the subject property between assessment cycles, the Appellant is attempting to establish a relationship between two completely separate assessment cycles, based on property improvements as the unit of measure. The Board finds no persuasive evidence for the Appellant’s position, as the determination of current value in the present assessment cycle is independent of events that occurred in the previous cycle. Each cycle has its own unique series of underlying circumstances that form the basis for making a determination of current value in that cycle.

28The Appellant’s evidence indicates that the subject property is classed as 430-Neighbourhood shopping centre. The Board notes that the suggested comparable properties presented by the Appellant are of a different property type, namely “Office” and “Investment”. Therefore, the Board finds that they are not sufficiently comparable for use in a comparable sales analysis. In support of this finding, the Board notes that MPAC has provided a persuasive analysis explaining why these properties are not comparable.

29The Board finds the Appellant has raised a valid concern related to the credibility of tenant rental information provided by MPAC in its income analysis. However, the Appellant provided no alternate evidence respecting rental information for the Board to consider. The only evidence before the Board is MPAC’s evidence. MPAC has demonstrated consistency in four of the five tenants’ rental data for its income analysis, which the Board finds sufficient to support its conclusions. Therefore, the Board finds this evidence to be persuasive, notwithstanding the concern raised by the Appellant.

30Accordingly, the Board finds MPAC’s evidence and analysis is persuasive respecting the determination of current value. Therefore, the Board confirms the correct current value for the taxation years in question, as of the January 1, 2012 valuation date, to be $3,905,000.

DECISION

31The Board confirms the current value of the subject property for each of the 2013 to 2016 taxation years is $3,905,000 as returned.