Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 01, 2018

FILE NO.: WR 151092

Assessed Person(s): Lewis Mario Lawrence Cassar

Appellant(s): Lewis Cassar

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 9

Respondent(s): City of Toronto

Property Location(s): 313 Cummer Avenue

Municipality(ies): City of Toronto

Roll Number(s): 1908-094-200-07000-0000

Appeal Number(s): 3186559 and 3294409 (deemed 2018 appeal)

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

Hearing Event No.: 693665

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

Heard: February 12, 2018 in Toronto, Ontario

APPEARANCES:

Parties	Representative
Lewis Cassar	Matthew Cassar
MPAC	Jeffrey Batcher
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1Lewis Cassar (the “Appellant”) appealed the 2017 assessment of the subject property at 313 Cummer Avenue because he believed the value returned by MPAC was too high. He takes particular issue with the application of a standard “renovation ‘B’ 1990” variable applied to the property. The Appellant also believes the current value of the subject property should be in the range of $810,000 to $851,000, when compared to the assessments of nearby properties.

2MPAC returned a value of $1,010,000 for the subject property. In preparation for the hearing, MPAC determined an estimate of current value, based on the sales of comparable properties, of $1,124,000 (rounded). MPAC was not seeking an increase in the assessment and submitted that the value returned should be confirmed.

3The Assessment Review Board (the “Board”) must decide two things in this appeal. Firstly the Board must determine, based on the evidence at the hearing, the current value of the subject property for the 2017 taxation year. Having reference to the assessments of similar properties in the vicinity, the Board must also decide if the current value determined needs to be reduced for the purpose of equitable assessment.

DECISION

4The Board finds that the current value of the subject property is $1,090,000. The Board also finds that a reduction in the current value is required for the assessment to be equitable with the assessments of similar properties in the vicinity.

5The Board therefore finds that the assessment is reduced from $1,090,000 to $1,007,000 for the purposes of equitable assessment.

6Accordingly, the Board finds that the assessment of the subject property, at 313 Cummer Avenue is reduced from $1,010,000 to $1,007,000 in the Residential property class for the 2017 and deemed 2018 taxation years.

LEGISLATION

7In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act (“Act”).

8Section 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.

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

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

10Section 40.(1) of the Act states:

40.(1) Appeal to Assessment Review Board. Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board,

(a) on the basis that,

(i) the current value of the person’s land or another person’s land is incorrect,

(ii) he person or another person was wrongly placed on or omitted from the assessment roll,

(iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support,

(iv) the classification of the person’s land or another person’s land is incorrect, or

(v) or land, portions of which are in different classes of real property, the determination of the share of the value of the land that is attributable to each class is incorrect; or

(b) on such other basis as the Minister may prescribe.

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.

What is the Current Value of the subject property?

MPAC’s Evidence

12Jeffrey Batcher is an Assessor with MPAC and provided a valuation report to show how he arrived at the subject property’s current value for 2017. Mr. Batcher undertook the direct comparison approach to value, which is the most common approach used by MPAC for single family dwellings, like the subject property. The direct comparison approach compares the sale values of properties that are comparable to the subject property. Any differences between the comparables and the subject property are accounted for to make the necessary changes to value to arrive at a value for the subject property.

13MPAC’s valuation report compared the subject property with eight properties that sold between January and December 2015. All eight properties are located within .55 kilometres of the subject property and are located on Cummer Avenue. They are all single storey dwellings with lot and building sizes that MPAC deems to be similar to the subject property.

14When making comparisons to the subject property, MPAC applies a Time Adjustment Factor (“TAF”) to each sale value. The TAF is used to adjust the sale price so that it more closely reflects the value at which the properties would have sold on the valuation day of January 1, 2016. According to Mr. Batcher the TAFs used in this case were derived from a ‘time changes over time’ study that used 332 sales of residential properties in the area that took place in 2015 and 2016. This study creates a trend line to show how prices for residential sales in the area change over that time period. A TAF for each month in the time period is applied to sales in that month to arrive at a ‘Time Adjusted Sale’ (“TAS”) value.

15Table A summarizes the characteristics of each of the eight comparable properties used by Mr. Batcher along with the same characteristics of the subject property.

TABLE A

	Subject Property – 313 Cummer Ave.	Sale 1 – 367 Cummer Ave.	Sale 2 – 393 Cummer Ave.	Sale 3 – 421 Cummer Ave.	Sale 4 – 374 Cummer Ave.	Sale 5 – 302 Cummer Ave.	Sale 6 – 304 Cummer Ave.	Sale 7 – 435 Cummer Ave.	Sale 8 – 460 Cummer Ave.
Lot Area (sq. ft.)	16,579	9,550	12,224	11,460	7,497	8,250	7,800	6,650	9,856
Living Area (sq. ft.)	1,151	1,306	1,268	1,296	1,193	1,170	1,638	1,215	1,170
Year Built	1959	1958	1965	1957	1957	1955	1955	1956	1954
Sale Price ($mil)/Date	N/A	1.10 / Dec 2015	1.29 / Oct. 2015	1.212 / Jan. 2015	.975 / Apr. 2015	1.048 / Oct. 2015	1.026 / Nov. 2015	1.045 / Sep. 2015	1.090 / June 2015
TAS Price ($)	N/A	1,112,257	1,365,225	1,319,427	1,199,768	1,109,113	1,061,390	1,132,351	1,272,268
TAS/Sq. ft.($)	N/A	851.65	1,076.68	1,018.08	1,005.67	947.96	647.98	931.98	1,087.41
2016 CVA ($mil)	1.010	1.170	1.245	1.212	1.059	1.071	1.068	1.122	1.200
2016 CVA / sq. ft. ($)	877.50	895.87	981.86	935.19	887.68	915.38	652.01	923.46	1,025.64

16Mr. Batcher testified that all eight of the comparable properties had sale dates within 12 months of the valuation day and that they all are very similar to the subject property in terms of dwelling size, age, location and condition. Mr. Batcher noted that the subject lot is substantially larger than the eight comparable properties.

17To address the Appellant’s concern with respect to the effective year built of 1979, Mr. Batcher explained that where there are no known renovations or updates to properties of the age of the subject (and most of the comparables in his sample) MPAC applies an assumed ‘B’ type renovation which is intended to reflect ongoing, normal maintenance and minor upgrades that it considers reasonable. The assumption is based on the fact that an overall average condition would not be attainable if this type of maintenance was not undertaken.

18Mr. Batcher testified that he inspected the property in preparation for the hearing and determined, based on his experience, that the ‘B’ renovation was appropriate in the case of the subject property and therefore the $34,000 value attributed to this adjustment is included in the assessment returned. He also indicated that for properties of similar age in this area of the City this additional value is considered standard in MPAC’s valuation model.

19Lastly, MPAC applies a standard 4% reduction on properties along this stretch of Cummer Avenue to reflect the nuisance factor resulting from the Cummer Avenue traffic which is not evident in other areas of the neighbourhood.

Appellant’s Evidence

20The Appellant was represented at the hearing by his son, Matthew Cassar. The younger Mr. Cassar has firsthand knowledge of the property and the neighbourhood as this was the family home for a good number of years.

21The Appellant’s position is that, while many of the characteristics of the properties in the neighborhood are very similar, the subject property is unique in that it has not undergone any renovations since it was built in the 1950s. Mr. Cassar testified that the dwelling is well kept and maintained but since there have been no upgrades, renovations or significant remodeling, it is unlike any of the other properties in MPAC’s sample of comparable properties.

22Mr. Cassar submitted that in order for a house of this age to be compared to other properties, some means of depreciation needs to be applied to account for these differences. While he was not specific as to percentage or amount, Mr. Cassar believes a value that is derived from the values of other nearby properties will be too high.

23The Appellant also submitted that the assessment returned for the subject property is too high because:

• The adjustment applied to the subject property for traffic conditions on Cummer Avenue is 4% and is described as ‘medium’. This adjustment is not enough for the traffic conditions that currently exist;
• The additional land area on the subject property is not an asset but is, rather, a liability as it requires much more maintenance than the other properties in the area; and
• Land values in the area are subject to speculative pricing. Some properties are being sold for re-development and this drives up values in the area that should not apply to the subject property.

When reference is made to the assessments of similar properties in the vicinity, should the current value determined be reduced to make the assessment equitable?

Appellant’s Evidence

24In support of a lower assessment for 2017, the Appellant submitted as follows:

• Average assessments in the immediate and adjacent neighbourhoods have risen 36.55% from 2012 to 2016, while the assessment of the subject property has risen by 66.67% in the same time frame;
• Properties along Cummer alone, with only single storey dwellings have assessments that have risen over the 2012 CVA by 49.68%, not by 66.67% as applied to the subject property.
• The subject property should have an assessed value of $851,000, representing the average increase over the 2012 CVA of the immediate neighbourhood and the more local Cummer Avenue properties in evidence.

MPAC’s Evidence

25In response to submissions on the equity of assessment, Mr. Batcher submitted an equity analysis report. He analyzed the sales of thirty similar properties in the vicinity by comparing the assessments of each to their TAS values. This comparison is known as an Assessment to Sale Ratio (“ASR”). The ASRs in the sample ranged from 0.735 to 1.190. Mr. Batcher explained that the purpose of this analysis is to compare the assessment to TAS values of the thirty properties to determine if similar properties in the vicinity of the subject property are being assessed accurately when compared to their sale values, or current values, as defined by the Act.

26In order to assess the reliability of this method, the International Association of Assessing Officers (“IAAO”) suggests two statistical methods. The first is to compare the median ASR in the sample to the number 1.0. Median ASRs below 1.0 indicate under-assessment, while median ASRs above 1.0 indicate over-assessment. The IAAO also stipulates that when an median ASR is between 0.90 and 1.10 for residential properties, the result is that properties in the vicinity are being assessed equitably. Mr. Batcher further explained that MPAC uses a more restrictive test and considers a median ASR of between 0.95 and 1.05 to indicate that assessments are equitable within the sample used.

27The second statistical test for reliability of the ASR method to determine equity is the co-efficient of dispersion (“COD”). This is a relationship expressed as a percentage to indicate the average difference of all the ASRs in the sample as compared to the median ASR. The IAAO stipulates that for residential properties, a COD of not more that 15% indicates reliability. The COD of the equity analysis in this case is 11.5%.

THE BOARD’S ANALYSIS

What is the Current Value of the subject property?

28MPAC’s valuation report provides a summary of a methodical and time-tested direct comparison approach to determining current value. The report determined that in comparison to eight properties on Cummer Avenue that sold in 2015, the subject property has:

• the lowest returned value;
• the smallest dwelling at 1,151 square feet;
• a consistent negative 4% value adjustment for traffic; and
• a ‘B’ renovation adjustment which is also applied to the properties in the comparison

29While he was not seeking an increase to the returned assessment, the MPAC assessor determined the current value of the property to be $1,124,000, reflecting the median Time Adjusted Sale value per square foot ($976.82) of the eight comparables in the valuation report multiplied by the subject dwelling area of 1,151 square feet.

30The Appellant found fault with that approach because, in his view, the subject property hasn’t been updated since it was built which sets it apart from the comparable properties in MPAC’s report. He submitted no documentary evidence to support this view, but relied on his personal knowledge of the property, which the Board finds compelling.

31The Board finds that MPAC’s valuation is the best evidence of the current value of the subject property with the exception of the value attributed to the disputed ‘B’ renovation adjustment. The Board prefers the testimony of Mr. Cassar who lived a good part of his life at the subject property and has had ongoing and current first hand knowledge of the subject property and whether or not there were minor upgrades, over the testimony of the assessor who spent, by his own testimony, 15 to 20 minutes at the property during his inspection.

32The Board finds that the current value of the subject property is $1,090,000; a $34,000 reduction from the current value otherwise determined by MPAC.

When reference is made to the assessments of similar properties in the vicinity, should the current value determined be reduced to make it equitable?

33The Appellant compared the changes in value of selected properties in the subject area from their 2012 valuation days to their 2016 valuation days. He submitted that the increase to the assessment of the subject property from 2012 to 2016 should be in the range of the increase of his neighbours. This logic is fundamentally flawed as a means of determining equitable assessment because:

• The comparison makes broad assumptions of similarity, which is a statutory requirement for the Board to consider when determining equity of assessment;
• There is no evidence to show how or why the differences in increases occurred;
• The ‘starting point’ 2012 value in the comparison has no relevance to the value on the 2016 valuation day; and
• In this case, the comparison does not take into account any adjustments made to the properties in the comparison sample that may have been made prior to either the 2012 CVA or the 2016 CVA.

34In order to reduce the amount of the current value for the purposes of equity or fairness, the Board has to reduce a correct finding to one that is incorrect. In order to so, the Board must have sufficient evidence to suggest the current value determined should be reduced to be fair.

35Mr. Batcher prepared an equity analysis that compares the assessments of thirty similar properties in the vicinity. His findings are consistent with the standards of reputable outside authority, and concludes that similar properties in the vicinity are being assessed at a rate of 92.4 percent of their TAS value, or current value.

36The Board agrees with MPAC as its equity analysis was based on established, recognized practice in determining equitable assessment and the analysis met the standards set by the IAAO for such studies. The Appellant’s approach of comparison with previous assessment cycles did not provide the Board with an equally compelling means to correct the current value determined for the purposes of equity.

37For the purpose of fairness in the assessment, the Board applies the level of assessment of similar properties (determined by MPAC to be 0.924 to their current value determined), to the current value determined for the subject property. assessment.

38Therefore the assessment is reduced as follows:

• $1,090,000 X 0.924 = $1,007,000 (rounded).

CONCLUSION

39The Board finds that the current value of the subject property is $1,090,000. The Board also finds that a reduction in the current value is necessary for the assessment to be equitable with the assessments of similar properties in the vicinity. For this reason, the current value determined is reduced to $1,007,000.

40Accordingly, the Board finds that the assessment of the subject property, at 313 Cummer Avenue is reduced from $1,010,000 to $1,007,000 in the Residential property class for the 2017 and deemed 2018 taxation years

2018 DEEMED APPEAL

41An 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.

42Section 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.