Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

July 05, 2018

FILE NO.:

WR 153245

Assessed Person(s):

Allan Fleisher and Judy Fleisher

Appellant(s):

Allan Fleisher and Judy Fleisher

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s):

City of Toronto

Property Location(s):

315 Forman Avenue

Municipality(ies):

City of Toronto

Roll Number(s):

1904-103-720-01000-0000

Appeal Number(s):

3222955 and 3295242 (deemed 2018 appeal)

Taxation Year(s):

2017 and 2018 (deemed appeal)

Hearing Event No.:

696175

Legislative Authority:

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

Heard:

May 14, 2018 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Allan Fleisher and Judy Fleisher

Allan Fleisher

MPAC

Gregory Tom

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1Allan and Judy Fleisher (the “Appellants”) are the owners of the property located at 315 Forman Avenue (the “Subject Property”) in the City of Toronto. It is a two-storey single-family detached home located on a 0.09 acres. It has 1,955 square feet (“sq. ft.”) of total building area. It was originally built in 1923 and underwent a “B” renovation in 1997 that also added 683 sq. ft.

2For the 2017 taxation year under appeal, MPAC returned the assessment for the Subject Property at $1,160,000.

3The Appellants appealed the assessment for the 2017 taxation year to the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act (“Act”). Mr. Fleisher, on behalf of the Appellants, states that the Subject Property is assessed too high and that he had hoped to negotiate a compromise. His estimate of the current value of the Subject Property is $847,862.

4Pursuant to the Act, the burden of proof as to the correctness of the current value of the Subject Property rests with MPAC. For the period of 2017-2020, the Subject Property is valued as of January 1, 2016. MPAC’s representative, Gregory Tom, estimates the current value of the Subject Property to be $1,376,000 based on the direct comparison approach.

5Mr. Tom conducted an equity study and determined that equity adjustment is required. It is his positon that the assessment as returned of $1,160,000 should be reduced $1,153,130 for the 2017 and deemed 2018 taxation years.

6Mr. Fleisher asserts that the Subject Property is inequitably assessed in relation to similar properties, and submits that the subject property should be assessed at $1,003,931, that is the mid-point of between the assessment as returned and his estimate of current value.

ISSUES

7The issues to be determined are:

a) What is the correct current value of the Subject Property as of the January 1, 2016 valuation date?

b) Whether there should be an equitable reduction of the current value as determined by the Board and, if so, what should the amount of this reduction be?

DECISION

8The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $1,239,000, under s. 44.(3)(a) of the Act. Furthermore, the Board finds that the evidence supports the conclusion that the current value requires an equity adjustment under s. 44.(3)(b) of the Act. The current value as determined of $1,239,000 is reduced to $1,038,000.

9The assessment of the property located at 315 Forman Avenue is reduced from $1,160,000 to $1,038,000 for the 2017 and the deemed 2018 taxation years.

RELEVANT LEGISLATION

10Section 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.

11Section 19.1(1) of the Act states:

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

12Section 19.2(1) 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.

13Section 40.(17) of the Act states:

40.(17) 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.

14Section 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.

Analysis and Findings

What is the correct current value of the property as of the January 1, 2016 valuation date?

MPAC’S Evidence and Submissions

15Mr. Tom stated that the Subject Property has an older renovation and addition completed in 1997. According to MPAC’s records, it is classified as a “B” type of renovation. However, the renovation should probably be higher - a “C” type of renovation based on the addition and work that was completed. However, due to the age or the renovation, MPAC is not looking to make a correction at this time.

16Mr. Tom relies on a Valuation Report. The Report provides information on the Subject Property and the sales of six properties. The sales were time adjusted to the January 1, 2016 valuation date.

17Key points of comparison of the Subject Property and the six sales comparables are set out below:

Property

Effective Site Area (acres)

Year Built

Reno-vation

Building Area (sq. ft.)

Other

Variable Adjustment

Time Adjustable Sale (“TAS”)

315 Forman Avenue (Subject Property)

0.09

1923

B (1997) & 683 sq. ft. added

1,955

N/A

N/A

334 Cleveland Street (Property 1)

0.09

1945

B (1990)

1,680

-2% light traffic

$1,243,074 (January 2015)

31 Hoyle Street (Property 2)

0.1

1931

C (1983)

2,022

3rd floor recreation room Finished basement area (120 sq. ft.) Detached garage

N/A

$1,032,456 (July 2016)

453 Soudan Avenue (Property 3)

0.09

1917

C (1993) & 1008 sq. ft. added

1,874

Finished basement area (700 sq. ft.)

N/A

$1,355,172 (December 2015)

497 Soudan Avenue (Property 4)

0.1

1923

C (1974)

1,863

3rd floor recreation room

-5% medium traffic

$1,381,934 (October 2015)

65 Soudan Avenue (Property 5)

0.08

1923

B (2013) C (1982)

1,520

3rd floor recreation room

-5% medium traffic

$1,509,025 (February 2015)

594 Hillsdale Avenue E (Property 6)

0.07

1926

B (2001) & 867 sq. ft. added

2,085

Finished Basement area (750 q. ft.) Shed

N/A

$1,445,198 (September 2016)

18Mr. Tom states that the average TAS for the six sales is $1,327,810.

19Properties 1, 5 and 6 have “B” type renovations like the Subject Property. Mr. Tom states that he further adjusted the TAS for Properties 1 and 5 to $1,267,935 and $1,584,476, respectively, to account for the traffic variable adjustments in order to make them comparable to the Subject Property. The adjusted average TAS for Properties 1, 5 and 6 is $1,432,536. Mr. Tom then took the average of the average TAS for the six properties of $1,327,810 and the adjusted average TAS for the “B” type renovated properties of $1,432,536 for a resulting value of $1,380,000. He further reduced this value by $4,000 to $1,376,000 to account for the Subject Property’s lack of a finished basement area.

20Based on his analysis, Mr. Tom estimates the current value of the Subject Property as $1,376,000.

Appellants’ Evidence and Submissions

21Mr. Fleisher, states that the Subject Property is assessed too high and that he had hoped to achieve a compromise.

22Mr. Fleisher states that the 2012 current value assessment (“CVA”) was $770,000. He arrived at his estimate of current value of the Subject Property of $847,862 by increasing the 2012 CVA value (and subsequent values) by 2.5% each year.

23Mr. Fleisher states that sales in this neighborhood range from $848,000 to $890,000. He produced a package of copies of MLS® listings of properties in his neighbourhood as obtained from a local real estate broker in support of his ballpark estimate of current value of $848,000 (rounded).

Board’s Analysis and Findings

24Under s. 44.(3)(a) of the Act, the Board must first determine “the current value of the land.” The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the Subject Property on the valuation date or close to it. If, as in this case, no such transaction took place, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

25To enable an estimate of value for the Subject Property to be derived from suggested comparable properties, there must be sufficient elements of similarity, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc. so as to enable a direct comparison to be made.

26The Board has considered the six properties in evidence. They share similarities with the Subject Property in terms of frontages that range from 24 feet (“ft.”) to 28 ft. as compared to the Subject Property at 24 ft. and site areas that range from 0.7 to 0.1 acres as compared to the Subject Property at 0.09 acres. All have undergone some level of renovation.

27Property 2 is very similar in building size at 2,022 sq. ft. and has a slightly larger lot size at 0.1 acres and frontage at 27.67 ft. It underwent a “C” renovation in 1983. It also has an older detached garage and a recreation room whereas the Subject Property does not. The Board finds this property to be slightly inferior to the Subject Property given the age of the renovation.

28Property 6 is very similar in building size at 2,085 sq. ft. and has a slightly smaller lot size at 0.07 acres and the same frontage at 25.08 ft. It underwent a more recent “B” renovation in 2001 that also added 867 sq. ft. It also has a finished basement area and a shed whereas the Subject Property does not. It also has three storeys. The Board finds this property to be slightly superior to the Subject Property.

29The midpoint of the range for the TAS for Properties 2 and 6 is $1,238,827.

30The Board finds Properties 1, 3, 4 and 5 to be inferior to the Subject Property. They all have smaller building sizes ranging from 1,520 to 1,874 sq. ft. for an average of 1,697 sq. ft. as compared to the Subject Property at 1,955 sq. ft. All have undergone some level of renovation.

31Property 5 underwent a recent B renovation in 2013 and a much older “C” renovation in 1982, but it also has the smallest building area at 1,520 sq. ft. It has a finished basement area whereas the Subject Property does not. Property 1 is 275 sq. ft. smaller and is older in condition having been assigned a default “B” 1990 renovation code to recognize that some maintenance has taken place such as a new roof. Property 3 has a smaller building area and is older in condition having undergone a “C” renovation in 1993. It also has a finished basement area whereas the Subject Property does not. Property 4 also has a smaller building area and is older having undergone a “C” renovation in 1974. Unlike the Subject Property, Properties 1, 3, 4 and 5 are all subject to a locational variable for either light or medium traffic (and receive adjustments).

32On the other hand, Mr. Fleisher states that sales in this neighborhood range from $848,000 to $890,000. He produced a package of copies of MLS® listings of properties in his neighbourhood as obtained from a local real estate broker in support of his ballpark estimate of current value of $848,000 (rounded).

33The Board has reviewed the package of listings. It appears that the properties include different property types (bungalows, semi-detached and detached) and are located in the general area of the Subject Property close to the Eglinton Avenue East, Davisville Avenue, Mount Pleasant Road, Bayview Avenue and Soudan Avenue thoroughfares. They include sales that took place from 2013 to 2015 and ranged from $660,000 to $1,054,000. None of the sales have been time adjusted to the legislated valuation date. Sales prices would reflect several factors including the condition and level of renovation of the properties. Key property details such as building size, age, level of renovation, lot size and any applicable locational adjustments are not known. As a result, the Board does not find this evidence helpful in its determination of the current value of the Subject Property.

34The Board prefers MPAC’s sales evidence and, more specifically, Properties 2 and 6. These properties are the closest to the Subject Property in terms of building area and are not subject to a locational variable adjustment for traffic. The midpoint in the range of the two properties (Properties 2 and 6) is $1,238,827 or $1,239,000 (rounded).

35For all of these reasons, the Board sets the current value at $1,239,000 (rounded).

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what should the amount of this reduction be

MPAC’s Evidence and Submissions

36Mr. Tom relies on an Equity Analysis Report that considered the time adjusted sales of 30 properties, Single Family Detached (Not on Water), that occurred between January 1, 2015 and December 31, 2016 within 1 kilometre of the Subject Property.

37In his Report, Mr. Tom states that the level of appraisal is established by determining the median Assessment to Sale Ratio (“ASR”) in the sales sample. For purposes of the equity test, MPAC takes the position that equity is achieved if the median ASR falls between 0.95 and 1.05. In this case, the median ASR of 0.838 indicates that similar properties in the vicinity have not been assessed at or near their current values.

38In order to ensure equity under the Act, Mr. Tom states that his opinion of current value should be reduced to $1,153,130.

39Mr. Tom concludes that the assessment for the Subject Property should be reduced from $1,160,000 to $1,153,130 for the 2017 and deemed 2018 taxation years.

Appellants’ Evidence and Submissions

40Mr. Fleisher asserts that the Subject Property is inequitably assessed in relation to similar properties, and submits that the subject property should be assessed at $1,003,931, that is the mid-point of between the assessment as returned and his estimate of current value.

Board’s Analysis and Findings

41Section 44.(3)(b) of the Act 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.”

42The purpose of equitable adjustment has been described as the equitable distribution of the tax burden according to the assessed value of property owned by taxpayers as follows by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) at page 2:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

43In addressing equity in assessment, the Court, at page 6, also noted that “an assessment made at the actual value of lands and buildings … would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred … [emphasis added].”

44The term “vicinity” is not defined in the Act but refers to the appropriate geographical area that will yield a meaningful number of comparables (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (ON CA) at page 6).

45The test set out in s. 44.(3)(b) of the Act, requires that the Board refer to similar lands in the vicinity. Similar property relates to the same general nature and character. Use as a point of similarity, may be, but is not necessarily determinative of similarity. In determining whether other lands are similar, the Ontario Divisional Court, in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., [2017] O.J. No. 1010 ONSC 1299, 276 A.C.W.S. (3d) 220, 2017 ONSC 1299, 62 M.P.L.R. (5th) 253, 2017 CarswellOnt 2861, applied the decision of the Ontario Divisional Court in Trizec Equities Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182, 27 O.A.C. 203, 37 M.P.L.R. 175, 8 A.C.W.S. (3d) 399. The Court stated at paragraph 23:

… All points of comparison must be considered. The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.

46The ASR analysis of a reasonable sample of sold properties is one method used to determine if properties in the vicinity are assessed below their current value. If other properties are assessed substantially below their current value then a reduction is required to make the assessment of the Subject Property equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the sale price.

47Mr. Tom relies on an Equity Analysis Report that considered the time adjusted sales of 30 properties, Single Family Detached (Not on Water), that occurred between January 1, 2015 and December 31, 2016 within 1 kilometre of the Subject Property. In this instance, the sales sample produced a median ASR of 0.838.

48The Board finds that the median ASR of 0.838 does not fall within MPAC’s generally acceptable standard of 0.95 and 1.05 required to establish that the level of current values assessments of similar properties is in line with the level of sales prices in the vicinity.

49The Board finds that the evidence before it supports the conclusion that an equity adjustment is required under s. 44.(3)(b) of the Act. The current value as determined of $1,239,000 is reduced to $1,038,282 or $1,038,000 (rounded).

CONCLUSION

50The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $1,239,000 (rounded). Furthermore, the Board finds that the evidence before supports the conclusion that an equitable adjustment is required under s. 44.(3)(b )of the Act. The current value as determined of $1,239,000 is reduced to $1,038,000.

51Accordingly, the assessment of the Subject Property is reduced from $1,160,000 to $1,038,000 for the 2017 and deemed 2018 taxation years.

2018 DEEMED APPEAL

52An appeal for the 2017 taxation year is presently before the Board. Section 40.(26) of the 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.

53Section 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.