Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 16, 2018

FILE NO.: WR 152992

Assessed Person(s): Patrick James F. Clark and Heather May Clark

Appellant(s): Patrick Clark and Heather Clark

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): 13 Kings Lynn Road

Municipality(ies): City of Toronto

Roll Number(s): 1919-011-330-00300-0000

Appeal Number(s): 3233322 and 3296594

Taxation Year(s): 2017 and 2018

Hearing Event No.: 696574

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

Heard: April 27, 2018 in Toronto, Ontario

APPEARANCES:

Parties	Representative
Patrick James F. Clark and Heather May Clark	Self-represented
MPAC	Maria Cheung and Andrew Martins
City of Toronto	No one appeared

MEMORANDUM OF ORAL DECISION DELIVERED BY SUBUOLA AWOLERI ON APRIL 27, 2018

INTRODUCTION

1The subject property is a single-family detached dwelling (not on water) built in 1935, with an effective year built of 1970 and construction quality of 7.0. It has a lot with 40 feet of effective frontage, 125 feet of effective depth and an effective site area of 0.11 acres with a building total area of 1,873 square feet (“sq. ft.”). The basement area is 931 sq. ft. of which 277 sq. ft. is finished. The subject property was renovated in 1990, and was given a renovation code “B” by MPAC. The subject property benefits from a 10% negative adjustment for the presence of asbestos on its pipes.

2For the 2017 taxation year, the current value assessment (“CVA”) was returned at $1,392,000. Maria Cheung, MPAC’s assessor provided the Assessment Review Board (“Board”) with a recommended current value of $1,236,000 based on the sales of four comparable properties in the vicinity of the subject property and the correction of the subject property’s building size from 1,976 sq. ft. to 1,873 sq. ft.

3Patrick Clark submits that the recommended current value is too high, that the correct current value of the subject property should be $991,800, based on the location and site features which he termed “nuisances” that impact its assessed value.

ISSUES

4The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 and 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

5The Board determines that the current value of the subject property for the 2017 and 2018 taxation years to be $1,303,000 (rounded).

6The Board finds that a further downward adjustment to the current value to $1,236,000 (rounded) is required to ensure that the assessment of the subject property is equitable with the assessments of similar lands in the vicinity.

7The Board reduces the returned assessment from $1,392,000 to $1,236,000 (rounded) for the 2017 and 2018 taxation years.

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 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

11Ms. Cheung presented the Board with four comparable property sales in proximity to the subject property. Details of the four comparable property sales are summarized in Table 1 below:

Table 1

Address	Assess-ment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Building/Size (“sq. ft.”)	Lot Size (“A”)	Year Built/Effective Year Built	Construction Quality
Subject Property 13 Kings Lynn Road	1,392,000	N/A	N/A	1,873	0.11	1935/1970	7.0
Sale 1 14 Kingsmill Road	1,484,000	July 2016 (1,650,000)	1,542,990	1,996	0.11	1916/1980	7.0
Sale 2 15 Kingsmill Road	1,537,000	May 2015 (1,525,000)	1,657,647	2,222	0.13	1929/1972	7.0
Sale 3 16 Kingsmill Road	1,505,000	Jan. 2016 (1,575,000)	1,566,642	2,323	0.11	1933/1985	7.0
Sale 4 11 Kingsmill Road	1,499,000	Nov. 2016 (1,650,000)	1,483,772	1,591	0.13	1929/1980	7.0

12Ms. Cheung testified that Sale 1 is relatively comparable to the subject property in terms of its original year built, quality of construction, building size and its lot size is identical to the subject property. She further testified that property Sales 2 and 3 are superior to the subject property in terms of building size, while Sale 4 is inferior due to its age, and smaller building size.

13Ms. Cheung submits that using the Time Adjusted Sale (“TAS”) price per square foot for Sale 1, which is $773.04 against the building size of the subject property, provides a current value of $1,447,903.90. She provided her opinion of value as $1,447,903.90. She further applied a negative 10% adjustment for the presence of asbestos on the subject property’s pipes and provided an adjusted current value of $1,303,113.51. Ms. Cheung further made an equity adjustment to her opinion of value. This will be addressed in the equity section of this decision.

Appellants’ Evidence

14Mr. Clark testified that the subject property is close to the subway line and that the noise and vibration from the subway is negatively impacting its value. He testified that in the past, the subject property has always benefited from a negative 15% adjustment, which MPAC termed as a market reduction and this adjustment is in fact for the subway noise and vibration.

15Mr. Clark further testified that MPAC’s Sale 1 is not comparable to the subject property as this property is approximately 80 feet from the subway line, while the subject property is approximately 40 - 50 feet away from the subway line. In Table 4, Exhibit 2 of his evidence, he provides various properties on the subject property’s street and neighbouring streets, with similar lot sizes and differing building sizes, which abut or are in proximity to a place of worship, transformer station, multi-residential and commercial properties. Mr. Clark testified that these properties are approximately 50 – 150 feet from the subject property and they benefit from various reductions to their assessed values based on these nuisances. He further argues that the subject property should also benefit from at least 5% negative adjustment since these properties qualified for adjustments to their assessed value.

16In Table 5, of Exhibit 2, Mr. Clark presented three property Sales – 10 Kingsmill Road, which sold in May 2012 for $1,141,000, 11 Kings Lynn Road which sold July 15, 2013 for $1,020,000 and 9 Kings Lynn Road which sold July 2016 for $1,339,000. He submits that these three sales sold approximately 12% - 18% below their assessed value and he attributes this to the subway noise and vibration. Consequently, he argues that the subject property should get approximately a negative 15% adjustment to its assessed value as this table provides sales data to back up the factors affecting house prices, which he testified as being the subway noise and vibration.

17He concludes that the subject property should benefit from a total of 30% negative adjustment to its assessed value. A 15% negative adjustment for noise and vibration from the subway, a 5% negative adjustment for other site features which the surrounding properties benefit from and there is no benefit to the subject property and 10% negative adjustment for the presence of asbestos around the pipes in the subject property. He submits that this provides a revised current value for the subject property at $991,800.

Current Value - Analysis

18The 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.

19Mr. Clark argued that several adjustments to what he determined to be the correct current value of the subject property should be applied based on the location and site features which he believes negatively impacts the value of the subject property. The Board shall provide its findings regarding any adjustments required due to location and site features as it may have an impact in the determination of the correct current value of the subject property.

Location and Site Features

20The Appellant applied a 30% negative adjustment to the returned assessment of the subject property.

Asbestos

21There is no issue with the 10% negative adjustment for the presence of asbestos on the subject property’s pipes. Ms. Cheung testified that during the inspection of the subject property, this issue was confirmed and accordingly, this adjustment should be applied against the current value of the subject property.

Proximity to Subway Line

22Ms. Cheung testified that in the last 2012 base year, all the properties in the subject property’s area benefited from a 15% negative adjustment due to being over assessed. Mr. Clark disagreed with the reason for this negative adjustment and argued that this adjustment was due to the noise and vibration from the subway line. Andrew Martins, the other MPAC assessor testified that he was also present at the inspection of the subject property and throughout the duration of the visit, he and Ms. Cheung did not feel the vibration from the subway line and none of the properties in this area have a reduction for subway noise and vibration. In line with MPAC’s argument, in Table 4 of Exhibit 2, of the Appellant’s evidence, there is no adjustment for subway noise and vibration for any of the properties. The Board cannot make a determination in this regard as the Board has no evidence to quantify or measure the impact (if any) of the noise and vibration of the subway against the determined current value of the subject property.

23In Table 5 of Exhibit 2, Mr. Clark presents three property sales, which he testified sold approximately 12% - 18% below their assessed value due to the subway noise and vibration. There was no evidence to prove that the noise and vibration from the subway affected the sales of these properties. There are many forces that could affect the sale of a property. Mr. Clark’s testimony without detailed information about their sales is speculative, especially when the parties have not questioned if the sales were non - arm’s length transactions. Furthermore, Mr. Clark arbitrarily used a 15% adjustment without providing corresponding evidence on why this specific number was adopted. The Board cannot arbitrarily assign a negative adjustment to value without quantitative market evidence.

24Mr. Clark further argued that there should be a 5% negative adjustment to the returned assessment of the subject property, since the properties close to it identified in Table 4 of Exhibit 2, benefit from various adjustments to their assessed values. The subject property’s profile does not state that it abuts or is in proximity to any of the location and site features identified in this evidence such as abutting or being in proximity to a place of worship, transformer station, multi-residential and commercial properties. At the commencement of the hearing, the Appellant confirmed MPAC’s description of the subject property after MPAC had adjusted the building size and basement area and there were no locational influences in this profile. The Board determines that the subject property cannot benefit from what negatively impacts other properties without the corroborating evidence that proves that it is also impacted by the same site features. Furthermore, the Board cannot arbitrarily assign a value to this.

Current value

25Mr. Clark presented three property sales; his purpose for presenting these sales was to show that they sold 12% - 18% below their assessed value. Property Sales 1 and 2 (Appellant’s Sale’s evidence) —10 Kingsmill Road and 11 Kings Lynn Road sold on May 2012 and July 2013 respectively. These property sales are too far removed from the valuation date. Sale 3 property- 9 Kings Lynn Road sold on July 28, 2016 for $1,339,000. It has a year built of 1986, the lot size is 0.12 acres slightly larger than the subject property and the building size is 2,141 sq. ft. Mr. Clark did not provide the Board with its quality of construction. Ms. Cheung provided the quality class as 7.5 and that it abuts a multi-residential and commercial property. The building size of this property is 268 sq. ft. larger than the subject property. The Board determines that this property sale is superior to the subject property, in terms of age and building size.

26Mr. Clark argued that MPAC’s property Sale 1 is not the best comparable to the subject property, as it is located 80 feet away from the subway line, and on another street. Ms. Cheung testified that she chose comparable property sales that are within the same homogenous neighbourhood as the subject property. She provided a map to the Board which shows that property Sale 1 is on the next street to the subject property. The Board determines that this Sale is similar to the subject property in terms of location, lot and building size, quality of construction and age.

27The Board agrees with MPAC that the best comparable sale is MPAC’s property Sale 1. It has an identical lot size, same quality of construction and structure as the subject property. The building size is only 123 sq. ft. larger than the subject property. MPAC’s property Sales 2, 3 and 4 are superior to the subject property in terms building size. Sale 3 has the largest lot size and it is newer than the subject property.

28In determining the correct current value of the subject property, the Board used MPAC’s best comparable property Sale 1, which has an adjusted sale price of $1,542,990, its TAS price per square foot is $773.04. Using this against the building size of the subject property of 1,873 sq. ft. provides a current value of $1,447,903.92. Applying the negative 10% adjustment for the presence of asbestos on its pipes, provides an adjusted current value of $1,303,000 (rounded).

29The Board determines that the correct current value of the subject property is $1,303,000 (rounded).

Equity Analysis

30Section 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.”

31The Assessment to Sale 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.

MPAC’s Evidence

32Ms. Cheung presented an equity analysis of 30 residential sales within 0.35 kilometers of the subject property from January 2015 to December 2016, with a median ASR of 0.949. She submits that the International Association of Assessing Officers (“IAAO”) standards state that the median ratio should fall between 0.90 and 1.10. MPAC’s position is that equity is achieved if the median ASR falls between 0.95 – 1.05. According to Ms. Cheung, her analysis reveals that similar properties in the vicinity have not been assessed at or near their current value and in order to achieve equity under the Act, her opinion of value for the subject property should be reduced to $1,236,000.

33The Appellant did not provide any evidence for equity.

34The best evidence on equity is presented by MPAC, as all the four sales used in determining current value are included in the 30 sales. Furthermore, Sale 3—9 Kings Lynn Road, presented by Mr. Clark, is also included amongst the 30 property sales used by MPAC. For establishing equity, properties need not be as similar as they need to for valuation purposes; however, they need to be of the same general nature, character or function. Property Sales 1 and 2 presented by Mr. Clark were not included as MPAC only used property sales from January 2015 to December 2016 and the Board determined that these property sales are too far removed from the valuation date. These 30 property sales provide a representative sample used to determine if the assessment of the subject property is equitable with the assessment of similar properties in the vicinity. The current value determined by the Board as $1,303,000 (rounded) requires a further downward adjustment in order for it to be equitable with the assessment of similar properties in the vicinity.

35The Board determines that the correct current value of the subject property is $1,236,000 (rounded).

CONCLUSION

36Based on all of the evidence, the Board determines that the current value of the subject property for the 2017 and 2018 taxation years to be $1,303,000 (rounded). The Board finds that a further downward adjustment to the current value to $1,236,000 (rounded) is required to ensure that the assessment of the subject property is equitable with the assessments of similar lands in the vicinity.

37The Board reduces the returned assessment from $1,392,000 to $1,236,000 (rounded) for the 2017 and 2018 taxation years.