Mohamad Bagher Ghadaki v. Municipal Property Assessment Corporation, 2018 CanLII 73664

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

July 31, 2018

FILE NO.:

WR 144592

Assessed Person(s):

Mohamad Bagher Ghadaki, Fereshteh Niroo

Appellant(s):

Mohamad Bagher Ghadaki, Fereshteh Niroo

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s):

City of Toronto

Property Location(s):

9 Valley Ridge Place

Municipality(ies):

City of Toronto

Roll Number(s):

1908-081-610-00302-0000

Appeal Number(s):

3136037, 3136036 and 3149129

Taxation Year(s):

2014, 2015 and 2016

Hearing Event No.

648367

Legislative Authority:

Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard:

December 05, 2016 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Mohamad Bagher Ghadaki, Fereshteh Niroo

Peter Tam and Magdalena Mo

MPAC

Carlo Bassi

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

REASONS

Background

1Mohamad Bagher Ghadaki and Fereshteh Niroo are the owners (the “Appellants”) of a residential property located at 9 Valley Ridge Place, Toronto (the “Subject Property”).

2The Subject Property, is a single family detached residential two storey limestone structure built in 2014. The property is located on a corner lot in the York Mills neighbourhood of Toronto.

3MPAC, has assessed the value of the Subject Property, as of January 1, 2012, at $7,399,000 for the 2016 taxation year. Where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land/property, rests with MPAC.

4Mr. Ghadaki and Mrs. Niroo have filed an appeal with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act (“Act”), challenging MPAC’s assessment of $7,399,000 for the 2016 taxation year, arguing the correct current value for the subject property is $5,600,000.

5For the taxation years 2014 and 2015, the Appellants appealed MPAC’s assessed values of $5,537,000 as being too high, as improvements were still occurring on the property. At the Hearing, it was disclosed to the Board that all parties agreed with the values as returned regarding the s. 33 appeals. Therefore the Board shall not address any further the s. 33 appeals for the 2014 and 2015 taxation years. The only appeal before the Board is for the 2016 taxation year.

6Pursuant to the provisions of the Act, the assessment of land shall be based on its current value. The Act also provides that, for the 2013 to 2016 taxation years the MPAC is required to assess this value as of the valuation date, January 1, 2012.

7Pursuant to s. 40.(11) of the Act, the Municipality, the City of Toronto, is a party to this proceeding. However, the Municipality did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the Municipality’s behalf.

8Section 44.(3)(b) of the Act, directs the Board to reduce the current value 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.

9MPAC takes the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue and is unnecessary for the Board to address it.

10At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board confirms MPAC’s current value assessment for the 2016 taxation year of $7,399,000 is correct.

Relevant Legislation and Rules

11The Act:

1. “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.

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

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.

s.33 Change re land omitted from tax roll

33. (1) The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

34. The assessment corporation shall make any assessment necessary to correct the omission. . . .

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.

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 current value of the Subject Property for the taxation year 2016 as of the January 1, 2012 valuation date?

Description of Subject Property

13The Subject Property, built in 2014, is a single family dwelling detached (not on water). It is a two storey limestone structure on a corner lot, located in the York Mills neighbourhood of Toronto. With a slate tile roof, copper eaves, large fenestration and intricate detailing throughout, this property has extensive landscaping. Having an effective frontage of 110 feet “(ft.”) and an effective depth of 140 ft., with an effective site area of 15,400 square feet (“sq. ft.”), the total building area is 9,540 sq. ft. with an additional basement area of 4,900 sq. ft., of which 2,923 sq. ft. is finished. MPAC has assigned this property the highest quality rating of 10, as reflected in the finishings and quality materials used in its construction.

Discussion, Analysis and Findings

MPAC’S Evidence

14Carlo Bassi represented MPAC. A Property Valuation Analyst, Mr. Bassi testified on behalf of MPAC.

15Mr. Bassi prepared a valuation report of the Subject Property, dated September 26, 2016 (“Valuation Report”) which he submitted into evidence.

16Mr. Bassi stated in his Valuation Report, that he personally inspected the Subject Property on August 17, 2016. Mr. Bassi presented eight suggested comparable properties in support of MPAC's position that the assessed current value is $7,399,000 as of January 1, 2012, for the tax year 2016. Six of the eight properties, including the Subject Property are considered as quality 10, with the remaining two comparable properties being 9.5. Mr. Bassi noted that his Valuation Report determined the assessed current value to be between $7,282,658 and $10,347,863 with a median of $9,105,667.

17Mr. Bassi stated that it was necessary to go as far back as 2009 to source out comparable properties. In his analysis, he determined one of the suggested comparable properties is superior to the Subject Property and four are inferior, with the remaining three comparable properties, specifically 114A Dunvegan Road, 9 Bayview Ridge Crescent, and 7 The Bridle Path, having characteristics relatively comparable to the Subject Property.

18Mr. Bassi’s Valuation Report outlined the Time Adjusted Sale Amounts for the eight suggested comparable properties ranging from $5,925.051 and $14,899,164, with the median being $7,887,921. Only the three relatively equivalent properties were used to arrive at the median of $9,105,667. The table below illustrates the suggested comparable properties provided by MPAC.

Table 1

Sale Date

Year Built

TAS

Quality

Frontage (ft.)

Depth (ft.)

Site Area (sq. ft.)

Bldg Total Area (sq. ft.)

Bsmt Area (sq. ft.)

Subject Property 9 Valley Ridge Place

N/A

2014

N/A

10.0

110.00

140.00

15,400

9,540

4,900

114A Dunvegan Road

2012/06

2008

10,347,863

10.0

75.00

173.91

13,068

10,034

3,714

29 Blyth Hill Road

2012/10

2005

5,950,250

9.5

86.00

200.00

17,200

6,559

3,812

458 Blythwood Road

2012/08

2007

5,925,051

10.0

75.00

411.96

30,897

6,254

3,291

45 Bayview Ridge Crescent

2010/02

2001

14,899,164

10.0

235.00

516.00

121,097

10,048

5,009

9 Bayview Ridge Crescent

2013/11

2012

7,282,658

10.0

100.00

250.00

25,000

8,488

3,973

65 Highland Crescent

2011/11

2008

6,347,802

10.0

95.00

167.00

15,865

6,656

3,812

7 Tudor Gate

2011/06

2011

6,668,176

9.5

100.00

140.00

14,000

7,066

3,559

7 The Bridle Path

2009/08

2006

9,105,667

10.0

100.00

299.00

29,900

9,552

4,778

19Mr. Bassi stated that the Subject Property should sell for $9,091,000 as at January 1, 2012.

20In cross-examination, Mr. Bassi was asked if he had inspected all of MPAC’s suggested comparable properties. Mr. Bassi replied that he had inspected two personally, and other MPAC colleagues either inspected the others or made estimates.

MPAC’s Submissions

21MPAC submits that its evidence indicates that the current value of the property is $9,091,000. However, MPAC is not seeking a higher assessment. Therefore, MPAC submits that the correct current value for the taxation year 2016 is $7,399,000.

22MPAC submits that the Board should not accept the evidence of the Appellants’ witness, Magdalena Mo, for several reasons. MPAC asserts that while Ms. Mo did consider factors such as backyard privacy, she did not provide any empirical evidence to support her assertion of a lack of backyard privacy. Ms. Mo prioritized property factors such as location, privacy, to support her valuation conclusions. However no analysis was provided to demonstrate how she measured value. MPAC notes that the sales of Ms. Mo’s suggested comparable properties are two to three years out of date, that she did not do any analysis of the comparable properties. MPAC also challenges Ms. Mo’s assertion that determining the quality of the Subject Property depends on the buyer. MPAC argues that it is her job to provide a professional opinion, as there are no buyers at this hearing.

Appellant’s Evidence

23Peter F.Y. Tam of Christam Consulting Inc., acted as representative for the Appellants, who did not attend this hearing.

24Ms. Mo, a licensed real estate representative in Toronto, was qualified as a witness in the capacity as a real estate sales representative, to give opinion evidence in matters related to the Subject Property, specifically opinion evidence of what buyers look for when deciding whether to purchase a property, in this case, a residential property.

25Ms. Mo stated that she had driven by the Subject Property as well as the comparable properties suggested by MPAC. However, Ms. Mo stated she did not inspect the interior of any of the properties, including the six alternate comparable properties suggested by her.

26Ms. Mo stated that prospective buyers looking to purchase in the multi-million dollar range, search for prestigious neighbourhoods, where homes are similar in price. Of considerable importance is privacy and exclusivity. Ms. Mo noted that the Subject Property is a corner lot, and .stated that a corner lot is not as desirable, as a house that is exposed on two sides. Ms. Mo stated that the lot width is not as important as the depth of the lot, as it gives the owner more privacy. Furthermore, she indicated that a ravine or green space configuration is highly desirable, as it offers a country like setting with lots of greenery. Ms. Mo also stated that the curb appeal must be good looking and grand, and the interior finishes must be of the best quality. Ms. Mo stated that homes with transaction values over $5 million should have similar quality finishings.

27Addressing MPAC’s suggested comparable properties, including her own suggested alternated comparable properties, Ms. Mo submits that the correct current value for the taxation year 2016 is in the range of $5.5 to $5.8 million. The Appellants are recommending a mid point of $5.6 million as the correct current value.

28Ms. Mo presented her analysis of MPAC's comparable properties as well as the Subject Property.

29Ms. Mo found 114A Dunvegan Road in the neighbourhood of Forest Hill, not relatively comparable to the Subject Property in her opinion. Ms. Mo asserted this neighbourhood to be prestigious and desirable, with multi-million dollar homes and two highly sought after private schools.

30Ms. Mo stated that 29 Blyth Hill Road is situated in a highly desirable location in the Lawrence Park neighbourhood. Designed by a renowned architect and having a deep lot, Ms. Mo opined that the property is not inferior to the Subject Property, and that it sold at market value in 2012.

31Ms. Mo stated that 458 Blythwood Road is prime real estate in the city, “even though the property is on a busier street in Lawrence Park” neighbourhood. It is her opinion that the property is not inferior to the Subject Property in terms of neighbourhood and land. Ms. Mo indicated the property was on the market in 2011 for $9 million but sold in 2012 for much less.

32Ms. Mo opined that 45 Bayview Ridge Crescent is more than a superior (property) even without considering the home. She stated that it was not a suitable comparison to the Subject Property.

33Ms. Mo opined that 9 Bayview Ridge Crescent to be ‘substantially superior’ to the Subject Property, based on the lot depth in particular, with its associated attribute for privacy and seclusion.

34Ms. Mo opined that 65 Highland Crescent is far superior to the Subject Property, having a huge lot and a contemporary modern design. She stated that this property cannot be regarded as inferior to the Subject Property.

35Ms. Mo opined that 7 Tudor Gate is not inferior to the Subject Property. While acknowledging that the smaller lot frontage by 10 ft., she emphasized that the green space the property backs onto, provides a strong attractiveness for high end buyers. Ms. Mo stated that it only sold in 2015 for $6.5 million, although the list price was close to $7 million.

36Ms. Mo opined that 7 The Bridle Path is not comparable to the Subject Property. The deep lot is mentioned as being very attractive to buyers. She indicated that a gated property with a set back from the street gives it more seclusion and privacy. In her opinion the deep lot and “The Bridle Path” address are the property’s two main attributes, and therefore, the property is not comparable to the Subject Property.

37Regarding the Subject Property, Ms. Mo characterized it as an imposing newer big home with a pleasing limestone facade. Being a corner lot with exposure on two streets, Ms. Mo opines that prospective buyers will feel that it is not as exclusive as the homes to the west of it, where the houses are shrouded by mature trees. Ms. Mo stated the backyard has very little privacy, as it is situated close to its neighbour at 189 Valley Road. She expressed her opinion that the property is not in the $7 miliion price range. Acknowledging that she has not seen the interior, she evaluates current value of the property in the range of $5.5 to $5.8 million.

38MPAC asked Ms. Mo if she has any evidence to corroborate her position that the Subject Property’s backyard lacks privacy. Ms. Mo replied that it is her opinion, based on her work with clients.

39MPAC criticized the professionalism of Ms. Mo as sales representative, for endeavouring to value a property that she has not inspected. Ms. Mo disagreed, replying that it is possible with newer homes.

40MPAC questioned the validity of the witness’ “orders of priorities” as the criteria used by prospective buyers, namely: Location & Neighbourhood; Size of property; Size of Lot; Setting of Property; Curb Appeal and lastly in ordinal priority, Interior Finishes. Ms. Mo replied that her experience in the real estate profession since the mid 1980s is the basis for her ordinal ranking of buyer priorities.

41MPAC noted that Ms. Mo’s comparable properties are two or three years past the valuation date, questioning her whether these properties are being used to establish current value. Ms. Mo replied that “we” are not as technical as MPAC and don’t necessarily use formulae, equations.

42MPAC asked Ms. Mo for her analysis of the Appellant’s suggested comparable properties. Ms. Mo replied that she did not do any analysis.

43MPAC asked Ms. Mo if 8 Wilket Road, one of the Appellant’s comparable properties, was sold. Ms. Mo replied she did not look into that property.

44MPAC asked Ms. Mo if the Subject Property is considered a “Grand” looking house. Ms. Mo replied it depends on the buyer.

Appellants’ Submissions

45The Appellants questioned MPAC’s quality classification ratings, arguing the difficulty in differentiating between a 10 and a 9.5 in terms of quality. While the Appellants acknowledge that the suggested comparable properties provided by Ms. Mo have a quality range between 9.0 and 9.5, they maintain that this does not justify MPAC’s assigned quality rating of 10 as the basis for a $4 million difference in values asserted by the Appellant and MPAC.

46The Appellants maintain that the primacy of property location is the overriding criteria.

47The Appellants disagree with MPAC’s proposed current value, arguing that locational factors have a negative value impact. Specifically, the Subject Property is a corner lot, that is close to Bayview Avenue, that the house is exposed on two sides, and that the backyard is all open.

48The Appellants submit that MPAC’s valuation analysis is deficient, maintaining that it does not allow for adjustments for lot depth. The Appellant’s maintain that the larger lots represent privacy to prospective buyers and short lot depths are not as private.

49The Appellants submit that the correct current value of the subject property is $5.6 million, which is midway in Ms. Mo’s proposed range of $5.5 and $5.8 million.

Findings on Issue

50The Board reviewed the evidence provided by both parties.

51For 114A Dunvegan Road, the Board finds there is no explanation or clarification to support Ms. Mo's position regarding the Subject Property not being comparable. The Board finds the Subject Property is of the same quality class, has a similar site area as well as building area and has a superior lot frontage than 114A Dunvegan Road. Ms. Mo provided no evidence addressing these factors in arriving at her conclusion.

52For 29 Blyth Hill Road, the Board finds that no explanation is provided to support Ms. Mo's opinion. No value is associated with the architect's influence on the property, nor any measure of value for the large lot depth. The Board finds that no mention is made about the house being 31% smaller than the Subject Property and having a smaller lot frontage. The Board is unclear whether Ms. Mo is implying that the property is equivalent or superior to the Subject Property. The ambiguity of her conclusion leaves the Board unclear as to how this information will assist the Board in determining the correct current value of the Subject Property.

53For 458 Blythwood Road, the Board finds that the house is much smaller than the Subject Property, by as much as 34%, its site area is almost twice that of the Subject Property, it abuts a school, is located on a feeder street; and has an inferior lot frontage compared to the Subject Property. The Board finds that the superior lot size, although having an inferior frontage to that of the Subject Property and the lot depth offsetting the busy street which provides privacy, are crucial criteria for prospective buyers. However it should be noted that MPAC negatively adjusted this property for abutting a school (-8%) and its location on a feeder street (-10%), to better reflect its locational disadvantages. While Ms. Mo opined that the property is not inferior to the Subject Property in terms of neighbourhood and land, the Board notes that she provided no analysis to support this position, nor did she clarify whether the property is equivalent or superior to the Subject Property. No analysis is provided on the smaller house size and compensating deficiency issues, to assist the Board in quantifying a current value for the Subject Property.

54For 45 Bayview Ridge Crescent, the Board accepts that the massive ravine type lot makes this property a poor candidate as a comparable to the Subject Property.

55For 9 Bayview Ridge, while Ms. Mo is correct about the lot depth, the Board finds there are more similarities than dissimilarities to suggest that this property is comparable. The Board notes the house is 10% smaller than the Subject Property, and although the lot depth is larger, the house was built recently in 2012 offering significant similarities to the Subject Property. The Board considers this property reasonably equivalent to the Subject Property. Therefore, the Board does not accept Ms. Mo’s opinion that it is superior to the Subject Property.

56For 65 Highland Crescent, Ms. Mo maintains the lot is huge, even though the Board finds that it has a smaller frontage than the Subject Property, being only 27 ft. deeper, and 3% larger in terms of site area. The property is assigned a quality rating of 10 and yet the house is 30% smaller than the Subject Property. Ms. Mo states that this property has a contemporary modern design, without clarifying how the market ascribes a value to such a design. While the Board can attribute similarities to lot sizes notwithstanding subtle differences in actual size, it cannot do so in this instance given the scale of the disparity in house size. The Board accepts that location attributes such as overlooking a prestigious golf club, and backing onto a ravine are important. However, the Board has not been provided with any quantitative evidence to support a value associated with such attributes, especially given the fact such lands are not part of the Subject Property.

57For 7 Tudor Gate, the Board notes that the green space is not part of the property’s site area. However Ms. Mo believes that it offers a ‘quiet environment’ to prospective buyers. She does not mention that the physical size of the house, which is 26% smaller than the Subject Property. According to MPAC, the rear of the property overlooks a film center. This negative attribute was not mentioned by Ms. Mo. While she maintains that this property is not inferior to the subject property, the Board cannot speculate whether she considers the property to be, superior or equivalent. For these reasons, the Board does not rely on this suggested comparable property.

58For 7 The Bridle Path, the Board notes that Ms. Mo makes no mention of the similar frontage to that of the Subject Property nor the similar house size (almost 100% same size). In fact the house is not even discussed in Ms. Mo’s analysis. Her emphasis is entirely on the branding of the street name and the lot depth as the predominant factors leading her to conclude that the property is not comparable to the Subject Property. The Board finds there is no evidence to support this opinion. There is nothing in the evidence to establish that current value can be determined on the basis of these criteria alone. The Board cannot speculate on the value of a street address.

59The Appellant provided an aerial photo which shows the location of the Subject Property. The Board finds that most of the properties depicted in this aerial photo are within close proximity to their respective neighbours, with the exception of the larger houses, such as the Subject Property which, although a corner property, appears to not only be twice as large as many of the other houses, but also provides a grand curb appeal, one of the criteria mentioned by Ms. Mo as well as Mr. Bassi. The Board finds Ms. Mo’s opinion discounting curb appeal as a key factor, is not supported by evidence. While Ms. Mo maintains that comparison based on size of house is not sufficient as a factor, and that there are other variables that a buyer will consider in their purchase decision, the Board finds a grand curb appeal is a contributing factor in the determination of current value.

60Ms. Mo suggested six (6) alternate comparable properties in lieu of MPAC's suggested comparable properties, to support the Appellants’ position on the current value of the Subject Property. The Board has reviewed these suggested comparable properties, noting that, unlike Ms. Mo’s analysis of MPAC’s comparable properties, no analysis has been provided at all, to support her choice of comparable properties. There is no mention regarding location, neighbourhood, exclusiveness, prestige nor coveted addresses, setbacks, ravines, etc. Ms. Mo did not clarify if she had visited these properties both, from the inside and outside, as she had done for MPAC’s comparables. Because Ms. Mo provided no analysis, the Board finds that there is insufficient evidence to establish that the suggested properties are comparable to the Subject Property.

61The Board finds that all of the sale dates for the suggested comparable properties provided by Ms. Mo, are not only significantly distant from the base year of January 1, 2012, with the exception of 143 Highland Crescent, which the Board finds to be inferior to the Subject Property, but also she has provided no time adjustment analysis of the sale values. Furthermore, the suggested comparable property provided by Ms. Mo, 8 Wilket Road, was not the subject of a sale.

62In light of the above analysis and findings, the Board is persuaded that the best evidence available for making a determination of current value for the Subject Property, is the two suggested property provided by MPAC, namely 9 Bayview Ridge Crescent and 114A Dunvegan Road.

63Taking into account that both these properties are relatively equivalent to the Subject Property and factoring in their respective total building areas and Time Adjusted Sales amounts, the Board arrives at a $/sq. ft. rate of $952/sq. ft. Applied to the Subject Property total building area, the current value is determined to be $9,082,080. As this result approximates the median value in MPAC's direct sales comparison analysis, the Board is satisfied that MPAC’s suggested comparable properties provide the best available evidence for the purposes of determining the correct current value for the Subject Property.

64The Board notes that MPAC is not seeking a higher assessment, but rather, is asking the Board to confirm its assessment as returned in the amount of $7,399,000 as of the January 1, 2012 valuation date, for the 2016 taxation year. Whereas the Board finds the correct current value to be at the higher end of MPAC’s range, the Board accepts and confirms MPAC’s current value assessment of $7,399,000 for the 2016 taxation year.

DECISION

65The Board confirms MPAC’s current value assessment of the Subject Property of $7,399,000 for the 2016 taxation year. As the section 33 appeals for the 2014 and 2015 taxation years were resolved between both parties, the Board withdraws these appeals.