Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
August 2, 2018
FILE NO.:
WR 153295
Assessed Person(s):
Eynat Katz
Appellant(s):
Eynat Katz
Respondent(s):
Municipal Property Assessment Corporation (“MPAC”) Region 14
Respondent(s):
City of Vaughan
Property Location(s):
155 Parr Place
Municipality(ies):
City of Vaughan
Roll Number(s):
1928-000-061-49912-0000
Appeal Number(s):
3233834 and 3301547
Taxation Year(s):
2017 and 2018
Hearing Event No.:
696178
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard:
April 18, 2018 by teleconference and written submissions
APPEARANCES:
Parties
Representative
Eynat Katz
Andrew Attard
MPAC
Leo Verduci
City of Vaughan
No one appeared
DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING
BACKGROUND
1Eynat Katz is the owner of 155 Parr Place, a single family detached residential property located in Vaughan (the “Subject Property”). The site area itself is a little larger than half an acre, and the home is 6,113 square feet (“sq. ft.”) in size. The home’s “effective year built” is 2006. This property has an attached garage of 868 sq. ft. and a swimming pool.
2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act“), the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, the MPAC is required to assess this value as of the valuation date, January 1, 2016.
3MPAC has assessed the current value of the Subject Property at $3,718,000.
4Eynat Katz (“the Appellant”) has filed appeals for taxation years 2017 and 2018 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is his position that MPAC’s assessment of current value is correct but that it is inequitable with the assessed values of similar lands in the vicinity. The Appellant submits that the equity calculation by MPAC is incorrect, and that the correct reduction would lead to an assessment of $2,900,000.
5Pursuant to s. 40.(11) of the Act, the City of Vaughan is a party to this proceeding. However, it did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing for the City of Vaughan.
6Section 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 of the municipal tax burden according to the value of the property possessed by each ratepayer. Both parties agree that a reduction is required but cannot agree on an appropriate amount.
DECISION
7At the hearing, the representatives for each party agreed on the current value of the Subject Property at $3,718,000. They also agreed that an equitable reduction was required. However, they did not agree on the correct equitable reduction that should be given.
8The representatives agreed that it would be preferable to present written submissions on the issue of equity. The representatives were given a schedule for the submission of the written materials, and both representatives complied. Upon consideration of the written submissions and the evidence filed at hearing, the Board finds that current value assessment for the 2017 to 2018 tax years is $3,718,000. Pursuant to s. 44.(3)(b) of the Act, this value should be reduced to $3,309,000.
RELEVANT LEGISLATION
- “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:
- 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.
39.1(1) Reconsideration of Assessment. The owner of a property or a person who has received or would be entitled to receive a notice of assessment under this Act may request the assessment corporation to reconsider the following matters:
Any matter that could form the basis of an appeal under subsection 40(1).
Any matter that could form the basis of an application under section 46.
39.1(10) Alteration of the tax roll. – Upon receiving notice of the settlement, the clerk or the Minister, as the case may be, shall alter the tax roll accordingly and taxes shall be levied in accordance with the amended assessment.
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
10There is no dispute that the current value of the Subject Property is $3,718,000. The only issue to be determined on these appeals is:
Should there be an equitable reduction of the current value of the Subject Property pursuant to s. 44(3) (b) of the Act, and, if so, what the amount of this reduction should be?
MPAC’S Evidence
11Leo Verduci, representing MPAC, submitted written submissions on the issue of the equitable adjustment required in this assessment. MPAC relies on 30 residential properties within 1.0 kilometre of the Subject Property. The sale prices used are all time-adjusted in order to reflect current value as of the valuation day, January 1, 2016. In the generally accepted methodology of dividing the assessed value of the properties by the time-adjusted sale value, the product is the assessment to sale ratio (“ASR”), and the perfect harmony between these two values would be a score of 1.0, indicating that the assessment and sale prices were identical.
12Mr. Verduci’s time adjustments form part of his calculations of the ASRs for the 30 selected single family homes. He argues that, without adjusting for the changes in the market over time, especially given the rapid growth in the residential market during the last year, the ASR cannot hope to be accurate for comparison purposes.
13Mr. Verduci explained that several of the properties have adjustments arising from recent renovations. Those kinds of adjustments reflect changes in the properties themselves, not changes in the market, and should not form part of the time adjustments.
14Mr. Verduci also submits that the Appellant’s equity study included 73% of sales occurring after the valuation day, which in his opinion was a period of escalating market activity. By not adjusting the sales prices back to January 1, 2016, the Appellant has artificially lowered the median ASR.
15Mr. Verduci referred the Board to Highland Equipment Ltd. v. Municipal Property Assessment Corp., Region No. 9 [2013], O.A.R.B.D. No. 157 a decision of Member B. Cowan, which, in paragraph 49 recommends the use of an ASR analysis using time-adjusted ASRs “not for evaluating MPAC’s methodology but to consider equity among actual, corrected assessments that form the basis for ultimate property tax obligations… I believe that the concept of time-adjusting the sales is appropriate to achieve a more accurate ASR…”
16Mr. Verduci’s equity analysis concluded that the level of appraisal in this case was 0.909, or lower than MPAC’s target level of appraisal between 0.95 and 1.05. For this reason he recommended a reduction of the assessed value of $3,718,000 by the MPAC’s median ASR (0.909) to $3,379,000.
Appellant’s Evidence
17Mr. Attard had filed his evidence prior to the hearing of the appeal, and followed up with submissions on the issue of Equity. Mr. Attard prepared his own equity study of 30 sales occurring in the 12 months before and after the Valuation Day. The vicinity he selected was essentially the same vicinity chosen by MPAC, being the area of Vaughan bordered by Highway 7 to the north, Regional Road 38 to the west, Centre Street to the south and Regional Road 1 to the East. The only difference between the “vicinities” selected by the Appellant is that five sales extended east of Riverside Boulevard, whereas MPAC selected 30 sales within a smaller area bounded to the east by Riverside Boulevard.
18Mr. Attard reviewed the evidence on which equity analyses would be based, pointing out that his analysis and MPAC’s used the same criteria with two exceptions. Firstly, Mr. Attard used actual sales amounts without time adjustments. Secondly, he limited the sale price range of the properties selected for the equity study. He states:
“Since there are a large number of possible comparable properties to choose from, the taxpayer has chosen to consider sales which are closer in value of the subject property. The reason for doing this is because it is believed that sales which are closer in value are more likely to be more similar in character than sales which are lower in value.”
19Mr. Attard further suggests that MPAC’s use of time adjusted sale prices in its equity analysis would have skewed the results for the reason that the application of time adjustment factors (“TAF”) would have required too many corrections to be accurate. In support of this position, Mr. Attard relied on two Board decisions. One of these was Highland Equipment Ltd., cited above, and the second was JS & JB Holdings Inc. and Joseph Schuster v. Municipal Property Assessment Corporation, 2015 CanLII 69920, a decision of Member A. Fenus. In both decisions, the Board held that the use of “corrected” sales values had the potential to make the equity study inaccurate.
20Mr. Attard’s Equity Report limited the residential properties chosen to a value between $1,900,000 and $5,600,000, and his report established a median ASR of 0.78. Mr. Attard submits that this is a more accurate value given the absence of time-adjusted values and the limits on the sales values of the 30 selected residential properties. When this adjustment resulting from his equity analysis is applied to the agreed-upon current value of $3,718,000, the resulting assessment is reduced to $2,900,000.
ANALYSIS AND BOARD’S FINDINGS
21The purpose of an equitable reduction has been described by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., [1968] 2 O.R. 388, 1968 CanLII 183 (ON CA) (“Empire Realty”) 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 application of 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.
22In 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.”
23However, the goal of the Act is to determine the correct current value. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted. In this regard, the burden of proof rests with the Appellant to establish, on a balance of probabilities, that an equitable reduction is required.
24In this case, the parties have submitted comprehensive explanations of the reasoning behind their preferred method of calculating the reduction where the evidence has revealed an inequity in the vicinity among similar lands.
25Both parties put forward good arguments in favour of their interpretations of caselaw and the legislation on the issue of equity. Both parties referred to comments made by Member B. Cowan in Highland Equipment which appear to be in complete contradiction with each other. However, a closer look at that decision leads to the conclusion that Member Cowan rejected the treatment of ASRs by MPAC in that particular case on the ground that they had been “corrected.” In the two cases cited above, the “corrected” values referred not to time adjustments but to adjustments made to lot sizes to account for differences. The Board in both cases accepted time adjustments, but found the other forms of “corrected” values misleading.
26Member Cowan did not reject the methodology of calculating ASRs as a method of determining equity and in fact carried out his own calculation of ASRs. In the competing interpretations provided by the parties in the present case, the Board prefers the analysis provided by MPAC which accepts that time-adjusting the sales is appropriate for the purpose of achieving a more accurate ASR.
27The Board would direct the parties to the decision of the Court of Appeal in Empire Realty, cited above, and of the Divisional Court in Junvir Investments Ltd. v. Municipal Property Assessment Corp. [2014] O.J. No. 4425 (“Junvir”). In the latter decision, Divisional Court was asked to grant leave to appeal on the ground that the Board had misconstrued the term “similar lands in the vicinity” from s. 44(2) of the Act, and had interpreted it to mean the “most similar lands in the vicinity.” The Board did this by preferring the evidence of two grocery stores more similar to the Subject Property than the other comparable sales put forward by either party.
28In paragraph 15 of Junvir, Justice Perrell makes the following finding:
“The point is subtle, but the outcome profound, and, in my opinion, it is arguable that what the Board did is to change the calculus of s. 44 of the Assessment Act from comparing the subject property to similar properties to comparing the subject property to properties approaching the identical (near equivalency), which is a methodological change, a difference in kind, not a factual matter of degree, and arguably an error of law.”
29While the Appellant’s approach has been well-researched and carefully documented, it cannot stand. By applying limitations to the cross-section of sales of “similar lands in the vicinity”, the Appellant has introduced an artificial measure of the level of assessment. Mr. Attard explains that he did so in an effort to produce comparable properties which would be “more similar in character than sales which are lower in value.”
30The more acceptable approach is to consider all points of comparison between the Subject Property and the similar lands. Focusing on one characteristic will impair a comprehensive consideration of the features that make lands “similar.” Justice Nordheimer writing for the Divisional Court in Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299, wrote:
In my view, the proper approach to be taken to determining what are “similar lands in the vicinity” is that set out by Saunders J. in Trizec, that is, that all points of comparison must be considered. I also agree with the point that he made, and which is of some importance to this case, that a single point of similarity, such as use, is not necessarily determinative of the issue.
31The Appellant also took the position that to use time-adjustments to calculate the ASRs would give a less accurate result. MPAC took the opposite position and submitted that, where a large portion of sales used in the equity analysis have occurred in a period of escalating market activity, a failure to adjust the sales values back to the valuation day will artificially lower the ASR. The Board agrees and references the analysis contained in paragraph 49 of Highland Equipment Ltd., above.
32In this case, because the parties have provided detailed information on 48 sales between them (with 12 common properties in their individual equity studies), all of which are similar to the subject property, the Board will use all 48 to determine the median ASR. While the Appellant chose more sales in 2016 than in 2015, time adjusting all the sales will remove any bias the imbalance may have caused. Using all 48 sales, and employing MPAC’s Price Change Over Time analysis for the time adjustment factors (“TAF”) to apply to non-adjusted sales, the resulting median is 0.89. [See Appendix A for a summary of the sales and TAFs used in this analysis].
33Because the median assessment shows that similar properties in the vicinity are assessed at 89% of their current value, an adjustment reducing the current value of the subject property to 89% of its current value will achieve equity with similar properties.
DECISION
34The correct current value of the Subject Property is $3,718,000 for the 2017 and 2018 taxation years.
35An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is required. The current value of the Subject Property is reduced to 89 per cent of its current value to $3,309,000 in order to achieve an equitable assessment with similar properties in the vicinity.
“Leslie Flemming”
LESLIE FLEMMING
MEMBER
Assessment Review Board
A constituent tribunal of Environment and Land Tribunals Ontario
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248
APPENDIX A
EQUITY ANALYSIS SUMMARY
Address
Assessment
Sale $
Sale Date
TAF
TAS $
ASR
1
10 Fairlea Ave
1,615,000
3,638,800
Dec 16
0.86
3,128,680
0.52
2
61 Riverside Blvd
1,464,000
2,550.000
Nov 16
0.86
2,193,000
0.67
3
53 Riverside Blvd
1,402,000
2,290,000
Sep 16
0.88
2,015,200
0.70
4
2 Sanibel Cres
1,418,000
2,220,000
July 16
0.91
2,010,401
0.70
5
105 Flamingo Rd
1,600,000
2,500,000
Oct 16
0.87
2,170,000
0.74
6
18 Oakbank Rd.
2,579,000
3,888,000
Aug 16
0.89
3,460,320
0.75
7
6 Riverside Blvd
2,106,000
2,960,000
May 16
0.93
2,752,800
0.77
8
145 Langtry Pl.
1,735,000
2,350,000
Apr 16
0.95
2,232,500
0.78
9
10 McDougall Crt
1,040,000
1,180,000
May 15
1.137
1,341,361
0.78
10
40 Flamingo Rd
998,000
1,440,000
Sep 16
0.88
1,267,200
0.80
11
89 Sanibel Cres
1,582,000
1,650,000
Feb 15
1.203
1,984,950
0.80
12
2 Evita Crt
1,577,000
1,813,500
Aug 15
1.078
1,954,953
0.81
13
2 Sanibel Cres
1,418,000
1,600,000
Jul 15
1.097
1,755,200
0.81
14
2 Glenforest Dr
1,612,000
2,255,000
Sep 16
0.88
1,984,400
0.81
15
315 Flamingo Rd
1,587,000
2,200,000
Aug 16
0.89
1,958,000
0.81
16
186 Flamingo Rd
1,555,000
1,685,000
May 15
1.137
1,915,845
0.81
17
65 Downing Blvd
1,041,000
1,320,000
Mar 16
0.961
1,268,520
0.82
18
37 Idleswift Dr
1,721,000
2,200,000
Apr 16
0.95
2,090,000
0.82
19
51 Downing Blvd
1,259,000
1,500,000
Dec 15
1.008
1,512,000
0.83
20
20 Oakbank Rd
2,778,000
3,800,000
Sep 16
0.88
3,344,000
0.83
21
23 Idleswift Dr
2,897,000
3, 700,000
May 16
0.93
3,441,000
0.84
22
80 Green Acres Rd
1,605,000
2,118,000
Oct 16
0.87
1,842,660
0.87
23
123 Sanibel Cres
1,595,000
2,050,000
Aug 16
0.893
1,830,000
0.87
24
86 Sanibel Cres
1,735,000
2,218,000
Sep 16
0.88
1,951,840
0.89
25
161 Rose Green Dr
1,506,000
1,460,000
Apr 15
1.158
1,690,680
0.89
26
159 Langtry Pla
1,667,000
1,747,500
Sep 15
1.059
1,850,602
0.90
27
357 Flamingo Rd
2,502,000
2,302,841
Feb 15
1.20
2,763,409
0.91
28
12 Evita Crt
2,535,000
2,595,000
Aug 15
1.078
2,797,000
0.91
29
9 Meadow Ht. Crt
1,669,000
1,522,800
Feb 15
1.203
1,831,928
0.91
30
14 Edmund Seager Dr
1,113,000
1,250,000
Mar 16
0.961
1,201,250
0.93
31
67 Downing Blvd
1,028,000
1,197,000
Jun 16
0.919
1,100,043
0.94
32
127 Flamingo Rd
1,336,000
1,636,000
Oct 16
0.868
1,420,000
0.94
33
3 Erica Rd
1,650,000
1,908,000
Jun 16
0.92
1,755,360
0.94
34
128 Flamingo Rd
1,388,000
1,618,000
Sep 16
0.88
1,423,840
0.98
35
388 Centre Street
1,892,000
1,975,000
Feb 16
0.98
1,935,500
0.98
36
11 Elmbank
3,094,000
2,900,000
Oct 15
1.04
3,160,000
0.98
37
29 Sanibel Cres
2,231,000
2,040,000
Sep 15
1.059
2,160,360
0,98
38
3 Oakbank Road
2,199,000
1,950,000
May 15
1.14
2,223,000
0.99
39
53 Langtry Pl
1,396,000
1,217,700
Apr 15
1.158
1,410,000
0.99
40
7 Riverside Blvd
3,195,000
3,138,888
Dec 15
1.01
3,170,277
1.01
41
135 Rose Green Dr
1,551,000
1,650,000
May 16
0.933
1,539,450
1.01
42
16 Meadow Ht Crt
1,818,000
1,918,000
Jul 16
0.906
1,737,000
1.05
43
9 Sanibel Cres
2,278,000
1,930,500
Jun 15
1.116
2,154,438
1.06
44
80 Callaway Crt
3,426,000
3,000,000
Aug 15
1.078
3,234,000
1.06
45
18 Parr Place
4,251,000
4,025,000
Jun 16
0.919
3,698,975
1.15
46
80 Callaway Crt
3,426,000
3,330,000
Aug 16
0.906
3,016,980
1.15
47
101 Callaway Crt
3,882,000
3,325,000
Apr 16
0.947
3,148,775
1.23
48
217 Flamingo Rd
1,737000
950,000
Jul 15
1.097
1,042,150
1.67
Sale $ = Sale Price
TAF = Time Adjustment Factor (from MPAC)
TAS $ = Time Adjusted Sale Price