Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 30, 2018

FILE NO.: WR 151098

Assessed Person(s): Phyllis Glanc, Stephen Kahn

Appellant(s): Stephen Kahn

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 16

Respondent(s): Town of Collingwood

Property Location(s): 45 Madeline Drive

Municipality(ies): Town of Collingwood

Roll Number(s): 4331-040-002-23500-0000

Appeal Number(s): 3210568 and 3308250 (deemed 2018 appeal)

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

Hearing Event No.: 691970

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

Heard: February 6, 2018, by teleconference call

APPEARANCES:

Parties	Representative
Stephen Khan	Self-represented
MPAC	Lynda Grimshaw, Andrew McBride
Town of Collingwood	No one appeared

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1The subject property was assessed by MPAC as a Seasonal/Recreational Dwelling - First Tier on Water, built in 2000, with a construction quality of 8.0. It has a lot with 118.57 feet of effective frontage, 199.92 feet of effective depth for an effective site area of 0.54 acres and building total area of 3,666 square feet (“sq. ft.”). The subject property does not have a basement area. It has an attached garage built in 2000, with a building total area of 441 sq. ft. and a construction quality of 4.0.

2For the 2017 taxation year, the current value assessment (“CVA”) was returned at $1,261,000. Lynda Grimshaw, MPAC’s assessor, provided the Assessment Review Board (“Board”) with an opinion of value for the subject property at $1,305,000. Ms. Grimshaw urged the Board to set the CVA of the subject property at $1,305,000 although MPAC did not serve the Appellant with a notice of increase in value in accordance to Rule 40(b) of the Board’s Rules of Practice and Procedure (“Board’s Rules”).

3Stephen Khan, the Appellant, submits that the assessment is too high. He provided the Board with three approaches which he used to determine what he believes to be the correct CVA for the subject property, and concluded that the correct CVA of the subject property should be $1,113,000.

ISSUES

4The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 and deemed 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 finds the current value of the subject property for the 2017 and deemed 2018 taxation years to be $1,274,000. MPAC did not file a notice of intention to seek a higher assessment as required by the Board’s Rules. The Board confirms the assessment below the current value determined at $1,261,000 for the 2017 and deemed 2018 taxation years and finds this value to be fair and equitable.

REASONS FOR DECISION

Current Value – Evidence and Analysis

6In 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 deemed 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.

7Section 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.

8Section 40.(17) of the Act further places “the burden of proof as to the correctness of current value on MPAC.”

MPAC’s Position

9At the commencement of the hearing, Ms. Grimshaw testified that the most recent sale of the subject property was on June 14, 2013, when the Appellant purchased it at $1,102,500. She testified that after inspecting the property and reviewing its structures, she noticed that air conditioning was added to the property, which increased the value of the subject property by $3,000, but this additional value will be reflected in its assessment in the 2018 taxation year. Furthermore, she testified that after the inspection and in the course of reviewing the data on the subject property, a $44,000 negative adjustment was removed from the assessed value of the subject property, which has increased the returned CVA from $1,261,000 to $1,305,000. According to Ms. Grimshaw, this negative adjustment should have been removed for the 2016 CVA. She further added that this negative adjustment was added to the 2012 CVA base year for the data change of removing a private road access and adding a year round road access.

10Ms. Grimshaw presented six comparable property sales in proximity to the subject property. She testified that three of the property sales (Sales 2, 4 and 5) are inferior to the subject property and the remaining three (Sales 1, 3, and 6) are similar to the subject property. The Time Adjusted Sale (“TAS”) prices for the three inferior comparable property sales range from $1,081,161 to $1,219,326 with sale dates from February 2014 to June 2016. The building total area of these three inferior sales range from 2,461 to 3,457 sq. ft., with year built ranging from 1978 to 2004 and construction quality of 7.0 and 7.5. One of the three inferior sale comparables has a basement area of 2,294 sq. ft. of which 1,544 sq. ft. is finished. The comparable property sales similar to the subject property have TAS prices ranging from $1,239,679 to $2,173,878, with sale dates from July 2014 to July 2016. The building total area for this sales range from 3,057 sq. ft. to 4,220 sq. ft., with year built ranging from 1979 to 2008, and construction quality of 7.5 and 8.0. One of the similar comparable sales has a basement area of 3,128 sq. ft. of which 2,750 sq. ft. is finished.

11Ms. Grimshaw submits that based on the sale prices of the similar comparable property sales, an estimation of the current value of the subject property should be $1,305,000.

12Ms. Grimshaw further testified that she conducted a Sales Ratio Trend Analysis (“SRTA”). This was based on 248 sales from the subject property’s neighbourhood and adjacent areas from January 3, 2014 to December 20, 2016, a 35 month period, which provided an overall change in the market at 23.54%. This was used to determine the time adjustment factors in MPAC’s valuation report. In this report, she plotted a graph, which showed an upward trend, which she testified indicates inflation. She further stated that since MPAC could not go too far beyond the base year to 2013, she divided the 23.54% by 35 months to obtain 0.67. She then multiplied 0.67 by 30 months (June 2013 - purchase of subject property, to 2015) and obtained 20% market increase. She multiplied the sale amount of the subject property in June 2013 at $1,102,500 by 1.20 (market increase) and obtained a TAS price for the 2013 sale at $1,323,000. Ms. Grimshaw submits that this is additional proof to corroborate her opinion of value.

Appellant’s Position

13Mr. Khan submits that in 2015 or 2016, the subject property would not have sold for the amount it is assessed at. He directed the Board to three approaches in which he used to determine the correct current value for the subject property.

First Approach

14He presented five comparable property sales which he believes are comparable to the subject property. Two of these sales (Sale 2 - 120 Bartlett Blvd. and Sale 4 - 57 Madeline Drive) were used by MPAC. The sale dates for all the five sales range from February 2014 to July 2015, with construction quality from 7.0 to 8.0 and year built ranging from 1978 - 2004. The site area range from 0.23 to 0.67 and the building total area ranges from 2,363 sq. ft. to 3,457 sq. ft. He testified that he carried out an individual comparison analysis of each of these properties and based on this analysis, most of the comparable property sales have a dredged/deeper body of water, with docks and exposure to sunsets, which the subject property does not possess. However, using this analysis, Mr. Khan testified that he was able to provide “discount/premiums” to the subject property. He provided discounts to the assessed value of each of the comparable property sales by taking a simple average and including their intangible features such as the quality of the waterfront which he testified that he could not quantify but used his discretion to ascribe a percentage to this feature. According to Mr. Khan, the discounts to each sale and the corresponding implied assessment from these discounts to the subject property are:

Comparable Sales	Assessed Value ($)	Discount	Implied Assessed value to Subject Property ($)
120 Bartlett	867,000	15%	1,020,000
164 Bartlett	881,000	10%	978,888
57 Madeline Drive	934,000	10%	1,037,777
136 Bartlett	1,082,000	5%	1,138,947
104 Princeton Shores	1,000,000	5%	1,052,632

Second Approach

15Mr. Khan utilized an average of the different features of the five comparable property sales and obtained their corresponding discount to the assessed value of the subject property. He presented the Board with the following figures:

Features	Average	Difference with Subject property
Lot size	0.43	19% smaller than the subject property
Frontage	94	20% smaller than the subject property
Building Area	2,725	26% smaller than the subject property
Functional Area (basement)	3,179	13% smaller than the subject property
Year Built	1986	14 years older than the subject property

16Mr. Khan testified that some of the intangible features which includes boat access and exposure to sunsets which are superior features of waterfront properties led him to a reasonable conclusion that “may be” the five comparable property sales should be valued at a 15% discount to the subject property. Mr. Khan applied a 15% discount (which he provided as 0.85) to the average assessed value of the five sales at $952,800 and provided an assessed value of $1,121,000 (rounded) for the subject property. Mr. Khan submits that this should have been the assessed value of the subject property, which is close to the purchase price in 2013.

Third Approach

17Mr. Khan used the average assessed value of the five comparable properties at $952,800 and divided it by their average sale price of $944,000 to obtain an Assessment to Sale Ratio (“ASR”) of 1.01, which he applied to the June 2013 purchase price of the subject property of $1,102,000 to obtain an assessed value of $1,113,000 (rounded). Mr. Khan submits that this is the best approach as it is the most objective and shows that the assessed value of the subject property should not be close to $1,305,000, but close to $1,100,000, which he compared to the sale of one of the five comparables - 57 Madeline Drive, with construction quality of 7.5, which sold in February 2014 for $970,000. He submits that this is the best comparable to the subject property, since it is on the same street as the subject property, although the building is smaller, the construction quality is similar, it has the best waterfront quality, which is sandy, has a volleyball court, it has a view of the sunset and the owners have a boat.

18Mr. Khan further testified that MPAC’s time adjustments factors (“TAF”) are inaccurate and illogical. That MPAC only provided TAF for the period of January 2014 to December 2016, which shows an 11.5% adjustment. The subject property was purchased in 2013 and MPAC did not provide any data for this year.

Analysis

19The best evidence of current value is the sale of the subject property on or close to the valuation date of January 1, 2016. When no such sale occurs, the Board looks to the recent sale of other similar properties in the vicinity to determine current value. The most recent sale on the subject property occurred in 2013, which is three years prior to the valuation date. Although this sale is far removed from the valuation date, this sale can be only be used to determine what the subject property would have sold for on the valuation date depending on market data.

20Mr. Khan testified that MPAC’s TAF are not accurate and are illogical since MPAC did not provide TAF for 2013, the year he purchased the subject property for the sum of $1,102,500. He further testified that in that year, there was no inflation and suggested that MPAC knew about this and chose not to provide the data for 2013. He did not provide evidence in this respect neither did he offer an alternative method on how to time adjust the comparable sale properties, submitting that he is not a statistician. The Board can only make a determination on current value based on sales evidence in or around the valuation date. The practice of the Board is to use 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. The 2013 sale is too far removed from the valuation date. Appropriately, MPAC could not have presented TAF for 2013. Sequel to this, Ms. Grimshaw utilized the overall change in the market at 23.54% from January 3, 2014 to December 20, 2016 to provide the time adjusted sale amount of the 2013 sale of the subject property as $1,323,000. The Board will disregard this approach, since it is unsubstantiated by sales evidence.

21Mr. Khan’s first and second approach which he utilized to determine the correct current value of the subject property is speculative and subjective and it further lacks evidentiary proof. He correctly used comparable property sales for his analysis; however his application of the various “discount/premium” to the analysis is inaccurate and subjective. On page 3 of his evidence presented to the Board, he states:

While I prefer the first method because it gives the lowest assessed value for my property, it is also the most subjective. Method 2 is also subjective, while method three is the most objective from a checking what a fair assessed value should be for my property. (sic)

22According to Mr. Khan, he is applying a “discount” to the assessed values of the five comparable property sales. He is actually increasing the assessed values of the five sales and using this to provide a discount to the assessed value of the subject property. This approach is better termed as applying “premiums” to the sales. Mr. Khan also described it as “discount/premium”. He further admitted under cross-examination that the percentage discounts also included intangible features of the five sale comparables which he could not quantify. Mr. Khan arbitrarily assigned an adjustment to value of the subject property without supportive and quantitative evidence to justify and verify the adjustments.

23For the third approach which Mr. Khan termed as the best and the “most objective” in arriving at a fair assessment of the subject property, he used the assessed values of all the five comparable sale properties without time adjusting the sales to the valuation date of January 1, 2016 to arrive at an ASR of 1.01. In addition, most of these properties are not similar to the subject property. The subject property has the largest frontage and largest effective site area excluding Sale 2 -164 Bartlett which has a site area of 0.67 acres. It also has the largest building total area and highest construction quality. The Board notes that for Sale 5 - 104 Princeton Shores, Mr. Khan testified that it has a construction quality of 8.0, based on the video he viewed of this property when it was put up for sale but MPAC has it as 7.0. The subject property is also newer than four of the comparables. Sale 3 - 57 Madeline Drive was built in 2004 and 1,205 sq. ft. smaller in building size than the subject property. For these reasons, this approach appears not to be appropriate in arriving at the correct current value of the subject property.

24The parties have provided sale comparable properties within and outside the shoulder years, which is 12 months before and after the valuation date of January 1, 2016. Although the Board prefers to use property sales of similar properties within the shoulder years, in this appeal, the Board accepts all these sales based on MPAC’s evidence that not many waterfront properties were sold within the valuation date and moreover, MPAC provided time adjustment factors dating back to January 2014.

25In determining the correct current value for the subject property, the Board reviewed and used all the comparable property sales of the parties. Mr. Khan used two of MPAC’s sale comparables. The Board was able to time adjust three of the Mr. Khan’s sale properties using MPAC’s TAF to the valuation date of January 1, 2016. The Board used nine sales from the parties to determine the correct current value for the subject property. The Board compared all the characteristics of all the property sales to make a finding whether the sales are inferior or superior to the subject property. The details of these nine sales are summarized in Table 1 below:

Table 1

Address	Assessment ($)	Sale Date / Sale Amt. ($)	Time / Adjusted Sale ($)	Building/Size (sq. ft.)	Lot Size (acres)	Year Built	Construction Quality	Inferior/ Superior
Subject Property / 45 Madeline Drive	1,261,000	N/A	N/A	3,666	0.54	2000	8.0	N/A
Sale A / 160 Princeton Shores	1,161,000	July 2014 / (1,650,000)	1,818,197	3,802	0.38	1979	8.0	Superior
Sale B (same as Appellants’) / 120 Bartlett Blvd.	867,000	July 2015 / (1,050,000)	1,088,117	3,457	0.23	1978	7.0	inferior
Sale C / 112 Bartlett Blvd.	1,459,000	July 2014 / (1,125,000)	1,239,679	4,220	0.54	1985	8.0	Superior
Sale D (same as Appellants’) / 57 Madeline Drive	934,000	February 2014 / (970,000)	1,081,161	2,461	0.36	2004	7.5	Inferior
Sale E / 104 Bartlett Blvd.	1,274,000	June 2016 / (1,290,000)	1,219,326	2,791	0.27	1989	7.5	Inferior
Sale F / 116 Bartlett Blvd.	1,365,000	July 2016 / (2,330,000)	2,173,878	3,057	0.41	2008	7.5	Superior
Sale G (Appellant) / 164 Bartlett	881,000	April 2014 / (980,000)	1,087,800	2,363	0.67	1986	7.0	Inferior
Sale H (Appellant) / 136 Bartlett Blvd.	1,082,000	Nov. 2014 / (855,000)	932,805	2,906	0.42	1980	7.5	Inferior
Sale I (Appellant) / 104 Princeton Shores	1,000,000	March 2014 / (865,000)	961,880	2,440	0.48	1984	7.0 (MPAC) / 8.0 (Appellant)	Inferior

26The Board reviewed the characteristics of each of the sale comparables and determines that six of these sales are inferior to the subject property, in terms of building size, frontage, effective site area (excluding Sale G, having an effective site area of 0.67), age (excluding Sale D, which is four years newer than the subject), and construction quality. The Board was unable to quantify what the Appellant termed as waterfront quality. The superior sales are Sales A, C and F. Sale C has the largest frontage of 222.5 sq. ft., which MPAC testified is significant in the assessment of waterfront properties and it also has the largest building total area. Sale A has a bigger building total area than the subject property, and its secondary structures include an outdoor pool and workshop which according to Ms. Grimshaw adds $20,933 to its assessed value. Sale F also has a larger frontage than the subject property and it is eight years newer than the subject property.

27The Board determines the current value of the subject property based on the current value range established by these inferior and superior sales, as illustrated in Table 2 below:

Table 2

Sale B, D, E, G, H & I Inferior Sales	Subject Property’s Current Value Range	Sale A, C & F Superior Sales
→$932,805 $1,219,326 →	$1,229,502	← $1,239,679 $2,173,878 →

28The mid-point of the current value range is $1,229,502. This is slightly below the TAS price of Sale C, which has the largest frontage and building total area, but with the same effective site area as the subject property and it is 15 years older, without a basement area or finished basement like the subject property. The Board determines that the correct current value of the subject property is $1,230,000 (rounded). The Board adds the $44,000 adjustment which Ms. Grimshaw testified was missed in the 2016 CVA, which was not opposed or questioned by Mr. Khan to the determined current value resulting in a current value of $1,274,000 for the subject property.

Equity Analysis

29Section 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.”

30The 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.

31Ms. Grisham presented an equity analysis of 30 Single Family Detached On Water and Seasonal/Recreational Dwelling – First Tier On Water with sales that occurred from January 1, 2014 to December 31, 2016, with no distance measurement passed kilometers of the subject property. The median ASR of the sales is 1.002. She submits that the International Association of Assessing Officers standards states that the level of appraisal for all properties should fall between 0.90 and 1.10. Ms. Grimshaw testified that by multiplying her opinion of value of $1,305,000 by the median of 1.002, this will provide a higher equitable assessment than the returned CVA consequently; no equity adjustment is permitted under the Act.

32The Appellant provided no equity argument.

33The best and only evidence on equity is presented by MPAC, due a larger sample size and based on this; the evidence does not lead the Board to the conclusion that the assessment of the property should be reduced below its current value to make it equitable with the assessments of similar lands in the vicinity.

CONCLUSION

34Based on all of the evidence, the Board determines the current value to be $1,274,000 (rounded). MPAC did not file a notice of intention to seek a higher assessment, as required by Rule 40(b) of the Board’s Rules. Consequently, the Board confirms the assessment below the current value determined at $1,261,000 for the 2017 and deemed 2018 taxation years and finds this value to be fair and equitable.

2018 DEEMED APPEAL

35An 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.

36Section 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.