Varadi v. Municipal Property Assessment Corporation, 2018 CanLII 76060

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 08, 2018

FILE NO.:

WR 153798

Assessed Person(s):

Joseph Alexander Varadi, Vera Susan Varadi

Appellant(s):

Joseph Alaxander Varadi and Vera Susan Varadi

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s):

City of Toronto

Property Location(s):

278 Bloor St. E., Unit TER 09

Municipality(ies):

City of Toronto

Roll Number(s):

1904-101-040-05805-0000

Appeal Number(s):

3233226 and 3298942

Taxation Year(s):

2017 and 2018

Hearing Event No.:

698564

Legislative Authority:

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

Heard:

June 15, 2018 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Joseph A. Varadi and Vera S. Varadi

Joseph Varadi

MPAC

Adriana Kim

City of Toronto

No one appeared

DECISION DELIVERED BY MARCELLE BOURASSA ON JUNE 15, 2018

INTRODUCTION

1Joseph A. Varadi and Vera S. Varadi (the “Appellants”) are the owners of a terrace condominium apartment, Unit TER 09, located at 278 Bloor Street East in the North Tower that backs onto the Rosedale ravine (the “subject property”) in the City of Toronto. It has 1,546 square feet (sq. ft.) of total building area. The condominium tower was built in 1982. MPAC has assigned it a quality of construction rating of 8.0.

2For the 2017 and 2018 taxation years under appeal, MPAC returned the assessment for the subject property at $835,000.

3The Appellants appealed the assessments for the 2017 and 2018 taxation years to the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act R.S.O. 1990, c. A.31 (“Act”). Mr. Varadi, on behalf of the Appellants, takes the position that the subject property is assessed too high. He is of the opinion that the subject property’s current value should be between $650,000 and $675,000 and certainly not more than $759,000, the sale price of the most comparable unit in the North tower.

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, Adriana Kim, estimates the current value of the subject property to be $883,000 based on the direct comparison approach.

5Ms. Kim conducted an equity study and determined that the equity adjustment is not required. MPAC is not seeking a higher assessment. It is MPAC’s positon that the assessment as returned of $835,000 should be confirmed for the 2017 and 2018 taxation years.

6Mr. Varadi did not take a position as to whether there should be an equitable reduction of the current value.

ISSUES

7The issues to be determined are:

a) What is the correct current value of the 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

8For the reasons that follow, the Board finds that the current value of the subject property, as of the January 1, 2016 valuation date, is $814,000 under s. 44.(3)(a) of the Act. Furthermore, the Board finds that the evidence does not support the conclusion that the current value requires an equity adjustment under s. 44.(3)(b) of the Act.

9The assessment of the property located at 278 Bloor Street East, Unit TER 09, is reduced from $835,000 to $814,000 for the 2017 and 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 the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

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

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

MPAC’S Evidence and Submissions

15Ms. Kim relies on a Valuation Report. Key property details for the six most comparable properties are set out below. All are located in the North tower, face the Rosedale ravine, and have a locker and a parking spot like the subject property. Some properties have an extra parking spot. A parking spot is valued at $19,000. There is a positive 1% adjustment for exposure for units located above the seventh floor.

Property

Year Built (effective)

Quality

Blg Area (sq. ft.)

Additi-onal Parking Spot

Exposure

Time Adjusted Sale (“TAS”)

TAS / sq. ft.

Adj. TAS /sq. ft.

278 Bloor St. E Unit TER 09 (subject property)

1982

8.0

1,546

No

North

278 Bloor St. E Unit 208 (Sale 1)

1982

8.0

1,563

No

North

1,046,958 (01/07/2016)

669.84

278 Bloor St. E Unit 308 (Sale 2)

1982

8.0

1,563

No

North

1,203,496 (12/01/2015)

769.99

278 Bloor St. E Unit 407 (Sale 3)

1982

8.0

1,692

Yes

North

863,028 (07/17/2015)

(844,028) 498.83

278 Bloor St. E Unit 507 (Sale 4)

1982

8.0

1,692

Yes

North

907,364 (01/13/2016)

(888,364) 525.04

278 Bloor St. E Unit 607 (Sale 5)

1982

8.0

1,692

Yes

North south

969,617 (09/01/2015)

(950,617) 561.83

278 Bloor St. E Unit 510 (Sale 6)

1982

8.0

1,799

No

North east

1,044,443 (06/30/2015

580.57

16Ms. Kim states that the median TAS value per square foot is $571.20. Applying this value to the subject property’s square footage of 1,546 sq. ft. results in a value of $883,000 (rounded).

17Ms. Kim states that she did not include Unit TER 10 as a sale comparable as it was sold under Power of Sale. At the request of the Board, she provided the 2016 current value assessment (“CVA”) of $976,000 for Unit TER 10.

18Ms. Kim states that her opinion of the subject property’s current value is $883,000.

Appellants’ Evidence and Submissions

19Mr. Varadi states that the condominium complex at 278 Bloor Street East consists of two residential towers. The South tower fronts Bloor Street East and has 135 units on 23 floors and the North tower fronts the Rosedale ravine and has 45 units on 9 floors.

20The South tower has more floors and enjoys a southern exposure whereas the North tower is deeper into the Rosedale ravine and is “trapped” between the Manulife building and the Bellagio on Bloor building to the east.

21Mr. Varadi referenced a summary of sales statistics for units in the condominium complex from 2013-2016.

22Mr. Varadi asserts that units in the South tower seem to sell for higher prices than units in the North tower. He referred to Unit 409 in the North tower and Unit 703 in the South tower. Both have 1,546 sq. ft. of building area. However, Unit 409 sold for $765,000 whereas Unit 703 sold for $825,000.

23Mr. Varadi asserts that there is a positive market bias in favour of units with the same building area and layout located at higher elevations. He referred to Unit TER 10 located at the terrace level like the subject property and Unit 710 located on the 7th floor. Both units are located in the North tower. Unit TER 10 sold for $759,000 whereas Unit 710 sold for $1,105,000.

24Mr. Varadi asserts that terrace units in the North tower are disadvantaged by both market biases. Of the sales that took place over the period of 2013 - 2016, only one sale involved a terrace unit, namely TER 10.

25Mr. Varadi asserts that the subject property is at a disadvantage as it is one level below Bloor Street East and also has less daylight on account of the mature trees in the ravine. The expanded 700 foot terrace is like a patio but is enclosed like a balcony. There is no direct access to the ravine. While there is privacy, its location also makes it vulnerable to intruders from the ravine.

26Mr. Varadi estimates that the tree foliage is dense up to about the fourth floor. Units at higher elevations enjoy more light and a better view of the Rosedale ravine.

27Mr. Varadi states that Unit TER 10 located next door to the subject property is the best comparable. Like the subject property, it is located one level below Bloor Street East, has an expanded terrace, has less sunlight on account of the mature trees and no view unlike other units in the North tower. Unlike the subject property, it has 16% more building area (1,799 sq. ft.). It sold in November 2015 for $759,000 (TAS $765,831). He states that he has been inside Unit TER 10. The previous owner was in arrears with condo fees and was forced out and the unit was sold. He acknowledges that the unit had been neglected and needed to be renovated. He asserts that there were no structural issues and that taste is personal to a purchaser. He asserts that it still sold at market value. The unit was listed with a broker, advertised and visited by potential purchasers.

28Under cross-examination, Mr. Varadi states that the purchaser of Unit TER 10 renovated it. Ms. Kim states that Unit TER 10 sold in 2018 for $1,300,000. In response, Mr. Varadi states that Unit 706 in the South tower (with smaller square footage) also sold in 2018 for $1,600,000. He noted a $300,000 differential in selling prices.

29Taking into account differences in building areas between Unit TER 10 and the subject property, Mr. Varadi asserts that the subject property’s current value should be $650,000 to $675,000 and certainly not more than $759,000.

30Mr. Varadi states that maintenance fees vary based on the square footage of the units.

31Under cross-examination, Mr. Varadi acknowledges that Unit 2006 sold for less than Unit 1506 ($622,000 versus $670,000). Both have southern exposures. He also acknowledges that Unit 802 sold for less than Unit 602 ($777,000 versus $1,049,900). Both have North-west exposures. All units are located in the South tower. Mr. Varadi opines that a market bias towards higher elevations is not as obvious in the South tower as it is in the North tower.

32Under cross-examination, Mr. Varadi also acknowledges that Unit 1402 sold for $950,000 whereas Unit 502, located at a lower level, sold for a price of $980,000. Both have North-west exposures. Mr. Varadi considers that they were sold for around the same price. He adds that Unit 502 overlooks an internal courtyard. He acknowledges that Unit 1402 has the better view. Again, he opines that a market bias towards higher elevations is not as obvious in the South tower as it is in the North tower.

Board’s Analysis and Findings

33Under 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.

34To 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.

35The Board has considered the following properties with time adjusted sales: Units TER 10, 208, 308, 407, 507, 510 and 607. All of these properties are located in the North tower and have northern exposures like the subject property.

36The Board notes that Mr. Varadi’s summary of sales statistics for units in the condominium complex from 2013-2016 includes sales information for Units 409, 710 and 410 that are also located in the North tower and have northern exposures like the subject property. However, these sales took place in 2013 and are too far removed from the legislated January 1, 2016 valuation dated to be considered by the Board. Also, no time adjusted factors were available to time adjust these sales.

37Mr. Varadi’s summary of sales statistics for units in the condominium complex from 2013-2016 also includes sales information for units located in the South tower. The Board did not find it necessary to consider sales in the South tower as it had a sufficient number of sales in the North tower to arrive at a determination of current value.

38The Board finds that Unit TER 10 is the most comparable property to the subject property in terms of location as it is a terrace condominium apartment located next door. Like the subject property, it is located one level below 278 Bloor Street East, has an expanded and enclosed terrace that overlooks the Rosedale ravine and has less sunlight on account of the mature trees in the surrounding ravine. It differs from the subject property in that is has 243 sq. ft. in additional building area. It also differs from the subject property in terms of condition at the time of sale in November 2015. Mr. Varadi acknowledges that the unit had been neglected and needed to be renovated. Ms. Kim states that she did not consider this sale as it sold under Power of Sale. Mr. Varadi asserts that it should be considered as it was listed with a broker, viewed by potential purchasers and sold at market value. The Board will consider the TAS of $765,831 of Unit TER 10. It is located in a condominium complex with a prime location along Bloor Street East among units with a high quality of construction rating. The Board notes from Mr. Varadi’s summary of sales statistics for units in the condominium complex from 2013-2016 that Unit TER 10 sold for less than its listed sale price. However, Units 507 and 208 had sales in November 2015 and also sold for less than their listed sale prices. Also, Unit 208 had the highest number of days on the market at 59 days. Given Unit TER 10’s condition at the time of sale, the Board finds that the subject property’s current value should be no lower than the time adjusted sale price of TER 10: $765,831.

39Units 407, 507 and 607 have TAS prices of $863,028, $907,364 and $969,617, respectively. They differ from the subject property in that they all have an additional 146 sq. ft. of building area and an additional parking space. Also, they have better views being located above the tree foliage from the mature trees in the ravine below. These three sales would appear to support Mr. Varadi’s assertion that there is a positive market bias in favour of units with the same building area and layout located at higher elevations. The Board finds these properties to be superior to the subject property.

40Units 208 and 308 have TAS prices of $1,046,958 and $1,203,496, respectively. They have slightly larger building areas at 1,563 sq. ft. They are located at a higher elevation than the subject property but still overlook the foliage of the trees in the ravine below. The higher TAS prices may be a reflection of their condition given that their TAS is higher than the TAS for Units 407, 507 and 607. The Board finds these properties to be superior to the subject property.

41Unit 510 has a TAS price of $1,044,195. It differs from the subject property in that it has an additional 243 sq. ft. of building area and a better view being located above the tree foliage from the mature trees in the ravine below. The Board finds this property to be superior to the subject property.

42The Board finds the subject property’s current value lies in the range of $765,831 (the TAS price of Unit TER 10) and $863,028 (the TAS price of Unit 407 at the low end of the TAS range of the superior properties). The midpoint of the range is $814,000 (rounded).

43The Board finds that the current value of the subject property is $814,000.

b) 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

44Ms. Kim relies on an Equity Analysis Report that considered the sales of 30 residential condominium properties that occurred between January 1, 2015 and December 31, 2016. All are located within 0.5 kilometres of the subject property.

45In her report, she states that the level of appraisal is established by determining the median Assessment to Sale Ratio (“ASR”) in the sales sample. She highlights that, in this instance, the sales sample produced a median ASR of 0.972. 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. The median ASR of 0.972 indicates that similar properties in the vicinity have been assessed at or near their current values. Therefore, an equity adjustment is not required.

46Ms. Kim concludes that the assessment for the subject property should be confirmed at $835,000 for the 2017 and 2018 taxation years.

Appellants’ Evidence and Submissions

47Mr. Varadi did not take a position as to whether there should be an equitable reduction of the current value. However, he asserts that the subject property is assessed too high at $835,000 and should not be assessed more than $759,000.

Board’s Analysis and Findings

48Section 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.”

49The 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 Re 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 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.

50In 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].”

51The 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).

52The 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. Used 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 ONSC 1299, [2017] O.J. No. 1010 ONSC 1299, 276 A.C.W.S. (3d) 220, 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] CarswellOnt 549, [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 9:

… 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.

53The 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.

54Ms. Kim relies on an Equity Analysis Report that considered the sales of 30 residential condominium properties that occurred between January 1, 2015 and December 31, 2016. All are located within 0.5 kilometres of the subject property. In this instance, the sales sample produced a median ASR of 0.972.

55The Board finds that the median ASR of 0.972 falls within MPAC’s generally acceptable standard of 0.95 and 1.05 required to establish that that the level of current values assessments of similar properties is in line with the level of sales prices in the vicinity.

56Mr. Varadi did not take a position as to whether there should be an equitable reduction of the current value.

57For these reasons, the Board finds that the evidence before it does not support the conclusion that an equity adjustment is required under s. 44.(3)(b) of the Act.

CONCLUSION

58The Board finds that the current value of the subject property, as of the January 1, 2016 valuation date, is $814,000 under s. 44.(3)(a) of the Act. Furthermore, the Board finds that the evidence does not support the conclusion that the current value requires an equity adjustment under s. 44.(3)(b) of the Act.

59Therefore, the assessment of the property located at 278 Bloor Street East, TER 09, is reduced from $835,000 to $814,000 for the 2017 and 2018 taxation years.