Ara Boyajian v. Municipal Property Assessment Corporation, 2018 CanLII 76069

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 08, 2018

FILE NO.:

WR 151844

Assessed Person(s):

Ara Boyajian

Appellant(s):

Ara Boyajian

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s):

City of Toronto

Property Location(s):

10 Araz Place

Municipality(ies):

City of Toronto

Roll Number(s):

1908-081-980-05001-0000

Appeal Number(s):

3179468 and 3300471 (deemed 2018 appeal)

Taxation Year(s):

2017 and 2018 (deemed appeal)

Hearing Event No.

692468 and 694569

Legislative Authority:

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

Heard:

January 19 and March 15, 2018 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Ara Boyajian

Paul Grosman

MPAC

Carlo Bassi

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property comprises a single family dwelling on a lot measuring 2.88 acres, located in the ‘Bridle Path’ area of the City of Toronto. The Appellant, Ara Boyajian believes that the returned value of the subject property for the 2017 taxation year is too high, for two reasons:

• the subject dwelling has had no updates since its construction in 1977; and

• the area of the subject lot is unfairly assessed because of its size. He believes that there are development restrictions on the lot because it includes a portion of the adjacent ravine.

2Part way through the Appellant’s evidence in chief on January 19, 2018, it became apparent that there was some important factual information missing from the case. The parties agreed that:

• an inspection would be completed by MPAC; and

• the Appellant would produce information from the Toronto Region Conservation Authority (“TRCA”) about the subject property.

3MPAC’s returned value is based on a market wide valuation method known as the direct comparison approach to value. At the January 19, 2018 hearing, MPAC’s assessor Carlo Bassi, determined that the correct current value is actually $5,693,079 based on a comparison of the subject property with 16 properties that have sold in the area. When the hearing re-convened on March 15, 2018 he reduced this opinion of value to $4,610,000 based on his inspection. While Mr. Bassi believes this is the correct current value, MPAC is not seeking an increase of the returned value of $4,443,000.

4The Assessment Review Board (“Board”) must decide two things in this appeal. Firstly, the current value of the subject property must be determined for the 2017 taxation year. Having reference to the assessments of similar properties in the vicinity, the Board must also determine if the current value found should be reduced to represent an assessment that is equitable.

5Section 40.(26) of the Assessment Act, (“Act”) states 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 did not dispose of the 2017 appeal before March 31, 2018. For that reason, this decision also applies to the 2018 taxation year.

DECISION

6The Board finds that the current value of the property at 10 Araz Place is $3,821,000. As there is evidence to support a reduction in this amount for the assessment to be fair and equitable, the assessment is reduced to $3,554,000.

7Accordingly, the assessment of 10 Araz Place is reduced for the 2017 taxation year from $4,443,000 to $3,554,000 in the Residential property class. This result is deemed for the 2018 taxation year.

LEGISLATION

8In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act (“Act”).

9Section 1 of the Assessment 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.

10Section 19.(1) of the Assessment Act states:

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

11Section 44.(3) of the Assessment 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.

What Is The Current Value Of The Subject Property?

MPAC’S Evidence

12Mr. Bassi carried out a valuation of the subject property using the direct comparison approach, whereby similar properties in the area that have sold in proximity to the statutory valuation day are used to approximate the current value of the property under appeal. He stated that differences in characteristics between the comparable properties and the subject property were considered, and appropriate adjustments to value were made to arrive at a reasonable value.

13Mr. Bassi stated that because market conditions and sale prices change over time, and because the comparable properties were not sold on the valuation day of January 1, 2016, Time Adjustment Factors (“TAFs”) are applied to adjust the sale value of each of the comparable properties to show their likely sale value as if they were sold on January 1, 2016. The TAFs in this case are derived from 366 sales of residential properties in the market area, between May 2014 and December 2016.

14In his analysis, Mr. Bassi used the sales of 16 properties that he found to be the most comparable to the subject property. The range of the Time Adjusted Sale (“TAS”) values of these 16 comparables is $2,906,082 to $6,075,022. These properties sold between October 2014 and November 2016; all within 13 months of the valuation day.

Appellant’s Evidence

15Mr. Boyajian described the subject property, and submitted photographs to illustrate the condition of its interior and exterior. Mr. Boyajian testified that the subject dwelling was a quality building, built in 1977 and aside from some decorating changes, the dwelling has not been updated. He also testified that the majority of the property surrounding the dwelling is unusable owing to the presence of steep, wooded slopes. He testified also that recognizes the presence of the ravine slope is an enhancement to value and acknowledged the 6% value increase applied by MPAC for the ‘ravine’ variable.

16Mr. Boyajian testified that the adjacent school yard and sportsfield, while technically green space in its character, actually has an impact on the quiet enjoyment of his property. He also acknowledged the 5% reduction in value applied by MPAC for this abutting institutional use.

17Mr. Grosman submitted a valuation study that used six sales that occurred within 12 months of the valuation day. Two of the six were the same as MPAC’s sales three and six. From his analysis, Mr. Grosman concluded that the resultant median of the six sales expressed as a per square foot basis resulted in a current value of the subject property of $3,312,982.

18When the hearing re-convened on March 15, 2018 Mr. Boyajian submitted a series of documents, produced by the TRCA. According to Mr. Boyajian these documents tell a story of how the TRCA first identified slope stability issues on and adjacent to the subject property, their plan to address erosion on the slope on the subject property and the agreements signed by the previous owners and the Boyajians, to allow the TRCA to carry out slope retention and erosion mitigation works.

19The latest document from the TRCA showed that since October 2013, in an area directly south of and in proximity to the dwelling, there has been movement in the slope as measured at five different points. From October 2013 through October 2017, the movement of the slope has varied from 0.0 metres to 1.2 metres on a year to year basis, depending on the specific location of the readings.

20In 2017 all five locations had a 0.0 movement. Mr. Grosman submitted that, while the slope seems to have stabilized in the 2017 reading, the historic movement of the slope serves to create concern and unpredictability with respect to future slope movement. He further submitted that this would reasonably lead to a lower sale price than if this uncertainty did not exist.

21Neither Mr. Boyajian or Mr. Grosman attached a specific value adjustment to the uncertainty of the slope issue. However, Mr. Grosman submitted that the seeming unreliability of the slope is evidence that the entire site area ought not to be considered when considering the land portion of the value, and that while the subject property measures 2.88 acres, the effective lot area (table land) would likely be close to the effective land area derived by MPAC. He added that, given the concerns of the TRCA and their demonstrated activity on and adjacent to the subject property, the area unrestricted to development would likely be even smaller. According to Mr. Grosman, the land portion value of the subject property should be the same as the median of the comparable properties in both MPAC’s and the Appellant’s samples.

Board’s Analysis

22The best evidence of current value of any property is an arm’s length sale of the property, between a willing seller and a willing buyer on or near the valuation day, which in this case is January 1, 2016. As in this case, where there is no such sale to rely on, the next best indicator of the subject property’s current value is reference to sales of comparable properties that sold in proximity to the valuation day.

23These comparable properties need not be identical, but must be suitably comparable to allow for reasonable adjustments so that their time adjusted sale price can be compared to the subject property for the purpose of determining its current value. The evidence before the Board focusses on two areas; the land area or lot, and the comparable properties.

The Lot

24The Board heard submissions from both parties as to the importance to current value of the size of the subject lot. The actual lot size reported by MPAC is 2.88 acres, which would suggest that the site would be attractive to re-development interests, as it represents land area not easily attainable elsewhere in what the parties agree is a desirable neighbourhood.

25MPAC also applied an ‘effective’ lot area calculation that attempts to create a comparable lot size by applying adjustments for things like lot shape, different front, side and rear lot dimensions and known administrative setbacks. MPAC determined the effective lot area to be 1.11 acres after these adjustments. A lot of 1.11 acres would be considered relatively large by local neighbourhood standards and MPAC considered this fact in its valuation.

26The Appellant submitted documentary evidence with respect to the limitations of the subject lot and its resultant restrictions on use. Photographs of the ravine slope and documents from the TRCA indicate that the full lot area is not usable residential land.

27The exterior photographs clearly show areas of active erosion and very steep slopes, the top of which are within a few metres of the subject dwelling and swimming pool. Technical drawings provided by TRCA on erosion control works completed in 1980s and the TRCA’s ongoing monitoring indicate that the ravine slopes are not developable and continue to be of concern to the TRCA. When compared to the topographic plan submitted, these technical documents show a severe slope that consumes over half of the 2.88 acres. While there was no specific evidence with respect to statutory setbacks from the slope, it is reasonable to conclude that the tableland portion of the lot, where actual building and development can occur, is very similar to the lot areas demonstrated by the comparable properties in evidence.

28The Board finds therefore that the subject lot is of similar value to those lots in evidence as comparables and that no adjustment for the subject lot size is warranted when it is compared with these comparable properties.

The Comparable Properties

29MPAC used a total of 16 comparable properties to arrive at its determination of current value using the direct comparison approach, while the Appellant submitted six comparable properties for the same purpose. Two properties, 2 Shady Oaks Crescent and 36 Salonica Road were used by both parties, resulting in a sample of 20 comparable properties for the Board to consider.

30The parties submitted evidence on a number of comparability factors. The Appellant testified that his property is identified as being in the Bridle Path neighbourhood and is at the very extreme edge of that neighbourhood with the outer rim of the Bridle Path between his property and ‘Bridal Path proper’. The Bridle Path is known as an exclusive area. Mr. Grosman submitted that to achieve appropriate comparison, the neighbourhood must be comparable and many of MPAC’s comparable properties are over two kilometres from the subject property.

31Mr. Bassi submitted that despite the differing distances between the subject property and the comparable properties, the characteristics of these sales are still suitably comparable. He submitted that the comparable sales were selected based on lot and building size, age, quality of construction, condition and time of sale as compared to the valuation day.

32The Board agrees with Mr. Bassi. There is no apparent trend with respect to sale value per square foot when compared to the specific location and distance from the subject property in evidence and on that basis the Board finds no reason to exclude sales based on distance from the subject property.

33However, some of these 20 comparable sales were on properties that are obviously less comparable to the subject property than others, for various reasons. The Board disregards the following MPAC comparables in evidence:

• 9 Doncliffe Drive was built in 1916 and is a 1-3/4 storey dwelling and is not suitably comparable because the subject property was built in 1969 and is a 2 storey dwelling;

• 35 Bayview Ridge is a 1-1/2 storey dwelling of 3,112 square feet, and is not suitable comparable because the subject property is a 2 storey dwelling of 4,403 square feet;

• 25 Country Lane is a 1 ½ storey dwelling of 3,019 square feet and is not suitable comparable because the subject property is a 2 storey dwelling of 4,403 square feet;

• 80 Bayview Ridge is a 1 storey dwelling and is not suitably comparable because the subject property is a 2 storey dwelling;

• 24 Forest Glen Crescent was built in 1932, has 2 ¼ stories and had a significant renovation in 2002 and is not suitably comparable because the subject property was built in 1969, is a two storey dwelling and has not undergone any renovations.

34The Board disregards the following Appellant comparables in evidence:

• 10 Suncrest Drive has a dwelling of 5,991 square feet and is not suitable comparable because the subject dwelling is 4,403 square feet;

• 53 Highland Crescent has a dwelling of 7,412 square feet and is not suitably comparable because the subject dwelling is 4,403 square feet.

35Table A compares the comparable characteristics of the remaining comparable sales used by the parties in supporting their opinions of current value.

TABLE A

Lot Area (acres)

Sale Price ($)/Date

TAS Price ($)

Dwelling Size (sq. ft.)

2016 CVA ($Mil.)

TAS Price / Sq.Ft. Dwelling

Subject Property

2.88

N/A

N/A

4,403

4.433

N/A

MPAC Comparables

Sale 1 – 1 Hyde Park Circle

.93

4,700,000 / April 2016

4,503,829

4,400

5.067

1,023.60

Sale 2 – 23 Tudor Gate

.42

4,350,000 / Nov 2016

3,847,278

4,810

3.006

799.85

Sale 3 – 36 Salonica Crescent *

.38

2,888,000 / Dec 2015

2,906,082 (MPAC) 2,899,552 (Appellant)

3,310

2.847

877.97

(MPAC)

875.86 (Appellant)

Sale 4 – 20 Glenorchy Road

.33

3,625,000 / May 2016

3,432,761

3,569

2.662

961.83

Sale 5 – 92 Arjay Crescent

.24

3,828,000 / June 2016

3,582,774

4,685

3.336

764.73

Sale 6 – 2 Shady Oaks Crescent *

.35

3,500,000 / July 2016

3,238,070 (MPAC) 3,378,083 (Appellant)

4,515

2.804

717.18

(MPAC)

748.19 (Appellant)

Sale 7 – 15 Tudor Gate

.35

3,300,000 / March 2016

3,200,429

3,688

3.119

867.80

Sale 9 – 81 Bayview Ridge Drive

.60

3,550,000 / Dec 2014

4,203,962

3,609

3.270

1,164.86

Sale 10 – 9 Saintfield Avenue

.31

2,950,000 / May 2015

3,253,863

3,591

2.298

906.07

Sale 11 – 32 The Bridle Path

.65

5,070,000 / Sept 2015

5,300,887

5,399

3.250

981.83

Sale 16 – 5 Valleyanna Drive

.57

3,400,000 / August 2015

3,601,699

3,751

3.382

960.20

Appellant’s Comparables

Sale 1 – 19 Royal Oak Drive

.28

2,550,000 / March 2015

2,679,265 (Appellant) 2,891,700 (MPAC)

3,791

2.465

706.74 (Appellant)

762.78

(MPAC)

Sale 6 - 1 Campbell Crescent

.26

2,350,000 / April 2015

2,457,708 (Appellant) 2,627,300 (MPAC)

3,248

2.556

756.68 (Appellant)

808.90

(MPAC)

*Indicates comparable property submitted by both parties for consideration by the Board

36The parties took different approaches to making a determination of current value. MPAC reviewed the time adjusted sale values of 16 sales that occurred within 13 months of the valuation day. By analyzing the differences between these properties that sold and the subject property, MPAC developed a range of value that the subject property could reasonably fall within. By contrast, the Appellant chose to analyse properties that had sold within 12 months of the valuation day and determine the median per square foot value of those sales, and then apply that median to the subject property.

37After the property inspection that occurred after the first hearing day in January, MPAC arrived at a value of $4,610,000 by comparing the subject property to the sales of the 16 properties in its sample and determining this value was reasonable and therefore correct. When the Appellant applied the median per square foot value of the six sales in their sample, they arrive at a value of $3,312,982 (or $3,313,000 rounded). This represents a significant disparity.

38The Board’s decision must take into account the best evidence of current value at the hearing, brought through documentary evidence and testimony. The Board notes that where there was a conflict in the way the parties determined time adjustments, the Board accepted both answers as separate values, resulting in a total of 17 time adjusted sale values. The Board finds the resultant median of $867.80 is the best indicator of the current value of the subject property. Applied to the 4,403 square feet of dwelling area, the current value found by the Board is $3,821,000 (rounded).

Is a reduction in the current value necessary to achieve equitable assessment when reference is made to the assessments of similar properties in the vicinity?

39In order to make an adjustment to the current value determined for the purposes of equitable assessment among similar properties in the vicinity, the Board must essentially reduce a correct value to one that is technically incorrect. Accordingly, reductions for this purpose cannot be made lightly and the Board must be convinced that the values in evidence support such a reduction.

40The Board heard two separate arguments from the parties with respect to the equitable assessment of the subject property. MPAC prepared an Equity Analysis, indicating that, when the TAS value of thirty properties in the vicinity are compared to their 2016 current value assessment (“CVA”), the median Assessment to Sale Ratio (“ASR") is 0.937. This means that similar residential properties in the vicinity of the subject property are generally assessed at a value equal to 93.7 % of their sale value, adjusted to the valuation day. Mr. Bassi summarized MPAC’s evidence of equitable assessment to suggest the current value determined for the subject property should be reduced by 6.63% for it to be considered equitable with the assessments of similar properties in the vicinity.

41Mr. Grosman advanced an alternative argument, whereby he compared the assessments of the six properties in his current value analysis to their time adjusted sale values. Mr. Grosman’s finding was that the equity adjustment should be a reduction of 7.78% from the value he determined as current value.

42In reviewing the 30 properties in the equity analysis sample, the Board notes that a total of 18 time adjusted sales that were in evidence for the respective current value arguments were not included in the equity analysis prepared by MPAC.

43In order to consider the largest sample of assessment to sale ratios possible from the evidence, the Board augmented the 30 properties use by MPAC with the ASRs of those MPAC properties and Appellant properties in the respective current value arguments that did not appear in MPAC’s equity analysis.

44MPAC and the Appellant calculated TAS values differently. Where both parties submitted the same property, the Board elected to use both resultant ASRs.

45When the sample is augmented by the additional 18 ASRs the median ASR is 0.930. There is no argument among the parties as to whether or not an adjustment to the current value determined is warranted; only the amount is under dispute.

46Accordingly, the Board finds that the evidence submitted at the hearing shows that the current value determined above should be reduced by the resultant ASR of 0.930 to make the assessment of the subject property equitable with the assessments of similar properties in the vicinity.

CONCLUSION

47The Board finds that the current value of the property at 10 Araz Place is $3,821,000. As there is evidence to suggest a reduction in this amount is necessary for the assessment to be fair and equitable with the assessments of similar properties in the vicinity, the assessment is reduced to $3,554,000.

48Accordingly, the assessment of 10 Araz place, in the Residential property class is reduced for the 2017 taxation year from $4,443,000 to $3,554,000. This same result applies to the 2018 taxation year.

2018 DEEMED APPEAL

49An 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.

50Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

40.(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.