Lin Xiu Wang and Hang Feng v. Municipal Property Assessment Corporation Region 14 and Town of Richmond Hill, 2018 CanLII 80818

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 21, 2018

FILE NO.: WR 154302

Assessed Person(s): Lin Xiu Wang

Appellant(s): Lin Xiu Wang and Hang Feng

Respondent(s): Municipal Property Assessment Corporation Region 14

Respondent(s): Town of Richmond Hill

Property Location(s): 50 Ridgewood Drive

Municipality(ies): Town of Richmond Hill

Roll Number(s): 1938-050-059-33330-0000

Appeal Number(s): 3264757 and 3303616

Taxation Year(s): 2017 and 2018

Hearing Event No. 700276

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

Heard: June 22, 2018 by Telephone Conference Call

APPEARANCES:

Parties

Representative

Appellants

Andrew Attard

MPAC

Lisa Williams

Town of Richmond Hill

No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

Background

1Lin Xiu Wang is the owner of 50 Ridgewood Drive (the “Subject Property”), which is located in the Town of Richmond Hill.

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, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”).

3MPAC’s has assessed the current value of the Subject Property at $2,728,000 for the 2017 taxation year and $2,610,000 for the 2018 taxation year.

4Lin Xiu Wang and Hang Feng (the “Appellants”) have filed an appeal for taxation year 2017 (and a deemed appeal for taxation year 2018) with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessment of current value is too high and that the correct current value is $2,600,000. At this hearing, MPAC takes the position that its assessed value should be changed to $2,625,000.

5Pursuant to s. 40(11) of the Act, the Town of Richmond Hill, is a party to this proceeding. However, no one appeared at the hearing on its behalf.

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. MPAC takes the position that an equitable reduction is not required. The Appellants take the position than equity reduction is required and that the equitable value should be $2,444,000 ($2,600,000 x 0.94 per cent).

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value assessment for the 2017 and 2018 taxation years is $2,600,000. Pursuant to s. 44(3)(b) of the Act, an equitable reduction of this value is not required.

RELEVANT LEGISLATION

8Section 1 of the Act states:

1. “current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

9Section 19.(1) of the Act states:

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

10Section 19.2(1) of the Act states:

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:

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

11Section 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.

12Section 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.

ISSUES

13The issue(s) to be determined on this appeal are:

1. What is the correct current value of the Subject Property for the taxation years 2017 and 2018; and

2. Whether there should 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.

Description of the Subject Property

14The Subject Property is described as a two-storey, single-family detached dwelling, located at 50 Ridgewood Drive, in the Town of Richmond Hill. The Subject Property was built in 1991 with a total building area of 6,286 square feet (“sq. ft.”), and a total lot size of 1.03 acres.

DISCUSSION, ANALYSIS AND FINDINGS

Issue No. 1: What is the correct current value of the Subject Property for the taxation years 2017 and 2018

MPAC’S Evidence

15Lisa Williams represents MPAC. Ms. Williams prepared a Valuation Report respecting the Subject Property, dated March 13, 2018 (“Valuation Report”) which she submits into evidence.

16Ms. Williams states that the Subject Property was inspected on June 8, 2018 and that the inspection revealed that the Subject Property has an indoor pool. She testified that in response to a Request for Reconsideration (“RfR”) MPAC offered a recommendation to reduce the assessed value to $2,610,000 and it was rejected by the Appellants.

17Ms. Williams states that the Subject Property was sold on the open market on December 1, 2015 for $2,600,000, and that Subject Property conforms to the general nature of the neighbourhood, meaning that it consists of custom built detached homes situated on lots that are 1 to 2 acres in size.

18Ms. Williams testifies that sale prices in the Subject Property’s neighbourhood ranged from $2,000,000 to $3,900,000. Ms. Williams presents a sales analysis report of five suggested comparable properties. These suggested comparable properties are located at 30 Trailwood Crescent, sold in 2016; at 80 White Pine Trail, sold in 2016; at 259 Forest Ridge Road, sold in 2016; at 103 Forest Ridge Road, sold in 2015; and at 2 Ridgewood Drive, sold in 2015.

19The analysis contains both actual sales and time-adjusted sale prices. These five suggested comparable properties are inferior to the subject property, because they are significantly smaller in total building area and older. On average, the suggested comparable properties have a total building area of 4,153 square feet (“sq. ft.”), a total lot size of 2.07 acres, year built 1985, a median sale price of $2,440,000 (based on actual sale prices) and a median sale price of $2,489,645 (based on time-adjusted sale prices).

20Ms. Williams testifies that the Subject Property’s sale price of $2,600,000, when it was time-adjusted to the valuation date of January 1, 2016 results in a value of $2,625,000. Ms. Williams testifies that it is MPAC’s opinion that the time-adjusted sale price of $2,625,000 for the Subject Property is the best indicator of current value.

21Ms. Williams further states that although MPAC’s recommended value of $2,610,000 in response to the 2017 RfR was rejected, MPAC continues to maintain that the current value should be the recommended value of $2,610,000.

MPAC’s Submissions

22Relying on its evidence, MPAC submits that the correct current value for the taxation years 2017 to 2018 is $2,610,000.

Appellants’ Evidence

23Andrew Attard represents the Appellants. Mr. Attard has the designation of Associate Member Institute of Municipal Assessors, and expressed his opinion that the sale price of $2,600,000 for the Subject Property which occurred December 1, 2015 (a month prior) to the valuation date of January 1, 2016 is the best evidence of current value.

24Mr. Attard presents no other sales evidence in support of current value.

Appellant’s Submissions

25Relying on their evidence, the Appellants submit that the correct current value for taxation years 2017 and 2018 is $2,600,000.

Findings on Current Value

26Under 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 property on the valuation date or close to it.

27Based on the evidence presented in support of current value, the Board finds the sale of the Subject Property on December 1, 2015 for $2,600,000 to be the best evidence of current value. The Board notes that both parties also agree that the sale of the Subject Property is the best indicator of current value.

28The Board accepts the Appellants’ opinion that it is not necessary to time adjust the sale price, because the sale occurred within a reasonable time period of the valuation date of January 1, 2016. The Board rejects MPAC’s opinion that the actual sale price of the Subject Property needs to be time-adjusted. The Board finds that there is no need to speculate as to what the Subject Property would sell for as of the valuation date of January 1, 2016, when the evidence is that it actually sold for $2,600,000 one month earlier. The Board finds that the current value of the Subject Property is $2,600,000.

Issue No. 2: Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html) (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 the amount of this reduction should be

MPAC’S Evidence

29MPAC presents an Equity Analysis Report in which the assessments of 30 comparable properties are compared to their respective sale prices to determine the Assessment to Sales ratio (“ASR”). The ASR is computed by dividing the assessed values of a property sold, by its sale price.

30MPAC testifies that these 30 comparable properties are single family detached dwellings like the Subject Property, which sold over the period January 1, 2015 to December 31, 2016, and located within two kilometres of the Subject Property.

31The analysis of these 30 comparable properties shows a Level of Appraisal (“LOA”) of 0.99 and a Coefficient of Dispersion (“COD”) of 9.2. Based on these findings, MPAC is of the opinion that an equity reduction is not necessary, because the findings fall within the International Association of Assessing Officers (“IAAO) standards of 0.90 to 1.10 for the LOA, and the COD standard of 15 for residential properties.

MPAC’s Submissions

32Relying on its evidence, MPAC’s submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is not required.

33MPAC submits that for equity purposes, properties have to be similar in nature, character and function, as opposed to their characteristics (e.g. building size, age, quality, and lot size) which is required to determine current value. In support of this submission, MPAC cited Devald v. Ontario Regional Assessment Commissioner, Region No. 16, 1977 CanLII 1246 (ON CA), 1977 CarswellOnt 350, [1977] O.J. No. 2166, 15 O.R. (2d) 212, 2 M.P.L.R. 301 (“Devald”).

Appellants’ Evidence

34Mr. Attard presents an Equity Analysis of the sales of 29 comparable properties (Property Code 301- single family dwellings) and 1 vacant lot property (Property Code 100 - vacant lots), located within 2.17 kilometres of the Subject Property, and sold in 2015 and 2016.

35Mr. Attard testifies that the sales of these 30 properties were time-adjusted using their proposed annual time adjustment rate of 16%, which result in a median ASR of 0.94.

36Mr. Attard also presents a second equity analysis, based on MPAC’s general criteria (301 single family detached dwelling) and included another criteria of a sale price range, because he is of the opinion that sales which are closer in value are more likely to be similar in character. The sale prices were time-adjusted by 28%, and it results in a median ASR of 0.94.

37Based on these analyses, Mr. Attard is of the opinion that an equity adjustment is required. Therefore, Mr. Attard believes that the equitable value should be $2,444,000 ($2,600,000 x 0.94).

Appellants’ Submissions

38The Appellants submit that an equitable reduction is required and the current value for the 2017 to 2018 taxation years should be reduced to $2,444,000.

39On cross-examination, Mr. Attard confirms that the equity analyses include a 2012 current value assessment and a vacant lot property. He could not say for sure if there is other incorrect information contained in the analyses.

40Mr. Attard confirms that the search area was changed from 1.77 kilometres to 2.17 kilometres of the Subject Property. He also confirms that a few sales were deleted and new ones were added, because of changes in the search criteria to include a sale price range.

Findings on an Equitable Reduction

41The purpose of an equitable reduction has been described by the Ontario Court of Appeal in Empire Realty Co. v. Metropolitan Toronto Assessment Commissioner, 1968 CanLII 183 (ON CA), 1968 CarswellOnt 149, [1968] 2 O.R. 388, [1968] O.J. No. 1164, 69 D.L.R. (2d) 387, at paragraph 6.

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.

In addressing equity in assessment, the Court, at paragraph 35, also noted that “an assessment made at the actual value of lands and buildings … would be an inequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred”.

42However, 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 Appellants to establish, on a balance of probabilities, that an equitable reduction is required.

43The term “vicinity” is not defined in the Act, but refers to the appropriate geographical area that will yield meaningful comparable properties (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 16 O.R. (3d) 83,1993 CanLII 8621 (Ont. C.A.) at page 6).

44In reviewing the above equity analyses, the Board accepts MPAC findings that an equity adjustment is not required, because the LOA of 0.99 and the COD of 9.2 fall within the IAAO standards of 0.90 to 1.10 for the LOA and less than 15 for the COD. On the contrary, the Board did not rely on the Appellants’ evidence, because it included incorrect assessment data in the analyses (e.g. 2012 assessed value) as opposed to 2016 assessed value, and included vacant lot as opposed to single family dwellings as the Subject Property.

45In regard to similar properties, the Board also agrees with Devald that:

The Board fell into the error of reading ‘similar real property’, as if these words were qualified by the word ‘physically’. Since there are obvious differences in the physical characteristics of buildings found in the down-town section and the shopping centre, it concluded they were not similar, even though used for the same mixture of commercial uses. Rather, it should be assessed as if it were residential property because it was of the same nature and character as that type of property. For the purpose of s. 90 the word ‘similar’ refers to property of the same general nature, character or function and is in no way limited to physical attributes.

DECISION

46The current value of the Subject Property is $2,600,000 for the 2017 and 2018 taxation years.

47An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.

48The Board therefore reduces the assessment for the 2017 taxtiaon year from $2,728,000 to $2,600,000 and reduces the assessment for the 2018 taxation year from $2,610,000 to $2,600,000.