Jin Yun Kyung v. Municipal Property Assessment Corporation, 2018 CanLII 84481

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

September 05, 2018

FILE NO.:

WR 152946

Assessed Person(s):

Jin Yun Kyung, Jae Un Yun

Appellant(s):

Jin Yun Kyung

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”), Region 14

Respondent(s):

City of Vaughan

Property Location(s):

158 Glenforest Drive

Municipality(ies):

City of Vaughan

Roll Number(s):

1928-000-061-50222-0000

Appeal Number(s):

3233484 and 3302193

Taxation Year(s):

2017 and 2018

Hearing Event No.:

696177

Legislative Authority:

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

Heard:

April 18, 2018 by teleconference call

APPEARANCES:

Parties

Representative

Jin Yun Kyung

Andrew Attard

MPAC

Leo Verduci

City of Vaughan

No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

Background

1Jin Yun Kyung (the “Appellant”) is the owner of the subject property, a single-family detached home not on water located at 158 Glenforest Drive in the City of Vaughan. This is a two-storey home located south of Highway 407 and east of Bathurst Street (Regional Road 38). Andrew Attard of Attard Property Tax Services Professional Corporation represents the Appellant and attended on his behalf at the hearing.

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”). MPAC has assessed the current value of the subject property at $1,000,000.

3The Appellant has filed appeals for the 2017 and 2018 taxation years 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 too high and that the correct current value is $831,000. At this hearing, MPAC takes the position that its assessed value is correct.

4Pursuant 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 on its behalf.

5Section 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 the municipal tax burden according to the value of the property possessed by each ratepayer. The Appellant is not seeking an equitable reduction in this appeal.

6At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the 2017 and 2018 tax years is $944,000. An equitable reduction of this value is not required.

Relevant Legislation

7The 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.

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:

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

4. After 2020, for each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year that precedes the period by two years.

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

8The issue to be determined on this appeal is the correct current value of the subject property for the taxation years 2017 and 2018.

MPAC’s Evidence

9Leo Verduci, a property valuation analyst with MPAC, specializing in residential and farm properties, gave evidence for MPAC, and authored the Valuation Report and the Equity Analysis Report that were provided to the Board.

10Mr. Verduci described the subject property as a two-storey home on a level 0.11 acre lot. It is of average condition with a construction code of 7 out of 10. The lot frontage is 39.37 feet, while the property depth is 126.31 feet. It was built in 1998, and features an attached garage of 480 square feet (“sq. ft.”). The total area of the home is 1,840 sq. ft.. It has a basement of 984 sq. ft., half of which is finished. MPAC deems the house to be of average quality. There is no pool on this property.

11MPAC based its assessment on the direct comparison of sales method. In this method, value is deduced by comparing the subject property with similar properties, and adjusting for differences. In this case, MPAC has selected three residential properties they deem to be comparable. All are two-storey single family detached homes, not on water, located either south of Highway 407 or just north of it. These homes were sold in 2015 and 2016, within one year of the valuation day, January 1, 2016. MPAC has calculated the values of the comparable homes using an analysis of price changes over time in order to make the values of the three comparable homes current as of the valuation day. The Appellant asked MPAC’s representative a number of questions about the utility and validity of time adjusted sales, but did not challenge the use of these values.

12The comparable homes are similar to the subject property in that all have attached garages of 480 sq. ft., and all have basements. The lot sizes are similar, with the subject property and 34 Breda Court having lots of 0.11 acres, while 32 Misty Moor Drive has a lot size of 0.09 acres and 208 Hammerstone Crescent has a lot measuring 0.12 acres. All four homes under comparison were built between 1982 and 1998. Only one of the homes has a swimming pool—34 Breda Court has an outdoor pool of 392 sq. ft. Of the three comparable sales, 32 Misty Moor Drive has a smaller sized-home than the subject property at 1,775 sq. ft. The subject property has a total building area of 1,840 sq. ft. and the remaining two homes are 2,053 sq, ft. (34 Breda Court) and 2,030 sq. ft. (208 Hammerstone Crescent).

13MPAC has referenced the sale dates for each home and the amount of the sale, and then has also provided a time-adjusted value as if the sale had occurred on January 1, 2016. They are:

Property

Sale Date

Sale Amount

Time Adjusted Sale Amount

32 Misty Moor Drive

07/15/2015

$1,050,000

$1,161,780

34 Breda Court

06/07/2016

$1,220,000

$1,112,920

208 Hammerstone Crescent

07/07/2015

$1,029,000

$1,138,544

14Based on his analysis of these three sales, Mr. Verduci concluded that the subject property would be worth more than the 32 Misty Moor Drive comparable sale for the reason that the subject is larger. It would be of a similar value as the 34 Breda Court property except that 34 Breda Court is 16 years older than the subject property. MPAC deems the third property, 208 Hammerstone Crescent, to be a more valuable property than the subject because of the fact that it’s only five years older than the subject while having a slightly larger site area. This property also has a swimming pool, an attribute that MPAC describes as something that may or may not add value. In conclusion, MPAC determined that the subject property would be closest in value to 34 Breda Court because of a similarity in size and usage.

15MPAC concluded that the current value of the subject property derived from an analysis of the comparable sales was $1,137,000.

16Following its determination of the current value, MPAC undertook an analysis of the values at which similar lands in the vicinity were assessed, and, if necessary, adjusted the assessment to make it equitable. The generally accepted method of making this determination is to look at the assessment to sale ratios (“ASR”) of a number of similar properties—in this case residential properties—and to find the median value. If the median ASR is within 5% of a perfect assessment (where the assessment and sales values are the same), then this has been accepted by MPAC, and by this Board, as being indicative of the achievement of equity. MPAC’s evidence, based on 30 sales occurring within one kilometre of the subject property between January 1, 2015 and December 31, 2016, was that the median ASR was below the acceptable deviation of 5%; it was 0.933. However, MPAC did not reduce the assessed value of the subject property.

Appellant’s Evidence

17Mr. Attard presented evidence on behalf of the Appellant, using comparable sales evidence to support his analysis of value. Mr. Attard had concluded that the value of the subject property based on comparable sales was $831,000. Mr. Attard conducted his own time adjustment study, and testified that the best evidence of value was the sale in July 2011, to the present owners, an arm’s length, open market sale for $607,000. Mr. Attard time-adjusted this sale price to the valuation day, January 1, 2016, arriving at a current value of $837,000. This increase in value of 38% was required to make the 2011 value current to 2016. To do this, Mr. Attard used his own Time Adjustment Summary based on an excess of 2,000 residential sales.

18Mr. Attard submitted seven comparable sales in his 2016 current value assessment analysis. These properties were sold between May 9, 2014 and January 1, 2017, and all were located within 1.04 kilometres of the subject property. Mr. Attard calculated a value per square foot of the seven homes chosen for comparison, and then calculated both a median and an average value per square foot of the seven homes. He then multiplied the square footage of the subject property by the median value per square foot of the comparable properties, and came out with a value of $831,000. He notes that, using the value given by MPAC of $1,000,000, and dividing this by the 1,840 sq. ft. of the subject property, led to a value of $543 per sq. ft. In contrast to the seven comparable properties used by the Appellant, only 208 Hammerstone Crescent had a similar value ($546 per sq. ft.). The following chart summarizes the Appellant’s evidence:

APPELLANT’S COMPARABLE SALES

Property

Sale Date

Build Area

Adj. Sale Price

Rate per sq. ft.

158 Glenforest Drive (subject property)

1,840 sq. ft.

173 Glenforest Drive

May, 2014

1,840 sq. ft.

$875,000

$476

145 Glenforest Drive

August, 2014

1,840 sq. ft.

$930,000

$505

208 Hammerstone Crescent

July, 2015

2,030 sq. ft.

$1,108,000

$546

90 Hammerstone Crescent

March, 2016

1,893 sq. ft.

$819,000

$433

101 Chilmar Crescent

Sept., 2016

1,767 sq. ft.

$798,000

$452

424 Highcliffe Drive

August, 2016

2,182 sq. ft.

$921,000

$422

95 Chilmar Crescent

January, 2017

1,927 sq. ft.

$774,000

$402

19In his summary, Mr. Attard submitted that the Appellant had used more sales of similar properties and that by calculating square foot values for each comparable, was able to ascertain a median value and apply it.

ANALYSIS AND CONCLUSION

Findings in Respect of Current Value

20Both parties presented carefully reasoned explanations accompanied by cogent evidence. The Appellant selected a larger number of comparative sales. The accompanying photographs would indicate that the properties are similar enough to the subject property to provide reliable evidence of value of similar homes. MPAC provided only three comparable sales, and while they were suitable comparators, there was only one example each of an inferior home (32 Misty Moor Drive), a relatively similar home (34 Breda Court) and a slightly superior home (208 Hammerstone Crescent).

21There are several available methodologies for testing the validity of assessment of value. In this case, the Appellant chose to compare the time-adjusted sale price of the subject property ($837,000) to the value of the property calculated using the median square foot value of the seven comparable homes chosen. The result was $831,000, only $6,000 different from the time-adjusted value of the home following its purchase in 2011.

22The Appellant also provided photographs of the exteriors of the seven comparable home sales, which is of assistance in determining whether the homes are actually comparable. In this case, the homes appeared comparable, and were situated on similar subdivision streets.

23In this case, where all the proposed comparable homes are suitable, the Board will use all nine sales. 208 Hammersmith was used by both parties, although the time-adjusted sale price for this home was different. MPAC took the sale price ($1,029,000) and multiplied it by a time adjustment factor (“TAF”) of 1.106 to arrive at $1,138,544. The Appellant added an adjustment of 7.7% and arrived at a time-adjusted value of $1,108,000. To resolve the conflict on this property alone, the Board will use the average of the two values, which is $1,123,272. The resulting chart is as follows:

ALL COMPARABLE SALES

Property

Sale Date

Build Area

Adj. Sale Price

Rate per sq. ft.

158 Glenforest Drive (subject property)

1,840 sq. ft.

173 Glenforest Drive

May, 2014

1,840 sq. ft.

$875,000

$476

145 Glenforest Drive

August, 2014

1,840 sq. ft.

$930,000

$505

208 Hammerstone Crescent

July, 2015

2,030 sq. ft.

$1,108,000

$546

90 Hammerstone Crescent

March, 2016

1,893 sq. ft.

$819,000

$433

101 Chilmar Crescent

Sept., 2016

1,767 sq. ft.

$798,000

$452

424 Highcliffe Drive

August, 2016

2,182 sq. ft.

$921,000

$422

95 Chilmar Crescent

January, 2017

1,927 sq. ft.

$774,000

$402

34 Breda Court

June, 2016

2,053 sq. ft.

$1,112,920

$542

32 Misty Moor Drive

July, 2015

1,775 sq. ft.

$1,161,780

$655

24With the larger sample, especially where the comparable properties are all similar to the subject property, and where variations in the the prices paid by purchasers are not explained by differences in quality, structure or amenities, it is possible to use an average of sales values as an indicator of value for the subject property. In this case, where we have combined all the comparable sales produced by both parties, averaging values will produce a fairer result.

25The Board finds the current value to be $944,000, which is the mean of all nine adjusted sale prices.

26The Appellants did not seek an equity adjustment because the results of their independent study showed that equity had been achieved. MPAC did not seek an equity adjustment. Therefore there is no necessity for a further adjustment to the current value.

DECISION

27The Board finds that the correct current value of the subject property is $944,000. The assessment of the subject property is therefore reduced from $1,000,000 to $944,000 for the 2017 and 2018 taxation years.