Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 06, 2018 FILE NO.: WR 154800

Assessed Person(s): Phyllis L. Johnson Appellant(s): Phyllis L. Johnson Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 9 Respondent(s): City of Toronto Property Location(s): 414 Valermo Drive Municipality(ies): City of Toronto Roll Number(s): 1919-013-390-03500-0000 Appeal Number(s): 3262913 and 3295518 Taxation Year(s): 2017 and 2018 Hearing Event No.: 701877

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

Heard: August 1, 2018 in Toronto, Ontario

APPEARANCES:

Parties	Representative
Phyllis L. Johnson	Surin Toor
MPAC	Edward Mui
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

Background

1Phyllis L. Johnson (“Appellant”) is the owner of 414 Valermo Drive (the “Subject Property”), which is located in the City of Toronto.

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 has assessed the current value of the Subject Property at $658,000 for the 2017 and 2018 taxation years.

4The Appellant has filed an appeal for taxation year 2017 and was deemed to have appealed the 2018 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is her position that MPAC’s assessment of current value is too high and that the correct current value is $522,000 (rounded). At this hearing, MPAC takes the position that its assessed value should be confirmed at $658,000.

5Pursuant to s. 40(11) of the Act, the City of Toronto 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 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 assert that an equity reduction is required.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value for 2017 to 2018 tax years is confirmed at $658,000. Pursuant to s. 44.(3)(b) of the Act, an equitable reduction of this value is not required.

RELEVANT LEGISLATION

8Relevant sections of the Act are as follows:

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.

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

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.

40.(17) Burden of proof - 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.

ISSUES

9The 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?

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

10The Subject Property is described as a one and a half storeys, single family detached dwelling, located at 414 Valermo Drive, in the City of Toronto. The Subject Property was built in 1950, with a total building area of 1,145 square feet (“sq. ft.”), and a total lot size of 0.13 acres.

DISCUSSION, ANALYSIS AND FINDINGS

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

MPAC’S Evidence

11Edward Mui represents MPAC. Mr. Mui prepared a Valuation Report respecting the Subject Property, dated April 27, 2018 (“Valuation Report”) which he submits into evidence.

12In support of current value, Mr. Mui presents a sales analysis of five suggested comparable properties sold in 2015 and 2016 on the same street as the Subject Property. Mr. Mui recognizes the fact that four of the five suggested comparable properties were assigned a 1990 and 2013 renovation code B, like the Subject Property; whereas, the suggested comparable property at 411 Valermo Drive was not assigned any renovation code. Mr. Mui explains that MPAC assigns a 1990 renovation code B, to older homes built in the 1950s or earlier that are generally maintained. In the case of 411 Valermo Drive, Mr. Mui states that this suggested comparable property is not maintained and was not assigned a renovation code. To capture the impact of the renovation code B, Mr. Mui presents both the actual year built and the effective year built for each of the suggested comparable properties.

13On cross-examination, Mr. Mui testifies that MPAC has no record of permits taken out for renovations of the suggested comparable properties at 436 Valermo Drive and 422 Valermo Drive and that is the reason MPAC assigns them a renovation code B, for general maintenance.

14Mr. Mui states that although a copy of a Multiple Listing of Sale (“MLS”) for the suggested comparable properties at 436 Valermo Drive indicates renovated kitchen, newer windows (date unknown) and furnace 2008; and a copy of a MLS for 422 Valermo Drive indicates renovated kitchen and bathroom, updated windows (2013) and high-efficiency furnace (2015) the listings clearly states that the Toronto Real Estate Board (“TREB”) assumes no responsibility for the accuracy of any information shown. As a result of this disclaimer, Mr. Mui is of the view that the MLS listings should not be relied on by the Board. He also states that the renovations indicated on the MLS could also be general maintenance, seen that these two suggested comparable properties are older homes built in 1950 and 1952 respectively and without a permit to say otherwise.

15The suggested comparable properties are located at 436 Valermo Drive, sold in 2016; 422 Valermo Drive, sold in 2016; 425 Valermo Drive, sold in 2016; 435 Valermo Drive, sold in 2016; and 411 Valermo Drive, sold in 2015. The analysis contains both actual sales and time-adjusted sale prices.

16The analysis shows that the actual sale prices of these five suggested comparable properties range from $574,000 to $925,000; and the time-adjusted adjusted sale prices range from $643,690 to $864,441. Mr. Mui testifies that he selected the sales of suggested comparable properties that are inferior, relatively comparable and superior to the Subject Property, in order to establish a probable range of current value for the Subject Property, by bracketing the Subject Property between sold properties that are inferior and superior to it. Mr. Mui testifies that the analysis shows that these five sales have median time-adjusted sale price of $699,884 and an average time-adjusted sale price of $725,282.

17Based on this analysis, Mr. Mui relies on the median time-adjusted sale price and determines the current value to be $699,000 (rounded).

MPAC’s Submissions

18Relying on its evidence, MPAC submits that the correct current value for the Subject Property for taxation years 2017 to 2018 is $699,000.

19He also agrees that the characteristics (lot size, building size, age, renovation code etc) of the suggested comparable properties are not identical to the Subject Property and that the sale prices reflect these differences. Mr. Mui reiterated that the five suggested comparable properties reflect properties that are inferior, relatively comparable and superior to the subject property.

Appellant’s Evidence

20Mr. Toor submitts an MLS listing for 422 Valermo Drive and an MLS listing for 436 Valermo Drive to show that these two suggested comparable properties presented above by MPAC are renovated and not just maintained.

21In support of current value, Mr. Toor presents a sales analysis of two suggested comparable properties sold in 2015. These two suggested comparable properties are located at 411 Valermo Drive, sold in 2015 for $574,000 (time-adjusted price $643,454); and at 418 Valermo Drive, sold in 2015 for $620,600 (time-adjusted price $667,145). These two suggested comparable properties have on average a total building area of 1,400 sq. ft. or (255 sq. ft. larger in total building area), a total site area of 5,808 sq. ft., year built 1950, un-renovated, and at a time-adjusted sale price of $468.11 per sq. ft. based on total building area. Applying the average sale price of $468.11 to the Subject Property results in a value of $535,990 ($468.11 X 1,145 sq. ft.).

22Mr. Toor also presented a second opinion of value of $549,000 which he states is based on adjusting the sale prices of these two suggested comparable properties for differences to the Subject Property.

Appellant’s Submissions

23Relying on his evidence, Mr. Toor submits two opinions of correct current value for taxation years 2017 and 2018. The first opinion of $535,990 is based on the time-adjusted sale prices of the above two suggested comparable properties. The second opinion of $549,000 is based on adjusting for differences between the above two suggested comparable properties and the Subject Property.

Findings on Current Value

24Under 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.

25In regard to the MLS listings which indicate that the suggested comparable properties at 436 Valermo Drive and 422 Valermo Drive are renovated. The Board did not rely on the MLS listings because the Board could not determine whether or not the renovation was for general maintenance/upkeep, because there were no official documents presented into evidence to evaluate the degree of renovation, the date of all the renovations, the costs associated with it and the impact on the assessed value.

26Based on the evidence presented in support of current value, the Board accepts the total of six sales of the comparable properties presented by MPAC and the Appellants (four sales by MPAC, 1 sale by both parties, and 1 sale by the Appellant). These six comparable properties include renovated homes (renovation code B), un-renovated homes, and variable sizes which the Board finds are difficult to quantify the impact without factual information. Therefore, the Board finds the best evidence in support of current value to be the median time-adjusted sale price of $683,000 (rounded).

27Based on the evidence the Board finds the current value to be $683,000.

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

28MPAC 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.

29MPAC 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 0.4 kilometres of the Subject Property.

30The analysis of these 30 comparable properties shows a Level of Appraisal (“LOA”) of 0.951 and a Coefficient of Dispersion (“COD”) of 5.1. Based on this finding, MPAC is of the opinion that an equity reduction is not required, because the finding falls within MPAC’s standards of an LOA of 0.95 to 1.05 and a COD of 15.

MPAC’s Submissions

31Relying on its evidence, MPAC’s submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is not required.

Appellants’ Evidence

32Mr. Toor relies on MPAC’s Equity Analysis as demonstrated above. However, Mr. Toor is of the opinion that an equity reduction is required. Mr. Toor states that applying the LOA of 0.951 to the first suggested value of $535,990 results in a value of $509,000 rounded ($535,990 X 0.951) and applying the LOA to the second suggested value of $549,000 results in a value of $522,000 rounded.

Findings on an Equitable Reduction

33The purpose of an equitable reduction has been described by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., [1968] 2 O.R. 388, 1968 CanLII 183 (ON CA) 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”.

34However, 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 Appellant to establish, on a balance of probabilities, that an equitable reduction is required.

35The 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).

36In reviewing the above evidence in support of equity, the Board accepts MPAC evidence that an equity reduction is not required, because the LOA of 0.951 and COD of 5.1 fall within MPAC’s acceptable standards.

37Based on all of the evidence the Board finds the current value to be $683,000. This value supports the returned assessment value of $658,000 for the Subject Property.

DECISION

38The Board confirms the returned assessment of $658,000 for the Subject Property for the 2017 and 2018 taxation years.