Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 11, 2018

FILE NO.: WR 154799

Assessed Person(s): Jose Manuel Sobral

Appellant(s): Jose Manuel Sobral; Maria De Fatima Sobral

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): 66 Twenty Fifth Street

Municipality(ies): City of Toronto

Roll Number(s): 1919-053-030-03300-0000

Appeal Number(s): 3265203 and 3294454

Taxation Year(s): 2017 and 2018

Hearing Event No. 701876

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
Jose Manuel Sobral and Maria De Fatima Sobral	Surin Toor
MPAC	Edward Mui
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

Background

1Maria De Fatima Sobral and Jose Manuel Sobral (“Appellants”) are the owners of 66 Twenty Fifth Street (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 $1,114,000 for the 2017 and 2018 taxation years.

4The Appellants have filed an appeal for taxation year 2017 and were deemed to have appealed the 2018 appeal 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 $1,036,000 (rounded). At this hearing, MPAC takes the position that its assessed value should be confirmed at $1,114,000.

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 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 $1,309,000. Pursuant to s. 44.(3)(b) of the Act, an equitable reduction of this value is required. The Board finds that an equitable assessment would be $1,217,000. However, that equitable assessment is higher than the assessment as returned. MPAC did not file a notice of intention to seek a higher assessment, as required by Rule 40 of the Board’s Rules of Practice and Procedure, so the Board will not increase the assessment. The Board therefore confirms the returned assessment of $1,114,000 for the Subject Property for the 2017 and 2018 taxation years.

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 issues 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 two-storey, single-family detached dwelling, located at 66 Twenty Fifth Street, in the City of Toronto. The Subject Property was built in 1990, with a total building area of 2,793 square feet (“sq. ft.”), and a total lot size of 0.15 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 26, 2018 which he submits into evidence.

12Mr. Mui states that the Subject Property was sold twice on January 21, 2014 for $1 and $2 respectively; and again on December 14, 2015 for $1. He testifies that he reviewed the conditions of the sales and found that the sales were not open-market transactions.

13On cross-examination Mr. Mui recognizes the fact that the degree of renovation matters and that is why the effective year built is shown on the Valuation Report to be more recent, than the actual year built for the suggested comparable properties that were renovated.

14On cross-examination, Mr. Mui also agrees that the characteristics of the suggested comparable properties are not identical to the Subject Property and that the sale prices reflect these differences.

15On cross-examination, Mr. Mui states that the Subject Property does not receive adjustments for proximity to the lake and park. He states that only properties that are abutting the lake receive adjustments. Mr. Mui also states that there is no adjustment for sidewalks.

16In support of current value, Mr. Mui presents a sales analysis of six suggested comparable properties sold in 2015 and 2016. Mr. Mui recognizes the fact that four of the six suggested comparable properties were renovated, whereas, the Subject Property is an un-renovated property. To capture the impact of the renovation, Mr. Mui presented both the actual year built and the effective year built for each of the suggested comparable properties. Mr. Mui also testifies that five of the sales are in the same homogeneous neighbourhood (A96) as the Subject Property and the sixth sale occurred in the neighouring homogeneous area (A97). He testifies that homogeneous areas A96 and A97 are similar neighbourhoods.

17The suggested comparable properties are located at 5 Elton Crescent, sold in 2016; 7 Thirty First Street, sold in 2015; 49 Thirty Seventh Street, sold in 2016; 25 Thirty Third Street, sold in 2016; 31 Ash Crescent, sold in 2015; and 352 Lake Promenade, sold in 2015. The analysis contains both actual sales and time-adjusted sale prices.

18The analysis shows that the actual sale prices of these suggested comparable properties range from $1,050,000 to $1,600,000; and the time adjusted sale prices range from $1,073,859 to $1,479,211. 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 sales have median time-adjusted sale price of $1,342,065 and an average time-adjusted sale price of $1,290,114.

19Based on this analysis, Mr. Mui relies on the average time-adjusted sale price and determines the current value to be $1,290,000 (rounded).

MPAC’s Submissions

20Relying on its evidence, MPAC submits that the correct current value for the Subject Property for taxation years 2017 to 2018 is $1,290,000.

Appellant’s Evidence

21Mr. Surin Toor represents the Appellants. Mr. Toor states that the Subject Property is located on a “T” intersection and directly faces the T. He argues that MPAC failed to recognize the impact of the T intersection on the assessed value of the Subject Property. He also testifies that the Subject Property has a sidewalk which he argues negatively impacts the assessed value.

22In support of current value, Mr. Toor presents a sales analysis of two suggested comparable properties sold in 2014 and 2015. These two suggested comparable properties are located at 46 Thirty First Street, sold in 2014 for $862,000 (time-adjusted price $1,002,506); and at 7 Thirty First Street, sold in 2015 for $1,170,000 (time-adjusted price $1,282,320). These two suggested comparable properties have on average a total building area of 2719 sq. ft., a total site area of 8,042 sq. ft., year built 1976, and a time-adjusted sale price of $395 per sq. ft. based on total building area. Applying the average sale price of $395 to the Subject Property results in a value of $1,103,235 ($395 X 2793 sq. ft.).

Appellant’s Submissions

23Relying on his evidence, Mr. Toor submits that the correct current value for taxation years 2017 to 2018 is $1,103,235.

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 issue of nuisances associated with a T intersection, sidewalk and proximity to a lake and park. The Board finds that Mr. Toor presented no quantitative evidence to demonstrate the impact on the assessed value of the Subject Property. On the contrary, MPAC submits that there are no negative adjustments for location close to a T intersection, a park and a lake and for having a sidewalk.

26In reviewing the above sales presented in support of current value by MPAC and the Appellants, the Board accepts six of the sales (five by MPAC and one by both MPAC and the Appellants) for consideration of current value. However, the Board rejects the sale at 46 Thirty First Street, sold in 2014, because this sale is too far removed from the valuation date of January 1, 2016, to provide any meaningful test of current value.

27Based on these six sales, the Board finds the best evidence in support of current value is the sales at 7 Thirty First Street, sold in 2015, at a time-adjusted price $1,282,320 ($468.68 per sq. ft.). This comparable property is presented and recognized by both MPAC and the Appellants as similar in age, quality, building area and lot size and un-renovated as the Subject Property. The cost of $468.68 per sq. ft. when applied to the Subject Property reflects a value $1,309,000 ($468.68 X 2793 sq. ft.).

28The Board finds the current value to be $1,309,000.

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 0.5 kilometres of the Subject Property.

31The analysis of these 30 comparable properties shows a Level of Appraisal (“LOA”) of 0.93 and a Coefficient of Dispersion (“COD”) of 10.2. Based on this finding, MPAC is of the opinion that an equity reduction is required, because the finding falls outside of MPAC’s standards of 0.95 to 1.05 for the LOA.

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 required.

Appellants’ Evidence

33Mr. Toor relies on MPAC’s Equity Analysis as demonstrated above and concurs with its finding that an equity adjustment is required. However, Mr. Toor is of the opinion that the LOA of 0.93 should be applied to the returned assessment of $1,114,000 to arrive at a value of $1,036,000 ($1,114,000 X 0.93).

Findings on an Equitable Reduction

34The 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”.

35However, 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.

36The 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).

37In reviewing the above evidence in support of equity. The Board accepts MPAC and the Appellant’s evidence that an equity adjustment is required.

38The Board rejects the Appellants argument that the LOA of 0.93 should be applied to the returned assessment of $1,114,000. As stated above, the Act clearly states in s.44.(3)(a) that the Board shall first determine the current value of the land; and (b) 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. The Board has found that the current value is $1,309,000 and land is to be assessed at its current value, unless an adjustment is required for equity. Any equity adjustment must be to the current value.

39In this case, the Board determines the current value to be $1,309,000. Applying the LOA of 0.93 to the current value of $1,309,000, results in a value of $1,217,000 ($1,309,000 x 0.93).

DECISION

40The Board finds that the current value of the Subject Property for the 2017 and 2018 taxation years is $1,309,000. The Board also finds that it would be fair and equitable to assess the Subject Property at 93% of that current value, or $1,217,000. However, that equitable assessment is higher than the assessment as returned. MPAC did not file a notice of intention to seek a higher assessment, as required by Rule 40 of the Board’s Rules of Practice and Procedure, so the Board will not increase the assessment. The Board therefore confirms the returned assessment of $1,114,000 for the Subject Property for the 2017 and 2018 taxation years.