Raymond John Chisholm v. Municipal Property Assessment Corporation, 2018 CanLII 89427

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

September 19, 2018

FILE NO.:

WR 152293

Assessed Person(s):

Raymond John Chisholm

Appellant(s):

Raymond John Chisholm

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”)

Region 15

Respondent(s):

Town of Oakville

Property Location(s):

159 Brookfield Crescent

Municipality(ies):

Town of Oakville

Roll Number(s):

2401-030-140-04300-0000

Appeal Number(s):

3255516 and 3306510 (deemed 2018 appeal)

Taxation Year(s):

2017 and 2018 (deemed appeal)

Hearing Event No.:

694382

Legislative Authority:

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

Heard:

March 12, 2018 in Oakville, Ontario

APPEARANCES:

Parties

Representative

Raymond John Chisholm

Robert Baranowski

MPAC

Raj Rakhra

Town of Oakville

Susan Price

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1The Appellant appealed the assessment of the subject property for the 2017 taxation year. Robert Baranowski, representing the Appellant argues that the assessment is too high. The subject property was assessed at $1,736,000 for the 2017 taxation year. MPAC requests that the assessment as returned be confirmed. The Appellant requests a current value of $1,359,000 with a further reduction for equity.

2The subject property is a single-family detached dwelling built in 1945, with effective year built of 1978, with construction quality of 7.0. It was renovated in 1993 with renovation “C” code. It has a lot with 144 feet of effective frontage, 156 feet of effective depth, an effective site area of 0.39 acres and building total area of 2,335 square feet (“sq. ft.”). It has one and ¾ storeys, and a detached garage. The basement area is 1,141 sq. ft. of which 610 sq. ft. is finished. The subject property abuts green space and has a positive adjustment of 4% added to its assessment.

ISSUES

3The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 taxation year?

ii.) Is the current value as determined by the Board equitable in reference to the assessments of similar lands in the vicinity?

DECISION

4The Board determines the current value of the subject property for the 2017 and deemed 2018 taxation years to be $1,870,000 (rounded).

5The Board finds that the determined current value is equitable with the assessment of similar lands in the vicinity; therefore no downward adjustment is necessary.

6MPAC did not file a notice of intention to seek a higher assessment, as required by Rule 40(b) of the Board’s Rules of Practice and Procedure (“Rules”). Therefore, the Board confirms the assessment below the current value determined at $1,736,000 for the 2017 and deemed 2018 taxation years

REASONS FOR DECISION

Current Value – Evidence and Analysis

7In accordance with s. 44.(3)(a) of the Assessment Act (“Act”), the first mandate of the Board is to determine “the current value of the land”. Section 1 of the Act defines current value as “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.” That is, for the 2017 taxation year, the Board must determine what the subject property would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by the Act.

8Section 19.2(1) of the Act prescribes the valuation days, which provides:

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 each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

9Section 40.(17) of the Act places “the burden of proof as to the correctness of current value on MPAC.”

MPAC’s Evidence

10Mr. Rakhra presented the Board with three comparable property sales in the same homogenous neighbourhood as the subject property. He testified that all three sales properties are inferior to the subject property although they are similar in some aspects. The Time Adjusted Sale (“TAS”) prices for the three properties range from $1,313,322 to $1,730,797 with sale dates from March 2015 to July 2016. The building total area (“BTA”) of the three properties range from 2,332 to 2,458 sq. ft., with effective year built from 1996 to 2002. All the three sales properties’ buildings have the same quality of construction as the subject property’s building. The effective lot sizes of the three sales properties range from 0.09 to 0.21 acres. Sales 2 and 3 property buildings were renovated like the subject property. Sale 1 property has an outdoor pool. None of the three sale properties abut green space; Sale 2 property abuts a multi-residential. Mr. Rakhra submits that the basis of his opinion of value is based on Sale 1, which has a TAS price of $1,730,797 and a substantially smaller lot size of 0.09 acres compared to the subject property but has a similar building size, same construction quality, similar storey and finished basement. However, it is inferior to the subject property based on its smaller lot size, consequently, he estimated that the current value of the subject property should be higher and the Board should confirm the assessment as returned.

Appellant’s Evidence

11Mr. Baranowski used MPAC’s Sale 2 and 3 to determine what he believes the correct current value of the subject property should be. He testified that Sale 2 and 3 properties are the most similar to the subject property. He further added that Sale 2 property has a BTA of 2,458 sq. ft., and Sale 3 property has a BTA of 2,332 sq. ft. The buildings have an original year built of 1952 and 1947 respectively, compared to the subject property’s original built of 1945, they were both renovated, the lot sizes are similar and they both have finished basement and they are in the same homogenous neighbourhood as the subject property.

12He submits that the subject property’s rate per sq. ft. is $743, using its returned assessment. The average rate per sq. ft. of Sale 2 and 3 property is $582. When applied against the subject property’s building size of 2,335 sq. ft., it provides a current value of $1,359,000 and this satisfies the requirement of s.44 (3) (a) of the Act.

13Mr. Baranowski’s equity argument will be addressed in the equity section of this decision.

Municipality’s Evidence

14Ms. Price commenced her evidence by presenting the multiple listing service (“MLS”) of 169 Brookfield Crescent, on the same street as the subject property, which she testified reveals that 169 Brookfield Crescent can be severed. She submits that from the legal description of the subject property it can also be severed into three lots, which makes it more valuable.

15She presented the Board with five comparable property sales. She withdrew Sales 2 for being at the north of Lakeshore Road West, which is not in close proximity with the subject property being at the south of Lakeshore Road West. She testified that Sale 1 is in the same homogenous neighbourhood as the subject property, while Sale 3, 4, and 5 are further away from the subject property, not in the same homogenous neighbourhood which Ms. Price submits are further away from downtown Lakeshore, making them less valuable than the subject property.

16The TAS prices for the four properties range from $1,361,141 to $2,248,480 with sale dates from March 2015 to May 2016. The BTA of the four properties range from 1,837 to 3,599 sq. ft., with effective year built from 1962 to 2010. Only Sale 4 building has the same quality of construction as the subject property building. The construction quality of Sales 1 and 3 buildings is 6.5. Ms. Price could not confirm the construction quality of Sale 5 building. She testified that Sale 1 building is inferior to the subject property building in terms of its quality of construction. Sale 3 property benefits from an 8% negative adjustment for medium traffic, according to Ms. Price to make it similar to the subject property she added 4% adjustment (subject abuts green space) and 8% for medium traffic (subject does not abut medium traffic) to its TAS price and submits that its TAS price should be $1,524,473. She testified that Sales 4 and 5 buildings were each demolished after sale and submits they were purchased for the land value and adding the 4% adjustment for abutting green space to both sales, she obtained a TAS price of $1,688,960 for Sale 4 and $2,338,416 for Sale 5.

17She submitted that the TAS price range for the four sales is $1,524,473 to $2,338,416 and the subject property CVA falls into this range, which is reasonable and fair, therefore the Board should confirm the assessment as returned.

Board’s Analysis

18The best evidence of current value is the sale of the subject property on or near the valuation date of January 1, 2016, which did not occur in this appeal. When a recent sale is unavailable, the Board looks to the recent sale of other similar properties in the vicinity to determine current value.

19Ms. Price provided three property sales (Sales 3, 4, and 5) which are not in the same homogenous neighbourhood as the subject property. She testified that Sale 3 and 4 properties are on Westdale, which is the west part of the Town of Oakville (“Oakville”) while Sale 5 property is on south-east Oakville. She further testifies that they are similar in terms of acreage and proximity to Lake Ontario as the subject property. The subject property has been assessed by MPAC as not on water, evidence was not lead by the parties regard its proximity to the lake. During cross examination, MPAC confirmed that homogenous neighbourhood means the properties in that location are similar, they have the same physical enclosures, similar structures and they are south of Lakeshore Road West. Mr. Baranowski further submitted that properties in the same homogenous neighbourhood are similar in character and are under the same forces of the market. During cross examination, Ms. Price admitted that Sale 3 and 4 properties are in the west part of Oakville on Westdale, while Sale 5 property is south-east Oakville. Furthermore she submits that Sales 4 and 5 properties were purchased for the value of the land. The Board agrees with Mr. Baranowski that this evidence is speculative. Ms. Price further used the MLS listing of 169 Brookfield Crescent to show that from the legal description of the subject property, it can also be severed making it more valuable. Market Evidence was not before the Board in this regard and the Board is not able to make a determination of a higher value on the subject property based on this. For these reasons the Board will only use the Town’s property Sale 1.

20The Board will make a determination on current value based on sales evidence within the shoulder years of the valuation date, which is 12 months on either side of the valuation date. This will reflect the market value of what the subject property will sell for as of the valuation date. All the sales presented by MPAC, Mr. Baranowski (MPAC’s Sales 2 and 3) and Sale 1 by Ms. Price are within the shoulder years of the January 1, 2016 valuation date. Mr. Baranowski argued that MPAC Sale 1 property is not similar to the subject property since the building is 25 years newer than the subject property building, it was not renovated, it has an outdoor pool and MPAC has not made any adjustment in this regard. Furthermore, he submits that MPAC has no evidence to present that a house with a smaller lot size and an outdoor pool is more valuable, as some potential buyers will view a pool as a liability.

21Sale 1 building is 18 years newer than the subject property building using the subject property’s effective year built of 1978, Sale 2 and 3 buildings which Mr. Baranowski used are 22 and 24 years newer than the subject property building using their effective year built of 2000 and 2002 respectively. The subject property abuts green space. None of the comparables have this positive site feature. Sale 1 property has an outdoor pool, however, it has a similar building size of 2,327 sq. ft. with the subject property’s building size of 2,335 sq. ft. and it has the same quality of construction, an attached garage and finished basement like the subject property. Sale 1 property also has a significantly smaller lot size of 0.09 acres compared to the subject property’s effective lot size of 0.39 acres. Mr. Baranowski argues that MPAC has not presented any market evidence to show that a smaller lot size will sell for less. He presented the case of Oakville (Town) v. Municipal Property Assessment Corp., Region No. 15, 2008 CarswellOnt 2005, where the Board determined that no evidence was presented to the Board to suggest that a dwelling with a larger lot would sell for more in open market. In that appeal, the Town augmented the selling values of its comparables by $750,000 to account for the subject property’s larger lot. This inadvertently changed the sales price of the comparables and this may not be what they will command in open market sale. In the present appeal, Sale 1 property building size is only 8 sq. ft. smaller than the subject property, it also has the same quality of construction as the subject property. Although it has an outdoor pool and it is 18 years newer than the subject property, the Board determines that this sale is inferior to the subject property, due to its significant smaller lot size and it does not abut green space like the subject property.

22In determining the correct current value for the subject property, the Board further reviewed the characteristics of MPAC’s property Sale 2 and 3 the Appellant’s Sale 1, and 2 (MPAC’s Sale 2 and 3) and the Town’s Sale 1. The Board determines that MPAC’s property Sales 2 and 3 properties are also inferior to the subject property. Although MPAC’s property Sale 2 is 22 years newer than the subject property, its effective lot size of 0.2 is also significantly smaller than the subject property. This sale was also renovated with a renovation “C” code, its building size is similar to the subject property but it abuts a multi-residential building, unlike the subject property that abuts green space. MPAC’s property Sale 3 also has a significantly smaller effective lot size of 0.14 compared to the subject property. This property sale was also renovated with a renovation “D” code. Its building size is similar to the subject property and 24 years newer than the subject property, but it does not abut green space.

23The Board finds that the Town’s property Sale 1 is superior to the subject property. Its effective lot size of 0.34 acres is within the range of the effective lot size of the subject property of 0.39 acres. Although it does not abut green space, it is 32 years newer than the subject property with the largest building size of 3,599 sq. ft, compared to MPAC’s property Sales 1, 2 and 3, with construction quality of 6.5 and a TAS price of $2,010,960.

24Mr. Baranowski argues that the Board should use an analysis of TAS price value per square foot in making a determination on the correct current value of the subject property. He presented the case of Ooi v. Municipal Property Assessment Corp., Region No. 15 2009 CarswellOnt 432, where the Board used values per square foot analysis for properties within 10% of the total building area of the subject property. The Board used this criterion to determine the similarity of the comparables presented by the parties. That decision does not provide all the features of the comparables, such the lot sizes and construction quality. In Kaur v. Municipal Property Assessment Corp. Region No. 15, [2012] O.A.R.B.D. No. 73 (“Kaur”), also presented by Mr. Baranowski, the Board used values per square foot analysis to determine the current value of the subject property under appeal. The Board determined in paragraph 24 of Kaur, that a comparable property presented by MPAC and the Appellant were directly comparable to the subject property since they were similar in site area, total building area, age, quality of construction and structure and further used the values per square foot to calculate its current value and determined this was the best evidence of current value (Emphasis added). The Board prefers the decision in Kaur. The comparables presented by MPAC in this appeal are only similar in terms of building size having building total area of 2,327 sq. ft., 2,458 sq. ft., 2332 sq. ft. The lot sizes and age vary.

25The Board determines the current value of the subject property based on the current value range established by MPAC’s inferior property sales and the Town’s superior property sale, as illustrated in Table 1 below:

Table 1

MPAC’s Sale 1, 2, & 3 Appellant’s Sale 2 & 3 (Same as MPAC’s Sale 2 & 3) Inferior Sales →$1,313,322 $1,730,797 →

Subject Property’s Current Value Range $1,870,878

Town’s Sale 1 Superior Sale ← $2,010,960 →

26The mid-point of the current value range is $1,870,000 (rounded). This is below the TAS price of the Town’s property Sale 1 and slightly above MPAC’s property Sale 1, which has an outdoor pool, with a building that is 18 years newer than the subject property but with a significantly smaller lot size. Property Sale 1 also does not have the positive site feature of abutting green space.

27The Board determines that the correct current value of the subject property is $1,870,000 (rounded).

Equity Analysis

28Section 44.(3)(b) mandates and directs that after determining current value, the Board shall 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.”

29The Assessment to Sales Ratio (“ASR”) is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the TAS price.

30MPAC’s Assessor presented an equity analysis of 30 single family detached dwelling with sales that occurred from January 1, 2015 to December 31, 2016, within 1.6 kilometers of the subject property. This provided a median ASR of 0.989. He submits that MPAC standards indicate that for residential property, the median ASR should fall between 0.95 and 1.05, which is in line with the International Association of Assessing Officers standards, which state that the median ratio should fall between 0.90 and 1.10. He further submits that similar properties in the vicinity have been assessed accurately and uniformly, consequently there is no need for an equity adjustment.

31The Appellant’s equity argument is based on:

• The average ASR of MPAC’s Sale 2 and 3, which is 0.92, which when applied to his determined current value of $1,359,000 provides an adjusted value of $1,250,280, or;

• The median ASR of MPAC’s 3 sales which is 0.89, which provides an adjusted value of $1,209,000 (rounded).

32Mr. Baranowski argued that MPAC’s equity analysis is defective for the following reasons:

i. There is no knowledge of how similar the 30 sales are to the subject property;

ii. MPAC did not include Sale 1 in its equity analysis, even though it determined that it was close to the subject property, in the same homogenous neighbourhood.

iii. Only 10 properties fall with MPAC’s acceptable parameter of 0.95 – 1.05, 33% out of 67% are within the parameter. Only 10 falls within this range and not a single ASR of 1.00 is met by MPAC and there is a 58% margin error.

33Mr. Baranowski further presented prior Board decisions where, due to the defect in MPAC’s model, the Board used the ASR of four to five properties, a much smaller sample size to determine equity.

Board’s Analysis

34The application of equity is remedial in nature. Where the Board is of the view that applying the determined correct current value, will result in unfairness if the subject property is bearing a corresponding tax burden based on its current value and all other similar properties are not. In order to correct this, in accordance to s. 44 (3)(b) of the Act, the Board has to make a determination that there is unfairness, that the assessment of the subject property at its current value creates inequity.

35In addressing the Appellant’s argument, questioning the similarity of the properties in the 30 sales MPAC used, the comparables need not be similar as it is needed in the determination of the correct current value. As determined by the Ontario Divisional Court in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., [2017] O.J. No. 1010 ONSC 1299, 276 A.C.W.S. (3d) 220, 2017 ONSC 1299, 62 M.P.L.R. (5th) 253, 2017 CarswellOnt 2861, applying the decision in Trizec Equities Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182, 27 O.A.C. 203, 37 M.P.L.R. 175, 8 A.C.W.S. (3d) 399, “…All points of comparison must be considered…”. MPAC has provided evidence of the sales on 30 single family detached homes within 1.6 kilometers of the subject property. This selection provides similar properties as the subject property, in terms of its location, nature, and use of these properties.

36Mr. Baranowski proceeded by using two to three properties to provide the Board with a time adjusted ASR of 0.92 or 0.89. The Board does not agree with Mr. Baranowski’s analysis for several reasons. This ASR only shows that two or three of the comparables are under assessed and does not provide a general level of assessment of similar lands in the vicinity. The Board will require sufficient evidence in order to determine the general level of assessment of similar lands in the vicinity. This determination cannot statistically be made with just two or three properties. Furthermore an adjustment will not be made any time the ASR is below 1.00. In Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et at., 1968 CanLII 183 (ON CA) (“Empire Realty”) the Ontario Court of Appeal provides the main objective of municipal taxation as:

… 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.

37The Court further addressed equity in assessment by stating that:

… an assessment made at the actual value of lands and buildings in compliance with the provisions of s. 35(1) would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred … (Emphasis added)

38Mr. Baranowski argues that MPAC has not achieved 1.00 for any of the 30 properties used. During cross-examination, MPAC’s assessor admitted that 1.00 is hard to achieve. This would indicate that MPAC is assessing properties at their exact current value. MPAC has presented in evidence a median ASR of 0.989 for 30 single-family detached dwellings, which reveals that MPAC is assessing properties in the vicinity at or near their current value. A review of the equity analysis shows that 10 properties are below MPAC’s acceptable standard, 10 properties are within the acceptable standards and 10 properties are above the acceptable standards. This does not provide a perfect situation of achieving 1.00, however using these 30 properties including Sale 1, which MPAC’s assessor admitted was un-intentionally excluded from the 30 properties, provides a broader picture on the whether the municipal tax burden is equitably shared by all the properties in the vicinity. The 31 properties provide a median ASR of 0.987. Using only two to three sales will not reveal this. In order to find a basis for underassessment within the vicinity, this is better represented by a larger sample size of properties in the area. The ASR’s for the Sales 1, 2 and 3 are, 0.83, 0.96 and 0.89, the average ASR is 0.89. Including Sale 1 to the 30 properties significantly changes the median ASR to 0.987. This reveals that reducing the sample size makes it a less probative value in making a determination on equity. Using the words of the Ontario Court of Appeal in Empire Realty, if all the 31 properties are substantially below one this would obviously show an inequity. A median ASR of 0.987 is not substantially below 1.00, consequently the evidence does not lead the Board to make an adjustment for equity.

CONCLUSION

39Based on all of the evidence, the Board determines that the correct current value of the subject property to be $1,870,000 (rounded) and determines that this current value is equitable with the assessment of similar lands in the vicinity.

40MPAC did not file a notice of intention to seek a higher assessment, as required by Rule 40(b) of the Board’s Rules. Consequently, the Board confirms the assessment below the current value determined at $1,736,000 for the 2017 and deemed 2018 taxation years.

2018 DEEMED APPEAL

41An 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.

42Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

(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.