Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 17, 2018

FILE NO.: WR 154596

Assessed Person(s): Yellow Cedar Investments Limited

Appellant(s): Yellow Cedar Investments Limited

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15

Respondent(s): Town of Oakville

Property Location(s): 1352 Edgeware Road

Municipality(ies): Town of Oakville

Roll Number(s): 2401-040-250-44322-0000

Appeal Number(s): 3262067 and 3307718

Taxation Year(s): 2017 and 2018

Hearing Event No.: 701305

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

Heard: July 11, 2018 in Oakville, Ontario

APPEARANCES:

Parties	Representative
Yellow Cedar Investments Limited	Robert Baranowski
MPAC	Roger Leroux
Town of Oakville	Susan Price

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1The Appellant appeals the 2017 and 2018 assessment of the subject property on the grounds that the assessment is too high. Robert Baranowski argues that the current value should be $660,000. The subject property was assessed at $814,000 for the 2017 and 2018 taxation years. MPAC’s opinion of value for the subject property is $904,000. Roger Leroux, MPAC’s advocate, requests that the assessment be confirmed as returned.

2The subject property is a single-family detached home, built in 1979 with a construction quality of 6.5. It has a lot with 60 feet of effective frontage, 101.22 feet of effective depth, an effective site area of 0.14 acres, with a building total area of 2,459 square feet (“sq. ft.”). It has an unfinished basement area of 1,266 sq. ft., an outdoor pool and it abuts green space. Asoka Jayalath, MPAC’s witness, testified that the subject property sits on a cul-de-sac, however, this was not noted on MPAC’s data base, and consequently, it would not be used as a basis for determining the current value of the subject property.

ISSUES

3The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 and 2018 taxation years?

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 2018 taxation years to be $861,000 (rounded).

5The Board finds that a downward adjustment to the current value to $817,000 (rounded) is necessary to ensure that the assessment of the subject property is equitable with the assessments of similar lands in the vicinity.

6MPAC did not file a notice of intention to seek a higher assessment, in accordance with Rule 40 (b) of the Board’s Rules of Practice and Procedure (“Rules”), the Board therefore confirms the assessment as returned at $814,000 for the 2017 and 2018 taxation years.

REASONS FOR DECISION

Legislation

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 and 2018 taxation years, 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 …: For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

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

Current Value – Evidence and Analysis

MPAC’s Evidence

10Ms. Jayalath presented the Board with five property sales in the vicinity, which she testifies as being comparable with the subject property. She testified that based on these five comparable property sales, MPAC’s opinion of value of the subject property is $904,000 (rounded). Details of the five comparable property sales are summarized in Table 1 below:

Table 1

Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Building/ Size (sq. ft.)	Lot Size (acres)	Year Built/Effective Yr. Build	Construction Quality
Subject Property	1352 Edgeware Road	814,000	N/A	N/A	2,459	0.14	1979/ 1979
Sale 1	1358 Edgeware Road	787,000	December 2015 (957,000)	963,497	2,399	0.14	1979/ 1979
Sale 2	1385 Edgeware Road	794,000	March 2016 (935,000)	904,499	2,218	0.14	1980/ 1980
Sale 3	1388 Edgeware Road	839,000	July 2015 (910,000)	982,917	2,137	0.13	1979/ 1997
Sale 4	1304 Griffith Place	793,000	May 2016 (805,000)	758,935	2,313	0.16	1981/ 1981
Sale 5	1392 Lancaster Drive	732,000	July 2015 (740,800)	800,159	2,230	0.14	1979/ 1979

11Ms. Jayalath submits that property Sales 1, 2, 3, and 5 were renovated prior to sale and that the sales prices would have included the renovation, even though she did not inspect all the comparable sales including the subject property and no building or renovation permit were filed with the Town of Oakville (“Town”). She testified that property Sale 1 is superior to the subject property, since it was renovated prior to sale, and this was not reflected in its assessment but will be updated next year. She further added that property Sales 2 and 3 are similar to the subject property despite being renovated prior to sale. These two property sales do not abut green space. Sale 2 has an outdoor pool like the subject property. According to Ms. Jayalath, the differences in the features of these two sales and the subject property were used to offset each other. Furthermore, she testified that property Sales 4 and 5 are inferior to the subject property. Property Sale 4 was not renovated, it abuts green space, it has a slightly larger lot, but the building is 146 sq. ft. smaller than the subject property and it does not have a pool. Property Sale 5 was renovated prior to sale, according to Ms. Jayalath, although Sale 5 is similar to the subject property in terms of age, quality of construction and lot size, its building size is 229 sq. ft. smaller, it does not abut green space and does not have a pool, making it inferior to the subject property.

12Ms. Jayalath testified that on April 26, 2018, MPAC requested an inspection of the subject property but was denied by the Appellant. Accordingly, she could not speak to the condition of the subject property, since MPAC has never inspected it.

13Ms. Jayalath submits that the Time Adjusted Sale (“TAS”) price range of all the five property sales is between $758,935 and $982,917 and the median TAS price is $904,000 (rounded), which is MPAC’s opinion of value for the subject property.

Appellant’s Evidence

14Mr. Baranowski used MPAC’s property Sale 4 in providing the Board with the current value of the subject property. He testified that MPAC’s property Sale 4 is the best comparable to the subject property since it has the same quality of construction, an unfinished basement, it has not been renovated and it abuts green space. He added that although it does not have a pool and the lot is slightly larger than the subject property, he did not make any adjustment for these features as he had no evidence to present that a larger land would sell for more and that a pool is valuable.

15Regarding the condition of the subject property, he testified that on April 26, 2018, MPAC requested for an inspection of the subject property, two months prior to the hearing, which was declined by the Appellant as they deemed this request to be prejudicial. He submits that if an inspection was needful and necessary, MPAC could have filed a motion to inspect the subject property.

16Using only property Sale 4, he provided the Board with two alternatives for finding the correct current value using 6 options for an equity adjustment. These equity adjustments will be discussed in the equity section of this decision.

First Approach

17For options 1 – 3, Mr. Baranowski urged the Board to set the current value at the TAS price of Sale 4 at $759,000 (rounded), with three different adjustments for equity.

Second Approach

18In the alternative, he requests that for options 4 – 6, the Board should set the current value at the assessed value of the subject property at $814,000, with three different adjustments for equity.

19In summation he argues that MPAC has not discharged its onus to prove correctness of current value and it has failed to prove how it arrived at $904,000 as its opinion of value for the subject property. This he concludes is contrary to the legitimate expectation of the taxpayer to know what to pay and how this value was determined.

Municipality’s Evidence

20Susan Price commenced her evidence by emphasizing that Edgeware Park, the location of the subject property, is surrounded by Iroquois Shoreline Woods, making this location desirable. She submits that the assessment of the subject property should be confirmed based on the three property sales she presented, which are the same as MPAC’s property Sale 1, 2, and 3. She testified that using the TAS price of Sales 2 and 3 with a 4% positive adjustment for green space since these two properties does not abut green space, their revised TAS price will be $940,678 and $1,222,233 respectively, and the subject property falls below this range. Furthermore, she submits that the assessments of these three properties range from $787,000 to $872,560, and the assessment of the subject property falls within this range.

21Ms. Price further testified that properties that were renovated were commanding higher values and she does not know if the subject property was renovated. She further added that it is possible that the subject property was renovated without a permit, since four of MPAC’s comparables were renovated without permits, although no evidence was furnished of this fact. In summation, Ms. Price concludes that she believes that the current value of the subject property is $904,000.

Board’s Analysis – Current Value

22The best evidence of current value is the sale of the subject property on or close to 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.

Condition of the Subject Property

23The Board finds that there is insufficient evidence before the Board to make a determination regarding the condition of the subject property. It is surprising that neither MPAC nor the Appellant provided the Board with any corroborating evidence regarding the condition of the subject property. Consequently, the Board will place little weight on this issue to determine the subject property’s current value.

24MPAC’s witness testified that the renovation of four of the sale comparable properties occurred prior to their sale and formed part of the sale price. Excluding Sale 1, the other sales properties that were renovated are not superior to the subject property, because other features were used to offset these renovations. This analysis was carried out without confirming the condition of the comparable sales, or the subject property, through an inspection. No building or renovation permits were filed with the Town. She further added that the only way to obtain information on the conditions of the comparable properties was through an inspection, which MPAC never carried out on the subject property and on all the five comparable properties. Ms. Jayalath could not provide the Board with evidence regarding the condition of the subject property, since MPAC has never inspected it. She provided MPAC’s opinion of value for the subject property based on comparable sales that she testified where renovated, but for one, without inspecting any of them. How then did MPAC form its opinion of current value?

25Ms. Price also testified that sales of renovated properties are going up although during cross examination she stated that she does not believe the Town’s Sales 1, 2 and 3 (MPAC’s property Sales 1, 2 and 3) were renovated.

26Mr. Leroux submits that neither MPAC nor the Appellant has any information as to the current condition of the subject property and that the proper approach the Board should consider is to review all other properties in proximity to the subject property. He argues that a determination should not be made regarding the condition of the subject property. Furthermore, he suggests that a negative inference should be drawn from the Appellant’s refusal to grant an inspection of the subject property.

27In accordance Rule 47 (c) of the Board’s Rules which provides:

A party may seek an order from the Board, by motion, ordering:

(c) any other method of discovery, including inspections of property.

MPAC could have filed a motion to inspect the subject property when a request to inspect was denied by the Appellant, especially when an inspection has never been carried out on the subject property as confirmed by Ms. Jayalath. There could have been enough time to inspect the subject property prior to the hearing date. During cross-examination, Mr. Baranowski confirmed that he did not inspect the subject property and has no photographs of the condition of the subject property but had visited the subject property sometime in November – December 2017, and submits that the subject property was not renovated. Mr. Baranowski further argues that the Appellant only questions the current value and equitable assessment of the subject property and did not raise an issue regarding the condition of the property. The condition of the subject property may have an impact on its value depending on the evidence furnished by the parties. There is no corroborating evidence furnished by the parties as to the condition of all the comparable sales and the subject property. This evidence was not presented at the hearing. For the reasons stated above the Board is unable to make a determination in this regard.

Current Value – Analysis

28The Board finds that property Sales 1 and 4 are the most comparable to the subject property. They are the only two comparable properties that abut green space like the subject property. Property Sale 1 has an identical lot size, identical year built, identical effective year built, and identical quality of construction as the subject property. The building size is only 60 sq. ft. smaller than the subject property, it has a finished basement while the subject property does not, this is offset by the subject property’s outdoor pool. Property Sale 4 has a slightly larger lot size, it is two years newer than the subject property, its building size is 146 sq. ft. smaller than the subject property and it does not have an outdoor pool. This difference is accounted for in its slightly larger lot size of 0.16 acres. These two properties are determined to be relatively comparable to the subject property. Furthermore, the subject property sits on a cul-de-sac. Although MPAC’s witness testified that this was not used as a basis for determining MPAC’s opinion of value, the Board determines that this is relevant. This on site variable of the subject property is noted in Appendix E of MPAC’s valuation report. All the other comparable sales do not have this positive site variable. This makes the subject property slightly superior to property Sales 1 and 4. The Board determines the current value of the subject property based on these two relatively comparable properties. Property Sale 1 sold at a TAS price of $963,497 and property Sale 4 sold at TAS price of $758,935. The midpoint of this sale is $861,216.

29The Board determines that the correct current value of the subject property is $861,000 (rounded).

Equity Analysis

30Section 44.(3)(b) of the Act 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.”

31The 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.

MPAC’s Evidence

32MPAC’s assessor presented an equity analysis of 29 residential sales of single family detached homes from January 1, 2015 to December 31, 2016 within 1.85 kilometers of the subject property. Ms. Jayalath had initially disclosed to the parties and the Board a median ASR of 0.96, which she changed a day prior to the hearing as 0.953 due to an error in calculation. She submits that the International Association of Assessing Officers standards states that the median ratio should fall between 0.90 and 1.10. MPAC’s standard is 0.95 -1.05 and this indicates that similar real property in the vicinity have been assessed at or near their current value. Therefore, no equity adjustment is required to MPAC’s opinion of value of $904,000. During cross-examination, Ms. Jayalath admitted that she did not include property Sale 5, which was used in her opinion of value as she choose 29 closest properties and if included in her equity analysis it provides a median ASR of 0.9339. The Board notes that the calculation of this ASR is incorrect. Upon proper calculation, the Board and the Appellant obtained a median ASR of 0.949. Mr. Leroux submits that adding Sale 5 will skew the result of the equity analysis and that the Board should use only the median of the 29 properties at 0.953, which requires no adjustment.

Appellant’s Evidence

33Mr. Baranowski provided six equity adjustments to the two alternatives he presented to the Board in finding the correct current value. He submits as follows:

i. Option 1: Upon finding the current value at $759,000, the Board should apply the corrected median ASR of 0.949, which he rounded down to 0.94, which results to $713,000; or

ii. Option 2: The median ASR of MPAC’s 5 comparable sales is 0.87 and the average is 0.89, the average of these two ratios is 0.88. The Board should apply this average at 0.88 to the determined current value of $759,000 to provide $668,000 (rounded); or

iii. Option 3: the Board should apply the median or the average ASR of MPAC’s property Sales 1, 2, and 3, which is 0.85 to the determined current value of $759,000 resulting to $645,000 (rounded) ;or

iv. Option 4: The Board should apply the revised median ASR of 0.94 to the returned assessment of the subject property at $814,000, resulting to $765,000 (rounded); or

v. Option 5: The Board should apply the average ASR of 0.88, used in option 2 (above) against the retuned assessment of the subject property at $814,000, to obtain $716,000 (rounded); or

vi. The Board should apply the average ASR of 0.85, used in option 3 (above) against the returned assessment of the subject property at $814,000 to obtain $692,000 (rounded).

34He submits that using options 2 and 3 equity adjustments, the adjusted value of the subject property should be $660,000, as provide in the Appellant’s Statement of Issues.

35Mr. Baranowski further provided prior decisions of the Board, where the Board adjusted for equity using fewer properties due to the errors in MPAC’s equity analysis. The Board references the most relevant:

a. Bernardo v. Municipal Property Assessment Corp. Region No. 15, [2011] O.A.R.B.D. No. 291, where the Board rejected MPAC’s two equity studies, based partly on the fact that extreme ratios were removed before the determination of the median ASR’s. The Board determined that this does not provide a complete and accurate depiction of equity. Therefore, the Board used the ASR of four sales to make a downward adjustment to the determined current value.

b. Tamana Holdings Ltd. v. Municipal Property Assessment Corp. Region No.15, [2013] O.A.R.B.D. No. 128, The Board determined that the five comparable sales had a time adjusted ASR well below 1.00 and the parties accepted the median ASR for the five comparable sales. The Board found that the best evidence to make an equity adjustment is the median ASR of the five comparable sales.

c. Atia v. Municipal Property Assessment Corp., Region No. 15, [2013] O.A.R.B.D. No. 32, the Board acknowledged that a larger sample size is preferable to make an adjustment for equity, however the best evidence presented were two comparable properties by MPAC. The Board relied upon the ASR of these two comparable properties to make a downward adjustment to the determined current value.

36In the present appeal, Mr. Baranowski argues that the errors in MPAC’s equity study are:

a. None of the 29 properties has an ASR of 1.00;

b. Only 14 properties out of the 29 properties fall within MPAC’s acceptable standard of 0.95 – 1.05; and

c. There is no evidence that the 29 properties used in the equity studies are similar to the subject property.

37The Board notes that while Mr. Baranowski wants the Board to disregard MPAC’s equity analysis, he still presents the result of the analysis as an option to be applied to his determined current value of the subject property.

38Mr. Leroux also presented the Board with prior decisions to support MPAC’s equity study:

a. Pusateri v. Municipal Property Assessment Corp., Region No. 15, [2012] O.A.R.B.D. No. 96, the Board determined that a single ASR is insufficient for equity purposes. Furthermore that “common sense, statistical analysis and simple math instruct that a finding of a general level of under-assessment can not justifiably be made on the evidence of a select few ratios”.

b. Ritchie v. Municipal Property Assessment Corp. Region No. 15, [2013] O.A.R.B.D. No. 70, The Board declined to use the assessments of properties rather than sales to derive the correct current value, when adequate evidence of sales of similar properties in the vicinity were presented.

Board’s Analysis

39The Board agrees with MPAC that a more representative sample size is preferred and will provide a general level of assessment of similar lands in the vicinity. This determination cannot statistically be made with just two or three properties. The 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. The Board disagrees with Mr. Leroux that adding property Sale 5 to the equity analysis will skew the results. MPAC used Sale 5 as one of the properties in proximity to the subject property in arriving at its opinion of value, there is no basis for excluding it in its equity analysis. The correct median ASR derived after adding Sale 5 to the analysis is 0.949.

40For equity, the comparables properties 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 ONSC 1299, , applying the decision in Trizec Equities Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182, “…All points of comparison must be considered…” The selection of these 30 properties (including Sale 5) provides similar properties as the subject property, in terms of its location, they all within 1.85 kilometres of the subject property, its nature - all single family detached homes, and its use - all residential properties.

41Mr. Baranowski further argues that MPAC had not provided a property with a perfect ASR of 1.00. This would indicate that MPAC is assessing properties at their exact current value. MPAC has presented in evidence a median ASR of 0.953, corrected to 0.949 for 30 single-family detached (not on water) properties, which reveals that MPAC is assessing properties in the vicinity at approximately 5% below their selling price. This is the purpose of the equity analysis, which has been better revealed in a larger sample size. This does not provide a perfect situation of achieving 1.00, however using these 30 properties including Sale 5, provides a broader picture on whether the municipal tax burden is equitably shared by all the properties in the vicinity.

42The Board finds that the current value of the subject property should be adjusted in order achieve equity with the assessment of similar properties in the vicinity. The Board applies the median ASR of 0.949 to the determined current value of $861,000 and reduces it to $817,000 (rounded).

CONCLUSION

43Based on all of the evidence, the Board determines that the correct current value of the subject property to be $861,000 (rounded) and determines that a reduction to the current value to $817,000 (rounded) is necessary in order to achieve equity with the assessment of similar properties in the vicinity.

44MPAC 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 $814,000 for the 2017 and 2018 taxation years.