Bruce Halow and Janice Halow v. Municipal Property Assessment Corporation Region 32 and City of Thunder Bay, 2018 CanLII 91620

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 26, 2018

FILE NO.: WR 154192

Assessed Person(s): Bruce Halow and Janice Halow

Appellant(s): Bruce Halow and Janice Halow

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 32

Respondent(s): City of Thunder Bay

Property Location(s): 2260 Sleeping Giant Parkway, Suite 2604

Municipality(ies): City of Thunder Bay

Roll Number(s): 5804-010-001-17150-0000

Appeal Number(s): 3264156 and 3315028

Taxation Year(s): 2017 and 2018

Hearing Event No.: 700970

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

Heard: July 4, 2018 in Thunder Bay, Ontario

APPEARANCES:

Parties	Representative
Janice Halow	Self-represented
MPAC	Thomas Pesek
City of Thunder Bay	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING AND JEAN-PAUL PILON

INTRODUCTION

1Bruce Halow and Janice Halow are the owners of 2260 Sleeping Giant Parkway, Suite 2604 (the “Subject Property”) which is a condominium unit located in the City of Thunder Bay (“City”).

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, the Municipal Property Assessment Corporation (“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 $929,000.

4Janice Halow (the “Appellant”) filed an appeal for the 2017 taxation year with the Assessment Review Board (the “Board”), and has been deemed to have brought the same appeal with respect to the Subject Property for the 2018 taxation year pursuant to section 40 of the Act. It was the Appellant’s position that MPAC’s assessment of current value is too high and that the correct current value is $696,750. MPAC took the position at the hearing that its assessed value is correct.

5Pursuant to subsection 40(11) of the Act, the City was a party to the proceeding. However, the City did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the City’s behalf.

6Subsection 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 possessed by each ratepayer. MPAC takes the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that for the 2017 and 2018 taxation years, the current value of the Subject Property as of the valuation date, January 1, 2016, is $905,625.

Relevant Legislation and Rules

The Act

8Section 1 of the 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.

9Section 19.(1) of the Act states:

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

10Section 19.2(1) of the Act states:

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.

11Section 40.(17) of the Act states;

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.

12Section 44.(3) of the Act states:

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

13The issue to be determined in this appeal is the correct current value of the Subject Property for the taxation years 2017 and 2018.

Discussion, Analysis and Findings

MPAC’s Evidence

14Thomas Pesek testified for MPAC and relied on MPAC’s valuation report prepared in anticipation of the hearing.

15It was not disputed that the Subject Property is a condominium unit on the sixth floor of a seven floor building, and that it is one of two buildings in a complex. The unit has a total building area of 2,250 square feet (“sq. ft.”) and was built in 2014. The Appellant was the first purchaser of the Subject Property on June 9, 2016.

16It was also not disputed that the direct comparison approach was the appropriate method in which to determine current value. As described in MPAC’s report, “the direct comparison approach estimates the current value of a subject property by adjusting the sale price of other sold properties for differences in property characteristics between the subject property and other sold properties.” Nor did the Appellant take issue with the adjustments MPAC made to sales prices to account for the passage of time.

17MPAC chose six properties which it said were comparable to the Subject Property. These were as follows:

Sale Number	Address	Sale Date and Time Adjusted Sale (or Resale) Amount	Unit Square Feet	Time Adjusted Sale Amount / Square Footage
1	2260 Sleeping Giant Pky, Suite P2605	November 15, 2016, $765,498	2,168	$353
2	2260 Sleeping Giant Pky, Suite P2601	June 22, 2016, $732,877	1,959	$374
3	2260 Sleeping Giant Pky, Suite P2701	June 22, 2016, $725,471	1,959	$370
4	2280 Sleeping Giant Pky, Suite P1701	August 28, 2015, $887,406	1,959	$452
5	2260 Sleeping Giant Pky, Suite P2702	September 15, 2016, $865,000	1,537	$558
6	2280 Sleeping Giant Pky, Suite 1502	November 30, 2016, $698,000	1,307	$530

18MPAC’s representative testified the first proposed comparable property is very comparable to the Subject Property, being a penthouse in the same building with the same area, the same number of bathrooms and the same number of bedrooms. MPAC’s second and third proposed comparable properties are also penthouse units in the same building with the same number of bathrooms and bedrooms, but they are slightly smaller.

19MPAC took the position that its fourth proposed comparable property is also relatively comparable to the Subject Property. While located in the other building in the complex and smaller, it is also a penthouse suite and contains the same number of bathrooms and bedrooms. The fifth and sixth proposed comparable properties are inferior in MPAC’s view. The fifth proposed comparable property is in the same building as the Subject Property and is a penthouse, but is smaller. The sixth proposed comparable property is in the other building, is smaller, and has one half bathroom and one less bedroom than the Subject Property.

20MPAC’s representative further testified that MPAC views each building or complex of buildings as, in his words, “an economic neighbourhood” and that exterior sales are only useful in the absence of more relevant sales in the same building or complex. He further testified that because the Subject Property is a unit not on the top floor, a premium normally added to penthouses was not imposed even though the municipal address of the Subject Unit refers to it being a penthouse.

Appellant’s Evidence

21The Appellant and her witness, neighbor Margaret Williamson, testified that the Subject Property did not match the “hype” when the Appellant purchased it: that it was not the “world class” building that was promised, that an adjoining five star hotel would only be four star and has not yet been built, that the pool for the hotel would not be accessible as promised, that the Subject Property does not look down to a promised green roof, that landscaping is subpar and that the noise from passing trains is worse than expected. The Appellant described ongoing issues and disputes with the new home warranty provider TARION related to soundproofing and said units were initially sold by the builder at inflated prices.

22The Appellant testified there are two other proposed comparable properties on the sixth floor of a building across the street missing from MPAC’s evidence of current value but included in its list of properties to support its time adjustment calculations. The first of these had a sale price of $495,000 in August, 2014 and the second had a sale price of $570,000 in December, 2016. The dimensions of the first unit were not before the Board but the Appellant was aware that it has a view blocked by the buildings in which the Subject Property is located. The Appellant further testified the second unit is 1,700 sq. ft. The Appellant also relied on a quantity of expired real estate listings in her written submissions that were not referred to at the hearing.

23The Appellant pointed out that while the original rebated purchase price from the builder of the Subject Unit was almost the same as what was paid for the fourth of MPAC’s proposed comparable properties, the latter’s current value assessment is $102,000 less than that of the Subject Property.

Analysis

24The Board’s task is to determine the current value of the Subject Property as of January 1, 2016. Although there was no evidence of any sales on that date, there was evidence of sales shortly after that date. As noted above, current value is “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” pursuant to s. 1 of the Act, not what a willing seller would want to extract from a willing seller in a transaction. For that reason, the listing prices of properties offered for sale are also of little assistance in determining current value because they do not indicate at what price, if any, a property sold for, or if a property sold at all.

25Only two of MPAC’s proposed comparable properties, the fifth and sixth, were resales and not builder sales. Both of these are inferior to the Subject Property because they are smaller and have fewer bathrooms and bedrooms. At the same time, the per square foot sale price of the former was $562 per sq. ft. on September 15, 2016 and the latter, at $534 per sq. ft. on November 30, 2016. MPAC’s opinion of the Subject Unit’s current value is significantly lower at $413 per sq. ft.

26The Appellant’s further evidence of sales across the street was lacking because the Board had no indication of the floor area of the first unit and no independent evidence confirming the dimensions of the second unit. The Board finds them not to be comparable where there was no other information as to the state of those units, and where the Appellant indicated she had never been in that building.

27The first four of MPAC’s proposed comparable properties were builder sales, which the Board is generally reluctant to consider as indicators of current value. This is because, among other things noted in Board decision Roitman v. Municipal Property Assessment Corp. Region No. 9, [2013] OA.R.B.D. No.138, sales prices can be distorted by incentives and there can be uncertainties as to the total consideration paid. On the other hand, the two remaining proposed comparable properties submitted by MPAC were unhelpful indicators of current value on their own, where they were both inferior to the Subject Property and yet sold at prices substantially higher than MPAC’s current value assessment. In addition, MPAC’s sixth proposed comparable property appears particularly outlying, where its time adjusted sale amount from the builder on August 24, 2016 was $550,369 and its time adjusted resale amount was $692,838 on November 30, 2016, an increase of nearly 26% in just three months.

28With insufficient evidence available to determine the current value of the Subject Property based on the fifth and sixth of MPAC’s proposed comparable properties, the resales, the Board is required to give weight to the evidence of the four builder sales in MPAC’s evidence. This conclusion is supported by the fact that MPAC’s first four proposed comparable properties have more in common with the Subject Property than the fifth and sixth resales because they are all the same approximate size, from 1,959 to 2,168 sq. ft. where the Subject Property is 2,250 sq. ft., and they have the same number of bathrooms and bedrooms. All are also penthouses, the first two on the same floor, the third one floor up and the fourth in the other building. As a result, the Board determines that all of these are relatively comparable to the Subject Property.

29The current value of the Subject Property can therefore be determined by taking the median of the time adjusted sales amounts of these four properties on a per square foot basis. The per square foot time adjusted initial sales amounts range from $353 to $452, and the median is $402.50. Multiplied by the square footage of the Subject Property of 2,250, the Board finds that the current value of the Subject Property is $905,625.

30There is evidence to support the Appellant’s central argument that the Subject Property is one of two buildings in a complex that did not live up to its billing in the declining sales prices between the two comparable sales presented by MPAC. No one argued we should take into account the fact that the Subject Property did not belong to the Appellant on January 1, 2016 but leaving aside what she might have paid for it in a builder sale, we can infer that the Subject Unit’s value was higher at that time, as were expectations. The issue is the current value of the Subject Property on January 1, 2016, not later.

31We therefore find that the evidence supports a current value of the Subject Property for the 2017 and 2018 taxation years of $905,625.

DECISION

32The Board finds that the correct current value of the subject property is $905,625. The Board therefore reduces the assessment returned for the 2017 and 2018 taxation years from $929,000 to $905,625.