Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 27, 2018 FILE NO.: WR 154543

Assessed Person(s): Janet Lindsay Appellant(s): Janet Lindsay Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09 Respondent(s): City of Toronto

Property Location(s): 98 Inglewood Drive Municipality(ies): City of Toronto Roll Number(s): 1904-102-280-00500-0000 Appeal Number(s): 3265199 and 3293440 Taxation Year(s): 2017 and 2018 Hearing Event No.: 701617

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

Heard: July 23, 2018 in Toronto, Ontario

APPEARANCES:

Parties	Representative
Janet Lindsay	Surin Toor
MPAC	Andre Campbell
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1The Appellant appealed the assessment of the subject property for the 2017 and 2018 taxation years, which was assessed at $3,185,000. Surin Toor, representing the Appellant, argues that the assessment is too high and submits that the correct current value of the subject property should be $2,828,950. Andre Campbell, MPAC’s assessor, requests that the Assessment Review Board (“Board”) confirm the assessment as returned for the 2017 and 2018 taxation years.

2The subject property is a single-family detached dwelling built in 1921. It was renovated in 1999. MPAC classified this renovation with a “D” code, which means a major renovation. This changed the effective year built of the subject property to 1995. It has a construction quality of 7.5. The lot size measures 50 feet of effective frontage, 275 feet of effective depth, an effective and actual site area of 0.32 acres and building total area of 2,919 square feet (“sq. ft.”) with two storeys. The basement area is 1,566 sq. ft. of which 1,000 sq. ft. is finished. The subject property abuts a ravine Type 1 of which MPAC provides a 7% positive adjustment 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 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 $2,942,000 (rounded).

5The Board finds that this assessment at current value is equitable with the assessments of similar lands in the vicinity, and therefore no further reduction is required to achieve equity.

REASONS FOR DECISION

Current Value – Evidence and Analysis

6In accordance with s. 44.(3)(a) of 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.

7Section 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:

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

8Section 40.(17) of the Act places “the burden of proof as to the correctness of current value on MPAC.”

MPAC’s Evidence

9Mr. Campbell presented the Board with five property sales, which he testified are all comparable to the subject property and located in the same homogenous neighbourhood as the subject property. The Time Adjusted Sale (“TAS”) prices for the five property sales range from $2,572,083 to $3,311,647 with sale dates from March 2015 to November 2015. The building total area of the five properties range from 2,440 sq. ft. to 3,275 sq. ft., with effective year built from 1968 to 1996. Property Sale 1, 3, 4, and 5 have construction quality of 7.0, while property Sale 2 has a quality of construction of 8.0. The effective lot sizes of the five property sales range from 0.2 to 0.26 acres. All the property sales, excluding Sale 2, were renovated. All the property sales abut a ravine Type 1. Property Sales 2 and 5 further have additional site features such as abutting public walkway, utility box, hydro corridor and railway.

10Mr. Campbell testified that all the five sales are similar to the subject property but with some differences and based on this differences, he decided to use the overall assessment of the five property sales to determine the correct current value of the subject property. He submits that the median Time Adjusted Sale Ratio (“TASR”) of the five sales is 1.04 and the average is 1.00. MPAC’s standards for Assessment to Sales Ratio (“ASR”) indicates that the acceptable range falls between 0.95 - 1.05. He submits that the five sales have been used by MPAC to test the assessment of the subject property, and since the median and average TASR is 1.04 and 1.00 respectively, it shows that the current value, which he concludes as being the same as the returned assessment, is reasonable. Therefore he requested that the Board should confirm the assessment as returned.

Appellant’s Evidence

11Mr. Toor presented the Board with six property sales. Three of the property sales are the same as MPAC’s Sales 1, 4, and 5. He submits that all the six property sales abut a ravine Type 1 and none of the sales are subject to site features such as abutting public walkway, utility box, hydro corridor and railway, like MPAC’s property Sales 2 and 5. He used property Sale 6 to arrive at what he believes to be the correct current value of the subject property and property Sales 1 and 4 to test the correctness of his determined current value in order to show the Board that the two values derived from these two approaches are not far apart.

12Mr. Toor testified that he used MPAC’s linear graph provided in MPAC’s valuation report to derive his own Time Adjustment Factors (“TAF”) used to time adjust the six property sales to the valuation date of January 1, 2016. He did not provide the Board with the data he used to derive this TAF.

13In providing the current value of the subject property, Mr. Toor submits that Sale 6 is the most similar to the subject property. Property Sale 6 has an original year built of 1936, an effective lot size of 0.36, it sold in October 2017 for $3,102,000 and it also abuts a ravine Type 1. Mr. Toor submits that it also has renovations within the last 15 years of its sale, which brings its effective year built to approximately 1990, which is also closer to the effective year built of the subject property. He further advised the Board that property Sale 6 has an in ground pool. He submits that the time adjusted sale price per sq. ft. for property Sale 6 is $885.83. He considered that the subject property’s effective frontage of 50 sq. ft. is bigger than Sale 6, which is 45 sq. ft. Accordingly, he applied a subjective increase to the time adjusted sale price per sq. foot of Sale 6 to $993 and applied it to the building size of the subject property at 2,919 sq. ft. to obtain a current value of the subject property at $2,898,567, rounded to $2,900,000. He submits that this is the correct current value of the subject property.

14In order to test this current value, Mr. Toor used Sales 1 and 4 (also MPAC’s Sale 1 and 4), which he submits are the most similar of all of MPAC’s five sales. He submits that the median and average TASR of these two sales is 1.09. He divided this by 1 to obtain 0.91743119 and multiplied it by the returned assessment of the subject property at $3,185,000 to obtain $2,922,018. He submits that this value is not far apart from what he obtained as the correct current value and that this shows that the correct current value of the subject property is $2,900,000 (rounded).

15He concluded that MPAC has not discharges its onus of showing the taxpayer what the current value of the subject property is in accordance to s. 44.(3)(a) of the Act and what Mr. Campbell was referring to as the correct current value is merely the assessment of the subject property which is provided by a model.

Board’s Analysis

16The 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.

17The details of the parties comparable property sales are summarized in Table 1 below:

Table 1

Address	Assessment ($)	Sale Date Sale Amt. ($)	Time / Adjusted Sale ($)	Building/Size (“sq. ft.”)	Effective Lot Size /Actual Lot Size(“A”)	Year Built/ Effective. Year Built	Construction Quality
Subject Property 98 Inglewood Drive	3,185,000	N/A	N/A	2,919	0.32/0.32	1921/1995	7.5
Sale 1 31 Ridge Drive	2, 715,000	July 2015 (2,245,000)	2,381,166	2,440	0.19/0.19	1926/1995	7.0
Sale 2 161 Hudson Drive	3,233,000	Nov. 2015 (3,260,000)	3,311,647	3,272	0.2/?	1996/1996	8.0
Sale 3 117 Hudson Drive	3,422,000	Oct.2015 (3,101,000)	3,183,755	2,658	0.26/0.5	1956/1996	7.0
Sale 4 49 Ridge Drive	2,483,000	March 2015 (2,160,000)	2,396,733	2,917	0.17/0.17	1924/1970	7.0
Sale 5 169 Rosedale Heights Drive	1,980,000	July 2015 (2,425,000)	2,572,083	3,275	0.19/0.18	1928/1968	7.0
Sale 6 (Appellant) 74 Inglewood Drive	2,212,000	May 2015 (2,200.000)	2,329,800 (Appellant) 2,387,000 (MPAC)	3,760	0.2	1928
Sale7 (Appellant) 79 Ridge Drive	2,524,000	Aug. 2017 (3,400,000)	2,859,400	3,435	0.17	1928
Sale 8 (Appellant) 197 Rosedale Heights Drive	2,738,000	Oct. 2017 (3,102,000)	2,608,782	2,945	0.36	1936/1990

18Mr. Toor provided two property Sales (Sales 7 and 8) which sold in August 2017 and October 2017 respectively. He submits that the shoulder year for the valuation date of January 1, 2016 is from 2015 and 2017. These two sales are 20 and 22 months after the valuation date of January 1, 2016. The Board finds that these two sales are too far removed from the valuation date to reflect market sales and will disregard this two property sales for this reason. The shoulder years for the valuation date is 12 months before and after the valuation date of January 1, 2016 and the Board can also go as far back as 18 months on either side of the valuation date, the caution being that the further a sale is from the valuation date, the less likely it reflects the market value on the valuation date. Furthermore, for property Sale 8, Mr. Toor applied a subjective increase to its sale price per square footage to $993 per sq. ft. in order to accommodate the difference in the bigger effective frontage of the subject property at 50 sq. ft. compared to Sale 8 with a smaller effective frontage of 45 sq. ft. This subjective arbitrary increase is not substantiated by evidence. The Board will also disregard his approach.

19Mr. Toor did not provide the Board with the data he used to derive his TAF. He testified that he used MPAC’s linear graph which MPAC provided in Exhibit 1 to determine the TAF. During cross-examination he could not explain how he arrived at the TAF of 1.076, which he used to time adjust his property Sale 1 (MPAC’s Sale 4). He admitted that he used the same TAF in another appeal, in the same neighbourhood which had settled with MPAC. This other matter is not the subject of this appeal and the evidence in not before the Board. Consequently, the Board cannot use Mr. Toor’s TAF.

20Mr. Campbell submits that MPAC’s approach of arriving at the current value of the subject property, which is the same as the returned assessment using the TASR of the five sales, is a better approach due to the differences in the features of the five comparable sales. He testified that he used the five sales to test the assessment of the subject property. The Board’s first legislative mandate is to determine the correct current value of the subject property using recent sales of similar properties in the vicinity, if there is no recent sale of the subject property. This will provide the best evidence of market value. The Board finds that there are adequate sales evidence provided by the parties to determine the correct current value of the subject property and the Board need not resort to the assessment of the comparable sale properties, which is determined by MPAC’s model.

21The Board will make a determination on the correct current value of the subject property based on sales evidence within the shoulder years of the valuation date, which is 12 months on either side of the valuation date.

22In determining the correct current value, the Board used MPAC’s property Sales 1, 2, 4 and 5 and the Appellants Sales 1, 3, 4 (same as MPAC’s Sale 1, 4 and 5) and 2. The Board used the parties’ five property sales (MPAC’s Sales 1, 2, 4 and 5, Appellant’s Sale 6 in Table 1 above) to determine the correct current value of the subject property. These five property sales all abut a ravine Type 1, as does the subject property, while there are differences in the features of these properties compared to the subject property; the Board has recognized these differences in order of inferiority and superiority, since they are not identical properties. The Board compared all the characteristics of all the property sales to make a finding whether the sales are inferior or superior to the subject property. The Board did not use MPAC’s Sale 3 as this is the only property sale with the largest actual lot size of 0.5 acres. As clarified by Mr. Campbell during cross-examination, the effective lot size of this Sale is 0.26 acres, which is the buildable area, while the actual lot size is 0.5 acres. A potential buyer will not just purchase the effective lot size, but the whole lot, which is 0.5 acres. Furthermore, this Sale has the largest effective frontage of 70 sq. ft. All the other property Sales are within the range of the effective frontage of the subject property of 50 sq. ft.

23MPAC’s Sale 2 and 5 in addition to abutting a ravine Type 1 have other site features such as abutting public walkway, utility box, hydro corridor and railway, for which MPAC did not make any adjustment. These two sales have bigger building sizes compared to the subject property. Sale 2 was not renovated but it is newer than the subject property with an original year built of 1996 and a construction quality of 8.0, with a larger building size.

24The Board determines that MPAC’s Sales 1, and 4 are inferior to the subject property in terms of lot size, building size and quality of construction. Sale 4 is 25 years older than the subject property. MPAC’s property Sale 5 is also inferior to the subject property in lot size, age and quality of construction, although it has a bigger building size. The Appellant’s Sale 6 (in Table 1 above) is also inferior in terms of lot size and year built. The Board used MPAC’s TAF in Exhibit 1 to time adjust the Appellant’s Sale 6 to a time adjusted sale price of $2,387,000. The Board further finds that MPAC’s property Sale 2 is superior to the subject property although its effective lot size is smaller, it has a bigger effective frontage of 60 sq. ft., it has an original year built of 1996, it has the highest quality of construction of 8.0 compared to all the other properties, with a bigger building size of 3,272 sq. ft.

25The Board determines the current value of the subject property based on the current value range established by these inferior and superior sales, as illustrated in Table 2 below:

Table 2

MPAC’s Sales 1, 4 & 5 Appellant’s Sale 6 Inferior Sales	Subject Property’s Current Value Range	MPAC’s Sale 2 Superior Sale
→$2,381,166 $2,572,083 →		← $3,311,647 →

26The mid-point of the current value range is $2,942,000 (rounded). This is slightly below the TAS price of MPAC’s Sale 3, which has the largest effective frontage of 70 sq. ft. and the largest actual lot area and was also renovated. The Board determines that the correct current value of the subject property is $2,942,000 (rounded).

Equity Analysis

27Section 44.(3)(b) of the Act mandates 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.”

28The Assessment to Sale 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.

29Mr. Campbell presented an equity analysis of 30 single family detached dwelling with sales that occurred from January 1, 2015 to December 31, 2016. He presented a median ASR of 0.977. 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.

30Mr. Toor also provided an equity study of 49 properties. The median ASR is 0.974. He submits that the average of both MPAC and his median ASR is 0.9755. He applied this average to his determined current value of $2,900,000 to obtain $2,828,950 as the correct adjusted current value of the subject property. However, he submits that, if the Board does not use the average median ASR of 0.9755, the Board can apply MPAC’s median ASR of 0.977 to his determined current value to adjust the current value.

31He further argued that the Board should apply a downward adjustment either using the average ASR of 0.9755 or MPAC’s ASR of 0.977, contrary to MPAC’s submission that it is within the acceptable range and an equitable adjustment should not be applied. He submits that it has been the practice of MPAC’s assessors and the Board to always apply this adjustment. The Board requested Mr. Toor to provide a case law to support his argument. None was provided.

32The 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.

33In Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) (“Empire Realty”) the Ontario Court of Appeal 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)

34MPAC and the Appellant are not far apart in the result of their equity analysis. This was the reason Mr. Toor requested that the Board can either use the average of the two median ASR’s or MPAC’s median ASR. The Board prefers MPAC’s equity analysis. Mr. Toor used the same TAF that the Board disregarded to time adjust the 49 property sales in his equity analysis. In addition, Mr. Toor does not object to using MPAC’s study.

35Using the words of the Ontario Court of Appeal in Empire Realty, MPAC’s median ASR of 0.977 is not substantially below 1.00 to show an inequity. It reveals that MPAC is assessing properties in the vicinity at or near their sales prices. Consequently, the evidence does not lead the Board to make an adjustment for equity.

CONCLUSION

36Based on all of the evidence, the Board determines that the correct current value of the subject property to be $2,942,000 (rounded) and determines that this current value is equitable with the assessment of similar lands in the vicinity. The Board reduces the returned assessment of the subject property from $3,185,000 to $2,942,000 (rounded) for the 2017 and 2018 taxation years.