Ferdinand Tobber v. Municipal Property Assessment Corporation, 2018 CanLII 94316

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

October 2, 2018

FILE NO.:

WR 155897

Assessed Person(s):

Ferdinand Tobber

Appellant(s):

Ferdinand Tobber

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 18

Respondent(s):

City of St. Catharines

Property Location(s):

32 Bayshore Crescent

Municipality(ies):

City of St. Catharines

Roll Number(s):

2629-060-018-09400-0000

Appeal Number(s):

3279878 and 3323214

Taxation Year(s):

2017 and 2018

Hearing Event No.:

704564

Legislative Authority:

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

Heard:

September 19, 2018 in St. Catharines, Ontario

APPEARANCES:

Parties

Representative

Ferdinand Tobber

Self-represented

MPAC

George Kaldenbach

City of St. Catharines

No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

BACKGROUND

1Ferdinand Tobber (the “Appellant”) is the owner of a one-storey single family detached residential property located at 32 Bayshore Crescent (the “Subject Property”) in the City of St. Catharines, in the desirable area known as Port Dalhousie. It was built in 1974 and has 1,055 square feet (“sq. ft.”) of total building area and a single attached garage. It is located on a 0.13 acre lot.

2MPAC returned the assessment for the Subject Property of $295,000 for the 2017 taxation year and $265,000 for the 2018 taxation year.

3Mr. Tobber has appealed the assessment for the 2017 and 2018 taxation years to the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act (“Act”) R.S.O. 1990 c. A. 31. He takes the position that the assessment as returned for the Subject Property is too high. He asserts that the condition of the Subject Property is the key thing and that it is not worth $295,000 or even $260,000 as offered by MPAC during the request for reconsideration process. He asserts that tenants seriously damaged the current value of the Subject Property and that it will require substantial remedial work to bring it up to livable condition.

4Pursuant to the Act, the burden of proof as to the correctness of the current value of the Subject Property rests with MPAC. For the period of 2017-2020, the Subject Property is valued as of January 1, 2016. MPAC’s representative, George Kaldenbach estimates the current value of the Subject Property as of January 1, 2016 to be $228,000, based on an inspection and the direct comparison approach.

5Mr. Kaldenbach conducted an equity study and determined that an equity adjustment is warranted and that his opinion of current value should be reduced to $216,000. He concludes that assessment should be reduced from $295,000 to $216,000 for the 2017 taxation year and from $265,000 to $216,000 for the 2018 taxation year.

6Mr. Tobber did not take a position on whether the Subject Property is inequitably assessed in relation to similar properties.

ISSUES

7The issues to be determined on this appeal are:

a) What is the correct current value of the Subject Property as of the January 1, 2016 valuation date;

b) Whether there should be an equitable reduction of the current value as determined by the Board and, if so, what should the amount of this reduction be.

DECISION

8The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $205,000. Furthermore, the Board finds that the evidence before it does not support the conclusion that an equitable adjustment is required under s. 44.(3)(b) of the Act.

9The assessment of the Subject Property located at 32 Bayshore Crescent is reduced from $295,000 to $205,000 for the 2017 taxation year and from $265,000 to $205,000 for the 2018 taxation year.

RELEVANT LEGISLATION

10Section 1 of the Act states:

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.

11Section 19.1(1) of the Act states:

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

12Section 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.

13Section 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.

14Section 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.

Analysis and Findings

What is the correct current value of the Subject Property as of the January 1, 2016 valuation date?

MPAC’s Evidence and Submissions

15Mr. Kaldenbach states that he inspected the Subject Property on March 28, 2018. As a result of his inspection, he states that he revised the total building area measurements from 1,141 sq. ft. to 1,055 sq. ft., removed the air conditioning as it is not functioning, and reduced the dwelling’s condition to “‘poor.” He states that the Subject Property has not been occupied for three to four years due to its condition.

16Mr. Kaldenbach relies on a “Valuation Report” of the Subject Property. Key property details for the three proposed comparable properties are set out below in Table A. All sales have been time adjusted to the January 1, 2016 valuation date. He states that he searched for properties in average condition and with similar total building areas that are located close to the Subject Property. He acknowledges that they are not in the same condition of the Subject Property. He states that he was unable to find any sales of properties in poor condition. He adds that he ran computer models that changed the condition to “poor” and also accounted for other differences with the Subject Property including differences in building and lot size and the absence of a pool. The revised time adjusted sale values for the proposed comparable sales are summarized in Table A.

Table A

Property

Year Built

Quality

Building Area (sq. ft.)

Site Area (ac.)

Other

Sale (Time Adjusted Sale “TAS”)

Revised TAS

32 Bayshore Crescent. (Subject Property)

1974

6.0

1,055

0.13

-Attached garage -53 ft. frontage -279 sq. ft. finished basement area -lot value $156,000

N/A

6 Bayshore Crescent (Sale 1)

1974

6.0

1,047

0.13

-Attached garage -50 ft. frontage -846 sq. ft. finished basement area -Average condition -lot value $155,000

347,000 (316,029) (09/2016)

252,000 (includes -$64,000 (condition)

56 Shoreline Drive (Sale 2)

1973

6.0

1,108

0.17

-Attached garage -55 ft. frontage -467 sq. ft. finished basement area -Average condition -Outdoor pool -lot value $163,000

281,000 (308,363) (05/2015)

210,000 (includes -$67,000 (condition) -$17,000 (pool) -$14,000 (lot size)

15 Bayshore Crescent (Sale 3)

1974

6.0

1,174

0.13

-Attached garage -52.96 frontage -469 sq. ft. finished basement area -Average condition -Outdoor pool -lot value $157,000

335,000 (329,305) (02/2016)

233,000 (includes -$71,000 (condition) -$17,000 (pool) -$14,000 (building size)

5 Bayshore Crescent (Sale 4)

1974

6.0

1,153

0.23

-Attached garage -118.5 ft. frontage -493 sq. ft. finished basement area -Average condition -Outdoor pool -lot value $191,000

313,500 (319,017) (11/2015)

220,000 (includes -$70,000 (condition) -$22,000 (pool) -$7,000 (building size)

17Mr. Kaldenbach states that he considers all of the proposed comparable sales to be superior to the Subject Property due to differences in condition, livable and used space, some level of renovation, and being up to current standards.

18His opinion of the Subject Property’s current value is $228,000 and it is based on the average of the revised time adjusted sales of the four proposed comparable sales.

19At the request of the Board, he provided property details for three vacant land sales. He states that it was difficult to find sales. The three sales are located within five kilometres of the Subject Property. Details are set out below in Table B.

TABLE B

Property

Site Area (ac.)

Frontage (ft.)

Distance from Subject Property (km)

Sale (Time Adjusted Sale “TAS”)

32 Bayshore Crescent. (Subject Property)

0.13

53

N/A

N/A

28A Hewko Street

0.21

37.11

3.0324

240,000 (230,640) (04/2016)

1 Timber Lane

0.12

74.95

3.1646

227,500 (11/2017) No TAF available

305 Scott Street

0.15

60.0

2.6417

190,000 (195,700) (10/2015)

20At the request of the Board, Mr. Kaldenbach provided the lot value portion of the assessment for the four proposed comparable sales and the Subject Property. This information is included in Table A.

Appellant’s Evidence and Submissions

21Mr. Topper states that he has not resided in the Subject Property for a number of years as he relocated to another city due to illness. It was rented out and it has not been a good experience. He asserts that tenants seriously damaged the value of the Subject Property. The last tenant was particularly destructive and had dogs that destroyed the living room carpet and dog urine seeped into the plywood subflooring and joists and into the recreation room ceiling below. The carpet in the master bedroom also smells strongly of urine. The carpet will have to be removed. He expects that the subfloor and joists underneath have been soaked with urine and will also have to be replaced. Mr. Topper’s written evidence expands on a list of interior and exterior deficiencies.

22Mr. Topper asserts that the condition of the Subject Property is the key thing. He asserts that it is not worth $295,000 or even $260,000 as offered by MPAC during the request for reconsideration process.

23Mr. Topper did not produce any written estimates at the hearing for the work that he asserts is needed to bring it up to “livable condition.” He states that his “cumulative estimate” is between $120,000 and $150,000. However, this estimate is six years old and so it would likely be more.

24Mr. Topper took exception with Mr. Kaldenbach’s request for written estimates of the work that needs to be done for his consideration. He asserts that it is MPAC’s job to do this and that they have professionals on staff that could come and determine what it would cost to bring it up to normal standards.

25Mr. Topper states that the property is located in a desirable neighbourhood. However, other houses nearby have been updated.

26The Board inquired whether Mr. Topper had asked a real estate agent for an opinion of value. He responded no.

Board’s Analysis and Findings

27Under 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 Subject Property on the valuation date or close to it.

28In the absence of a sale of the Subject Property, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

29To enable an estimate of value for the property to be derived from suggested comparable properties, there must be sufficient elements of similarity, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc. so as to enable a direct comparison to be made.

30The parties are in agreement that the Subject Property is in poor condition. Mr. Kaldenbach states he was unable to find any sales of properties in poor condition. He explained that he searched for properties in average condition with similar total building areas that are located close to the Subject Property. He acknowledges that the four proposed comparable sales are not in the same condition of the Subject Property. He then adjusted the time adjusted sales to account for differences with the Subject Property as summarized in Table A. The revised time adjusted sale values for the proposed comparable sales range from $210,000 to $252,000 for an average value of $228,000.

31Mr. Topper took issue with the inclusion of the property at 5 Bayshore Crescent due to its larger lot size at 0.23 acres. If this property is excluded the average value is a little higher at $231,000.

32The Board finds the four proposed sales comparable sales to be reasonably comparable to the Subject Property in terms of total building size, age of build and lot size. Three of the comparable properties have a pool whereas the Subject Property does not. The biggest difference is the condition of the dwelling.

33The Board finds that MPAC has met its onus. Mr. Kaldenbach took a reasonable approach in adjusting the time adjusted sale values for condition and other differences

34However, the Board determined the revised time adjusted sale values per square foot of the comparable sales to be $240, $189, $198 and $190. The revised time adjusted sale values take into account an allowance for “poor” condition like the Subject Property. Using the median sale value per square foot of $194 results in a value of $204,670 or $205,000.

35The Board has considered how this opinion of current value compares to sales of vacant land. The Board finds the property at 305 Scott Street to be the most comparable of the three sales to the Subject Property in terms of site area. It has 0.15 acres (versus 0.13 acres for the Subject Property) and 60 ft. of frontage (versus 53 ft. for the Subject Property). It has a time adjusted sale of $195,770. The Board finds the value of $205,000 for the Subject Property to be reasonable. The dwelling, notwithstanding its current condition, still adds value.

36The Board would have been prepared to consider any written estimates of the “cost to cure” any structural deficiencies. Based on Mr. Tobber’s evidence, it would appear that some items from his lengthy list of deficiencies may have been considered by the Board in making a one-time adjustment to the Subject Property’s current value. However, this would not include items considered as routine maintenance by a property owner. However, no “cost to cure” estimates were presented. Mr. Tobber referred to a “cumulative estimate” of between $120,000 and $150,000 to bring it up to “livable condition.” The onus lies with Mr. Tobber to present evidence of the “cost to cure” being claimed. He has not met that onus.

37For all of these reasons, the Board finds that the current value of the Subject Property is $205,000.

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(b) of the Act, and, if so, what should the amount of this reduction be?

MPAC’s Evidence and Submissions

38Mr. Kaldenbach relies on an “Equity Analysis Report” that considers the time adjusted sales of 27 single family detached properties that occurred between January 1, 2015 and December 31, 2016 located within 0.5 kilometres of the Subject Property.

39In his Report, Mr. Kaldenbach states that the level of appraisal is established by determining the median Assessment to Sales Ratio (“ASR”) in the sales sample. For purposes of the equity test, MPAC takes the position that equity is achieved if the median ASR falls between 0.95 and 1.05. In this case, the median ASR is 0.95.

40Mr. Kaldenbach asserts that based on his analysis, similar properties in the vicinity have been assessed at or near their current values and that an equity adjustment would not normally be required. However, given his findings on inspection, the condition of the Subject Property, the comparable properties including vacant land sales, it is his opinion that an equitable adjustment is warranted in the circumstances of this case. Applying the median ASR of 0.95 to his opinion of current value results in an equitable value of $216,000.

41Mr. Kaldenbach concludes that the assessment should be reduced from $295,000 to $216,000 for the 2017 taxation year and from $265,000 to $216,000 for the 2018 taxation year.

Appellant’s Evidence and Submissions

42Mr. Tobber did not take a position on whether the Subject Property is inequitably assessed in relation to similar properties.

Board’s Analysis and Findings

43Section 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.”

44The purpose of equitable adjustment has been described as the equitable distribution of the tax burden according to the assessed value of property owned by taxpayers as follows by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) at page 2:

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 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.

45In addressing equity in assessment, the Court, at page 6, also noted that:

an assessment made at the actual value of lands and buildings … 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].

46The term “vicinity” is not defined in the Act, but refers to the appropriate geographical area that will yield a meaningful number of comparable sales (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 16 O.R. (3d) 83, 1993 CanLII 8621 (Ont. C.A.) at page 6.

47The test set out in s. 44.(3)(b) of the Act, requires that the Board refer to similar lands in the vicinity. Use as a point of similarity, may be, but is not necessarily determinative of similarity. In determining whether other lands are similar, 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, applied the decision of the Ontario Divisional Court 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. The Court stated at paragraph 23:

…All points of comparison must be considered. The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.

48The ASR analysis of a reasonable sample of sold properties is one method used to determine if properties in the vicinity are assessed below their current value. If other properties are assessed substantially below their current value, then a reduction is required to make the assessment of the Subject Property equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the sale price.

49Mr. Kalbenbach relies on an Equity Analysis Report whose sample of time adjusted sales produced a median ASR of 0.95. He asserts that an equity adjustment would not normally be required. However, he recommends an equitable value of $216,000, in the circumstances of this case.

50The Board finds that evidence before it does not support the conclusion that an equitable adjustment to the current value as determined is required. The median ASR of 0.95 falls within an acceptable range of 0.95 and 1.05. Furthermore, the Board has considered the condition of the Subject Property under its current value analysis.

CONCLUSION

51The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $205,000. Furthermore, the Board finds that the evidence before it does not support the conclusion that an equitable adjustment is required under s. 44.(3)(b) of the Act.

52The assessment of the Subject Property located at 32 Bayshore Crescent is reduced from $295,000 to $205,000 for the 2017 taxation year and from $265,000 to $205,000 for the 2018 taxation year.