Heldmann v. Municipal Property Assessment Corporation, Region 21, 2018 CanLII 99125

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

October 16, 2018

FILE NO.:

WR 152842

Assessed Person(s):

Nicolas Heldmann and Celina Liliete Correia Sousa

Appellant(s):

Nicolas Heldmann

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”), Region 21

Respondent(s):

City of Kitchener

Property Location(s):

86 Pennsylvania Crescent

Municipality(ies):

City of Kitchener

Roll Number(s):

3012-060-020-01088-0000

Appeal Number(s):

3256557 and 3311410

Taxation Year(s):

2017 and 2018

Hearing Event No.:

697308

Legislative Authority:

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

Heard:

April 18, 2018 in Kitchener, Ontario

APPEARANCES:

Parties

Representative

Nicolas Heldmann

Self-represented

MPAC

Allison Haffner and Jim McAdam

City of Kitchener

No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

INTRODUCTION

1This is an appeal of the assessed value of 86 Pennsylvania Crescent (the “subject property”) in the City of Kitchener. The Appellant, Nicolas Heldmann, takes the position that the assessed value of his property should not have changed between the January 1, 2012 valuation day and the January 1, 2016 valuation day.

2MPAC takes the position that the January 1, 2016 valuation day returned assessment of $912,000 is correct and equitable.

Legislation

3Section 44.(3)(a) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act"), requires the Assessment Review Board (“Board”) to “determine the current value of the land”. Current value is defined in s. 1 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, I must determine what the property would have sold for in an arm’s length transaction on the valuation day, set pursuant to s. 19.3 of the Act, which, in this case is January 1, 2016 for the 2017 taxation year.

4Once I have determined the current value, s. 44.(3)(b) requires that I “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” but only if that adjustment would result in a reduction of the assessment.

5In addition to the 2017 taxation year appeal filed by the Appellant, there is a 2018 taxation year appeal before the Board. This is because, pursuant to subsection 44.(26), a 2018 appeal is deemed to have been filed if the 2017 taxation year appeal was “not finally disposed of before March 31,” 2018.

6For the reasons stated below I find that the current value of the subject property exceeds the assessment as returned. However, as no one is seeking an increase in the assessment, I am confirming the assessment of $912,000 in the residential property class for the 2017 and deemed 2018 taxation years. I also find that there is no evidence to suggest that a reduction of this value is necessary to achieve equitable assessment.

Current Value

7The subject property is improved with a single-family detached 1.5 storey home in the Deer Ridge neighbourhood of Kitchener, Ontario and backs onto Kuntz Park and beyond the park is the Grand River. The home was built in 2003 and has 3,490 square feet (“sq. ft.”) of building area, with 2,512 sq. ft. on the first floor and 978 sq. ft. on the second floor. There is an attached two-car garage. The lot has an effective frontage of 74 feet and an effective depth of 132 feet and an effective lot area of 9,786 sq. ft.

8The assessment was returned at $912,000 for the 2017 and 2018 taxation years which reflects a 9% downward adjustment from MPAC’s model valuation. This adjustment was carried forward from a Request for Reconsideration process for the 2012 valuation day.

MPAC’s Evidence

9MPAC’s valuation report compared the subject property to six other properties, all located within the Deer Ridge neighbourhood. These six properties all sold between October 2015 and October 2017. In order to compare the sale values of the comparable properties to the subject property, Allison Haffner applied a Time Adjustment Factor (“TAF”) to each of the sale values.

10A Time Adjustment Study determined the TAF for each of the six sales. The study considered 265 sales that took place between January 2015 and October 2017. The Time Adjusted Sale (“TAS”) values applied to each of the six comparable properties in the analysis allows them to be compared as though they occurred on the statutory January 1, 2016 valuation day stipulated in the Act. A summary of the six comparable properties appears in Table 1, below.

11Ms. Haffner explained that she chose the sale properties based on their comparability to the subject property’s lot and building size, location, quality of construction and age. The time adjusted sale prices range from $707,170 to $1,168,228 with a median of $911,000. The median time adjusted sale price per square foot results in a value of $935,241 for the subject property. A summary of the sale properties is set out in Table 1.

Table 1

Subject Property

Sale 1 – 18 Black Maple Crescent

Sale 2 – 900 Riverstone Court

Sale 3 - 44 Pennsylvania Crescent

Sale 4 - 28 Pennsylvania Crescent

Sale 5 - 431 Deer Ridge Drive

Sale 6 - 282 Terrace Wood Crescent

Lot Area (sq. ft.)

9,786

6,950

8,869

11,811

9,184

6,670

8,727

Building Size (sq. ft.)

3,490

3,560

3,432

3,354

3,370

3,404

3,015

Quality of Construction

8.5

8.5

8.5

8

8.5

8

8.5

Year Built

2003

2005

2009

2005

2004

2007

2010

Sale Price ($) /Date

N/A

1,380,000/ March 2017

849,900/ Oct. 2015

800,000/ Nov. 2016

1,175,000/ Sept. 2017

950,000/ Oct. 2016

1,350,000/ Oct. 2017

TAS Price ($)

N/A

1,168,228

877,320

707,170

944,697

849,149

1,085,397

TAS/sq. ft. ($)

N/A

328.15

255.63

210.84

280.33

249.46

360.00

2016 CVA ($)

912,000

1,087,000

926,000

889,000

1,001,000

938,000

1,052,000

Other

Finished basement

Corner Lot, partially finished basement

Finished basement

Backs on to other park, finished basement

Abuts sports/play field, finished basement

Abuts park and river

Yes

Yes

No

No

No

No

No

12Ms. Haffner argued that properties 1 and 6 are superior to the subject property, properties 2 and 3 are inferior, and property 4 and 5 are similar. She pointed out that the subject property’s assessed value falls between the TAS prices for the similar properties but should not exceed the higher value of $945,000. She argued that while property 2 is similar in size and is newer, it is inferior to the subject property because it is a corner lot, and does not back onto a park. Therefore, the subject property should not sell for less than $877,000.

13Ms. Haffner concluded that given her analysis and the range of values determined by the sale properties, the value returned of $912,000 is reasonable and correct.

Appellant’s Evidence

14The Appellant, Mr. Heldmann, takes the position that his property’s assessed value should not increase from $815,000, the January 1, 2012 valuation day assessed value.

15He presented 26 sale properties in the Deer Ridge neighbourhood which he then narrowed down to six based on sale dates close to the valuation day and their comparability to the subject property. He then identified two sales as most comparable to the subject property. A summary of these sales is set out in Table 2.

Table 2

Subject Property

Sale 1 – 427 Deer Ridge Drive

Sale 2 – 289 Deer Ridge Drive

Lot Area (sq. ft.)

9,786

7,345

8,901

Building Size (sq. ft.)

3,490

3,582

3,466*

Quality of Construction

8.5

8.0

8.0

Year Built

2003

2005

2001

Sale Price ($)/Date

N/A

859,900/Oct 2015

775,000/May 2016

Number of Bathrooms

2.5

3.5

2.5

TAS/sq. ft. ($)

N/A

2016 CVA ($)

912,000

905,000

922,000

Other

Partially backs on to other park

Pool

Back onto park and river

Yes

No

No

*During a Request for Reconsideration process, MPAC determined that this property’s building size was 300 sq. ft. smaller and, therefore, the actual building size is approximately 3,166 sq. ft.

16Mr. Heldmann argued that MPAC did not have to search beyond 12 months either side of the January 1, 2016 valuation day to find a sufficient number of sale properties and that time adjustments should not be necessary.

17He also presented 11 sales which occurred during a two-year period preceding the current valuation day. Of these he identified one good comparable, 427 Deer Ridge Drive, and three moderate comparables. The non-time adjusted sale values ranged between $685,000 and $860,000. He argues that these results are similar to his study of sales occurring on either side of the valuation day.

Analysis

18The best evidence of the current value of a residential property is the sale of that property on or near the valuation day. When that evidence is not available, the sales of similar properties on or near the valuation day are the next best evidence.

19The Appellant argued that time adjustments are not necessary because there are enough sales occurring near the valuation day. He presented a number of sales but identified two as the most comparable to his property. One sale occurred before and the other occurred after the valuation day. In reviewing these sales, I find that, beyond having a similar age and location, they are both inferior to the subject property.

20Sale 1, 427 Deer Ridge Drive, is inferior to the subject property in lot and building size, quality of construction and, most importantly, it does not back onto the park and river. In reviewing the map provided by MPAC and the testimony of the parties, Sale 1 partially backs onto an interior neighbourhood park surrounded by homes and streets which I find to be inferior to the subject property which fully backs onto a park and river. Accordingly, I find that the subject property would sell for more than $859,000.

21The Appellant’s Sale 2, 289 Deer Ridge Drive, is inferior to the subject property in lot and building size, quality of construction and because it does not back onto the park and river. It has a pool; the Appellant submits that MPAC data shows the pool is valued at $23,662. However, because the subject property does not have a swimming pool, this value would be deducted from its sale price in order to compare it to the subject property. Accordingly, I find that the subject property would sell for more than $775,000 (or $751,000 if adjusted for the pool).

22MPAC presented six sale properties. Unlike the Appellant, MPAC time-adjusted its sales to estimate the sales prices as of the valuation day.

23I find that MPAC’s Sale 1 is superior to the subject property. While it has a smaller lot size, it is similar to the subject property in that it, too, backs onto the park and river and it has a similar building size, age, and quality of construction. However, it has a finished basement whereas the subject property’s is not. As a result, I find that the subject property would sell for less than $1,168,228.

24I find that MPAC’s Sale 2 is inferior to the subject property. It has a similar building size and quality of construction and it has a partially finished basement. However, it is inferior to the subject property because it is a corner lot and does not abut the park and river area. Accordingly, the subject property would sell for more than $877,320.

25If find that MPAC’s Sale 3 is inferior to the subject property. While it has a larger lot and a similar building size, its quality of construction is lower than the subject and it does not abut the park and river. Accordingly, the subject property would sell for more than $707,170.

26I find that MPAC’s Sale 4 is slightly inferior to the subject property. It has the same quality of construction and is located on the same street as the subject property but it has a slightly smaller lot and building area. While it has a finished basement it does not abut the park and river area. Accordingly, I find that the subject property would likely sell for more than $944,697.

27I find that MPAC’s Sale 5 is slightly inferior to the subject property. It has a similar building area but a smaller lot and has a lower quality of construction. It backs onto an interior neighbourhood park but not the park and river area which abuts the subject property. Accordingly, I find that the subject property would likely sell for more than $849,149.

28I accept Ms. Haffner’s testimony that MPAC’s Sale 6 is superior to the subject property. It has a slightly smaller lot and building area and abuts a sports field and playground, but not the park and river area of the subject property. However, it is the same quality of construction, has a finished basement, and has 6.5 bathrooms whereas the subject property has only 2.5. Accordingly, I find that the subject property would likely sell for less than $1,085,397.

29The assessment as returned for the subject property is $912,000. The Appellant is seeking a value at or below $860,000 and, in particular, $815,000 which is the same value as his 2012 assessment. However, based on the evidence presented, I find that the current value of the subject property as of the January 1, 2016 valuation day is likely $1,015,000 which is the mid-point between $944,697 and $1,085,397.

Equity

30I must also consider the assessments of similar properties in the vicinity and determine whether the correct current value, as established, is inequitable relative to those assessments. If so, the current value should be adjusted to make it equitable, as required by s. 44.(3)(b) of the Act.

31For the purpose of establishing equity, properties do not need to be comparable however they need to be of a similar nature and within a reasonable proximity to the subject property.

MPAC’s Evidence

32Ms. Haffner prepared an equity analysis where the assessments of 30 single family detached properties in the Deer Ridge neighbourhood were compared with the TAS values. She testified that the results of the equity analysis show that the median Assessment to Sale Ratio (“ASR”) of these 30 sales is 1.021, and the Coefficient of Dispersion (“COD”) was 11.6. MPAC’s position is that equity is achieved if the median ASR falls between 0.95 and 1.05 and the COD (for residential properties) is less than 15. She concluded that her study shows that the assessments are equitable in the vicinity of the subject property and, therefore, an adjustment for equity is not required.

Appellant’s Evidence

33With regard to MPAC’s Equity Report, Mr. Heldmann argued that MPAC did not have to time adjust sale prices as the ASR and COD for non-time adjusted sales fall within MPAC’s parameters. His calculations show that the median non-time-adjusted ASR is 0.954 and the COD is 13.2. However, he argued that difference between MPAC’s TAS prices and non-TAS prices range from 0.80 to 1.15, a 35% range which he felt was significant.

34Mr. Heldmann argued that MPAC’s COD of 11.6 translates to almost $93,000 and MPAC’s COD tolerance level of 15 translates to almost $120,000. Based on a property tax bill of $10,000, he argued these variances would result in a $1,000 to $1,500 overpayment each year. He argued that a COD of 15 might work well for moderately priced properties, perhaps in the $250,000 range, but not for costlier homes such as his.

Analysis

35I agree with Mr. Heldmann that a COD or 15 or even 11.6 may not be relevant with costlier properties. However, while he presented a number of interesting and compelling arguments with regard to MPAC’s equity analysis, he presented no evidence that an equity adjustment is required.

36To make a conclusion that the current value determined for the subject property represents equitable assessment, I have the 30 sales analyses by both MPAC and the Appellant, using TAS and non-TAS prices in comparison to the assessed values. I accept the parties’ conclusion that the median ASRs for both fall within an acceptable parameter and find that there is no evidence to support a reduction in the current value determined above.

DECISION

37I find that the current value of the subject property, as of the January 1, 2016 valuation day, is $1,015,000. I also find that no adjustment is required to make the current value equitable.

38This current value exceeds the assessment as returned of $912,000. Because no one has served a notice to increase the assessment pursuant to Rule 40 of the Board’s Rules of Practice and Procedures, I am confirming the returned assessment of $912,000 in the Residential Property Class for the 2017 and 2018 taxation years.