Akbar Rafighi and Soraya Hormoziyan v. Municipal Property Assessment Corporation, 2019 CanLII 1219

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 11, 2019

FILE NO.: WR 157743

Assessed Person(s): Akbar Rafighi and Soraya Hormoziyan

Appellant(s): Akbar Rafighi and Soraya Hormoziyan

Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 09

Respondent(s): City of Toronto

Property Location(s): 9 Beechwood Avenue

Municipality(ies): City of Toronto

Roll Number(s): 1914-072-280-02000-0000

Appeal Number(s): 3321165

Taxation Year(s): 2018

Hearing Event No.: 708865

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

Heard: December 7, 2018 in Toronto, Ontario

APPEARANCES:

Parties	Representative
Akbar Rafighi and Soraya Hormoziyan	Akbar Rafighi
MPAC	Aron Perrie
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA AND ALAN BUTCHER

BACKGROUND

1Akbar Rafighi and Soraya Hormoziyan (the "Appellants") are the owners of a single-family detached home located at 9 Beechwood Avenue (the "Subject Property") in the City of Toronto (the "City"). It is situated on a 2,175 square foot (sq. ft.) lot with 25 feet of effective frontage. It has 577 sq. ft. of total building area, 250 sq. ft. of finished basement area and has an effective year of build of 1981. MPAC has assigned it a quality class rating of 6.0. It was purchased by the Appellants in February 2016 for $389,000.

2MPAC returned the assessment for the Subject Property at $379,000 for the 2018 taxation year.

3The Appellants appealed the assessment for the 2018 taxation year to the Assessment Review Board (the "Board"), pursuant to s. 40 of the Assessment Act R.S.O. 1990, c. A.31 (the "Act"). Mr. Rafighi, on behalf of the Appellants, takes the position that the Subject Property is assessed too high. The Subject Property's property taxes have increased by over 35% from 2016 to 2017. Mr. Rafighi estimates the current value of the Subject Property to be $300,000.

4Mr. Rafighi takes the position that the Subject Property is inequitably assessed in relation to similar properties and should be assessed at $300,000.

5Pursuant 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, Aron Perrie, estimates a current value of $380,000 based on the direct comparison approach.

6Ms. Perrie also conducted an equity study and determined that an equity adjustment is not required. It is her position that the assessment should be confirmed at $379,000 for the 2018 taxation year.

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 $381,317. 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.

9MPAC did not provide notice that it is seeking a higher assessment, as required by Rule 40 of the Board's Rules of Practice and Procedure. Therefore, the assessment of the Subject Property located at 9 Beechwood Avenue is confirmed at $379,000 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.

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

MPAC's Evidence and Submissions

15Ms. Perrie states that she inspected the Subject Property on September 19, 2017. She adds that the finished basement area had not been captured in MPAC's records.

16Ms. Perrie relies on a Valuation Report of the Subject Property.

17The key property details for the proposed comparable properties presented by MPAC are set out below in Table A. All sales have been time adjusted to the legislated valuation date.

Table A

Property	Site Area (sq. ft.) (effective)	Frontage (ft.) (effective)	Year Built (effective)	Building Area (sq. ft.)	Other	Sale (Time Adjusted Sale "TAS")	2016 Assessed Value
9 Beechwood Avenue (Subject Property) (Sale 1)	2,175	25	1922 (1981)	577	-1 storey -Exterior "B" renovations (estimated at 2013) -Finished basement area: 250 sq. ft.	389,900 (381,317) (02/25/2016)	379,000
6 Beechwood Avenue (Sale 2)	2,175	25	1923 (1981)	901	-1 storey -Exterior "B" reno (2013)	470,000 (446,547) (04/15/2016)	427,000
2 Beechwood Avenue (Sales 3 and 4)	2,175	25	1915 (1962)	1,472	-2 storeys -"B" reno (1990) -Detached garage	572,000 (551,317) (03/24/2016) 355,000 (368,836) (10/29/2015)	529,000
37 Beechwood Avenue (Sale 5)	2,175	25	1914 (1962)	881	-1 storey -"B" reno (1990) -Finished basement area: 869 sq. ft.	450,000 (482,586) (08/27/2015)	471,000
44 Beechwood Avenue (Sale 6)	2,175	25	1913 (1962)	979	-2 storeys -"B" reno (1990)	410,000 (425,980) (10/30/2015)	426,000
51 Beechwood Avenue (Sale 7)	2,175	25	1921 (1965)	751	-1 storey -"B" reno (1990) -Detached garage -Corner lot (-1 %)	435,000 (466,500) (08/14/2015)	594,000
66 Beechwood Avenue (Sale 8)	2,377.71	27.33	1914 (1962)	914	-11/2 storeys -"B" reno (1990) -Detached garage	437,000 (440,303) (12/15/2015)	425,000

18Ms. Perrie states that 2 Beechwood Avenue had two sales. She asserts that the first sale involved an estate sale. The property was resold within three months for a TAS of $551,317.

19Ms. Perrie states that Sale 7 was renovated post sale and that its assessed value reflects the renovations.

20Ms. Perrie estimates the Subject Property's current value as $380,000, its rounded time adjusted sale value.

Appellants' Evidence and Submissions

21Mr. Rafighi states that he is a realtor and knows his neighbourhood.

22He states that the basement area was finished before the Subject Property was purchased in 2016. He asserts that the outside paneling is just plywood and that the Subject Property is in "just livable" condition. He adds that there is a leak in the foundation.

23Mr. Rafighi expresses his concern regarding MPAC's use of the direct comparison approach to determine current value. If a property has not been in the market for years it may not be assessed accordingly in relation to a property like the Subject Property that sold two times in less than four years. It sold for $260,000 in January 2014. The Appellants purchased it in February 2016 for $389,000. The Board asked Mr. Rafighi if the sale price was reflective of its market value. Mr. Rafighi responded that they could have paid less but purchased it anyway for personal reasons.

24Mr. Rafighi asserts that many properties in his neighbourhood have undergone major renovations such as extensions, inside redecoration, updated kitchens, and finished basements or have been properly maintained. As a result, they are effectively newer and the economic lives of the buildings have been extended, resulting in a higher market value than the Subject Property. He asserts that the Subject Property's dwelling contributes no value and that its value lies in its land value.

25Mr. Rafighi asserts that MPAC has assessed recently renovated properties either less, slightly higher, or at the same assessed value as the Subject Property.

26He referred to several properties in support of his assertion that the Subject Property is assessed unfairly. He asserts that 19 Beechwood Avenue is in better condition than the Subject Property and that it sold for $445,000 in 2016. It has two kitchens, a fully finished basement, three bedrooms, and two washrooms. It is assessed lower than its sale price at $390,000. He asserts that the Subject Property should be assessed much lower. He also asserts that 10 Beechwood is a well maintained 1½-storey property with a larger building size and two bedrooms and bathrooms. In his opinion, it could sell for at least $50,000 more and yet it is assessed lower than the Subject Property at $374,000. He states that the property at 25 Beechwood sold in 2016 for $528,827. It has two kitchens, a fully finished basement, three bedrooms, and two bathrooms. It is assessed $17,000 higher than the Subject Property at $396,000. He also refers to the property at 56 Rockcliffe Boulevard that is located in the same neighbourhood as the Subject Property. It has a separate basement apartment, two kitchens, plus two bedrooms and two washrooms. It sold for $260,000 more than the Subject Property and yet it is assessed just $50,000 more. The property at 170 Lambton Avenue is located nearby and sold for $655,000 in 2017 and is assessed lower at $482,000.

27Mr. Rafighi asserts that the Subject Property's current value should be $300,000.

28At the request of the Board, Ms. Perrie provided key property details for the properties referred to by Mr. Rafighi. She states that there is no 2016 sale of 25 Beechwood Avenue, only a 2017 sale for $528,827 that is under review. Also, the property at 170 Lambton Avenue is a duplex and had a sale in August 2018 for $655,000. The property at 154 Spears Street is a semi-detached property and had a sale in 2018 for $538,000.

Property	Site Area (sq. ft.) (effective)	Frontage (ft.) (effective)	Year Built (effective)	Building Area (sq. ft.)	Other	Sale (Time Adjusted Sale "TAS")	2016 Assessed Value
9 Beechwood Avenue (Subject Property)	2,175	25	1922 (1981)	577	-1 storey -Exterior "B" renovations (estimated at 2013) -Finished basement area: 250 sq. ft. -1 bathroom	389,900 (381,317) (02/25/2016)	379,000
19 Beechwood Avenue	2,175	25	1921 (1965)	681	-1 storey "B" reno (1990) -Brick exterior	MPAC has no record of a sale	390,000
25 Beechwood Avenue	2,175	25	1921 (1965)	699	-11/2 storeys -"B" reno (1990) -Brick exterior	528,827 (03/2017)	482,000
10 Beechwood Avenue	2,175	25	1917 (1964)	642	-11/2 storey -"B" reno (1990) -Vinyl exterior	MPAC has no record of a sale	374,000
56 Rockcliffe Boulevard	2,800		1948	855	-Duplex -1 storey -Brick exterior	649,999	429,000
170 Lambton Avenue	2,375		1920	1,518	-2 storey -Brick exterior	655,000 (08/2018)	482,000
154 Spears Street	3,069		1916	722	-Semi-detached -Brick exterior	538,000 (2018)	408,000

Board's Analysis and Findings

29Under 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.

30In this instance, there was a sale of the Subject Property close to the January 1, 2016 valuation date. It sold in February 2016 for $389,000. Applying the time adjustment factor of 0.0789 to the sale price results in a time adjusted sale value of $381,317.

31The Board has considered the 11 properties with sales.

32MPAC relies on properties with sales located on Beechwood Avenue in addition to the Subject Property. Time adjusted sales range from $381,317 to $551,317 and took place in either the 2015 or 2016 shoulder years to the January 1, 2016 valuation date. The Subject Property's time adjusted sale price of $381,317 is at the low end of the range.

33The Board does not find the properties at 2 Beechwood Avenue and 44 Beechwood Avenue to be comparable as they are two-storey properties and the Subject Property is a one-storey property. Also, the 2015 sale at 2 Beechwood Avenue was identified by MPAC as an estate sale.

34The Board finds the property at 37 Beechwood Avenue with its time adjusted sale of $482,586 to be superior to the Subject Property as it has a larger building area and a larger finished basement area that adds additional living space even though its effective age is older. The Board has also taken into account Mr. Rafighi's evidence regarding the interior condition of the Subject Property.

35The Board finds the property at 51 Beechwood Avenue with its time adjusted sale of $466,500 to be superior to the Subject Property as it has a larger building area and a detached garage even though its effective age is older. The Board has also taken into account Mr. Rafighi's evidence regarding the interior condition of the Subject Property.

36The Board finds the property at 66 Beechwood Avenue with its time adjusted sale of $440,303 to be superior to the Subject Property as it has a larger building area and site area, a detached garage and is a one and one half storey building even though its effective age is older. The Board has also taken into account Mr. Rafighi's evidence regarding the interior condition of the Subject Property.

37The Board finds the property at 6 Beechwood Avenue, with its time adjusted sale of $446,547, to be most comparable in terms of effective age of build of 1981. Like the Subject Property, it underwent exterior renovations in 2013. However, it is about 36% larger in total building area and the Board considers it superior.

38Mr. Rafighi referred the properties located at 19 Beechwood Avenue, 25 Beechwood Avenue, and 10 Beechwood Avenue. Only 25 Beechwood Avenue has a record of a sale and this sale occurred in 2017. However, the Board finds that the sale is too far removed from the January 1, 2016 valuation date and did not consider it.

39The Board did not consider the properties at 56 Rockcliffe Boulevard, a duplex, and at 154 Spears Street, a semi-detached property, as it does not consider them to be comparable with the Subject Property as a one-storey single family detached property.

40The Board did not consider the 2018 sale of the property at 170 Lambton Avenue as it is considered too far removed from the January 1, 2016 valuation date.

41The Board finds the current value of the Subject Property as of the January 1, 2016 valuation date to be $381,317, its time adjusted sale price. The Board finds that the time adjusted sale price falls within the range of time adjusted sales of properties on Beechwood Avenue, albeit at the very low end of the sales range.

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what should the amount of this reduction be?

MPAC's Evidence and Submissions

42Ms. Perrie relies on an Equity Analysis Report that considers the time adjusted sales of 30 properties that occurred between January 1, 2015 and December 31, 2016 located within 0.5 kilometres of the Subject Property.

43In her Report, Ms. Perrie states that the level of appraisal is established by determining the median Assessment to Sale 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 0.968 and falls within the target level.

44Ms. Perrie asserts that based on her analysis, similar properties in the vicinity have been assessed at or near their current values and that an equity adjustment is not required.

45Ms. Perrie states that 66 Beechwood Avenue's time adjusted sale was not included in her analysis as it appears not to have been within the 30 closest properties with sales.

46Ms. Perrie concludes that the assessment should be confirmed at $379,000 for the 2018 taxation year.

Appellants' Evidence and Submissions

47Mr. Rafighi asserts that the Subject Property is inequitably assessed in relation to similar properties in the vicinity. It should be assessed lower at $300,000.

Board's Analysis and Findings

48Section 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."

49The purpose of equitable adjustment has been described as the equitable distribution of the tax burden according to the assessed value of properties 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.

50In 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].

51The term "vicinity" is not defined in the Act, but refers to the appropriate geographical area that will yield a meaningful number of comparables (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (Ont. C.A.) at page 6).

52The 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 ONSC 1299 (Can LII), 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. 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.

53The 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 time adjusted sale price.

54Ms. Perrie relies on an Equity Analysis Report that considers the time adjusted sales of 30 properties located within 0.5 kilometres of the Subject Property. In this case, the median ASR of 0.968 falls within the acceptable range of 0.95 to 1.05.

55The Board has considered the ASRs for the valid sales for the properties located at 6 Beechwood Avenue, 2 Beechwood Avenue, 66 Beechwood Avenue, 37 Beechwood Avenue, 9 Beechwood Avenue, 44 Beechwood Avenue, and 51 Beechwood Avenue. All except the sale at 66 Beechwood Avenue are referred to in Ms. Perrie's Equity Report. The sale of the property located at 66 Beechwood Avenue is referred to in MPAC's Valuation Report. The Board finds that the median ASR of 0.976 does not support an equitable adjustment.

56The Board has also considered the assessed values for the Beechwood Avenue properties referred to in evidence by either Ms. Perrie or Mr. Rafighi and located at 2 Beechwood Avenue, 6 Beechwood Avenue, 10 Beechwood Avenue, 19 Beechwood Avenue, 25 Beechwood Avenue, 37 Beechwood Avenue, 44 Beechwood Avenue, 51 Beechwood Avenue, and 66 Beechwood Avenue. Assessed values range from $374,000 to $594,000. The median assessed value is $427,000. The Subject Property is assessed at the lower end of the range at $379,000. It is assessed slightly higher than the property located at 10 Beechwood Avenue with an assessed value of $374,000 that has a similar building area but an older effective year of build.

57For all of these reasons, the Board finds that the evidence does not support the conclusion that an equitable adjustment is required.

CONCLUSION

58The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $381,317. 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.

59MPAC did not provide notice that it is seeking a higher assessment, as required by Rule 40 of the Board's Rules of Practice and Procedure. Therefore, the assessment of the Subject Property located at 9 Beechwood Avenue is confirmed at $379,000 for the 2018 taxation year.