Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 10, 2019

FILE NO.: WR 157792

Assessed Person(s): Jennifer Candeloro, Darrin Wolter

Appellant(s): Jennifer Candeloro, Darrin Wolter

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15

Respondent(s): City of Mississauga

Property Location(s): 42 Cotton Drive

Municipality(ies): City of Mississauga

Roll Number(s): 2105-010-016-08500-0000

Appeal Number(s): 3320469 and 3336956

Taxation Year(s): 2017 and 2018

Hearing Event No.: 708864

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

Heard: December 10, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Jennifer Canderloro, Darrin Wolter	Self-represented
MPAC	Laurie De Winter
City of Mississauga	No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA AND ROBERT WRIGHT

BACKGROUND

1Jennifer Candeloro and Darrin Wolter (the “Appellants”) are the owners of a two storey detached family home located at 42 Cotton Drive (the “Subject Property”) in the Mineola West neighbourhood in the City of Mississauga. It is situated on a 0.18 acre (“ac.”) lot and has 2,148 square feet (“sq. ft.”) of total building area and 817 sq. ft. of finished basement area. It was built in 1953 and has undergone renovation. It has an effective year of build of 1990. MPAC has assigned it a quality class rating of 6.5. There is also an outdoor pool.

2MPAC returned the assessment for the Subject Property at $1,128,000 for the 2017 and 2018 taxation years. The assessed value was recalculated to $1,044,000 pursuant to the request for reconsideration process.

3The Appellants 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, R.S.O. 1990, c. A.31 (“Act”). Mr. Wolter, on behalf of the Appellants, states that the Subject Property is assessed too high. They are longtime residents of the Mineola West neighbourhood. However, they feel that longtime residents such as themselves are being taxed out of their neighbourhood. Mr. Wolter estimates the Subject Property’s current value is in the $900,000s.

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, Laurie De Winter’s, opinion of current value is $1,136,000 based on the direct comparison approach.

5Ms. De Winter also conducted an equity study and determined that an equity adjustment is required and that the equitable assessed value should be $1,070,000. The equitable assessed value as determined is still higher than the assessed value as recalculated at $1,044,000 pursuant to the request for reconsideration process. She concludes that the assessment should be reduced from $1,128,000 to $1,044,000 for the 2017 and 2018 taxation years.

6Mr. Wolter is of the opinion that the Subject Property is inequitably assessed in relation to similar properties. He proposes an assessed value of $750,000.

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 $1,093,000. Furthermore, the Board finds that the evidence before it supports the conclusion that an equitable adjustment is required under s. 44.(3)(b) of the Act such that the equitable value is $1,030,000.

9Therefore, the assessment of the property located at 42 Cotton Drive is reduced from $1,128,000 to $1,030,000 for the 2017 and 2018 taxation years.

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…

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. De Winter states that she inspected the Subject Property on September 25, 2018 as part of the request for reconsideration process. She states that data was corrected with respect to the renovation information, the Subject Property was re-measured and the square footage adjusted, and the effective year of build was updated as was the date of construction of the pool. As a result, the assessment as returned at $1,128,000 was recalculated as $1,044,000.

16She states that the Subject Property is located in the residential area known as Mineola West with many homes undergoing renovations and re-modelling.

17Ms. De Winter relies on a “Valuation Report” of the Subject Property. The key property details for the two proposed comparable properties with sales presented by MPAC are set out below in Table A. Ms. De Winter’s evidence is that the sales have been time adjusted to the legislated valuation date and that the structures on the proposed comparable properties have a quality of construction rating of 6.5. Both properties are located about 0.5 kilometres from the Subject Property.

Table A

Property	Site Area (ac./sq. ft.) (effective)	Frontage (ft.) (effective)	Year Built (effective)	Building Area (sq. ft.)	Other	Sale (Time Adjusted) (Sale Date)	2016 Assessment
42 Cotton Drive (Subject Property)	0.18 (7,750)	50	1953 (1990)	2,148	"B' reno ((2008) -Finished basement area:817 sq. ft. -2.5 bathrooms -Basement garage -Outdoor pool
125 Troy Street (Sale 1)	0.13	50	1939 (2003)	2,037	-1,322 sq. ft. added in 2007 -Finished basement area: 508 sq. ft. -3.5 bathrooms -Attached double garage	$920,000 ($1,038,205 (04/30/2015)	$899,000
189 Rosemere Road (Sale 2)	0.17	62	1954 (2001)	2,223	-1,223 sq. ft. added in 2011 -Finished basement area: 230 sq. ft. -1 bathroom -Attached garage	$1,360,000 ($1,220,984) (09/28/2016)	$1,132,000

18Ms. De Winter considers Sale 1 to be inferior to the Subject Property and Sale 2 as comparable to the Subject Property.

19Applying the median and average sale per sq. ft. of $529 of the two sales to the Subject Property’s total building area of 2,148 sq. ft. results in a value of $1,136,292.

20Ms. De Winter’s opinion of current value is $1,136,000 (rounded).

21The Board inquired whether the sale of 36 Cotton Drive as included in MPAC’s evidence had been considered. Ms. De Winter states that there was a sale of this property in July 2016 and that the existing house was demolished. Mr. Wolter adds that the previous structure was a raised bungalow with a finished basement. A new house has since been built. Ms. De Winter provided key property details for the property at the time of sale: quality 6.5, built in 1979, 1,484 sq. ft. of total building area, 0.18 ac. lot and 50 ft. of frontage. It sold in July 2016 for $1,110,000 (Time Adjusted Sale (“TAS”) $1,021,097) and has a 2016 assessed value of $962,000.

Appellants’ Evidence and Submissions

22Mr. Wolter states that the Appellants are longtime residents of the Mineola West neighbourhood and that they have a strong desire to remain and retire in the neighbourhood. However, they feel that longtime residents such as themselves are being taxed out of their neighbourhood.

23Mr. Wolter states that they bought the Subject Property, with a bungalow, in 2004 and that he built the second floor with three bedrooms and a bathroom over the course of a year. He considers that it has the look and feel of a 11/2 storey house. He adds that the garage is a “non-garage” as it does not fit a car. There is a pool but the backyard remains non-landscaped.

24Mr. Wolter asserts that many properties in the neighbourhood are being purchased for their land value, the existing structures demolished, and huge multi-million dollar houses are being built causing an unfair rise in the taxes of ordinary people with lower priced houses. He refers to several examples in his evidence.

25Mr. Wolter asserts that MPAC’s model works well in areas with uniform housing where the housing stock is not undergoing significant changes, but that the Subject Property’s neighbourhood is not one of those neighbourhoods. He refers to his analysis of the problems faced by the MPAC model in his evidence.

26Mr. Wolter proposes using other Mississauga housing stock with two storeys and similar building areas that is not undergoing development of multi-million dollar houses. He referred to two properties located in Cooksville, about two and a half kilometres away and north of the Queen Elizabeth Way (“QEW”) along Hurontario and four properties located in Lisgar, about 13 to 14 kilometres further north and near Highway 407 and Highway 401. The average assessed value per square foot is $299. Applying this value to the Subject Property’s building area results in a value of $641,000. He asserts that the Subject Property’s neighbourhood is nicer and that his property also has a pool. He proposes a value per square foot of $350 that yields a value of $751,000.

27The Board asked Mr. Wolter if he had an opinion of the Subject Property’s current value as of the January 1, 2016 valuation date. His view is that the Subject Property could have sold for over $900,000. He referred to the sale of 389 The Thicket and to the sale of 36 Cotton Drive.

28At the request of the Board, Ms. De Winter provided property details for these properties in addition to the two properties located on Antigua Road. Details are summarized below in Table B.

Table B

Property	Site Area (ac./sq. ft.) (effective)	Frontage (ft.) (effective)	Year Built (effective)	Building Area (sq. ft.)	Other	Sale (Time Adjusted) (Sale Date)	2016 Assessment
42 Cotton Drive (Subject Property)	0.18 (7,750)	50	1953 (1990)	2,148	"B' reno ((2008) -Finished basement area:817 sq. ft. -2.5 bathrooms -Basement garage -Outdoor pool
389 The Ticket	0.14	65.78	1985	2,094	-Quality 6.5	$1,072,500 ($986,700) (07/2016)	$1,079,000
36 Cotton Drive	0.18	50	1979	1,484	-Raised bungalow has since been demolished	$1,100,000 ($1,021,097) (07/2016)	$962,000
365 Antigua Road	0.14	50	1973	1,042	-Quality 6.0 -Finished basement area: 412 sq. ft.	$200,000 (10/2016-family sale)	708,000
348 Antigua Road	0.17	60	1973 (1981)	2,443	-reno -Attached garage	723,500 (738,693) (11/2015)	735,000

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.

30If, as in this case, no such transaction took place, 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.

31To enable an estimate of current value for the Subject 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., as to enable a direct comparison to be made.

32The Board finds the properties located at 389 The Thicket, 125 Troy Street and 189 Rosemere Road to be reasonably comparable to the Subject Property in terms of building area, lot size, and effective age of build. They have time adjusted sale values per square foot of $471, $509, and $549, respectively. The median time adjusted sale value per square foot is $509. Applying this value to the Subject Property’s building area of 2,148 square feet results in a value of $1,093,332.

33The Board does not consider the property at 36 Cotton Drive to be comparable to the Subject Property. The existing bungalow on that property has been raised since its July 2016 sale. However, the bungalow was 610 sq. ft. smaller than the Subject Property and therefore not comparable.

34The Board does not consider the properties in Lisgar to be comparable as they are 13 to 14 kilometres away from the Subject Property in a different neighbourhood near Highway 407 and Highway 401.

35The Board does not consider the properties at 365 and 348 Antigua Road to be comparable to the Subject Property as they are located in a different neighbourhood above the QEW. The Board has before it a sufficient number of comparable sales put forward by both MPAC and the Appellants in the Subject Property’s neighbourhood to arrive at a determination of current value. Furthermore, the sale of the property at 365 Antigua Road does not appear to have been a valid arm’s length sale.

36For all of these reasons, the Board finds the current value of the Subject Property as of January 1, 2016 to be $1,093,000 (rounded).

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?

MPAC’s Evidence and Submissions

37Ms. De Winter relies on an “Equity Analysis Report” that considers the time adjusted sales of 30 single family detached properties that occurred between January 1, 2015 and December 31, 2016 located within 2 kilometres of the Subject Property.

38In her Report, Ms. De Winter 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 0.942.

39Ms. De Winter asserts that based on her analysis, similar properties in the vicinity have not been assessed at or near their current values and that an equity adjustment is required. In her opinion the equitable assessed value is $1,070,000 ($1,136,000 x 0.942).

40Ms. De Winter concludes that the equitable assessed value is still higher than the assessed value as recalculated at $1,044,000 during the request for reconsideration process. She concludes that the assessment should be reduced from $1,128,000 to $1,044,000 for the 2017 and 2018 taxation years.

Appellants’ Evidence and Submissions

41Mr. Wolter agrees that the Subject Property is inequitably assessed in relation to similar properties. He proposes an assessed value of $750,000 based on his above referenced analysis of Mississauga housing stock with two storeys and similar building areas that is not undergoing development of multi-million dollar houses.

Analysis and Findings

42Section 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.”

43The 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 per 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.

44In 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].

45The 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).

46The 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., 2010 ONSC 1299, 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.

47The Board has frequently relied upon an ASR analysis of a reasonable sample of sold properties as 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.

48Ms. De Winter relies on an Equity Analysis Report that considers the time adjusted sales of 30 properties located within 2 kilometres of the Subject Property. In this case, the median ASR of 0.942 falls outside of the acceptable range and supports an equitable adjustment.

49The Board prefers MPAC’s evidence, based on the sales that occurred in either shoulder year to the valuation date and involving 30 single family detached properties located within two kilometres of the Subject Property to the valuation date, to Mr. Wolter’s analysis of Mississauga housing stock.

50The Board finds that the evidence supports the conclusion that an equitable adjustment is required. Applying the median ASR of 0.942 to the Subject Property’s current value of $1,093,000 results in an equitable value of $1,029,606 or $1,030,000 (rounded).

CONCLUSION

51The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date is $1,093,000. Furthermore, the Board finds that the evidence before it supports the conclusion that an equitable adjustment is required under s. 44.(3)(b ) of the Act, such that the equitable value is $1,030,000.

52Therefore, the assessment of the Subject Property located at 42 Cotton Drive is reduced from $1,128,000 to $1,030,000 for the 2017 and 2018 taxation years.