Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
December 20, 2019
WR 163193
Assessed Person:
Roy Lushi
Appellants:
Roy Lushi and Arbesa Lushi
Respondents:
Municipal Property Assessment Corporation (“MPAC”), Region 09
City of Toronto
Property Location):
18 Lemonwood Drive
Municipality:
City of Toronto
Roll Number:
1919-023-180-03200-0000
Appeal Number):
3384470
Taxation Year):
2019
Hearing Event No.:
726764 and 728386
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard:
December 4 and 9, 2019 in Toronto, Ontario
APPEARANCES:
Parties
Counsel+/Representative
Roy Lushi and Arbesa Lushi
Self-represented
MPAC
Frank Lee
City of Toronto
No one appeared
MEMORANDUM OF ORAL DECISION DELIVERED BY JEAN-PAUL PILON ON DECEMBER 9, 2019
BACKGROUND
1Roy Lushi and Arbesa Lushi (the “Appellants”) are the owners of 18 Lemonwood Drive in Toronto (the “Subject Property”). They filed an appeal for the 2019 taxation year with the Assessment Review Board (the “Board”).
2Pursuant to the Assessment Act, R.S.O. 1990, c. A. 31 (the “Act”), the assessment of land is to be based on its current value. For the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”).
3MPAC returned a current value for the Subject Property of $999,000 for the 2019 taxation year, although it took the position at the hearing that the correct current value of the Subject Property for the taxation year was $1,091,000. Nevertheless, MPAC’s representative at the hearing did not seek a current value exceeding $952,000.
4The Appellants argued that the correct current value of the property was $830,000, their purchase price for the Subject Property on May 31, 2016.
5Pursuant to subsection 40(11) of the Act, the City of Toronto was a party to the proceeding. However, it did not advise the Board of its position on the issues raised in this appeal, and no one appeared at the hearing on its behalf.
6Subsection 44(3)(b) of the Act directs the Board to reduce the current value of the Subject Property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute the municipal tax burden according to the value possessed by each ratepayer.
7MPAC’s position was that no equitable reduction was required. The Appellants argued that there should have been an equitable reduction.
8At the completion of the hearing, the Board delivered its oral decision which included the reasons below. That oral decision made reference to the same three properties used below to reach the Board’s conclusion on current value. However, as a result of an inadvertent clerical error made by the Board, those oral reasons indicated that the final value to be returned to the roll was $830,000, when that number should have been $952,000. As a result, the hearing was promptly reconvened by telephone to notify the parties of the error and to correct the oral reasons given.
9The Appellants then requested these written reasons.
REASONS
10There were two issues to be determined by the Board in this 2019 taxation year appeal. The first issue was to determine the correct current value of the Subject Property as of the valuation date, January 1, 2016. The relevant state and condition of the Subject Property was to be the date of the return of the roll which was the second Tuesday following December 1, 2018. The second issue was to determine whether there should be an equitable reduction.
Current Value
MPAC
11MPAC’s representative at the hearing testified that the Subject Property had been renovated after the Appellants purchased the Subject Property by the date of the return of the roll, but not to the extent that MPAC had originally thought before an inspection was conducted, finally describing it as a “moderate to high degree renovation.” As a result of these renovations, MPAC’s position was that the Subject Property was worth more than the Appellants paid for it on May 31, 2016.
12MPAC adjusted the purchase prices of all of its comparable properties for the purpose of estimating the value of each property as of the valuation date of January 1, 2016. Those adjustments were not disputed at the hearing. As noted above, the Appellants purchased the Subject Property for $830,000 on May 31, 2016, and MPAC’s time adjusted value was $786,422.
13MPAC’s representative provided data relating to six other properties near the Subject Property that had sold within the one-year period prior to and following January 1, 2016. All were built around the same time as the Subject Property in 1964. However, only two of them, MPAC’s second and fourth comparable properties, had been renovated like the Subject Property.
14MPAC’s second comparable property, 2 Cadman Court, sold for $1,150,000 on April 11, 2016, and with the time adjustments that amount became $1,102,484. It had frontage of 59 feet (“ft.”) to the Subject Property’s frontage of 40 ft., but its lot had less depth, 108 ft. to the Subject Property’s 140 ft. The site area was similar, with 2 Cadman Court being bigger by only 0.2 acres. The renovations were older, making the “effective built” date 1997, compared to the Subject Property’s effective built date of 2013 (see below). It also had of slightly lower quality of construction.
15The other comparable property referred to by MPAC that had been renovated was its fourth, 23 Woodvalley Drive. This property sold for $968,000 on April 30, 2015, before the valuation date, resulting in a time adjusted value of $1,081,164. That property had frontage of 69 ft., but it had the same depth as the Subject Property. It had, however, almost twice the site area. The renovation for this property was older, with an effective built date of 1996, and the building area was slightly larger than that at the Subject Property.
16Taking the mean of these two comparable properties, MPAC arrived at a current value of $1,091,000 but, as was indicated above, MPAC was not seeking a value greater than $952,000.
17In terms of equity, MPAC relied on information from 30 properties within 0.7 km of the Subject Property that had sold near the valuation date and determined that the assessment sale ratio (“ASR”) was 0.961, within its acceptable range of 0.95 to 1.05.
Appellants
18The Appellants testified that the renovations to the Subject Property were not as significant as portrayed by MPAC. They said the kitchen and bathroom were replaced but otherwise the Subject Property had simply been painted.
19They further argued that most of MPAC’s comparable properties were not comparable because they were bigger. They additionally argued that the character of the immediate neighbourhood, from which they derived many of their own comparable properties, was different from surrounding streets.
20The Appellants presented evidence of 19 comparable properties of their own, but the first eleven of these had not been the subject of sales. This is problematic as the direct comparison method of determining value requires evidence of sales.
21All of the buildings in the Appellants’ remaining eight comparable properties were larger than the one on Subject Property and all but the seventeenth had more land. That seventeenth comparable property appeared to be the most similar to the Subject Property, but the Appellants indicated that it included a bungalow and was not comparable because properties with bungalows are worth more than the Subject Property.
22Referring to MPAC’s equity analysis, the Appellants argued that assessments in the area were lower than sale prices, therefore there should have been an adjustment in equity. In support of this argument, they pointed to properties on the same street as theirs, arguing they were similar but had lower assessments.
Analysis
Current Value
23As indicated above, the problem with all but two of MPAC’s comparable properties was that they had not been renovated. Even MPAC did not take them into account in its analysis.
24MPAC’s second and fourth properties remained and formed the basis of MPAC’s conclusion that the correct current value of the Subject Property was $1,091,000.
25The problem with the Appellants’ comparable properties was that they were much bigger, and the Appellants took the position that the one that appeared most comparable to the Subject Property was not. It may have been the case that the character of properties on streets other than theirs was different, however none of the properties on their street had sold since before 2012.
26In addition, the Appellants argued that the renovation to the Subject Property was less significant than MPAC said it was. However, MPAC’s representative inspected the property and, instead of providing evidence as to the specific extent of the renovation, which would greatly increase the difficulty of comparing the Subject Property to others, it determined an “effective built” date for the Subject Property of 2013. While imperfect, this method provided a simpler, standardized and more convincing means of comparison, where MPAC’s other comparable properties were actually built around the same time as the Subject Property. They were also given effective built dates to address the extent of their renovations as well.
27To determine current value, the Board bracketed the time adjusted sale prices of three comparable properties, where one of each was superior, inferior and relatively comparable to the Subject Property. In 1210299 Ontario Inc. v. Municipal Property Assessment Corporation, Region 15, 2019 CanLII 18811 (ON ARB), the Board wrote that:
(B)racketing is a very good method for comparing properties in the direct sales approach when very few properties are provided in evidence that can be considered directly comparable. Bracketing is based on the general principle that a comparable property that has superior attributes to the subject will sell for more, those that have similar attributes will sell for similar amounts, and inferior attributes will sell for less.
28The time adjusted sales prices for the bracketed comparable properties were as follows:
MPAC #2 (relatively comparable): $1,102,484
MPAC #4 (superior): $1,081,164
Subject Property (pre-renovation, inferior): $786,422
29The mean or average of these three values is $990,023. MPAC’s opinion of current value was $1,091,000, but the Board found it be this lower amount: $990,023. At the hearing, MPAC supported $952,000 as the value which should be returned on the roll.
Equity
30The Act directs the Board to look at the assessments of similar lands in the vicinity. If they were assessed below their current value, then the Board would have been required to lower the assessment of the Subject Property accordingly.
31The Appellants argued similar homes on the same street had higher assessments than the Subject Property. Normally, an equity analysis is undertaken looking at sales values and comparing them to assessments, but it is possible for it to be done on properties that are virtually identical for comparison. The problem with this approach (and the reason that it is rarely used) is that it is usually impossible to know with any precision how similar properties are, or what considerations went into their assessments. Properties may look the same from the outside, but without detailed knowledge of each, there is no certainty of sufficient similarity.
32In addition, the term “vicinity” is a term that is not defined in the Act but usually it is taken to mean a larger radius for comparison than a single street.
33MPAC’s equity analysis considered 30 properties within a 0.7 km radius of the Subject Property. It compared sales prices to assessments because the goal of the exercise was to determine if similar properties in the area were assessed at less than their current value.
34As noted above, MPAC’s ASR was 0.961 which is sufficiently close to 1 and would not require any adjustment in equity. Using the mean ASR rather than the median used by MPAC would have resulted in a very similar result of 0.958.
35A separate analysis was taken by the Board at the hearing which took into account only the Appellants’ comparable properties that had sold, excluding their thirteenth property they said was not comparable. That calculation resulted in a similar ASR of 0.958. Including the thirteenth of their properties resulted in an ASR even closer to 1.
36The Board therefore determined at the hearing that there was no equitable adjustment to be applied because the assessment of the Subject Property was equitable to other similar properties in the vicinity.
Determination
37The Board determined the current value of the property to be $990,023 which was lower than MPAC’s determination of current value of $1,091,000. The Board also determined that no equitable reduction was required. MPAC’s representative at the hearing indicated that MPAC was not seeking an assessment exceeding $952,000, and where the returned assessment was $999,000, the value for the roll was to be reduced to $952,000.
CONCLUSION
38The correct current value of the Subject Property was $990,023, but MPAC did not seek an assessment exceeding $952,000. The Board also determined that there was no evidence to support a reduction in this amount for the purposes of achieving an equitable assessment.
39Therefore, the assessment of 18 Lemonwood Drive in Toronto was reduced from the returned assessment of $999,000 to $952,000, with no change in its classification in the residential tax class.
“Jean-Paul Pilon”
JEAN-PAUL PILON
MEMBER
Assessment Review Board
A constituent tribunal of Tribunals Ontario - Environment and Land Division
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248```