Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 20, 2019 FILE NO.: WR 151142

Assessed Person(s): 6900 Davand Investments Limited Appellant(s): 6900 Davand Investments Limited Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15 Respondent(s): City of Mississauga

Property Location(s): 6900 Davand Drive Municipality(ies): City of Mississauga Roll Number(s): 2105-050-116-49300-0000 Appeal Number(s): 2945545, 3033581 (Deemed), 3085283 (Deemed) and 3152307 (Deemed) Taxation Year(s): 2013, 2014, 2015 and 2016 (2014 – 2016 Deemed appeals) Hearing Event No.: 683185

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

Heard: September 20, 2017 in Mississauga, Ontario

APPEARANCES:

Parties Counsel⁺/Representative

6900 Davand Investments Limited Michael S. Steinberg

MPAC Roger Leroux

City of Mississauga No one appeared

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

REASONS

Background

16900 Davand Investments Limited (“the Appellant”) is the owner of 6900 Davand Drive (the “Subject Property”) which is an industrial property located in City of Mississauga (“City”).

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act“), the assessment of land shall be based on its current value. The Act also provides that, for the 2013 to 2016 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2012 (“current value”).

3For the 2013 through 2016 taxation years under appeal, MPAC assessed the current value as returned at $5,410,000 for a 100% partition in the industrial tax class. MPAC takes the position that the correct current value is $5,410,000.

4The Appellant has filed appeals for taxation years 2013 to 2016 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessed value is too high and that the correct current value is $4,382,000.

5Pursuant to s. 40(11) of the Act, the Municipality, in this case, the City, is a party to this proceeding. However, the Municipality did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the Municipality’s behalf.

6Section 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 of the property possessed by each ratepayer.

7MPAC takes the position that an equitable adjustment is not required. The Appellant did not provide any equity analysis and did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

8At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that for the 2013 to 2016 tax years the correct current value is $4,723,000 (rounded) in the industrial tax class.

Relevant Legislation and Rules

9The Act

1. “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.

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

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

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.

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.

ISSUE

10The issue to be determined in this appeal is the correct current value of the Subject Property for the taxation years 2013 to 2016, as of the January 1, 2012 valuation date. In addressing this issue, the parties have raised a number of sub-issues which the Board must address:

a. Are the vacant land sales valid in this instance;

b. Is there a causal relationship between a building’s age and it’s sale price;

c. Is there a causal relationship between a building’s height and it’s sale price;

d. Is lot coverage a better measure of value than lot size in this instance;

e. What significance does mezzanine floor space play in determining value in this instance; and

f. Are the time adjustment factors relevant in this instance.

Description of the Subject Property

11Located in the City of Mississauga, the Subject Property has a land area of 3.65 acres. Constructed in 1981, the building has a floor area of 69,964 square feet inclusive of a two-storey office area with an average ceiling height of 24 feet. The property has two entranceways off of Davand Drive, one to the north for employee parking and a westerly entrance for truck access. The Subject Property is designated as industrial.

Discussion, Analysis and Findings

MPAC’s Evidence

12Roger Leroux represented MPAC. Gaurav Kadian is a witness for MPAC.

13Mr. Kadian, a Property Valuation analyst, testified on behalf of MPAC. He is not an accredited appraiser. Mr. Kadian has been employed with MPAC since January, 2017. Possessing a Master of Business Administration in finance, with experience in corporate finance and real estate, Mr. Kadian serves as an external consultant for five months in 2016 with the Toronto Dominion Bank and with Telus as a Financial Analyst. From January 2014 until January 2016, Mr. Kadian was a senior associate with a Dubai headquartered investment banking firm, performing among other tasks, feasibility analysis, financial analysis, valuation and due diligence of real-estate projects, including office, retail, multi-unit residential, hotels, industrial properties, and infrastructure projects such as hospitals, education institutes and parking lots. The Board accepts that Mr. Kadian is qualified to give opinion evidence, but will weigh his evidence in accordance with his training, education and experience.

14Mr. Kadian prepared a valuation report respecting the Subject Property, dated September 13, 2017 (“Valuation Report”) which he submitted into evidence.

15Mr. Kadian’s assessment is based on the Cost Approach, wherein he assessed the improvements by relying on its automated costing system (“ACS”) and referred to its land table rates to establish the current value for the land component of the Subject Property. The ACS valued the improvements at $2,778,088 and MPAC’s land tables estimated the land value at $2,632,808, for a total value of $5,410,896 or $5,410,000 (rounded).

16For his analysis, Mr. Kadian relied on two approaches to determine current value, the Cost Approach and the Direct Comparison Approach, preferring the latter approach in his analysis.

17Mr. Kadian relied on his own vacant land property sales to determine the value for the land component of the Subject Property. He also relied on the Subject Property’s current cost cards, building plans, aerial photographs and information noted from his August 2nd, 2017 inspection of the property, in his determination of current value. Although there were interior improvements done to the property in April of 2016, they were exempt from the 2016 tax year.

18In his analysis, Mr. Kadian considered only the finished mezzanine floor space of the Subject Property as part of the total building square footage of 69,964 and did not factor in any unfinished mezzanine floor area.

19Mr. Kadian identified six suggested comparable properties that sold between June 2010 and March 2013. These properties sold in the "shoulder years", meaning, during a timeline on either side of the valuation date, in this case January 1, 2012. All the suggested properties exhibited elements of comparability to the Subject Property in terms of nature, character, function and location, but required further adjustments in terms of height, lot size, year built and time, to serve as a useful comparison to the Subject Property.

20The table below identifies the suggested comparable properties provided by Mr. Kadian along with key descriptors:

ADDRESS	YEAR BUILT	LOT SIZE Acres	BLDG SIZE Sq. Ft.	BLDG HEIGHT Ft.
6900 Davand Drive (Subject)	1981	3.6	69,964	24
1825 Alstep Drive	1997	3.3	50,054	26.3
6675 Rexwood Road	1984	3.3	56,420	24.0
1100 Steeles Avenue East	1986	3.4	66,488	24.9
1250 Matheson Boulevard East	1973	3.0	67,583	23
54776-5497 Gorvan Drive	1982	3.5	74,423	21.0
6400 Northwest Drive	1977	3.7	75,808	20.0

21Mr. Kadian made a number of adjustments in the course of his analysis, which are as follows:

Adjustments To Properties

Time Adjustment Factor

22Mr. Kadian reviewed 685 industrial property sales occurring from January 2009 to August 2015 to determine a time adjustment factor to accommodate the differing timelines that the suggested comparable properties sold. A time adjustment factor (“TAF”) of 1.012 was estimated and applied to his suggested comparable properties to arrive at his time adjusted sale (“TAS”) prices as of the January 1, 2012 valuation date. This adjustment process enabled all the sale prices for the comparable properties to be measured against each other at a common point in time for the purposes of price comparison.

Lot Size Adjustments

23Mr. Kadian adjusted the differing lot sizes of all his suggested comparable properties based on land rates derived from his own vacant land sales data and choosing not to rely on MPAC’s land table rates data.

Height Adjustments

24Mr. Kadian developed a statistical model to correlate the influence of building height on overall property value, by inferring a relationship between a property’s sale price per square foot (“psf”) and its building height. A total of 352 industrial property sales were sampled to develop this relationship. Mr. Kadian applied the results of his model to his suggested comparable properties and relied on the Direct Comparison Approach in his analysis.

Age Adjustments

25Mr. Kadian developed a statistical model to correlate the impact of a building’s age (year built), on a property’s sale price psf, by determining a relationship between the two variable factors. He concludes that properties built prior to1994, showed a slower increase in value based on year built, than properties built after 1994. A total of 446 industrial property sales were sampled to develop this relationship.

Vacant Land Sales

26Mr. Kadian increased the land value component for the Subject Property based on his inspection of the property and drawing comparisons using his own vacant land sales data. The value for the land component increased to $2,904,604, approximately 10% higher per acre, with Mr. Kadian amending his previous overall total property value from $5,410,000 to $5,682,692, or $5,682,000 (rounded).

Recommended Current Value

27Mr. Kadian proposed a sale price psf value for the Subject Property between $60 to $85. Based on his analysis of his suggested comparable properties, factoring in the variety of adjustments, including time adjusted sale prices, and building areas, he calculated that the median value is $78 psf. Applying this sale price psf value to the Subject Property’s building area, Mr. Kadian concluded that the correct current value is $5,441,000 (rounded).

MPAC’s Submissions

28MPAC argues that for this type of industrial building, the age of the building (year built) and building height significantly influence a property’s value. MPAC maintains that it appropriately used two statistical models in its analysis to isolate these factors.

29MPAC emphasizes that Mr. Kadian made subjective adjustments on height issues for some of the suggested comparable properties, referring to “degrees of differences”, as the basis for adjustments. MPAC relies on Mr. Kadian’s opinion which disagrees with the Appellant’s contention that height adjustments are more suitable to manufacturing type properties than to industrial properties.

30MPAC maintains that only the finished mezzanine floor space of the Subject Property should be included in the total square footage of the Subject Property (69,964 sq. ft.), and not the unfinished portion. MPAC argues that while their witness selected only finished mezzanine floor space in his analysis, this is in contrast to the Appellant, who chooses to ignore mezzanines altogether without any evidence to support this decision, other than his knowledge and experience.

31MPAC disagrees with the Appellant's view that the suggested property sales occurring in excess of 12 months on either side of the valuation date ("shoulder years") should not be considered reliable. Mr. Kadian stated that within reason, if the properties offer comparableness to the Subject Property, then consideration as a comparable is warranted.

32MPAC disagrees with the Appellant’s approach of not taking into consideration lot size and lot irregularities. MPAC maintains that the correct approach is to consider lot size as the key determinant to estimating current value, and not lot coverage as the Appellant contends is the correct approach in this instance.

Suggested Property Sales

33MPAC’s witness disagrees with most of the Appellant’s choice of suggested comparable properties, noting that:

• The neighbouring property to the Subject Property, 6885 Davand Drive, has a lot size that is dissimilar to the Subject Property.
• The Columbus property has a smaller lot, making it unsuitable.
• MPAC excluded the sale of the Maingate property, stating that it was a sale involving the seller taking on a private mortgage from the purchaser, that it would not be an ideal sale for comparison purposes, notwithstanding it is a much larger property.
• The 1100 Steeles Avenue East property is, in regards to lot size, building type, age and height considered to offer the best comparable to that of the Subject Property.
• The Appellant made no adjustments to the 1250 Matheson Boulevard East property.
• The Appellant has adjusted the 6400 Northwest Drive property’s value by 5% in terms of height without any supporting analysis or empirical data, relying solely on his knowledge and experience.

Case Authorities

34Two case authorities were submitted to the Board for consideration. Zullo Holdings Inc. v. Municipal Property Assessment Corp., Region No. 9, [2012] O.A.R.B.D. No. 263 (WR 114932) (“Zullo Inc.”); Emery Investments v. Municipal Property Assessment Corp., Region 15, [2016] O.A.R.B.D. No.129 (WR 140742) (“Emery Investments”).

35MPAC notes that, in Zullo Inc. the Board placed no weight on the appellant’s valuation of the subject property in that case, finding that direct comparisons on a value per square foot basis are not reliable unless the properties being compared are roughly similar. In that instance, the Board Member found the comparable properties were not similar to the subject property. In this proceeding, MPAC argues that the Appellant’s suggested comparable properties are more dissimilar than similar to the Subject Property.

36MPAC also relies on the Board decision in Emery Investments, wherein the Board found that the comparable properties required further adjustments for the differences in lot size, building area, building age and height as well as differences in office areas in order to make a meaningful comparison between the subject property and the comparable properties.

Appellant’s Evidence

37Michael Steinberg, represented the Appellant. Paul Grosman testified on behalf of the Appellant.

38Mr. Grosman is a retired Appraiser affiliated with the Appraisal Institute of Canada. He is presently employed at Argil Property Tax Services Paralegal Professional Corporation. Mr. Grosman has worked in the property tax consulting industry since 1993, providing assessment and property tax management and appeal services. Experienced in industrial, commercial and investment (“ICI”) property valuations, Mr. Grossman has appeared before the Board and the Ontario Municipal Board as an expert witness in both, property and assessment valuation. Mr. Grosman holds a BA from the University of Toronto and holds an Accredited Appraiser Canadian Institute, (“AACI) designation.

39The Appellant entered into evidence spreadsheets, photographs, a location map of all the properties relative to the Subject Property, a written submission summary and a resume of the witness.

40Mr. Grosman relied on the Direct Comparison Approach in his analysis of current value.

41Mr. Grosman identified seven suggested comparable property sales in the vicinity of the Subject Property. Mr. Grosman also included an additional property for consideration as a comparable property, 6675 Rexwood Road, for the November 2011 sale and rejecting the 2016 sale as not being an open market transaction (sold to a tenant). Therefore, a total of 8 suggested comparable properties are presented for consideration.

42The table below illustrates the eight property sales as well as key descriptors. Four of the eight properties, namely 1100 Steeles Avenue East; 1250 Matheson Boulevard East; 6675 Rexwood Road and 6400 Northwest Drive are also suggested properties used by MPAC.

ADDRESS	YEAR BUILT	LOT SIZE Sq. Ft. (Acres)	BLDG SIZE Sq. Ft.	BLDG HEIGHT Ft
6900 Davand Drive (Subject)	1981	158,732	69,964	24
6885 Davand Drive	1981	102,801	47,781	23
6781 Columbus Road		90,169	49,005	25.5
1100 Steeles Avenue East	1986	149,410	66,488	24.9
1250 Matheson Boulevard East	1973	130,680	67,583	22.5
296 Orenda Road	1987	188,615	94,127	25
6400 Northwest Drive	1977	162,914	75,808	20.0
5380 Maingate Drive	1977	179,467	90.083	20.0
6675 Rexwood Road	1984	142,879	56,420	24.0

Suggested Property Sales

43Mr. Grosman accepts 5380 Maingate Drive as a valid comparable property, notwithstanding the private financing arrangement between the seller and purchaser, arguing that the 4% rate of interest reflected market conditions at the time and is not a preferred rate.

44Mr. Grosman considered the Northwest property as very comparable to the Subject Property.

45Mr. Grosman accepts the neighbouring property, 6885 Davand Drive as comparable to the Subject Property, noting that, even though not identical, it has many points of comparability.

46Mr. Grosman accepts Orenda Drive as a comparable to the Subject Property.

47Mr. Grosman determined the time adjusted sale price for the 2011 sale of 6675 Rexwood Road to be $4,222,400 with an overall adjusted sale price psf rate of $74.83 for building area.

Property Adjustments

Time Adjustment Factor

48Mr. Grosman applied a 0.5% time adjustment factor per month for all properties that required an adjustment in time, translating into an annual adjustment of 6%. He does not consider the timelines for the suggested properties in this instance, as significant towards affecting value and therefore considers a uniform fixed value for time adjustment.

Lot Coverage vs Lot Size

49Mr. Grosman applied lot coverage, not lot size, in determining current value. Lot coverage refers to the building footprint over the lot area, or, percentage built out. Applying this metric, Mr. Grosman concluded that the Subject Property's lot coverage is not significantly different from that of his suggested comparable properties.

50Mr. Grosman, states that, in his experience, prospective purchasers attribute value to land that allows for expansion in the future. In this instance, Mr. Grosman made no adjustments for lot size, as the Subject Property does not have any remaining land for expansion. He believes that any lot irregularities are quite common and unimportant in determining value, particularly in this instance.

51Mr. Grosman stated that, for his suggested comparable properties, lot coverages range between 46% - 54% in contrast to the Subject Property's coverage of 43%, suggesting that there is more available land in those properties for expansion, than the Subject Property.

Height Adjustments

52Mr. Grosman applied a 5% adjustment to value for ceiling height to all his suggested comparable properties, arguing that for this type of property and use, ceiling height is not a major determinant of value.

Age Adjustments

53Mr. Grossman stated that he made no adjustment for a building’s age, arguing that it is very difficult to measure the age of a building in isolation of the many interrelated property elements/components of a building and then assign a value to it.

Mezzanine Floor Space

54Mr. Grosman attributed no value to mezzanine floor space. In his view, value should be assigned only to productive space, in this instance warehouse space. From his experience, buyers don't see value from mezzanine space.

55At the Board’s request the Appellant provided a one page document showing the mezzanine space included in the gross floor area (“GFA”). Factoring in the mezzanine space, whether finished or not, Mr. Grosman calculated the median sale price psf as $51.47 and the mean as $60.15. He stated that including mezzanine floor space as part of the total building floor area, knowing it is unproductive space in this instance, undervalues the property unnecessarily.

56Mr. Grosman stated that it is his experience that industrial properties sell in the market place based on rates psf, that purchasers are looking at investments of this type in terms of cash flow as the over-riding determinant of value, and that market valuations based on a cost approach are not useful in these types of sale transactions.

57Mr. Grosman maintains that including mezzanine floor space skews the overall value results to a much lower value. He demonstrated this by including mezzanine floor area in determining value.

58Mr. Grosman explained that, in choosing a monthly time adjustment factor of 0.5%, he based this adjustment factor on his experience and on several industrial property appeals he has been involved with, particularly for the January 1, 2012 valuation date.

59Mr. Grosman expressed his view that there is no evidence that the Subject Property has excess land for development. He stated that the property has been in operation for over thirty years with no new development because there is no land for expansion.

60Mr. Grosman stated that he disagrees with Mr. Kadian’s choice of his vacant land sales, as they have new development potential which adds more value to land, unlike the Subject Property where there is no land available for further development.

61Mr. Grosman and Mr. Kadian both agreed that the theoretical nature of the Cost Approach is very difficult to apply practically to older properties like the Subject Property, given the myriad of adjustments that are needed. As a retired appraiser, Mr. Grosman stated that appraisers avoid the Cost Approach, as it is too theoretical and the market doesn’t transact in that way.

Appellants’ Submissions

62The Appellant disputes the notion that height can be isolated from all other property elements and used to determine value with any significance. The Appellant rejects the statistical tools used to depict charts showing trend lines to infer a correlation between height and sale price ($ psf). The Appellant maintains that isolating a variable height from such a complex entity is not a standard practice.

63The Appellant disputes Gaurav Kadian’s use of the statistical models to contrast sale price and time of sale for a grouping of properties to establish a relationship. The dispute centers on the models not being supported by any evidence to show how he arrives at its conclusions.

64The Appellant disagrees with Mr. Kadian making arbitrary subjective adjustments with respect to ceiling height, disputing the notion of "degrees of difference" as the basis for the adjustment.

65The Appellant relies on Mr. Grossman’s evidence that the small relative age range for the suggested property sales did not warrant any age adjustment. The Appellant submits that it is too difficult to isolate age as a factor from the many other inherent factors found in properties of this type.

66The Appellant disagrees with MPAC that shoulder years can exceed a 12 month time period from which properties may be considered, referring specifically to one of MPAC’s suggested properties, 5477-5497 Gorvan Drive, which sold in June 2010, six months beyond the presumed 12 month shoulder year limitation (18 months total). The Appellant submits that the Board limits shoulder years to a maximum of 12 months from the valuation date in question.

67The Appellant argues in favour of the use of lot coverage as the key to determining current value, and not lot size, maintaining that a smaller building needs a smaller lot in contrast to a larger building, which needs more land. The Appellant disputes that lot size is relevant to value determination, particularly where lot irregularities are not useful in establishing value.

68The Appellant emphasizes that, in cross-examination Mr. Kadian admitted that he does not know what portion of land is remaining for industrial development. The Appellant further notes that, although Mr. Kadian said he checked the zoning by-laws for permitted industrial development, he agreed that the permitted development reference applied to medical offices and offices, not industrial use. The Appellant also notes that Mr. Kadian admitted that he did not find any exact amount for development expansion regarding the Subject Property and that he agreed that the Subject Property appears to be fully occupied and all lands in use.

69The Appellant relies on Mr. Grosman’s opinion that Mr. Kadian’s choice of his vacant land sales is inappropriate in this instance and not suitable as comparable properties for the land component.

Legal Submissions

70Two case authorities were submitted to the Board for consideration. Pine Valley Packaging Ltd. v. Municipal Property Assessment Corp., Region 13, [2017] O.A.R.B.D. No. 23 (WR 145344) (“Pine Valley”); 1282652 Ontario Ltd. v. Municipal Property Assessment Corp., Region 9, [2015] O.A.R.B.D. No.177 (WR 132286) (“Ontario Ltd.”).

71The Appellant highlighted that, in Pine Valley, the Board Member’s analysis addressed MPAC’s concern regarding a lack of evidence to support or verify the adjustments made by the appellant’s witness, on the basis that they were wholly subjective. In that decision, the Board stated that in the real world this is how real estate markets operate, with buyers, sellers and appraisers making all sorts of subjective judgements on the relative merits of different properties, endeavouring to quantify them, without the benefit of statistics, algorithms, graphs or computer models. The Board Member refers to the process as a largely qualitative effort based on experience in transacting and appraising properties, concluding that the Appellant’s witness was credible as the witness had considerable experience in the field.

72The Appellant also referred to Ontario Ltd., noting that the Board Member rejected MPAC’s adjustment calculations to compensate for differing lot sizes between the Subject Property and the suggested comparable properties. In that Decision, the Board Member found that there was no evidence to show a connection between the value of vacant land and the value of excess land, nor any evidence of the quantity of excess land and whether the excess land was severable and capable of being sold. The only evidence provided by MPAC in that case, was that the property under appeal had a larger lot size, with MPAC admitting it was unaware if the property included any excess land. Instead, MPAC merely proceeded to use vacant land sales to makes its adjustments for the larger lot size.

Recommended Current Value

73Relying on Mr. Grosman’s evidence, the Appellant submits that the correct current value for taxation years 2013 to 2016 is $4,382,000 at $64.40 psf for a GFA of 67,939 sq. ft., excluding mezzanine floor area.

Findings

74Under 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 property on the valuation date or close to it. If no such transaction took place, the next best measure of current value is an arm’s length and market-tested sale of comparable properties located nearby, or as close as possible to the legislated valuation date of January 1, 2012.

75When using the Direct Comparison Approach, there must be sufficient comparable elements, in terms of physical factors such as building area, land area (lot size), land frontage, age of construction, physical condition, etc.

76The Board finds that both parties agree that the best method in this instance, for determining current value for the Subject Property, is the Direct Comparison Approach. The Cost Approach, although initially used by MPAC, was not the choice method of either party, largely because of the difficulty in making the myriad of adjustments required, thus putting into doubt the integrity of the results.

77The Board observes that while both parties provided their own suggested comparable properties, some of which overlap, there are significant differences in how they are analyzed by each party, as well as the nature of the adjustments made to their respective suggested properties sales.

78The Appellant emphasizes that applying too many adjustments underscores that a suggested property is not, in fact, comparable. The Board notes that Mr. Grosman chose to broadly assign adjustments for age and height and not to assign any adjustments due to other factors. In contrast, MPAC presented a more extensive list of adjustments, confident that statistically, the its final calculation of value would be representative of the correct current value for the Subject Property.

79Before addressing its final conclusion respecting the correct current value, the Board must first deal with a number of sub-issues that can influence the selection and treatment of the best available evidence from which current value is decided.

Vacant Land Sales

80The Board finds there is no comparison between the Subject Property and Mr. Kadian’s vacant land sales. Of the eight vacant land sales, only one property approximates a lot size to that of the Subject Property. The Board is not persuaded that it can rely on a single property to establish a credible land value, particularly given the abundance of suggested property sales provided by both parties. While the Board recognizes Mr. Kadian’s efforts to isolate land value, the Board finds that the vacant land properties are not sufficiently comparable to the Subject Property, because too many adjustments are required, putting into question the merit of any calculated result.

81The Board notes that Mr. Grosman has raised concern that the Subject Property has no development potential in contrast to the development potential of the vacant land sales suggested by Mr. Kadian. Although neither party has provided any evidence to persuade the Board of their respective positions on the use of these vacant land sales, the Board prefers the Appellant’s evidence, as it is based on Mr. Grosman’s knowledge and experience in providing a nuanced insight into the significant factors that would impact the determination of the value of the Subject Property in an actual sale transaction.

82The Board notes that Mr. Grosman has emphasized that the Subject Property has no extra land for development and therefore argues that vacant lands sales are not at all similar to the Subject Property. The Board notes that MPAC has adduced insufficient evidence to counter this assertion. Therefore, the Board finds the choice of vacant land sales provided by Mr. Kadian are not comparable. The Board will not rely on these lands when determining the current value of the Subject Property.

Age and Height Models

83Mr. Kadian stated he developed modelling techniques relying on hundreds of properties, to isolate the impact of building height and age on property value, which he used in his adjustments for his suggested comparable properties. However, the Board finds Mr. Kadian did not provide sufficient evidence to demonstrate this relationship, other than a statistical correlation. He provided no property description details on the hundreds of properties used in his analysis. Although he stated that he utilized a large data set to determine a statistically acceptable confidence level to support his statistical conclusion, the Board finds that he has not demonstrated the existence of a causal relationship using his modelling tools. In other words, although there may be a statistical correlation, there is no evidence to suggest that these factors have a significant impact on the determination of the sale price in actual sale transactions.

84In reaching this conclusion, the Board notes that Mr. Grosman, who has considerable practical knowledge and experience in market transactions, has stated that he has never encountered a sales transaction where the correlation advanced by Mr. Kadian was applied. Given the complexity of these property types, and the fact the Board has received insufficient properties details to support Mr. Kadian’s conclusion, the Board is not persuaded that it should consider these adjustments when determining current value.

Lot Coverage vs Lot Size

85Mr. Grosman’s evidence is that lot coverage is preferable to lot size in determining the value of a property such as the Subject Property. Relying on his experience in the field and as a former appraiser, Mr. Grosman asserted that prospective buyers consider that lot coverage and expansion potential are the key determinants of value. The Board notes that Mr. Grosman did not provide quantitative evidence to support his opinion. Instead, he relies on his professional knowledge as an appraiser and his experience in representing buyer/sellers in sale transactions of industrial properties such as the Subject Property.

86The Board finds that Mr. Grosman’s opinion that lot coverage is a key factor in determining current value is plausible. Although no quantitative evidence was provided by Mr. Grosman, the Board takes note of his depth of experience as the basis for his assertion and finds his evidence is probative.

87Mr. Grosman stated that the differences in coverage between his property sales to that of the Subject Property is not huge, suggesting coverages are relatively tight, that value will mainly derive from coverage. For this reason, he did not make any adjustments for lot size or lot irregularities.

88The Board accepts this approach. The market place is driven by subjective judgements made by, buyers and sellers. Appraisers do not always have the benefit of statistical modelling, trend charts, etc. Therefore, the Board finds the use of lot coverage acceptable in this instance, toward determining current value.

Mezzanine Floor Area

89Mr. Leroux has stated that Mr. Kadian selected only finished mezzanines in his analysis to determine current value, choosing to not address unfinished mezzanine space. In contrast, Mr. Grosman has decided not to consider mezzanine space at all in his analysis. The Board finds that neither witness has provided sufficient evidence to support their conclusions. The Board finds the issue of mezzanine space as a contributing factor to value unclear, as both parties have not provided any evidence to support their respective positions. Here, Mr. Kadian is selective on including only finished mezzanine space in his analysis. In other words, finished mezzanine space is included, whereas unfinished space is not. Mr. Grosman has chosen to exclude consideration of mezzanine space entirely, on the basis that it has no bearing in the market place on investor purchasing decisions. While the Board does not discount Mr. Kadian’s opinion, the Board finds that Mr. Grossman’s evidence is more probative because it is based on his practical experience with investor purchasing decisions, and particularly in this case, given the relatively small square footage mezzanine space plays in the overall property area of the Subject Property.

Time Adjustments

90Regarding MPAC’s time adjustments and the willingness to consider properties that have sold as much as 19 months outside of the January 1, 2012 valuation date, in particular the Gorvan Drive property, the Board finds the timeline is too far removed from the January 1, 2012 valuation date, notwithstanding this property being relatively comparable to the Subject Property. Property sales need to be relatively comparable after factoring in the variety of adjustments, in order to ensure the best evidence will lead to the correct current value. In this case the time adjustment is too great. Considering the significant spread, the Board will disregard this property sale as a candidate for the determination of current value. The Board finds the use of time adjustments relevant if they are useful. In this instance the Board is not persuaded of their utility.

Board’s Analysis of Current Value

91MPAC provided six suggested property comparable properties for the Board to consider. The Board accepts four of MPAC’s suggested property sales as being comparable to the Subject Property, namely, 6675 Rexwood Road, 1100 Steeles Avenue, 1250 Matheson Boulevard East and 6400 Northwest Drive, as they offer comparable elements in terms of lot size, floor area, height, year built and building coverage, to enable a determination of current value for the Subject Property.

92The Board finds 1825 Alstep Drive a relatively newly built property compared to the Subject Property. With a 16 year difference in age, the Board accepts Mr. Grosman’s assertion that Alstep is not comparable, as the construction materials and design indicates that it comes from another era of construction. The Board finds reconciling this property to that of the Subject Property would require too many adjustments, to make it a reliable comparable property.

93The Board has already found that MPAC’s suggested property sale, 54776-5497 Gorvan Drive, is unsuitable as the sale is too far from the valuation date. For this reason the Board does not rely on this property in determining current value.

94The Board finds four properties suggested by the Appellant are inappropriate for comparison purposes to the Subject Property, namely, 5380 Maingate Drive, 6885 Davand Drive, 296 Orenda Road and 6781 Columbus Road as all four properties cited have GFA significantly dissimilar to that of the Subject Property.

95The Board has reviewed the Appellant’s other suggested comparable properties, noting that both parties agree that these four properties, namely Rexwood Drive, Steeles Avenue, Matheson Boulevard East, and Northwest Drive are suitable comparable properties. The Board finds these properties to be the best evidence for the purposes of determining current value. Based on the four comparable properties, the Board finds the mean value per square foot is $67.51 psf. When applied to the Subject Property’s building area, the Board finds the correct current value to be $4,723,270 or $4,723,000 rounded.

DECISION

96The current value of the Subject Property is $4,723,000 for the 2013 to 2016 taxation years in the industrial tax class.