Payal Satishkumar Patel and Satishkumar Babubhai Patel v. Municipal Property Assessment Corporation Region 14 and Town of Aurora, 2019 CanLII 14333

Assessment Review Board

Issue Date: February 22, 2019 File No.: WR 151992 Assessed Person(s)/Appellant(s): Payal Satishkumar Patel and Satishkumar Babubhai Patel Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 14 Respondent(s): Town of Aurora Property Location(s): 109 Roy Harper Avenue Municipality(ies): Town of Aurora Roll Number(s): 1946-000-125-85825-0000 Appeal Number(s): 3225515 and 3302431 (deemed 2018 appeal) Taxation Year(s): 2017 and 2018 (deemed appeal) Hearing Event No.: 694372 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended Heard: March 6, 2018 in Aurora, Ontario

APPEARANCES:

Parties	Representative
Payal Satishkumar Patel	Self-represented
MPAC	Albert Ng
Town of Aurora	Kelly Powis (Observe only)

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

Background

1Payal Satishkumar Patel is the owner of 109 Roy Harper Avenue (the "Subject Property"), in the Town of Aurora.

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 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016. ("current value").

3For the 2017 taxation year, MPAC has assessed the current value as returned at $919,000 for the Subject Property.

4Payal Satishkumar Patel (the "Appellant") filed an appeal for the taxation year 2017 with the Assessment Review Board (the "Board"), pursuant to s. 40 of the Act.

5It is the position of the Appellant that MPAC's assessment is too high and that the correct current value is $810,990. At this hearing, MPAC takes the position that its assessed value is correct.

6Pursuant to s. 40(11) of the Act, the Town of Aurora 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 the representative that appeared at the hearing on the Municipality's behalf, Kelly Powis, did not participate in the hearing.

7Section 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. MPAC takes the position that an equitable reduction is not required. The Appellant 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 2017 and 2018 taxation years the current value of the Subject Property as of the valuation date, January 1, 2016, is $919,000.

Relevant Legislation

9The Act states that:

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:

• what is the correct current value of the Subject Property for the 2017 and 2018 taxation years?

DESCRIPTION OF THE SUBJECT PROPERTY

11The Subject Property is a 2015 newly built residential single family detached house that abuts a green space. The property was purchased directly from the builder for $810,990 with a closing date of January 7, 2016. The property purchased was not an open market transaction.

Discussion, Analysis and Findings

MPAC's Evidence

12Albert Ng represented and testified on behalf of MPAC. Mr. Ng has 15 years of experience as a valuation analyst.

13Mr. Ng prepared and submitted a property Valuation Report ("Report"), dated January 1, 2016 in which he applied the Direct Comparison Approach in his Report to verify MPAC's assessed value of the Subject Property, which MPAC determined using its mass appraisal model.

14Mr. Ng stated that, on October 10, 2017, he inspected the Subject Property both, inside and from the exterior, concluding that the property was in average condition.

15Albert Ng factored in a 4% upward adjustment to the Subject Property's assessed value for being next to a green space.

16Mr. Ng identified eight suggested comparable properties in the vicinity of the Subject Property, with sales from 2015 to 2016, to support his analysis. All eight properties are builder sales, new construction, in average condition and in the same quality class. All have two-car garages and are full two-storey structures. All are the same property type and in the same neighbourhood as the Subject Property.

17Mr. Ng stated that MPAC does not consider builder sales as valid sales, as they are not transacted in the open market. He provided builder sales to demonstrate that MPAC's assessment is higher than builder sales.

18Mr. Ng explained that MPAC's mass appraisal model was used to prepare the property assessment statement sent to the property owner. The suggested comparable properties are viewed as reflecting the most current market data to verify MPAC's assessed value.

19Mr. Ng explained to the Board that the sale date used for the eight suggested comparable properties is the closing date. He had no access to sale prices prior to the closing date, and, therefore, the sale date has been assumed to be the closing date in the analysis.

20Mr. Ng stated that the value of the Subject Property, as registered on the title transfer is $738,929. However, the amount paid to the builder is $810,990. Mr. Ng explained the difference is the initial deposit amount.

21Mr. Ng recommends a current value based on his analysis of $1,028,230. However, he states that MPAC is returning a lower assessed value based on a mass appraisal model approach that also factors equity into consideration. Mr. Ng's equity analysis determines that his recommended current value, after adjusting for equity, arrives at an adjusted value of $918,209, which confirms MPAC's assessed value as returned to be reasonable.

MPAC's Submissions

22MPAC relies on Mr. Ng's evidence in support of MPAC's position that the correct current value is $919,000. Although Mr. Ng's opinion is that the correct current value is $1,028,230, MPAC is not seeking a higher assessment.

23In response to the Appellant's submissions, MPAC argues that builder sales are always lower than market sales.

Appellant's Evidence

24Payal Satishkumar Patel appeared as self-represented and testified at the hearing.

25Mr. Patel entered into evidence a series of Multiple Listing Service ("MLS®") information documents on six of the eight suggested properties that were also provided by MPAC.

26Mr. Patel testified that he relies on his Builder Sale Statement as his evidence in support of his position on value.

27Mr. Patel retracted his position of seeking a current value between $750,000 and $780,000 as he acknowledged that he had no evidence to support his position. He stated that he relies on the builder sale amount of $810,990.

28Mr. Patel stated that the purchase amount paid to the builder of $810,990, includes a $96,000 HST adjustment and a rebate of $24,000, concluding that the net sale price is $738,929.

Appellant's Submissions

29Mr. Patel expressed the opinion that all of MPAC's suggested property sales are speculative sales, because they had short ownership timelines.

30The Appellant suggested that MPAC's comparable, 90 William Graham Drive, with a sale date of May 31, 2016, was not an MLS® sale, and, therefore, alleges it is not an open market sale. He said he had no evidence to support his conclusion.

31The Appellant believes that short ownership timelines of the suggested comparable properties are indicators that the initial sales were speculative in nature.

32The Appellant does not believe that builder sales are lower than market sales. He is of the opinion that the initial sale prices are a result of speculative sales activity.

Findings

33Under 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, as in this case, no such transaction took place, the next best measure of current value is an 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. However, in this instance, the absence of market driven sales has resulted in both parties relying on builder sales entirely.

34Although not formally qualified to give opinion evidence, the Board nevertheless shall take into consideration the views of the Appellant, assigning the proportionate weight necessary in its determination of current value.

35The Board has considered the suggested comparable properties, albeit builder sales. Nevertheless, to enable an estimate of value for the Subject Property to be derived from these suggested comparable properties, there must be sufficient elements of comparability, such as building area, land area, land frontage, age of construction, physical condition, etc. so as to enable a direct comparison to be made.

36The Board finds the Appellant's submission that builder sales are not lower than market determined sales, unpersuasive. He provided no evidence of property sales to support this submission. Furthermore, the Board finds the Appellant's submission that speculative sales activity accounted for the sale prices of the suggested comparable properties, is not corroborated by supporting evidence.

37It is the mandate of the Board to determine based on the best evidence, the correct current value as of the January 1, 2016 valuation date. In the absence of any alternative evidence, the best evidence in this proceeding is Mr. Ng's eight suggested comparable properties. The Board does not rely on MPAC's mass appraisal model result, as there is no evidence to verify its accuracy.

38The Board has reviewed Mr. Ng's suggested comparable properties and related time adjustment factors and is persuaded by the analysis that the current value is $1,028,230. While this value is higher than MPAC's assessed value, the Board notes this is consistent with Mr. Ng's contention that builder sales tend to be lower than similar market driven sales. However, MPAC has indicated that it is not seeking a higher value than its assessed value. For these reasons, the Board accepts that $919,000 is the correct current value of the Subject Property.

DECISION

39The current value of the Subject Property is $919,000 for the 2017 and the deemed 2018 taxation years.

2018 DEEMED APPEAL

40An appeal for the 2017 taxation year is presently before the Board. Section 40.(26) of the Assessment Act provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2017 appeal before March 31, 2018. For that reason, this decision also applies to the 2018 taxation year.

41Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

(26) For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.