Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 21, 2019

FILE NO.: WR 154692

Assessed Person(s): Magdalena Nagy

Appellant(s): Magdalena Nagy

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

Respondent(s): City of Toronto

Property Location(s): 295 Senlac Road

Municipality(ies): City of Toronto

Roll Number(s): 1908-072-520-00100-0000

Appeal Number(s): 3262096 and 3293140

Taxation Year(s): 2017 and 2018

Hearing Event No.: 701693

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

Heard: July 11, 2018 by teleconference call

APPEARANCES:

Parties	Representative
Magdalena Nagy	Self-represented
MPAC	Aron Perrie
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY JOSEPH JEBREEN

OVERVIEW

1Magdalena Nagy (the "Appellant") appeals the assessment of her property located at 295 Senlac Road in the City of Toronto (the "Property"). MPAC submits that the correct January 1, 2016 current value of the Property is $1,100,000. It is not seeking an increase to the 2017 returned assessment of $1,052,000 or the 2018 returned assessment of $999,000. The Appellant takes the position that the correct current value is $899,000.

2For the reasons that follow, I find that the current value of the subject property as of January 1, 2016 is $1,134,000 for the 2017 and 2018 taxation years and I further find that an equitable adjustment to 89% of the current value is warranted. The equitable assessment is therefore $1,009,000. The 2017 returned assessment is therefore reduced from $1,052,000 to $1,009,000. Since MPAC did not seek an increase to its 2018 assessment, the returned assessment of $999,000 is confirmed for the 2018 taxation year.

BACKGROUND

3The Property under appeal is in the City of Toronto. It has a frontage of 60 feet and a depth of 131 feet for a total site area of 7,860 square feet ("sq. ft."). The Property is in an urban area on the corner of Senlac Road and Hounslow Avenue and is connected to municipal water and sewer.

4The main structure is a single family detached residential dwelling with an attached garage. The 1,296 sq. ft. 2 ½ storey dwelling was built in 1963. The basement is 1,330 sq. ft. with 1,099 sq. ft. of that area finished. The Appellant rents out the Property to a tenant.

ISSUES

5The first issue to decide is the current value of the Property. In other words, I must determine what the Property would have sold for in an arm's length transaction on January 1, 2016. Once the current value has been determined, clause 44(3)(b) of the Assessment Act, R.S.O. 1990, c. A.31 (the "Act") requires that I "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" but only if that adjustment would result in a reduction of the assessment.

6In addition to the 2017 taxation year appeal, the 2018 taxation year appeal is also before me because, pursuant to subsection 44(26) of the Act, a 2018 appeal is deemed to have been filed if the 2017 taxation year appeal was not finally disposed of before March 31, 2018.

LAW AND ANALYSIS

Current Value

7Subsection 40(17) of the Act states that MPAC has the burden of proving "the correctness of the current value of the land." As this Assessment Review Board (this "Board") found in Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation, Region 5, 2019 CanLII 39629 (ON ARB), 2018 CanLII 70338 (ON ARB) ("Patry Enterprises") at paragraph 21, the burden is around "current value" and not the assessment. That is, MPAC is not required to prove the correctness of its returned assessment. It is required to prove the correctness of "the amount of money the fee simple, if unencumbered, would realize if sold at arm's length from a willing seller to a willing buyer."

8Patry Enterprises summarizes the procedure to follow in an appeal where current value is at issue, at paragraph 40:

...first look at MPAC's evidence on its own and make a determination as to whether it can prove its suggested current value on a balance of probabilities. If MPAC meets its burden, the Board should review all of the evidence before it and determine the current value of the property. However, if MPAC has not met its burden, the taxpayer's evidence must be analyzed to see if it is capable of proving that a particular current value is more likely than not. If there is no evidence in the record that is capable of proving current value, the Board should fix the assessment at the last uncontested assessed value.

9I will follow that procedure here.

Can MPAC's evidence prove its suggested current value?

10As stated in Patry Enterprises at paragraph 23, in order for MPAC to meet its burden, MPAC's evidence "must show how the current value MPAC is proposing is arrived at and why that value is correct. Without this bare minimum, the Board cannot possibly determine if MPAC's proposed current value is correct."

11MPAC submitted a Valuation Report to establish an opinion of current value. As with most residential properties, MPAC relies on the direct comparison approach to prove its suggested current value of $1,100,000 for the Property.

12To satisfy its burden when using the direct comparison approach, MPAC cannot simply present any properties. It must review the market data and select properties that are in fact comparable. In her Valuation Report, Aron Perrie relies on six comparable properties in her current value analysis as summarized in the table below:

Property	Subject	Sale 1	Sale 2	Sale 3	Sale 4	Sale 5	Sale 6
Date sold		09/01/2016	02/19/2016	03/30/2015	07/06/2016	09/25/2015	03/20/2016
Address	295 Senlac Rd.	302 Hounslow Ave.	284 Hounslow Ave.	319 Senlac Rd.	117 Talbot Rd.	253 Drewry Ave.	261 Horsham Ave
Lot area (sq. ft.)	7860	6550	7860	7500	5739.9	7039.8	7552.5
Frontage/ Depth (feet)	60/131	50/131	60/131	50/150	50.35/114	60/117	49.5/133
Primary building type	Single family detached	Single family detached	Single family detached	Single family detached	Single family detached	Single family detached	Single family detached
Building area (sq. ft.)	1,296	1,024	1,255	1,194	1,226	1,298	1,125
Year built	1963	1947	1955	1950	1969	1965	1954
Quality of construction	6	6	6	6	6	6	6
Basement area (sq. ft.)	1,330	1,024	1,073	780	1,358	1,381	1.151
Finished basement area (sq. ft.)	1,099	160	462	330	887	980	450
Sale price		$1,236,000	$1,148,300	$860,000	$1,355,000	$952,000	$1.250,000
Time adjusted sale price		$1,006,732	$1,103,934	$1,153,628	$1,154,026	$1,050,509	$1,171,530

13Like the Property, all of MPAC's suggested comparable sales are single family detached residential dwellings. All of the comparable sales are within 1.3 kilometres of the Property and have similar, if not identical, lot sizes. The primary residential structures are also quite similar.

14Ms. Perrie's opinion is that all six comparable sales are either similar or slightly inferior properties that provide a good range of values for the Property.

15Using time adjustment factors that she calculated, and based on her analysis of the comparable properties, Ms. Perrie's opinion is that the Property has a value below $1,171,530 (see Sale 6 above) but above $1,006,732 (see Sale 1). She estimated a value of $1,100,000 based on the average of the six comparable properties she presented.

16With this evidence, I find that MPAC has met its burden. Ms. Perrie clearly showed her pathway to arriving at her proposed current value of $1,100,000 and why, in her opinion, that value is correct. That is what is required as a minimum.

17I note that I am not making a finding that the correct January 1, 2016 current value is $1,100,000. Rather, at this stage of the analysis, I am simply finding that MPAC's evidence, if believed, can prove its proposed current value.

What is the correct current value of the Property?

18Following the framework in Patry Enterprises, if MPAC has met its burden, I must then determine current value based on all of the evidence before me.

19In response to MPAC's evidence, the Appellant did not provide any documentary evidence. She did not provide any evidence of other sales. Her main concern is that the assessed value of the Property has increased drastically as compared to the 2012 assessment. The Appellant agreed that Ms. Perrie presented what appeared to be an accurate valuation but she submits that this increase is unfair.

20All six sales presented by MPAC were within 1.3 kilometres of the Property in the densely populated area of North York. Two of the sales are within 63 metres of the Property, one of which (Sale 1) is the corner lot across the street from the Property. Another two sales are within 170 metres of the Property. All of the sales have either identical or very similar lot frontages, depths, and site areas. All of the sales have similar single family detached dwellings. There are differences in the structures such as size and some renovations, but these differences are not significant enough to require significant adjustments. All six comparable properties were sold within nine months of the January 1, 2016 valuation date. A willing buyer would use the information of these six sales in determining what amount to purchase the Property for.

21However, for reasons given in previous decisions¹, I do not accept the time adjustment study. The comparable properties sold between March 30, 2015 and September 1, 2016. Although this neighbourhood may have experienced a large increase in values due to a thriving market, the evidence as presented does not persuade me for the reasons cited in my previous decisions. Also, as there are comparable sales on either side of the January 1, 2016 valuation date, the effect of time on sale prices is lessened.

22Based on the foregoing analysis, the current value of the Property is likely to be between $860,000 (Sale 3) and $1,355,000 (Sale 4), with the midpoint being $1,108,000. However, the sale prices of four of the six properties are above the midpoint, the median of the six sale prices is $1,192,150 and the mean of the six sale prices is $1,133,550. These three factors indicate a current value that is slightly higher than the midpoint. As I have found that all six comparable properties are similar to the Property and therefore good indicators of current value, there are no outliers in this small dataset. I therefore find the mean value of $1,133,550, or $1,134,000 rounded, to be the January 1, 2016 current value.

Equity

23Section 44(3)(b) of the Act requires me to consider whether an equitable adjustment to the current value is required:

44(3) For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(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.

24Ms. Perrie submits that the proper test for "similar lands in the vicinity" for equity purposes is that the properties only need to be of the same general nature, character or function as the Property. This is not the correct test for determining similar lands in the vicinity.

25In Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299 ("Loblaw"), the Divisional Court specifically considered whether the test of "the same general nature, character or function" was approved by the Supreme Court of Canada in Regional Assessment Commissioner v. Downtown Oshawa Property Owners, [1978] 2 SCR 1030, 1978 CanLII 36 (SCC) ("Downtown Oshawa"). The Divisional Court found, at paragraph 22, that the Supreme Court of Canada in Downtown Oshawa did not adopt the test of the "the same general nature, character or function" as set out by the Court of Appeal in that case. Rather, the Supreme Court of Canada referred to "many points of comparison" in determining whether properties were similar. The Divisional Court further found, at paragraph 26, that the Downtown Oshawa Decision "does not decide the appropriate test."

26The Divisional Court in Loblaw confirmed, at paragraph 25, that the "the proper approach to be taken to determining what are "similar lands in the vicinity" is... that all points of comparison must be considered."

27The Divisional Court further found, at paragraph 25, that a single point of similarity, such as use, is not necessarily determinative of what "similar lands in the vicinity" are.

28In the analysis on current value above, I only used comparable sales of single family detached dwellings within 1.7 kilometres of the Property. I find that the points of comparison that must be considered for similar lands in the vicinity are:

a. Properties with single family detached dwellings; b. Within 2 kilometres of the Property; and c. That sold either in 2015 or 2016.

29I note that it is the taxpayer's burden to prove that an equitable adjustment is required. However, the Appellant did not have any evidence or make any submissions relating to equity.

30MPAC submitted an equity report. Although Ms. Perrie did not use the proper test in determining what properties are similar lands in the vicinity, I find that the 30 properties selected by MPAC in its equity report are nevertheless similar lands in the vicinity for equity purposes. Twenty nine of the 30 properties were single family detached dwellings (MPAC's property code 301) and the last property was a single family dwelling converted to a duplex (MPAC's property code 332). All 30 properties sold from June 1, 2015 to June 30, 2016 and are within 0.5 kilometres from the Property.

31For reasons previously cited, I do not rely on the time adjusted sale prices in calculating the assessment to sale ratios. Using the 30 properties presented by MPAC, the median assessment to sale ratio is 0.89. The level of appraisal as indicated by the median ratio is below MPAC's target of 0.95 to 1.05 and suggests that properties in the vicinity are assessed, on average, at 89% of their value. Further, the coefficient of dispersion for the median is 24.9, which falls well outside of the acceptable range of 5.0 to 15.0 for single family residential properties in older or more heterogeneous areas. The high coefficient of dispersion indicates that the dataset is not uniform and varies considerably. Individual ratios vary, on average, by 24.9% in this sample. The 95% confidence interval of the median is 0.757 to 1.03.

32The mean assessment to sale ratio is 0.990. The level of appraisal as indicated by the mean ratio of 0.990 is well within MPAC's target of 0.95 to 1.05 and suggests that properties in the vicinity are equitably assessed. However, the standard deviation from the mean of 0.377 is significant and the 95% confidence interval is 0.855 to 1.12. I do not draw any conclusions from the 95% confidence intervals for the median or the mean because, as detailed below, the data varies significantly.

33The mean level of appraisal of 0.99 and the median level of appraisal of 0.89 suggest different equitable outcomes. In this instance, I prefer the median over the mean. A large percentage of the assessment to sale ratios lies outside of MPAC's target range of 0.95 to 1.05. Specifically, the ratios of 19 of the 30 properties are below 0.95, with the lowest ratio at 0.58, and another 7 properties are above 1.05, with the highest ratio at 2.05. So, 26 of the 30 ratios are not within the acceptable range. The coefficient of dispersion and the standard deviation show that the dataset varies considerably. When there are so many outliers and the uniformity of the data is put into question, the median is a better measure of central tendency. The mean is a helpful measure of central tendency when the dataset falls within a normal distribution. That is not the case here.

34The median tells us that 50% of the properties in this sample are assessed at or below 89% of their value. The assessment to sale ratios of 63% of the properties (19 out of 30) fall below the accepted level of 0.95. This trend in the data cannot be overlooked simply because the mean falls within the acceptable range.

35MPAC submits that an equitable adjustment to 91.5% of current value is warranted. Based on the analysis above, I find that an adjustment to 89% of current value is required. The current value of $1,134,000 is therefore reduced to $1,009,260, or $1,009,000 rounded.

CONCLUSION

36The current value of the Property as of January 1, 2016 is $1,134,000 for the 2017 and 2018 taxation years. However, an adjustment to $1,009,000 is required in order to make the assessment equitable with the assessments of similar land in the vicinity. The 2017 returned assessment is therefore reduced from $1,052,000 to $1,009,000. Since MPAC did not seek an increase to its 2018 assessment, the returned assessment of $999,000 is confirmed for the 2018 taxation year.

Footnotes

1. 1See Bernier v Municipal Property Assessment Corporation, Region 2, 2018 CanLII 107728 (ON ARB) at paras 47-55; Patrick v Municipal Property Assessment Corporation, Region 02, 2019 CanLII 7194 (ON ARB) at paras 31-37; Patrick v Municipal Property Assessment Corporation, Region 02, 2019 CanLII 7196 (ON ARB) at paras 30-36.