Huczek v. Municipal Property Assessment Corporation, 2019 CanLII 14352

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 19, 2019

FILE NO.: WR 156292

Assessed Person(s): Richard Huczek, Bonnie Huczek

Appellant(s): Richard Huczek, Bonnie Huczek

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 9

Respondent(s): City of Toronto

Property Location(s): 2 Edyth Court

Municipality(ies): City of Toronto

Roll Number(s): 1919-051-740-03300-0000

Appeal Number(s): 3262536 and 3297287

Taxation Year(s): 2017 and 2018

Hearing Event No.: 703874

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

Heard: October 2, 2018 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Richard Huczek, Bonnie Huczek

Self-represented

MPAC

Edward Mui

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY ROBERT STEINBERG

REASONS

BACKGROUND

1Richard and Bonnie Huczek (“Appellants”) are the owners of 2 Edyth Court (“Subject Property”), City of Toronto, which is a single family residence with a building area of 2,238 square feet (“sq. ft.”) and an effective site area of 0.20 acres.

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 and 2018 taxation years, the MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”).

3MPAC has assessed the current value of the Subject Property at $1,847,000.

4The Appellants have filed appeals for taxation years 2017 and 2018 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessment of current value is too high and the correct value is $1,200,000. At this hearing, MPAC takes the position that its assessed value is correct.

5Pursuant to s. 40(11) of the Act the City of Toronto 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. MPAC takes the position that an equitable reduction is not required. The Appellants did not assert that an equitable reduction is required. Therefore, in this proceeding this ground for appeal is not an issue.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the correct current value of the Subject Property for the 2017 and 2018 tax years is $1,847,000.

Relevant Rules and Regulations

8The 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

2. (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.

4. (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.

5. (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

9The issue to be determined on this appeal is what is the correct current value of the Subject Property for the taxation years 2017 and 2018.

Discussion, Analysis and Findings

MPAC’s Evidence

10Edward Mui, Property Valuation Analyst, representing MPAC has a B. Sc. degree and holds the A.I.M.A. designation from the Institute of Municipal Assessors.

11Mr. Mui’s provided a drawing of the first floor of the Subject Property indicating a first floor measurement of 2,276.8 sq. ft. plus an attached garage of 318.72 sq. ft. He also provided a description of “living area” that is taken by the exterior measurements of the building to determine the total area or square footage of the building.

12Mr. Mui’s submitted as evidence a valuation report dated April 27, 2018 (“Valuation Report”) which describes the Subject Property and five proposed comparable properties, including details as to the nature of the properties.

13The five proposed comparable properties are as follows:

1. 1 Lake Shore Drive,

2. 2677 Lake Boulevard West,

3. 93 Lake Promenade

4. 2 Lake Shore Drive and

5. 6 Chartwell Road (which is located in the Town of Oakville).

Mr. Mui indicated that they were in the vicinity and the nature of these properties is comparable to the Subject Property. All of these suggest comparable properties are waterfront properties.

14Mr. Mui’s analysis of the comparable properties is as follows: Property 1 is considered superior to the Subject Property as larger property with a higher Quality Class. Property 2 is considered most closely comparable to the Subject Property. Properties 3 and 4 are considered inferior to the Subject Property due to size and age. Mr. Mui acknowledges that Property 5 is in a different municipality (Oakville) but he indicated it is necessary to consider this additional property, due to the limited number of comparable properties in the City of Toronto. It is his view that it is very comparable in nature to the Subject Property.

15Mr. Mui’s response to the Appellants is that, based on their analysis of the five comparable properties using the Direct Comparison Approach, the range of the adjusted selling prices is from $3,113,000 to $3,591,000 with a median of $3,427,000. He concluded that the value of the Subject Property is $3,358,000. Mr. Mui advised that, in previous 2008 and 2012 assessment cycle appeals for the Subject Property, the Board applied a 45% downward adjustment when determining current value. He indicated that, while he could not explain the reason for this downward adjustment, but he accepts that this reduction should continue to apply. Reducing $3,358,000, by 45%, he concludes that the correct current value of the Subject Property is $1,847,000

MPAC’s Submissions

16MPAC relies on Mr. Mui’s evidence in support of MPAC’s submission that the correct current value for the 2017 and 2018 taxation years is $1,847,000.

Appellant’s Evidence

17The Appellants, Mr. and Mrs.Huczek, testified together.

18The Appellants provided a drawing of their property indicating a first floor area of 2,289.63 sq. ft. based on external measurements.

19The Appellants also provided a detailed drawing of the Subject Property indicating its interior measurements, as well as a plot plan showing the coverage of the improvement on a portion of the lot and a copy of the original survey on title. In addition, the Appellants provided aerial photographs of the Subject Property and nine properties in the immediate vicinity.

20The Appellants described renovations to the Subject Property which includes an 870 sq. ft. addition. In their view the 590 sq. ft. of unfinished basement should not be assessed by MPAC.

21The Appellants submitted a detailed interior layout of 127 Lake Shore Drive along with MPAC’s Comparable Property Report for the property. They also testified that, due to the narrow nature of Edyth Court, the Municipality does not properly maintain or plow the road, there are no storm sewers, garbage trucks have poor access and that access to the residence is by way of a shared easement with three other properties.

Appellants’ Submissions

22The Appellants submit that the correct current value for both taxation years is $1,200,000. The Appellants emphasize that there has been a substantial increase of the assessed value of the Subject Property, approximately 36%, between the previous assessment cycle (valued as of January 1, 2012) and the current cycle (valued as of January 1, 2016). They submit that this increase in assessed value is not warranted.

23The Appellants’ view is that the proposed comparable properties used by MPAC are not appropriate, as they argue that all are superior to the Subject Property in quality of construction and design.

24The Appellants submit that MPAC is not correct in using exterior measurements of the improvement to the Subject Property, in order to calculate living area. They argue that, instead, interior measurements should be used.

25The Appellants submit that MPAC’s calculations should include only the lot area above the hazard line which does not have restrictions as to future expansion of the improvements. They also assert that the frontage of the land should be from the municipal road, not the 96.5 water frontage on Lake Ontario.

26The Appellants submit that, due to the narrow nature of Edyth Court, the Municipality does not properly maintain or plow the road, that there are no storm sewers, that garbage trucks have poor access and that access to the residence is by way of a shared easement with three other properties.

27The Appellants submit that the 45% downward adjustment carried over from the previous assessment cycle should be applied to MPAC’s assessed value of $1,847,000 not Mr. Mui’s conclusion as to current value before the discount is applied, i.e. $3,358,000.

Findings

28The Board finds that four of MPAC’s proposed comparable properties located in the City of Toronto are comparable to the Subject Property, namely:

a. Property 1, Lake Shore Drive, which has a Time Adjusted Sale Amount (“TASA”) of $1,849,675;

b. Property 2, 2677 Lakeshore Boulevard West, which has a TASA of $1,787,504;

c. Property 3, 93 Lake Promenade, which has a TASA of $1,404,152; and

d. Property 4, 23 Lake Shore Drive, which has a TASA of $1,633,000.

29The Appellants submit that MPAC’s comparable properties are all superior. The Board does not accept this submission because the Board finds that they all have significant smaller frontages on Lake Ontario. Also, comparable Properties 3 and 4 are both one storey, and each have a building total area that is approximately one half the area of the Subject Property.

30The Board calculated the rate per square foot of each of the two one-storey comparable properties by dividing the TASA by the square footage with the calculated rates per square feet as follows:

• Property 3: $1,333.47 per sq. ft. with an effective water frontage of 30 feet.

• Property 4: $1,440.05 per sq. ft. with an effective water frontage of 29 feet.

31Therefore the Board analyzed comparable Properties 3 and 4 which are both one-storey residences and have a mean of $1,386.76 per sq. ft. which when applied to the Subject Property of 2,238 sq. ft. gives a current value of $3,103,568.

32The downward reduction of 45% that is carried over by MPAC from a previous Board decision is not disputed by either party. Therefore, the Board accepts this reduction. Based on the mean rate per sq. ft. of Comparables 3 and 4 the current value is $3,103,568. Applying the 45% reduction to this amount results in a reduction of $1,396,605 for a current value of $1,706,963. This analysis, based on just two of the comparable properties, indicates that the MPAC's analysis is reasonable. For this reason, the Board finds that the correct current value of the Subjec Property is $1,847,000.

33The Appellants submit that the 36% increase in current value from the 2012 to 2016 base year is not warranted. However, the increase is not considered by the Board as the amount of increase or decrease from the previous base year is irrelevant. The Board must value the Subject Property based only on the condition of the property and the market as of the valuation date, January 1, 2016. There is nothing in the Act requiring that there be a correlation for different base years, nor is there a requirement that all properties increase in value by the same percentage.

34The Appellants indicated that MPAC was not correct in their calculation of the area of the Subject Property because MPAC used exterior measurements. The Board does not accept the Appellants’ submissions that interior measurements should be used in this case, because interior measurements are used for multi-family properties such as apartments and condominiums. The Board accepts that exterior measurement is the correct method to determine total building or living area, as this is the method that is used consistently for all free standing single family residences assessed by MPAC.

35The Board accepts MPAC’s method to determine the frontage by the exposure on the Lake as opposed to the road. This is the normal practice for properties with frontage on a lake and has been applied in same manner to all of the comparable properties.

36The Board notes that the lot size of the Subject Property supports the existing improvements and although a portion of the lot may not support an additional building due to setback requirements from Lake Ontario, the current utility of the residential lot is not impacted.

37The Appellants submit that the current value of the Subject Property should be reduced to reflect the narrow nature of the street, restrictions as to access and a shared access easement. However, the Board notes that they provided no evidence to support a conclusion that these factors would reduce the current value, nor did they provide any evidence to indicate what specific amount the reduction should be.

38The Board did not receive any evidence to explain how the 45% reduction was calculated, only that it was carried over from a previous Board decision. MPAC has satisfied the Board that the resulting 2016 current value of $1,847,000 is supported by their evidence. In reaching this conclusion, the Board also notes that the Appellants did not provide any comparable sales analysis in support of their position that the correct current value should be $1,200,000.

DECISION

39The current value of the Subject Property is confirmed at $1,847,000 for the 2017 and 2018 taxation years.