Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 25, 2019

FILE NO.: WR 150094

Assessed Person(s): David Barrett Gladwin and Mary Florence Soper

Appellant(s): David Barrett Gladwin and Mary Florence Soper

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 02

Respondent(s): City of Brockville

Property Location(s): 15 St. Andrew Street, Unit 1002

Municipality(ies): City of Brockville

Roll Number(s): 0802-020-035-14231-0000

Appeal Number(s): 3211487

Taxation Year(s): 2016

Hearing Event No.: 688364

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

Heard: December 7, 2017 by telephone conference call

APPEARANCES:

Parties	Representative
David Gladwin and Mary Soper	Self-represented
MPAC	Amy Raycroft
City of Brockville	No one appeared

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

REASONS

Background

1David Gladwin and Mary Soper are the owners of 15 St. Andrew Street, Unit 1002 (the “Subject Property”), a residential condominium unit located in the Tallships Condominium Complex in the City of Brockville.

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”).

3MPAC has assessed the current value of the Subject Property at $678,000 as of the January 1, 2012 valuation date.

4Mr. Gladwin and Ms. Soper (the “Appellants”) have filed an appeal for the taxation year 2016 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 that the correct current value is $636,145. At this hearing, MPAC takes the position that its assessed value is correct.

5Pursuant to s. 40(11) of the Act, the Municipality, in this case, the City of Brockville, 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 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 in issue.

8At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value for the 2016 tax year is $678,000.

Relevant Legislation

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 main issue to be determined in this appeal is the correct current value of the Subject Property for the taxation year 2016. In addition, certain sub-issues have been raised for which the Board needs to address:

a. The impact on value of unit floor level (height);

b. The impact on value of unit customization

Description of the Subject Property

11The Subject Property is a corner condominium unit, featuring two bedrooms, two bathrooms, one fireplace, an open balcony and two premium parking spots. It is a residential condominium unit on the 10th floor of a medium, 20 storeys high rise building known as “The Lookout Tall Ships Landing”, facing west overlooking the Saint Lawrence River. The Subject Property is the “T’Gallant West” Model with a partial upgrade of interior finishings. As a corner unit, it abuts the elevators and garbage chute overlooking the commercial delivery and garbage pickup bays located at ground level, that accommodate the needs of a restaurant and aquarium and discovery centre known as the Aquatarium.

Discussion, Analysis and Findings

MPAC’s Evidence

12Amy Raycroft represented and testified as the Property Valuation Specialist on behalf of MPAC. She filed a valuation report for the Subject Property at the hearing.

13Ms. Raycroft states that the Subject Property was registered in December of 2014, selling for $663,080 including two premium indoor parking spots valued at $60,000. She conducted an analysis for the entire complex using the Direct Comparison Approach to arrive at her opinion of current value. Units were separated according to the building stack they were located and compared to only those in the same stack.

14Ms. Raycroft relied on Builder Sales as the best indication of value for 2012, as the majority of Purchase Agreements for the condominium units were dated during the base year 2008-2013. She argued that, because the condominium complex was under construction in 2013 and only completed sometime in 2015, it is difficult to find other proposed comparable properties offering comparable features to the Subject Property. For this reason, she decided to use the available Builder Sales information as part of her analysis. This required adjusting sale prices over a lengthy period of time as units were purchased over a few years and registered much later.

15Ms. Raycroft identified the sales of seven proposed comparable properties within the Tallships Condominium Complex for her analysis. All the proposed comparable properties are in the same stack as the Subject Property. All the proposed comparable properties have the exact same floor area and “identical structural features” as the Subject Property, with only the number of indoor parking spots differing among units. Three of the units (including the Subject Property) have two indoor parking spots, the rest have only one parking spot.

16Ms. Raycroft treated all the proposed comparable properties as inclusive of parking, rather than addressing parking spaces as separate sales items, as was the process with the Builder at the time of purchase.

17Ms. Raycroft did not consider adjustments for floor height (level). Unit sale prices were assumed to include the price of parking and all adjustments for time were backward adjusted to January 1, 2012.

18Ms. Raycroft notes in her analysis that house price increases of 7.1% occurred in the Subject Property’s vicinity for the period January 2009 to December 2012.

19Ms. Raycroft determined that the assessed current value is at market value for the exact same unit type in the complex, that the current value for the Subject Property falls within the range defined by the proposed comparable properties in her analysis.

20Ms. Raycroft calculated a median time adjusted sale price to unit floor area ratio ($1,622 per square foot) of $456 rounded, using her proposed comparable units. She applied this result to the Subject Property’s floor area (also $1,622 per square foot), arriving at an estimated market value to be $739,000. Applying the assessment to sales ratio of 0.92% to $739,000, Ms. Raycroft estimates market value for the Subject Property as $679,000.

21Ms. Raycroft concludes that the recommended current value of $678,000 for the Subject Property is correct.

MPAC’s Submissions

22MPAC submits that the correct current value for the taxation years 2016 is $678,000 and that the disagreement between the Appellants and MPAC pivots on the approach used to determine current value.

23MPAC disagrees with the Appellant’s approach of factoring in the specific parking packages of each unit, the unit customization upgrades and the unit’s floor level (height) into the determination of current value.

24MPAC disagrees with the Appellants’ view that parking is worth more than the $9,000 per indoor spot, recognizing that many owners payed $25,000 and more for a spot.

25MPAC disagrees with the Appellants’ view that unit floor level (height) plays a role in pricing of units. It challenges the Appellant’s monetizing of floor height at $6,000 per floor, arguing that it was not consistent on each floor.

26MPAC disagrees with the Appellants’ costing estimates for materials. MPAC questioned the accuracy of a floor materials pricing document provided by the Appellants.

27When asked by MPAC for evidence to quantify the value associated with the custom upgrades, costing estimates and unit floor level price differentials, the Appellants admitted they have no quantitative evidence other than their assumptions to support their calculations and could not be certain as to the specific unit upgrades. They admitted that pricing of floor materials came from a sample price list from 2011 and are not sure if it is the same pricing for 2013.

28MPAC disagrees with the Appellant’s approach of adjusting unit prices based on occupancy date. MPAC argues that the Agreement of Purchase and Sale date is more useful, as it falls within the shoulder years of the 2012 valuation year, than using the occupancy date. MPAC also argues, given that most units were registered a few years after the occupancy date, the latter date would not prove useful in its analysis.

29MPAC disagrees with the Appellants’ decision to selectively ignore time adjustments for unit sales that occurred nine months from the valuation date.

Appellant’s Evidence

30The Appellants represented themselves. Mr. Gladwin spoke for the Appellants. The Appellants were not formally qualified to give opinion evidence however, their views, beliefs, suggestions and claims shall be given consideration where appropriate for the Board to make a determination of current value.

31Mr. Gladwin filed a valuation report (“Report”) dated September 7, 2017 at the hearing.

32The Report refers to the use of the Direct Comparison Approach in its analysis. The proposed comparable properties used for analysis include Units 902, 1102, 1402, 1502, 1602 and 1902, all in the same building as the Subject Property, all having the same layout and position within the floor plate, although at different floor heights. These units were all purchased from the same sales price sheet prior to construction. Mr. Gladwin said that his proposed comparable properties are the same as those used in MPAC’s analysis. He maintains that only Units 9, 10, 11 are considered the best evidence for comparability to the Subject Property.

33The Report states that the Condominium Corporation was registered in December 2014. Before then, the building was under construction and did not exist until 2013, and unit occupancy started in September of the same year. The condominium building was completed and occupied before 2016, the tax year in question. The Report states that actual sales of the proposed comparable properties started to appear during the 2013 to 2014 period.

34Mr. Gladwin interprets the use of the “Interim Occupancy Date”, not the “Purchase Date” as being more accurate for sale price determination and time of sale, challenging MPAC’s position. The Report states that the Subject Property’s date of sale was July 9, 2014, considered the Interim Occupancy Date.

35The Appellants maintain that the building as a whole was marketed by the builder, offering a very high degree of customization potential to prospective purchasers resulting in a broad range of final purchase prices. Customizing flooring type, fireplace style, kitchen and bathroom cabinetry, fixtures, tiling, countertops, etc. are examples of customization options.

36Mr. Gladwin argues that unit value pivots on the number of parking units, floor height and the degree of customization of each condo unit. The Report states that the difference between the lowest comparable unit sale price ($639,877) and the highest comparable sale price (841,700) represents a 32% spread. Mr. Gladwin maintains that for supposedly identical units, a 32% spread in sale prices from lowest to highest is noteworthy, and that such a price difference reflects a significant variation in terms of value associated with customization, number of parking units and the floor level of the condominium unit. He asserts that the biggest difference between units in terms of pricing is due to the degree of customization.

37Mr. Gladwin maintains that, in terms of parking spot pricing, there is a 5.5% variance in total sale price between the proposed comparable units, indicating in his view, that the quantity and type of parking package purchased has an impact on value.

38Mr. Gladwin has assigned a $6,000 per floor value to unit floor height, noting that with a range of nine floor levels, the influence of floor height is reflected in the higher floor level unit having an added value of $54,000 in the sale price. Mr. Gladwin alleges this represents an 8% variation in total sale price among the proposed comparable units.

Appellant’s Submissions

39Relying on their evidence, the Appellants submit that the correct current value for the taxation year 2016 is $636,145.

40The Appellants assert that floor height within the building is an important consideration because it affects the view and its relationship to the activities on the grounds surrounding the building, such as parking, garbage pickup and restaurant deliveries. The Appellants argue that from their observations, floor values are more consistent on Floors 9 and higher.

41The Appellants acknowledge that their account of the estimates on customizations of each unit, is subjective and not fact based.

42The Appellants maintain that the upper floor units, particularly those selected by MPAC (16th and 19th floor units), have a greater degree of customization and therefore are not suitable condominium units to be used as comparable properties. Mr. Gladwin is of the opinion the lower floor condominium units are more comparable to the Subject Property.

43The Appellants are concerned of the future plans for new development phases slated for the complex, arguing that the new buildings will negatively impact on their unit’s views of the waterfront and thus affect the value of their unit.

Findings

44Under 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 arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2012.

45In this instance, the Board is presented with only Builder Sales as evidence by both parties. The Board recognizes the limitations of Builder Sales of not necessarily reflecting market determined sale prices. However, the fact that all the comparable properties by both parties are the result of Builder Sales and from the same condominium project, the Board sees merit in consistency of location and property type, thereby mitigating the short comings of non-market derived sales. The Board, therefore, finds that in this instance, Builder Sales are the best evidence from which it can determine current value.

46The Board has reviewed all the proposed comparable properties from both parties, noting that they are the same properties used in their respective analyses. For the Board to make a finding of current value from the proposed comparable properties in this instance, there must be sufficient elements of comparability to the Subject Property in terms of physical factors, such as floor area, age of construction, physical condition, quality of finishings, customization and location of the individual units.

47The Board finds that MPAC’s seven proposed properties are relatively comparable to the Subject Property. However, the Board notes that MPAC only deals with the “structural features” as a point of comparison. No details are provided on any other elements of the units to explain the significant price differential between the higher floor units and the units immediately above and below the Subject Property.

48The Board notes that Ms. Raycroft’s evidence does not provide any explanation of why she chose her proposed properties as the best comparables to the Subject Property, namely those units on the 16th and 19th floors, Units 1602 and 1902. With the exception of the unifying element that both units have two parking spots similar to the Subject Property, their respective sale prices are considerably higher than the Subject Property. The Board finds that by including the Subject Property, which MPAC also considers as the third best unit as a comparable property, the unit sale prices range from $663,080 up to $798,284, a $135,204 spread.

49The Board finds that MPAC did not provide any analysis to explain why these properties were selected over the other four proposed comparable properties. The evidence is very clear that all units have exactly the same floor area, constructed in the same time frame and have the same waterfront view.

50The Appellants’ argument relating to condominium unit floor height and variations in customization contributing to the differences in sale prices, offers a plausible explanation for the wide variation in prices. While the Board recognizes the non-market nature of builder sales, the only plausible differentiating factors presented before the Board for consideration, other than the number of parking units, to account for the higher sale prices, are the unit floor level/height and the degree of customization. In MPAC’s selection, two of its three best comparable properties are on the highest floors and according to the Appellant, allegedly with greater degrees of customization than the Subject Property.

51The Board finds that the Appellants’ estimates on customization details and costing are their opinions only and not based on facts. The Appellants have admitted this as well. The Board therefore, in regards to the customization features specific to each proposed comparable property, gives no weight to the issues of customization and costings in its determination of current value.

52The Board finds that the Appellants’ monetized values for parking spots and condominium unit floor level to be arbitrary and without corroborating evidence, leaving the Board with no persuasive evidence to support these monetized values as fact based.

53The Appellants’ assumption that adjustments for time are not needed because the time interval is not significant, is somewhat confusing, particularly when they refer to time adjusting their own proposed comparable properties. The Board notes this inconsistency in approach by the Appellants.

54The Board finds that the Appellants’ assumption of equating the occupancy date to the registration date to be misleading. The sale of any real property is a matter of transferring ownership. In this instance, the occupancy date is an interim stage prior to actually transferring ownership from the builder/developer to the condominium unit buyer. Such a transfer occurs on the registration date.

55Whereas the Board considers that the Appellants’ argument which favours factoring in unit customization, unit floor level height and unit parking configuration is compelling, the Board finds that the Appellants’ monetization assumptions, associated dollar values for floor height, customization and parking configuration are not supported by any fact based evidence. Therefore, the Board can ascribe little weight to this evidence. For this reason, the Board does not find that this evidence is persuasive. The Appellants acknowledge that the assumptions and figures used are estimates only, that the degree of customization for specific units are subjective and not fact based. For these reasons, the Board does not consider that these are reliable factors on which the Board can rely on when making its determination of current value.

56Turning to the issue of determining current value, the Board finds that the adjacent two units to the Subject Property (9th and 11th floors) to be the best comparable properties to arrive at a current value. Their relative proximity, sale pricing and limited customization, offers more compelling evidence than the proposed comparable properties on the 16th and 19th floors. The Board rejects MPAC’s recommended units 1602 and 1902 as too over-priced compared to the Subject Property, particularly given that none of the units were subjected to the whims of the open market.

57The Board determines that by taking Units 902, 1102 and the Subject Property’s sale prices into consideration and calculating the mean time adjusted sale price, the Board arrives at a current value of $673,216 for the taxation year 2016, as of the January 1, 2012 valuation date. The Board chose not to make any adjustments for parking. As the value of parking is a matter of disagreement by both parties, the Board chose not to factor in the additional parking unit. However, the Board notes that the additional parking unit would increase current value over the value of $678,000, which is MPAC's assessed value. As MPAC is not arguing that the correct current value is higher than MPAC’s assessed value of $678,000, the Board accepts that $678,000 is the correct current value of the Subject Property.

DECISION

58The correct current value as returned as of the January 1, 2012 valuation date, in the amount of $678,000 for the 2016 taxation year.