Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

February 28, 2019

FILE NO.:

WR 156993

Assessed Person(s):

Essam El Sandi; Sherine Soliman

Appellant(s):

Essam El Sandi; Sherine Soliman

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 15

Respondent(s):

Town of Oakville

Property Location(s):

91 Ennisclare Drive East

Municipality(ies):

Town of Oakville

Roll Number(s):

2401-040-110-13200-0000

Appeal Number(s):

3269510 and 3306884

Taxation Year(s):

2017 and 2018

Hearing Event No.

708174

Legislative Authority:

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

Heard:

October 26, 2018 by telephone conference call.

APPEARANCES:

Parties

Representative

Essam El Sandi and Sherine Soliman

Self-represented

MPAC

Raj Rakhra

Town of Oakville

Susan Price

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

BACKGROUND

1Essam El Sandi and Sherine Soliman (the “Appellants”) are the owners of 91 Ennisclare Drive East (the “Subject Property”), which is located in the Town of Oakville (the “Town”), in an area north of Lake Ontario and southwest of Lakeshore Road.

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”).

3MPAC has determined that the current value of the Subject property is $2,385,000, but has returned an assessment of $2,072,000 and has not given notice that it is seeking an increase.

4The Appellants have filed an appeal for 2017 taxation year with the Assessment Review Board (the “Board”), and have been deemed to have brought the same appeal with respect to the Subject Property for the 2018 taxation year pursuant to s. 40 of the Act. It was the Appellants’ position that MPAC’s assessment of current value is too high and that the correct current value is $1,700,000. MPAC took the position that its assessed value should not be reduced.

5Pursuant to s. 40(11) of the Act, the Town is a party to this proceeding. It is the Town’s position that the correct current value exceeds the assessed value of $2,072,000 and, therefore, the assessed value should not be reduced.

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 of 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.

7At the completion of the hearing, I reserved my decision. For the reasons that follow, I find that for the 2017 and 2018 taxation years, the current value of the Subject Property as of the January 1, 2016 valuation day is $2,123,000. I further find that an adjustment is not warranted for the purpose of equity.

8However, this current value exceeds the assessment as returned. Because no one is seeking an increase in the assessment, I confirm the assessment of $2,072,000 for the 2017 and 2018 taxation years.

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:

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

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 on this appeal is the correct current value of the Subject Property for the taxation years 2017 to 2018.

Discussion, Analysis and Findings

Description of the Subject Property

11The Subject Property is a corner lot located at the south east corner of Lakeshore Road and Ennisclare Drive East in the Town of Oakville. It has an effective frontage of 161 feet and an effective depth of 183 for an effective lot size of 0.65 acres. The lot is improved with a single storey detached residence built in 1959 with 2,294 square feet (“sq. ft.”) of building area. It has a 1,700 sq. ft. basement, 1,167 sq. ft. of which is finished. In addition, there is a triple-car garage.

12The assessment as returned of $2,072,000 reflects a -3% adjustment for the corner lot and a -8% adjustment for medium traffic on Lakeshore Road for a total adjustment of -11%. The Parties agree that these adjustments should be made when comparing the Subject Property to properties that are not located on a corner lot and do not abut a traffic nuisance.

MPAC’s Evidence

13Raj Rakhra represented MPAC. He prepared a Valuation Report respecting the Subject Property, dated April 25, 2018, which he submitted as evidence.

14In support of the current value, Mr. Rakhra presented a sales analysis report of three suggested comparable properties. All three are in the same area as the Subject Property, that is, in the same municipality and between Lakeshore Road and Lake Ontario, and all three have single-storey homes with initial build dates similar to the Subject Property.

15MPAC’s Sale Property 1, 64 Alexander Drive, is located furthest from the subject property at 1.22 kilometres. It sold in January 2016 for $2,250,000. Mr. Rakhra time adjusted the sale price to the January 1, 2016 valuation day resulting in a value of $2,237,304. Compared to the Subject Property, it has a slightly smaller lot size but it is not a corner lot. It was built in 1962 and was renovated in 1990. The building size is similar at 2,339 sq. ft. but the basement is larger at 2,311 sq. ft.

16The second property, 83 Ennisclare Drive East (“83 Ennisclare”), located next door to the Subject Property, sold in June 2016 for $2,250,000 with a time adjusted sale price of $2,117,811. Compared to the Subject Property, it has a smaller lot of 100 ft. by 185 feet, a smaller residence, with 1,629 sq. ft. and a smaller basement of 726 sq. ft. It is not a corner lot and does not have the same traffic nuisance as the Subject Property.

17The third property, 65 Cox Drive, is located one street over from Ennisclare Drive. It sold in March 2015 for $1,880,000 with a time adjusted sale price of $2,107,179. Compared to the Subject Property, it has a smaller lot of 100 feet by 171 feet, a slightly larger residence with 2,441 sq. ft. but a smaller basement of 1,332 sq. ft. It has an outdoor pool but it is not a corner lot and does not have the same traffic nuisance as the Subject Property.

18Mr. Rakhra took the average time adjusted sale value per square foot of building area for these three properties and applied that value to the Subject Property’s building area resulting in a value of $2,385,633. This value was calculated by taking the sale prices, on a square foot basis, from its three sales and applying that value to the Subject Property. ((2,250,000/2339 sq. ft) + (2,250,117/1,629 sq. ft.) + (1,880,000/2,441 sq. ft.) /3 x 2,294 sq. ft.).

MPAC’s Submissions

19Relying on its evidence, MPAC’s submits that the correct current value for the taxation years 2017 to 2018 is $2,385,000, rounded. MPAC takes the position that the assessment of $2,072,000 is fair and should be confirmed.

20MPAC argues that the areas located south of Lakeshore Road have a different market than areas located to the north and will fetch higher property values. MPAC argues that only properties located south of Lakeshore Road are comparable to the Subject Property.

21MPAC also argues that two-storey properties are not directly comparable to single-storey properties.

Municipality’s Evidence

22Susan Price represented the Town and presented photographs of the Subject Property, an aerial photograph and a map showing the location of the Subject Property, a sales analysis and photographs of 83 Ennisclare and 65 Cox Drive with a locational map and a real estate listing for 83 Ennisclare. The details of these two sales are outlined in MPAC’s evidence, above.

Municipality’s Submissions

23The Town takes the position that the returned assessment of $2,072,000 is fair and equitable.

24The Town submits that most homes that are similar to her two suggested comparable sales and the Subject Property have been replaced with newer, larger homes measuring 5,000 - 6,500 sq. ft. She testified that 65 Cox Drive was in relatively good condition but it was demolished after its 2015 sale and that she expects both 83 Ennisclare and the Subject Property will follow suit in the near future. As such, she provided a calculation of current value based on the value of the lots. Using MPAC’s time adjusted sale prices she calculated a value of $115.75 per square foot of lot for 83 Ennisclare and $120.00 per square foot of lot for 65 Cox Drive. Applying the average to the subject property’s effective lot size, which she calculates as 28,314 sq. ft., results in a value of $3,341,052. Adjusting this value for the corner lot and traffic results in a value of $2,973,536. Considering only the 83 Ennisclare sale, the lot value would be$2,897,937. She argues that this property is the most comparable because it is located next door to the Subject Property.

25The Town relies on its photographs to support its position that the Subject Property is better maintained than 83 Ennisclare and, therefore, it would likely sell for a higher value.

26The Town suggests that because these lots are smaller than the Subject Property’s lot, the economy of scale theory would mean that the Subject Property’s value would likely be lower that the above values. She also stated that a larger lot, like the Subject Property, is more desirable.

27In response to the Appellant’s suggested comparable properties, the Town takes the position that the area between Lakeshore Road and Lake Ontario is more prestigious than areas north of Lakeshore Road and will sell for higher values.

28In response to the Appellants’ suggested comparable of 217 Chartwell Road, the Town argues that Chartwell Road is almost as busy as Lakeshore Road. It is a heavily used north/south road and traffic-calming speedbumps have been installed. She argues that an adjustment for the traffic nuisance would not be required in this instance.

29On cross-examination of MPAC, the Town determined that none of MPAC’s sale properties are corner lots or are located on Lakeshore Road and have not been adjusted for these differences. The Town submits that applying these adjustments to the sales results in a value of $2,123,000 rather than $2,385,000.

Appellant’s Evidence

30Essam El Sanadi represented himself and Sherine Soliman. He presented two properties to support his estimated current value of $1,700,000, 217 Chartwell Road and 306 Maple Grove Drive. Mr. El Sanadi’s evidence was given orally on agreement by MPAC and the Town. The basis of their agreement is that Mr. El Sanadi discussed these two properties with MPAC and the Town at the mandatory meeting which preceded this hearing. Mr. El Sanadi presented no documentary evidence at the hearing.

31The first property, 217 Chartwell Road, sold in September 2017 for $2,400,000 and was assessed at $1,795,000. It has an actual lot size of 0.74 acres and an effective lot size of 0.66 acres. The residence is two-stories, was built in 1965, and has 2,466 sq. ft. of building area. There is an 836 sq. ft. basement, 295 sq. ft. of which is finished and there is an outdoor pool. Mr. El Sanadi describes Chartwell Road as equal or superior to Ennisclare Drive East because, although it runs north of Lakeshore Road, it is considered a prestigious street. He submits that this property is not a corner lot and while Chartwell Road has some traffic, it is not as busy as Lakeshore Road.

32The second property, 306 Maple Grove Drive, has not sold but was assessed at $1,684,000. It has an actual lot size of 0.79 acres and an effective lot size of 0.76 acres. The residence is one and a quarter storeys, was built in 1953, and has 2,265 sq. ft. of building area. There is a 1,796 sq. ft. basement, 851 sq. ft. of which is finished and there is an outdoor pool. Mr. El Sanadi describes Maple Grove Drive as less prestigious than Chartwell Road and it, too, runs north of Lakeshore Road. It is not a corner lot but does have traffic but it is not as busy as Lakeshore Road.

33Mr. El Sanadi testified that he and Sherine Soliman bought 83 Ennisclare before it was listed for sale. He does not know how the Town obtained a listing for this property. It is his understanding that he bought it before it was listed and he has not listed the property since the purchase. He states that he used his knowledge of the market and his 25 years of experience living in Oakville to negotiate the purchase price of $2,250,000. However, he is of the view that because the property was not exposed to the open market before the purchase price was agreed upon, this sale should be disregarded.

Appellants’ Submissions

34Relying on his evidence, the Appellants submit that the correct current value for the 2017 and 2018 taxation years is $1,700,000.

35The Appellants take the position that a corner lot on a busy road is less desirable. In support of his position, he said that the longest side of the Subject Property’s lot is exposed to the very busy Lakeshore Road and that there have recently been two accidents near his property and, in one instance, a car landed in his yard. He argues that, of MPAC’s sale properties, the only one that should be used is 65 Cox Drive which has an adjusted sale value of $1,875,389 (the time adjusted sale price of $2,107,179 less 3% for the corner lot and 8% for the traffic).

Findings on Current Value

36The best evidence of the current value of a residential property is an arm’s length sale of that property on or near the valuation day. When that evidence is not available, arm’s length sales of similar properties on or near the valuation day are the next best evidence.

37The Appellants presented 306 Maple Gove Drive as a suggested comparable. No sale evidence was presented for this property. Therefore, I am disregarding this property in my determination of current value.

38The parties presented five sale properties, four with single-storey homes and one with a two storey home. The two storey home, 217 Chartwell Road, is a similar age and has a similar building size as the Subject Property. However, I am disregarding this sale for two reasons. First, I find that it is not directly comparable to the Subject Property because it has a two storey home whereas the Subject Property has a single storey home. Second, the sale date is too far removed from the January 1, 2016 valuation day. MPAC’s evidence included a Price Change Over Time analysis showing that residential sale prices were increasing exponentially from the beginning of 2015 to the end of 2016. The sale date of September 2017 is too far from the valuation day to provide me with a reliable indication of value as of the valuation day.

39The Town’s evidence is that many homes in the vicinity of the Subject Property are demolished and replaced with larger homes, regardless of the condition of the original homes. This was the case for 65 Cox Drive which was demolished shortly after its 2015 sale. The Town argues that I should consider both this property and 83 Ennisclare as land sales. I disagree. The evidence I received is that only one property, 65 Cox Drive, was demolished. I have received no evidence that the house at 83 Ennisclare was demolished. Because I have three sales to consider, I will not use the land value sale of a single property to determine another property’s current value.

40The Town argues that 83 Ennisclare is the most comparable of the sale properties. The Appellant argues that this property should not be considered because it was not exposed to the market before it sold for $2,250,000 in June 2016. The only evidence I received that it was exposed to the market was the undated listing for $2,295,000, submitted by the Town. I give this document little weight because the date and length of the listing could not be established.

41The Act provides that a property’s assessment is based on its current value and the Act defines current value as “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”. The Act does not provide that the sale is an open market sale only that it should be at arm’s length.

42Despite the fact that the term ‘open market’ is not provided in the Act, it is often an important consideration as to whether a sale achieved its market price. Considerations of whether a sale reflects its market value include:

a. Whether the transaction took place between unrelated parties;

b. Whether the buyer and seller were motivated to enter into a binding transaction without duress; and

c. Whether the property was reasonably exposed to the open market to identify potential buyers.

43Normally, these are important considerations. However, in this instance, we have direct evidence from the buyer. Mr. El Sanadi said that three factors were used to establish his purchase price of 83 Ennisclare: his knowledge of real estate, his 25 years of experience living in Oakville, and that he negotiated the sale value with the vendor. Based on Mr. El Sanadi’s testimony, I am satisfied that 83 Ennisclare was sold at arm’s length by a willing seller to a willing buyer.

44I find that the best evidence of current value is the three single storey sale properties, 64 Alexander Drive, 83 Ennisclare Drive East. and 65 Cox Drive. MPAC proposed calculating the current value based on the sale value per square of building area for each of its three sales. This method is acceptable in this instance because the sale properties are very similar to the Subject Property; they are similar ages, have relatively similar lot and building sizes, they all have single storey homes and are located in the same area. Using the average of MPAC’s time-adjusted sale values results in a value $2,385,630 (($2,237,304/2339 sq. ft.) + ($2,117,811/1,629 sq. ft.) + $2,107,179/2,441 sq. ft.)/3 x 2,294 sq. ft.). I then adjusted this value by 0.89 to reflect the fact that none of the comparable sale properties have a corner lot (valued at -3%) or have medium traffic (valued at -8%) which results in a value of $2,123,211. This is the current value of the Subject Property.

Issue No. 2: Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html#sec44subsec3_smooth)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be.

45Neither the Appellants nor the Municipality presented evidence regarding equity.

MPAC’s Evidence

46Mr. Rakhra presented an Equity Report which included an Assessment to Sales Ratio (“ASR”) study of 30 residential properties located within 1.4 kilometres from the Subject Property which sold from January 1, 2015 to December 31, 2016. The median ASR is 0.997 and the coefficient of dispersion (“COD”) is 9.0.

MPAC’s Submissions

47MPAC takes the position that equity is achieved if the median ASR falls between 0.95 and 1.05. MPAC also takes the position that a lower COD implies good appraisal uniformity and it relies on the International Association of Assessing Officers standards which require a COD of not more than 15 for residential properties.

48Relying on its evidence, MPAC’s submits that an equitable reduction of the current value for the 2018 taxation year is not required.

Findings on Equity

49The goal of the Act is to determine the correct current value. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted.

50In making my determination of any equity reduction, I must be convinced by the best evidence available that the reduction is warranted. Here, the only evidence I received indicates that MPAC’s model is assessing properties very near their market values.

51Based on the evidence received, I am satisfied that no adjustment for equity is warranted.

DECISION

52The correct current value of the Subject Property is $2,123,000, rounded, for the 2017 to 2018 taxation years.

53An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.

54The current value exceeds the assessment as returned of $2,072,000. Because no one has served a notice to increase the assessment pursuant to Rule 40 of the Board’s Rules of Practice and Procedures, I confirm the assessment of $2,072,000 in the Residential Property Class for the 2017 and 2018 taxation years.