Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 6, 2019 FILE NO.: WR 155192

Assessed Person(s): The Estate of Natalia Kouznetchik Appellant(s): Vlad Kouznetchik, Executor for the Estate of Natalia Kouznetchik Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 9 Respondent(s): City of Toronto

Property Location(s): 206 Bishop Avenue Municipality(ies): City of Toronto Roll Number(s): 1908-094-200-12501-0000 Appeal Number(s): 3265687 and 3293155 Taxation Year(s): 2017 and 2018

Hearing Event No.: 701791 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: August 13, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
The Estate of Natalia Kouznetchik	Vlad Kouznetchik
MPAC	Daniel Leduc
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

OVERVIEW

1The Estate of Natalia Kouznetchik (the “Appellant”) is the owner of 206 Bishop Avenue, located in the North York area of Toronto (the “Subject Property”), which is a single family home.

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”).

3The Appellant filed an appeal with the Assessment Review Board (“the Board”) pursuant to s. 40 of the Act. It is the Appellant’s position that the MPAC’s assessment of current value is too high and that the correct current value is $833,240 for the 2017 and 2018 taxation years.

4MPAC’s returned its assessments at $1,272,000 for the 2017 taxation year and $1,145,000 for the 2018 taxation year. At the hearing MPAC took the position that the value of $1,272,000 is correct but recommended the value of $1,145,000 to honour an offer made to the Appellant prior to the hearing.

5Pursuant to s. 40.(11) of the Act, the City of Toronto is a party to this proceeding. However, it did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on its 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 of the municipal tax burden according to the value of the property possessed by each ratepayer. MPAC takes the positon that an equitable reduction is not required. The Appellant takes the position that the equitable value of the Subject Property is $860,902.

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 $1,299,985. Pursuant to s. 44.(3)(b) of the Act, an equitable reduction of this value is not required.

8The current value of $1,299,985 exceeds the value of the assessment as returned for the 2017 and 2018 taxation years. No one has file a notice seeking a higher assessment for the Subject Property. Therefore, the assessment of $1,272,000 is confirmed for the 2017 taxation year and the assessment of $1,145,000 is confirmed for the 2018 taxation year.

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 four taxation years from 2017 tp 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.

PRELIMINARY MATTER

Request for Adjournment

10The Appellant’s representative, Vlad Kouznetchik, initiated the proceeding by requesting an adjournment. His reasons were 1) that MPAC had assessed his properties with two different values, $1,272,000 for the 2017 taxation year and $1,145,000 for the 2018 taxation year, and that he was not prepared to argue the different values and 2) that MPAC’s disclosure is incomplete, containing only routine information. I denied the request at the hearing, with the following reasons.

11MPAC objected to the adjournment request arguing that the Appellant should have raised these issues and filed a written notice of motion prior to the hearing in accordance with the Board’s Rules of Practice and Procedure (“Rules”). MPAC said it was not provided with any indication that the Appellant would bring a motion and that significant costs and time were expended by both MPAC and the Board to prepare for and attend the hearing.

12With regard to the two values, MPAC submits that the 2017 value is the assessment as initially returned for the 2016 valuation day and the 2018 value reflects MPAC’s offer to reduce the assessment which was rejected by the Appellant. The Appellant argued that the two taxation years should be heard separately; that he was unprepared to argue the lower amount, that he is confused by the process, is aware that the Board has new Rules and that MPAC had no right to disclose the offer made in settlement discussions to the Board.

13With regard to the disclosure, Mr. Kouznetchik stated he expected a fulsome disclosure of MPAC’s assessment methodology, that he felt that MPAC’s adjustment factors were incomplete, and that MPAC treated its disclosure as an initial disclosure rather than a final disclosure.

14Before granting an adjournment, I considered the Board’s Rules, in particular, Rule 84 which requires me to consider:

(a) The interests of the parties in a full and fair proceeding;

(b) The impact of the adjournment on parties and other persons;

(c) The integrity of the Board’s process, including the Board’s ability to efficiently resolve all appeals filed with the Board within the current four year cycle;

(d) The circumstances giving rise to the need for an adjournment;

(e) The timeliness of the request for the adjournment;

(f) The position of the other parties;

(g) The public interest in the delivery of the Board’s services in a just, timely and cost effective manner; and

(h) Any practice directions issued by the Board.

15Owing to the limited scope of the appeals, I find that no consideration is needed for points (c), (g) and (h).

16This adjournment request was submitted orally, at the hearing. It was therefore not made in a timely manner.

17I heard nothing that would lead me to conclude that additional time to prepare for the hearing is necessary. The inconvenience and cost to MPAC, who was prepared for the hearing, outweighs the Appellant’s request for more time.

18Both parties have an interest in a full and fair proceeding. I note that, in its evidence, the Appellant used the 2018 assessed value and, therefore, was prepared to argue the lower value. I find there is no prejudice to the Appellant by MPAC’s disclosure of the recommended lower assessment because the Appellant used this value in his evidence and that it disclosed this evidence to both MPAC and the Board prior to the hearing.

19The Appellant’s argument with regard to disclosure of MPAC’s assessment methodology is not a reason that justifies an adjournment. The current value of the Subject Property is at issue in this appeal, not MPAC’s assessment methodology. In addition, Mr. Kouznetchik did not say that MPAC denied his request for certain data. Indeed, his evidence included much of the data that created his assessed value.

20As to Mr. Kouznetchik’s claim that he is confused by the process and that the Board has new Rules (which came into effect April 1, 2017) I took care to explain each step of the hearing process and gave Mr. Kouznetchik opportunity to ask any questions on the process.

21Accordingly, the request for an adjournment was denied.

ISSUES

22The issues to be determined on this appeal are:

1. The correct current value of the Subject Property for the 2017 and 2018 taxation years; and

2. Whether there should be an equitable reduction of the current value of the Subject Property pursuant to s. 44.(3) (b) of the Act, and, if so, what the amount of this reduction should be.

Discussion, Analysis and Findings

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

Description of the Subject Property

23The Subject Property is located in the North York area of Toronto. The lot is an irregular shape with an effective frontage of 80 feet and an effective depth of 69 feet and an effective area of 0.13 acres. The lot is improved with a two-storey, single family residence, built in 1996. It has a total building area of 2,098 square feet (“sq. ft.”) with 883 sq. ft. on the main floor and 1,215 sq. ft. on the second floor. There is a basement with 909 sq. ft., 651 sq. ft. of which is finished. MPAC has allocated the residence with a 7 out of 10 quality of construction. The Subject Property abuts a hydro corridor which is also used as green space and, directly behind the Subject Property there is a community garden. Beyond the hydro corridor/green space is a school and a Sunnybrook Rehabilitation facility. MPAC describes the property as abutting a hydro corridor, a commercial area, and a ‘green space or park (not playground or sports field) as well as being affected by light traffic.

MPAC’s Evidence

24Daniel Leduc represented MPAC and Michael Quiachon and Jonathan Langille testified on behalf of MPAC.

25Mr. Quichon entered into evidence a Valuation Report dated April 23, 2018. MPAC used the direct sales comparison method in order to determine the current value of the Subject Property. MPAC selected five single-family residential properties located in the same neighbourhood as the Subject Property, which MPAC identifies as B66-421. All of the proposed comparable properties were two-storeys with quality of construction of either 6 or 7 out of 10.

26MPAC’s proposed comparable properties sold during 2015 and 2016 which makes the sales quite close to the valuation day of January 1, 2016. MPAC carried out a Sales Ratio Trend Analysis study of residential real estate market during 2015 and 2016. This allowed MPAC to estimate the sale values of its proposed comparable sale properties by applying the time-adjusted sale factor (“TASF”) amounts to those sales. The Appellant did not object to the use of the time-adjusted sales, and I have referred to those values here.

MPAC’S PROPOSED COMPARABLE PROPERTIES - HIGHLIGHTS

	Subject Property	210 Bishop Avenue	204 Bishop Avenue	181 Bishop Avenue	202 Pemberton Avenue	177 Pemberton Avenue
Date of Sale	N/A	June 2015	December 2016	October 2015	October 2016	September 2016
Time-adjusted Sale Price	N/A	$1,500,108	$1,365,730	$1,234,241	$1,369,642	$1,629,800
Year Built	1996	1996	2004	1961	1964	1994
Quality of Construction	7	7	7	6	6	7
Building Area (sq. ft.)	2,098	2,929	2,970	1,654	2,060	2,828
Basement Area/ Finished Area (sq. ft.)	909/ 651	1,170/ 870	1,485/ 804	640/ 270	714/ 291	1,505/ 0
Effective Lot Size (front x depth)	80 x 69	51 x 106	40 x 102	51 x 146	51 x 146	43 x 128
Lot Size (sq. ft./ acres)	5,520/ 0.13	5,428/ 0.12	4,080/ 0.09	7,396/ 0.17	7,494/ 0.17	5,578/ 0.13
Garage (sq. ft.)	720	480	385	240	240	480
Abuts Green Space	Yes	No	Yes	No	No	No
Abuts Hydro Corridor	Yes	Yes	Yes	No	No	No
Proximity to Hydro Corridor	Yes	Yes	Yes	Yes	No	No
Abuts Commercial	Yes	Yes	Yes	No	No	No
Traffic Pattern	Light	Light	Light	Light	No	No
Corner Lot	No	Yes	No	No	No	No

MPAC’s Submissions

27MPAC used the bracketing method in its analysis. Bracketing is based on the general principal that comparable properties that are inferior to the Subject Property will sell for less, those that are superior will sell for more, and those that are directly comparable will have similar market values. MPAC submits that the time-adjusted sale values of its five suggested comparable properties range from $1,234,000 to $1,629,000, and, therefore, the Subject Property’s assessed value of $1,272,000, which falls within this range of values, is reasonable.

28MPAC further argues that taking only the three properties on the same street as the Subject Property, which have time-adjusted sale values of $1,500,108, $1,365,730 and $1,234,241, also support the assessed value of $1,272,000.

29Relying on its evidence, MPAC submits that the correct current value for the taxation years 2017 and 2018 is $1,272,000. However, MPAC is recommending a value of $1,145,000 as that was the value offered to the Appellant prior to the hearing. This is the amount that MPAC returned for the 2018 taxation year.

30In response to the Appellant’s suggested adjustments for variable characteristics between the Subject Property and the suggested comparable sale properties, MPAC submits that it has already applied adjustments to the Subject Property’s assessment for abutting or proximity to nuisances including hydro and commercial as well as the depth of the lot. MPAC submits that it does not consider the educational institution to be in proximity to the Subject Property because the hydro/green space corridor acts as a buffer.

31In response to the Appellant’s argument that Bishop Street is has a medium traffic pattern, MPAC submits that it considers Bishop Street to have light traffic, that a larger artery such as Finch Avenue would have medium traffic, and a highway such as Highway 401 would have heavy traffic.

Appellant’s Evidence

32Vlad Kouznetchik represented the Appellant. He presented MPAC’s ‘Market Valuation Report, Residential Properties, Market Area: North Toronto’ (“MVR”). This document applies to the January 1, 2016 valuation day and lists the valuation parameters MPAC uses to value properties. From this document, Mr. Kouznetchik applied the factors to the time-adjusted sale value of 204 Bishop Avenue to account for the difference in total building area and lot depth. Based on the proposition that 50% of the property’s total value is attributable to the building, and that there is a 42% difference in building area between the Subject Property and 204 Bishop Avenue, he reduced the time-adjusted sale value of $1,365,840 by 21%. He further reduced the value by 5% to account for the difference in effective lot depth. Mr. Kouznetchik did not make adjustments for age, lot width, garage size, or basement size. The resulting value presented is $1,010,714.

33Mr. Kouznetchik also adjusted 204 Bishop Avenue’s assessed value of $1,126,000 by the same factors which resulted in a value of $833,240.

34Mr. Kouznetchik takes the position that the Subject Property’s assessment is incorrect in relation to the data found in MPAC’s MVR. Based on this document’s data, he reduced MPAC’s recommended assessed value of $1,145,000 to $904,550 by the following:

a. -2% because he believes Bishop Avenue is a medium traffic street rather than a light traffic street. In support of this argument, he presented the City of Toronto’s ‘Road Classification System, Summary Document’, published in August 2013, which classifies Bishop Avenue as a collector rather than a local road. He argues that a collector road is equivalent to MPAC’s medium traffic classification. MPAC allocates -2% for light traffic and -4% for medium traffic.

b. -3% because MPAC has allocated -11% for proximity to a hydro corridor but has an allowable range of -11 to -14%. Mr. Kouznetchik argues that his property deserves the full amount allowable because it is not simply near a hydro corridor but abuts a hydro corridor.

c. -3% x 2 because the Subject Property is located near an educational institution, Cummer Valley Middle School. It is located on the far side of the hydro corridor/green space which, he estimates, is 235 metres from the Subject Property. In his calculations, Mr. Kouznetchik included two reductions for proximity to educational institutions however he identified only one school.

d. -3% for proximity to a commercial property because Bishop Allotment Gardens, a community garden, is located directly behind the Subject Property (and within the hydro corridor/green space area). He describes the gardens as “extremely unappealing visually, closely resembling a junkyard” and that “activities . . . cause constant nuisance by way of noise, garden equipment utilization, and unpleasant smell due to fertilizer use.”

e. -2% for proximity to an institutional property because a rehabilitation centre, St. John’s Rehabilitation at Sunnybrook, is located on the far side of the hydro corridor /green space area, which he estimates is 315 metres from the Subject Property.

f. -5% for the lack of lot depth because MPAC’s MVR indicates a typical lot depth is 122 feet whereas the Subject Property’s is 69 feet. The MVR also indicates that depth rate varies by location and the valuation parameter range for depth is $334 - $6,091.

Appellants’ Submissions

35Relying on his evidence, the Appellant submits that the correct current value for 2017 and 2018 taxation years is $833,240.

36The Appellant made a number of arguments challenging MPAC’s assessment model and argued that the model is not transparent. For example, he pointed out that the factors used to assess a property are not disclosed or easily identifiable or obtainable by the public and, therefore, the public has no way of knowing whether their assessment is correct. In addition, a number of the factors have ranges which seem to be subjectively applied. Mr. Kouznetchik argues that the Board has to be satisfied that the model is correct.

Findings on Current Value

37The Appellant argues that MPAC’s model and how it resulted in the assessed values are at issue. I appreciate the Appellant’s frustration with MPAC’s assessment model which may not be clear or transparent. However, MPAC’s model is not on trial, only the resulting assessed values. This is because the Act directs that the issue to be determined on this appeal is the correct current value. Section 1 of the Act defines current value as the amount of money a property would realize in an arm’s length sale between a willing buyer and a willing seller.

38The very best way of determining the current value of a property is if it was sold near the valuation day. Where a sale has not taken place near the valuation day, as here, I must look to other methods of providing current value. Arm’s length sales of similar properties, located near the Subject Property, which occurred near the valuation day, are usually the next best evidence. This is called the direct sales comparison approach to value.

39The parties presented evidence of five two-storey residential property sales in the area of the Subject Property. The sales occurred relatively close to the valuation day and range from $1,172,500 to $1,907,000 with time-adjusted values ranging from $1,234,241 to $1,629,800. MPAC proposed bracketing the sales to determine the current value of the Subject Property and the Appellant proposed adjusting the sale value of a single property by the differences between it and the Subject Property.

40The Appellant’s argument that the differences between the Subject Property and 204 Bishop Avenue can be quantified has merit but only if all differences are accounted for. I do not consider this analysis to be the best indication of current value because the Appellant’s adjustments were made for differences in building size and lot depth but not for other known differences which are the lot width, the age of the building, the basement’s size and finished area, or the garage size.

41The Appellant also made similar arguments with regard to the assessed value of 204 Bishop Avenue as well as MPAC’s recommended assessed value of the Subject Property. However, the assessments of properties do not assist me in determining current value.

42MPAC’s Sale 1, 210 Bishop Avenue, is similar to the Subject Property in that it is located on the same side of the same street, is the same age, abuts the hydro corridor and community garden, and has a similar lot size. While the Subject Property has a wide but shallow lot, this property is a corner lot and is bordered on two sides by streets and, therefore, may be affected by more traffic than the Subject Property. It is superior to the Subject Property in that its building size is approximately 40% larger and it has a larger basement with more finished area. Based on the building size, I find that this property is superior to the Subject Property and that the Subject Property would likely sell for less than the time-adjusted sale price of $1,500,108.

43The Appellant’s suggested comparable sale which is also MPAC’s Sale 2, 204 Bishop Avenue, is similar to the Subject Property because, it, too, is located on the same side of the same street, abuts the hydro corridor and community garden and green space, and it is affected by the same amount of traffic as the Subject Property. The lot is smaller but it is deeper than the Subject Property’s. It is superior to the Subject Property in that the building is slightly newer and more than 40% larger with a larger basement with more finished area. Based on the building size and age, I find that this property is superior to the Subject Property and that the Subject Property would likely sell for less than the time-adjusted sale price of $1,365,730.

44Although MPAC’s Sale 3, 181 Bishop Avenue, has a larger lot than the Subject Property, it is inferior in age, quality of construction, garage area, building area, and basement area and it has less finished basement area. It is located on the same street but on the opposite side from the Subject Property and, therefore, is affected by the same level of traffic. MPAC describes it as being in proximity to the hydro corridor but not abutting it, nor does it abut green space or the community garden. Based on the age, size, and quality of construction, I find that this property is inferior to the Subject Property and the Subject Property would likely sell for more than its time-adjusted sale price of $1,234,241.

45MPAC’s Sale 4, 202 Pemberton Avenue, has a larger lot with more depth than width and it does not abut the hydro corridor or public garden nor is it in proximity to any other nuisances. In addition, MPAC does not consider Pemberton Avenue to be negatively affected by traffic. These factors make it superior to the Subject Property. However, its building area is smaller and older and has a lower quality of construction and the garage is both older and smaller. Based on its superior location and lack of nuisances, I find that the Subject Property would likely sell for less than its time-adjusted sale price of $1,369,642.

46MPAC’s Sale 5, 177 Pemberton Avenue, has a similarly sized lot and the building is a similar age and quality of construction. However, it is, on balance, superior to the Subject Property. It does not abut any of the negative influences as the Subject Property nor does MPAC consider it to be negatively affected by traffic. In addition, the building and basement areas are larger. Therefore, the Subject Property will likely sell for less than the time-adjusted sale price of $1,629,800.

47Based on the above analysis, I find that the Subject Property’s current value is less than $1,365,730 but more than $1,234,241. The mid-point of this range is $1,299,985. This is the current value of the Subject Property for the 2017 and 2018 taxation years.

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(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.

Appellant’s Evidence

48Mr. Kouznetchik presented an equity study of 50 properties that sold in 2015 and 2016 within the City of Toronto. Each of the properties in his equity study has a time adjusted sale value that exceeds the assessed value. He calculated that the median time-adjusted sale price to assessment ratio is 133%. Using MPAC’s methodology, the assessment to sale ratios (“ASR”) range from 0.63 to 0.81. Dividing MPAC’s recommended assessed value of $1,145,000 by his factor of 133% results in a value of $860,902.

49On cross-examination, Mr. Kouznetchik testified that the criteria he used to select the sales in his equity study were any property of the same general nature located within the same city as the Subject Property.

Appellant’s Submissions

50The Appellant submits that that an equitable reduction is required and the current value for the 2017 to 2018 taxation years should be reduced to $860,902.

MPAC’s Evidence

51MPAC presented an equity study of 30 single-family detached property sales, which occurred from January 1, 2015 to December 31, 2016. The search parameters were limited to properties located within 0.5 kilometres from the Subject Property. The ASR’s in the study ranged from 0.749 to 1.159. It found that the median ASR of these 30 sales is 0.976 and the coefficient of dispersion is 10.9.

MPAC’s Submissions

52Relying on its evidence, MPAC’s submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is not required. MPAC takes the position that a median ASR falling between 0.95 and 1.05 indicates that equity has been achieved. MPAC also takes the position that a coefficient of dispersion of less than 15 for residential properties implies “good appraisal uniformity among individual properties.”

Findings on Equity

53The 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.

54Both parties presented an analysis in which the assessments were compared to the time-adjusted sale values. Such an analysis is a test of whether MPAC’s model is working well for a class of properties.

55Of the two equity reports presented, I prefer MPAC’s because it uses sales of properties that are in close proximity to the Subject Property. Therefore, it reflects how well MPAC’s model is assessing similar properties in the vicinity, or market, of the Subject Property. The Act does not define the term vicinity however it is reasonable to conclude that the vicinity of an equity study should extend no farther than necessary to capture sales within the local market of the Subject Property.

56MPAC’s analysis shows that the median ASR is 0.976. Using these same 30 properties, the mean ASR is 0.960. Both measures of central tendency fall within MPAC’s target range of 0.95 to 1.05. The 95% confidence interval of the mean is 0.914 to 1.005 which means the true mean of the population based on this sample is more likely than not to be within MPAC’s target range. Further, the coefficient of dispersion for the median is 10.9, which falls below the acceptable value of 15 for residential properties. This means that the assessments in the data are sufficiently uniform.

57Based on the evidence before me, I find that no adjustment is required for the purpose of equity.

DECISION

58The correct current value of the Subject Property is $1,299,985 for the 2017 and 2018 taxation years.

59An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.

60The returned assessments for both the 2017 and 2018 taxation years are less than the current value. However, no one has filed a notice seeking a higher assessment. Accordingly, I confirm the assessment of $1,272,000 for the 2017 taxation year and $1,145,000 for the 2018 taxation year in the Residential Property Class.