Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: March 7, 2019
Assessed Person(s): 1210299 Ontario Inc.
Appellant(s): 1210299 Ontario Inc.
Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15
Respondent(s): Town of Oakville
Property Location(s): 1102 Argyle Drive
Municipality(ies): Town of Oakville
Roll Number(s): 2401-040-110-02600-0000
Appeal Number(s): 3321963
Taxation Year(s): 2018
Hearing Event No.: 710364
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard: February 15, 2019 by telephone conference call
APPEARANCES:
Parties
Representative
1210299 Ontario Inc.
Andrew Attard, Darcy Walker
MPAC
Raj Rkhra
Town of Oakville
Susan Price
DECISION OF THE BOARD DELIVERED BY JOANNE LAWS
OVERVIEW
11210299 Ontario Inc. (the “Appellant”) is the owner of 1102 Argyle Drive (the “Subject Property”), which is a single family detached home located on the shores of Lake Ontario in the Town of Oakville.
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 returned an assessment of $10,127,000 for the 2018 taxation year.
4The Appellant filed an appeal for the 2018 taxation year with the Assessment Review Board (the “Board”) pursuant to s. 40 of the Act. It is the Appellant’s position that MPAC’s assessment of current value is too high and that the correct current value is $7,978,320.
5MPAC took the position at the hearing that the correct current value is $13,939,000 but it is not seeking an increase in the assessed value.
6The Town of Oakville (the “Town”) took the position that the correct current value exceeds $14,000,000. However, it is not seeking an increase in the assessed value.
7Section 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 took the position that an equitable reduction is not required. The Town did not take a position on this issue. The Appellant took the position that an equitable reduction of 20% is required.
8At the completion of the hearing, I reserved my decision. For the reasons that follow, I find that for the 2018 taxation year, the current value of the Subject Property is $14,972,000. However, this value exceeds the assessment as returned and no one has sought a higher assessment. Accordingly, I am confirming the returned assessment of $10,127,000. Pursuant to s. 44(3)(b) of the Act, an equitable reduction of this value is not required.
Relevant Legislation
- “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:
- 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.
Issues
10The issues to be determined on this appeal are:
The correct current value of the Subject Property for the 2018 taxation year; and
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 the correct current value of the Subject Property is for the 2018 taxation year.
MPAC’s Evidence
11Raj Rakhra represented MPAC. Mr. Rakhra entered into evidence a Valuation Report dated October 26, 2018. He describes the Subject Property as a waterfront property on Lake Ontario. The lot has an effective frontage of 113 feet and an effective depth of 212 feet with an effective area of 23,956 square feet (“sq. ft.”). There is a single family detached home, three storeys in height, with a building area of 9,498 sq. ft. The quality of construction is ranked by MPAC as 9 out of 10. In addition to the residence, there is a pool, a shed measuring 379 sq. ft., and an attached garage measuring 623 sq. ft. All of the structures were built in 2012.
12Mr. Rakhra describes the Subject Property’s neighbourhood as the “Gold Coast” area of Oakville, bordered by Maple Grove Drive, Chartwell Road, Lake Ontario, and Lakeshore Road East. Mr. Rakhra and the Town’s representative, Susan Price, both state that the area between Lakeshore Road East and Lake Ontario is a specific market in the area which is highly desired.
13MPAC used the direct sales comparison method in order to determine the value of the Subject Property. MPAC selected three single family waterfront properties located in the same neighbourhood as the Subject Property.
14MPAC uses the direct sales comparison method to estimate the Subject Property’s current value. Mr. Rakhra said that the Subject Property is unique and that there are few properties that are similar to it in the area. Therefore, he expanded his search in terms of time to find three properties that are similar to the Subject Property; one sold in 2015 and two sold in 2017. All are waterfront properties located on Lake Ontario, are located 0.6 to 1.1 kilometres from the Subject Property, were ranked with a quality of construction within 0.5 of the Subject Property, and are a similar age or have an effective year built similar to the Subject Property.
15Mr. Rakhra carried out a Sales Ratio Trend Analysis study in order to derive values in the residential real estate market from 2012 to 2017. This allowed him to adjust values to the valuation day, so that he could provide the time-adjusted sales (“TAS”) amounts for each of his chosen comparable sales.
16MPAC’s first sale, 15 Ennisclare Drive East, was also submitted by the Town and the Appellant. It sold in November 2015 for $10,500,000 and MPAC time-adjusted the sale value to $10,602,765. It has an effective lot size of 130 feet of waterfront and an effective depth of 238 feet for an effective lot size of 30,940 sq. ft. It was built in 2001 but as a result of renovations in 2015, MPAC has allocated it with an effective year built of 2008. Its two storey residence has 7,301 sq. ft. and MPAC allocated it with a 9.5 quality of construction. It has an outdoor pool, a secondary structure measuring 646 sq. ft., and an attached garage measuring 612 sq. ft.
17MPAC’s second sale, 35 Colonial Crescent, sold in June 2017 for $16,000,000 and MPAC time-adjusted the sale value to $14,374,569. It has an effective lot size of 151 feet of waterfront and an effective depth of 255 feet for an effective lot size of 38,505 sq. ft. It was built in 2001 but as a result of renovations in 2015, MPAC has allocated it with an effective year built of 2011. Its two storey residence has 9,332 sq. ft. and MPAC allocated it with a 9.0 quality of construction. It has an attached garage measuring 890 sq. ft.
18MPAC’s third sale, 21 Ennisclare Drive East, sold in August 2017 for $9,000,000 and MPAC time-adjusted the sale value to $7,992,896. It has an effective lot size of 100 feet of waterfront and an effective depth of 250 feet for an effective lot size of 25,000 sq. ft. It was built in 1994 but as a result of renovations in 2016, MPAC has allocated it with an effective year built of 2005. Its two storey residence has 5,668 sq. ft. and MPAC allocated it with an 8.5 quality of construction. It has an outdoor pool and an attached garage measuring 720 sq. ft.
19Mr. Rakhra calculated that the TAS prices per square foot of building area are $1,452.23, $1,540.35 and $1,410.15, respectively. He took the average of these three values, $1,467.59, and applied it to the Subject Property’s building area of 9,498 sq. ft. for a value of $13,939,158.17.
MPAC’s Submissions
20Relying on its evidence, MPAC submits that the correct current value for the 2018 taxation year is $13,939,000.
21On cross-examination, Mr. Rakhra testified he chose his comparable properties based on quality class, lot size and building size. He testified there are not many properties in the area with similar building sizes. He testified he did not include the Appellant’s first four proposed sale properties because they have smaller lots and older buildings.
22On cross-examination, Mr. Rakhra testified that the assessor can make adjustments to the assessment manually to fine-tune the model’s results. For the Subject Property there were three adjustments. All properties in the area received a neighbourhood and a local market adjustment and the Subject Property received an additional 20% adjustment because the initial assessment by the model plus the neighbourhood and local market adjustments did not reflect the market trend for the area.
23In response to the Appellant’s time adjustment factor study, MPAC argues that it is too small because it has only 30 properties, whereas MPAC’s is likely more reliable because it used 437 sales.
Appellant’s Evidence
24Andrew Attard represented the Appellant. Mr. Attard called Darcy Walker, a valuation analyst for his company, as a witness.
25The Appellant relied on its own direct comparison report which included its own time adjustment factors. The Appellant’s witness, Darcy Walker, calculated a time adjustment factor of 1% per month during the period of 2015 and 2016. She determined the time adjustment factor using 30 resales of properties which sold first in 2013 or 2014 and re-sold in 2016 or 2017. All of the properties were located less than 2 km from Subject Property and all were valued in excess of $1,000,000.
26Ms. Walker also calculated an adjustment value for land differences. Using data from MPAC, she calculated the Subject Property’s assessed value for land is $5,785,000 per acre.
27Ms. Walker then looked at five sales of waterfront properties. All are located less than 1 km from Subject Property. She adjusted each of the sale values by her time adjustment factor plus a value reflecting the difference in lot size.
28The Appellant’s first sale, 29 Colonial Crescent, was built in 1975. It has a waterfront of 40 feet and an overall site size of 13,913 sq. ft. The residence is has 6,410 sq. ft. It sold in October 2015 for $8,800,000 which Ms. Walker adjusted to $5,072,000 to reflect a 3% upward time adjustment and a 45.4% downward land adjustment.
29The Appellant’s second sale, 16 Ennisclare Drive West, was built in 1989. It has a waterfront of 36 feet and an overall site size of 11,366 sq. ft. The residence has 6,093 sq. ft. It sold in September 2016 for $6,800,000 which Ms. Walker adjusted to $4,983,000 to reflect an 8% downward time adjustment and an 18.7% downward land adjustment.
30The Appellant’s third sale, 2 Ennisclare Drive West, was built in 1956. It has a waterfront of 80 feet but an overall site size of 20,447 sq. ft. The residence has 6,449 sq. ft. It sold in November 2016 for $5,700,000 which Ms. Walker adjusted to $3,915,000 to reflect a 10% downward time adjustment and a 21.3% downward land adjustment.
31The Appellant’s fourth sale, 18 Raymar Place, was built in 1988. It has a waterfront of 47 feet and an overall site size of 10,559 sq. ft. The residence has 6,397 sq. ft. It sold in May 2016 for $5,000,000 which Ms. Walker adjusted to $3,874,000 to reflect a 4% downward time adjustment and an 18.5% downward land adjustment.
32The Appellant’s fifth sale, 15 Ennisclare Drive East, which was also presented by both the Town and MPAC, was built in 2001. Ms. Walker used the actual width of 110 feet and a depth of 238 feet to which results in an overall site size of 26,180 sq. ft. The residence has 7,301 sq. ft. It sold in November 2015 for $10,500,000 which Ms. Walker adjusted to $10,074,000 to reflect a 2% upward time adjustment and a 6.1% downward land adjustment.
33Ms. Walker calculated that the adjusted sale values per square foot of building areas are $791, $818, $607, $606 and $1,380, respectively. She took the average of the five values, $840, and applied it to the Subject Property’s building area of 9,498 sq. ft. for a value of $7,978,320.
Appellants’ Submissions
34Relying on its evidence, the Appellant submits that the correct current value for the 2018 taxation year is $7,978,000.
35The Appellant argues that MPAC’s time adjustment study and its resulting time adjustment factors are unreliable. It covers the period from May 2012 to December 2017. During the period of May 2012 until February 2015 there are only two sales, one in May 2012 and the other in August 2014. Mr. Attard question whether only two sales occurred during this time and further questions why MPAC felt it needed to go back so far to capture only two sales. There are multiple sales for each month from February 2015 to December 2017.
36The Appellant argues that MPAC’s sales in 2017 are too far from the valuation day, that only sales that occurred within a year of the valuation day are relevant.
The Town’s Evidence
37Ms. Price submitted a report that included photographs of Subject Property, aerial photographs and a map of area, and a single suggested comparable, namely 15 Ennisclare Drive East, and a photograph of that property.
Town’s Submissions
38The Town argues that MPAC’s second sale, 35 Colonial Crescent is the best comparable sale property because it is the most similar to the Subject Property. The Town concludes that the Subject Property’s current value is MPAC’s time adjusted sale value of $14,374,569.
39In response to the Appellant’s argument that 2017 sales are too far from the valuation day, the Town argues that the date of a sale is not specified in the act. The Town takes the position that while sales close to the valuation day are preferred, they are not always available, such as in this case where there are very few sales of properties that are similarly located to and have similar building sizes as the Subject Property. She states that if time adjustment factors are provided, one can expand the search to find comparable sales.
40The Town prefers MPAC’s time adjustment factors because MPAC considered over 400 sales which makes them more reliable than the Appellant’s which are based on only 30 sales.
Findings on Current Value
41On the evidence received, the Board accepts that the direct sales approach is the best approach to value the Subject Property.
42The issues that arise in applying this method, generally, are the degree of comparability between the properties and the date on which the properties sold. The degree of similarity between the properties refers to the physical characteristics and their locations. These issues must be considered when assigning weight to evidence of current value. Sales that are comparable but sold some distance from the valuation day should not be disqualified outright.
43All three parties presented waterfront property sales that are located very near the Subject Property. Both MPAC and the Appellant presented separate time adjustment studies and accompanying time adjustment factors that they used to estimate a likely sale value on the valuation day. MPAC’s report is that it considered 437 residential sales of both improved and vacant land during the period of 2012 to 2017. I agree with the Appellant that, based on the lack of sales between 2012 and 2015, the resulting time adjustment factors may not be reliable. However, the Appellant’s study does not fully assist me because it is lacking time adjustments for 2017. Therefore, I will use the actual sale values in my analysis.
44In my determination of current value, I have analyzed the parties’ evidence using both bracketing and sale values on a square foot basis. Bracketing is a very good method for comparing properties in the direct sales approach when very few properties are provided in evidence that can be considered directly comparable. Bracketing is based on the general principle that a comparable property that has superior attributes to the subject will sell for more, those that have similar attributes will sell for similar amounts, and inferior attributes will sell for less.
45The Appellant made adjustments to its five proposed sale properties for the time of sale and lot area. However, no adjustments were made for differences in age, quality of construction, or building size, nor were adjustments made for narrow lots that had significantly smaller waterfronts than the Subject Property. In addition, the calculations and adjustments made for the land values were based on an assessed value, not a sale value. I find that the adjustments are incomplete and, therefore, I cannot rely on the adjusted values. The following is an analysis of the un-adjusted sale values.
46The Appellant’s first sale property, 29 Colonial Crescent, is inferior to the Subject Property. The residence is older and smaller, it has less waterfront and a smaller lot. It sold in October 2015, which is very near the valuation day, for $8,800,000. Accordingly, I find that the Subject Property would sell for more than this value.
47The Appellant’s second sale property, 16 Ennisclare Drive West, is inferior to the Subject Property. The residence is older and smaller it has a smaller waterfront and a smaller overall lot size. Accordingly, the Subject Property will likely sell for more than its sale value of $6,800,000.
48The Appellant’s third sale property, 2 Ennisclare Drive West, is inferior to the Subject Property. The residence is smaller and older and while the overall lot size is similar, it has a slightly smaller waterfront. Accordingly, the Subject Property would likely sell for more than its sale price of $5,700,000.
49The Appellant’s fourth sale property, 18 Raymar Place, is inferior to the Subject Property. The residence is older and smaller and it has less waterfront and a smaller lot. Accordingly, the Subject Property will likely sell for more that its sale value of $5,000,000.
50All three parties presented 15 Ennisclare Drive East. Compared to the Subject Property, it has a slightly larger lot and more water front, however, the building area is smaller. It is a similar age and it, too, has an outdoor pool and a secondary structure and the garages are a similar size. On balance, I find this property to be very similar to the Subject Property however, based on the building size, it is slightly inferior. Accordingly, the Subject Property would not sell for less than its sale price of $10,500,000.
51MPAC’s second sale property, 35 Colonial Crescent, is very similar to the Subject Property except that it has a larger lot with more water front and a larger garage area. It has a similar sized building area which is a similar age however it does not have a pool or a secondary structure. On balance, I find that this property is very similar to the Subject Property however, based on the lot dimensions, it is slightly superior. Accordingly, the Subject Property would not sell for more than $16,000,000.
52MPAC’s third sale property, 21 Ennisclare Drive, is inferior to the Subject Property. It has a similar sized lot with a similar amount of waterfront however the building area is significantly smaller. Accordingly, the Subject Property would sell for more than its sale value of $9,000,000.
53Based on the above, I find that the Subject Property would sell for more than $10,500,000 but less than $16,000,000.
54MPAC and the Appellant used sale values per square foot of building area to arrive at their proposed current value. Using the two most comparable properties, 15 Ennisclare Drive East and 35 Colonial Crescent, the average sale value per square foot of building area is $14,972,125 (($10,500,000/7,301 sq. ft.) + ($16,000,000/9,332 sq. ft.)/2 x 9,498 sq. ft.). This value falls in line with my bracketing analysis. The current value of the Subject Property is $14,972,000, rounded.
Whether there should be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be.
Appellant’s Evidence
55The Appellant presented documents obtained from MPAC showing that the Subject Property’s assessed value included a 20% adjustment and MPAC’s evidence is that this adjustment was made manually rather than by its model. Deducting it from the assessment as returned results in a value of $8,439,921.
Appellant’s Submissions
56The Appellant argues that the 20% adjustment to its assessment should be removed from the assessment as returned because the adjustment is not applied uniformly to all properties, it is arbitrarily added manually rather than by MPAC’s model, and therefore, it is inequitable.
MPAC’s Evidence
57Mr. Rakhra presented an equity analysis report. It consisted of an assessment to sales ratio (“ASR”) study of 30 single family detached properties, both waterfront and non-waterfront, located near the Subject Property with a median ASR of 0.961 and a 10.2 coefficient of dispersion.
MPAC’s Submissions
58MPAC stated that equity is achieved if the median ASR falls between 0.95 – 1.05.
59Relying 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
60The 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.
61The Appellant argues that the 20% adjustment applied to the Subject Property’s assessment is inequitable and should be removed from the current value. I disagree. The current value, found above, is based on sales, not on assessments. Neither the assessment nor the adjustments to the assessments form part of this value.
62The best evidence presented is MPAC’s equity analysis. An ASR analysis is a test of whether MPAC is assessing properties accurately. MPAC presented a study of 30 ASRs of properties located near the Subject Property with a median ASR of 0.961.
63Using these same 30 properties, I calculate the mean ASR to be 0.969. Both the median and the mean are quite close, they are within MPAC’s target of 0.95 to 1.05 and they both suggest that properties in the vicinity are equitably assessed. Further, the standard deviation from the mean is 0.131 and the 95% confidence interval is 0.922 to 1.016 which means that the true mean of the population based on this sample is more likely than not to be within the acceptable range.
64Based on the evidence before me, I find that no adjustment is required to for the purpose of equity.
DECISION
65The correct current value of the Subject Property is $14,972,000 for the 2018 taxation year.
66An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.
67This value exceeds the assessment as returned of $10,127,000. 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 $10,127,000 in the Residential Property Class for the 2018 taxation year.
“Joanne Laws”
JOANNE LAWS
MEMBER
Assessment Review Board
A constituent tribunal of Tribunals Ontario - Environment and Land Division
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248```