Ko v. Municipal Property Assessment Corporation, Region 09, 2019 CanLII 25955

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 25, 2019

FILE NO.: WR 158796

Assessed Person(s): Elaine Man Shu Ko

Appellant(s): Elaine Man Shu Ko

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s): City of Toronto

Property Location(s): 28 Bamboo Grove

Municipality(ies): City of Toronto

Roll Number(s): 1908-083-150-02100-0000

Appeal Number(s): 3262117 and 3293138

Taxation Year(s): 2017 and 2018

Hearing Event No.: 710280

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

Heard: February 6, 2019 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Elaine Man Shu Ko

Self-represented Hugh Mark

MPAC

Mary Stiliadis Aidan Mailer

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1This appeal was adjourned on September 26, 2018, to allow MPAC file a motion for an inspection of the property located at 28 Bamboo Grove (“subject property”). On December 4, 2018, the Board issued a disposition, DM 157245, Municipal Property Assessment Corporation, Region 09 v Ko, 2018 CanLII 118878 (ON ARB) granting an inspection of the subject property.

2At the commencement of the hearing, MPAC objected to the admissibility of Appellant’s additional evidence, which was electronically filed and served on February 4 and 5, 2019. MPAC’s advocate, Aidan Mailer, submits that the main purpose of the scheduled hearing was to provide post inspection updates and not to introduce new evidence as MPAC will be prejudiced if the Board admits the Appellant’s additional evidence. The Appellant submits that she was advised by MPAC’s senior manager, who was not available at the hearing, to provide her own comparable properties. She further stated that MPAC made submissions and included pictures of these comparable properties in their post inspection report. The Appellant also provided hand written worksheets of the comparison of the sale prices of houses west of Banbury Road and east of Banbury Road (location of the subject property) with attached sales listing for 176 Valley Road.

3The Board ruled that MPAC will not be prejudiced by this additional evidence as MPAC had the opportunity to review the Appellant’s comparable properties, by providing submissions on it in its post inspection report. The Board further allowed MPAC additional time at the hearing to review the Appellant’s worksheets before proceeding with the hearing.

4The subject property is a single-family detached home, built in 1969, and has an effective year built of 2014, with a construction quality of 8.5 (changed by MPAC after the inspection to 8.0). It has a lot with 60 feet of effective frontage, 110.01 feet of effective depth, an effective site area of 0.15 acres, with a building total area of 3,934 square feet (“sq. ft.”). It has a basement area of 1,649 sq. ft. of which 1,419 sq. ft. is finished.

5The Appellant purchased the subject property in October 2014. In 2015, the Appellant started renovating and added additional areas to it.

6The subject property was assessed by MPAC at $2,820,000 for the 2017 and 2018 taxation years. MPAC’s opinion of current value is $3,434,000, with a further reduction to $3,063,128 to make the assessment of the subject property equitable with the assessment of similar lands in the vicinity. MPAC further recommends a reduction in the assessment to $2,535,000, due to the data changes from the inspection of the subject property. The Appellant rejected the recommendation on the basis that it is too high. Consequently, the Appellant’s appeal is based on the assessed value of the subject property.

ISSUES

7The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 and 2018 taxation years?

ii.) Is the current value as determined by the Board equitable in reference to the assessments of similar lands in the vicinity?

DECISION

8The Board determines the current value of the subject property for the 2017 and 2018 taxation years to be $2,815,000 (rounded).

9The Board finds that a downward adjustment to the current value to $2,511,000 (rounded) is necessary to ensure that the assessment of the subject property is equitable with the assessments of similar lands in the vicinity.

10The Board reduces the assessment of the subject property from $2,820,000 to $2,511,000 (rounded) for 2017 and 2018 taxation years.

REASONS FOR DECISION

Legislation

11In accordance with s. 44.(3)(a) of the Assessment Act R.S.O. 1990, c. A.31, (“Act”) the first mandate of the Board is to determine “the current value of the land.” Section 1 of 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.” That is, for the 2017 and 2018 taxation years, the Board must determine what the subject property would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by the Act.

12Section 19.2(1)4 of the Act prescribes the valuation days, which provides:

Valuation days

19.2 (1) Subject to subsection (5), the day as of which land is valued for a taxation year is …: For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

13Section 40.(17) of the Act places “the burden of proof as to the correctness of current value” on MPAC.

Current Value – Evidence and Analysis

MPAC’s Evidence

14Mary Stiliadis presented the Board with the post inspection data changes on the subject property. She testified that the quality class of the subject property was changed from 8.5 to 8.0, the reason being that the first-floor area is 8 feet high with no vaulted area. However, according to her the second floor is extra ordinary. The additional area added to the subject property was changed from 1,413 sq. ft. to 1,233 sq. ft., but Ms. Stiliadis testified that this did not change the total building area of the subject property. The number of fireplaces was also changed from 2 to 3. Ms. Stiliadis further added that the input of these changes in MPAC’s system changed the assessment of the subject property to $2,535,000, which is MPAC’s final recommendation.

15However, Ms. Stiliadis further testified that according to the sales of similar properties in the subject property’s vicinity, MPAC’s opinion of current value of the subject property is $3,434,000 (rounded). She presented the Board with six comparable property sales in the vicinity, which she testifies as being comparable with the subject property. Details of the six comparable property sales are summarized in Table 1 below:

Table 1

Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Building/ Size (sq. ft.)	Lot Size (acres)	Year Built/Effective Year Built	Construction Quality
Subject Property 28 Bamboo Grove	2,820,000	N/A	N/A	3,934	0.15	1969/ 2014	8.0
Sale 1 127 Denlow Boulevard	2,757,000	July 2015 (3,436,000)	3,784,879	4,256	0.25	1975/ 2001	8.0
Sale 2 15 Chipstead Road	2,595,000	June 2017 (4,500,000)	3,479,495	4,061	0.17	2011/ 2011	8.0
Sale 3 23 Tahoe Court	2,423,000	August 2015 (2,600,000)	2,812,080	3,808	0.24	1985/ 1985	8.0
Sale 4 6 Brandy Court	2,172,000	April 2016 (2,600,000)	2,455,939	3,700	0.18	1988/ 1988	8.0
Sale 5 7 Tahoe Court	2,168,000	November 2016 (3,000,000)	2,551,075	3,684	0.17	1985/ 1985	8.0
Sale 6 31 Nomad Crescent	3,684,000	October 2016 (4,600,000)	3,968,202	4,788	0.24	2007/ 2007	9.0

16Ms. Stiliadis testified that the change in the quality class of the subject property lines up with MPAC’s comparables. She further testified that the most similar comparable property sales are Sales 1 and 2. Sale 2, has similar effective year built, total building area and the same frontage of 60 feet as the subject property. According to Ms. Stiliadis, the time adjusted sale per square foot for Sales 1 and 2 is $889.30 and $856.81 respectively. An average of these is $873.05. Applying this average rate per square foot to the subject property’s total building area of 3,934 sq. ft. provides a current value of $3,434,578. Mr. Mailer submits that the current value of the subject property is $3,434,000 based on the sales of the two similar properties, but MPAC is not seeking an increase in the assessment of the subject property.

Appellant’s Evidence

17The Appellant commenced her evidence by stating that contrary to MPAC’s statement that the subject property is a new built, with high end finishing, the subject property is an old house with renovation and ordinary finishing. The Appellant testified that 90% of the old foundation was retained and the additional area added to the subject property was only at the back and the room over the garage, which she corroborated with architectural drawings. She emphasized that the old bricks to the house were painted, that the subject property still maintains its old structure but was recladed. The Appellant submits that the quality class of the subject property should be 7.0, when compared with MPAC’s Sale 1, however she admitted that she did not compare it with the other MPAC’s comparable property sales.

18In her evidence, the Appellant presented pictures of the subject property, to show the Board that the materials used in the renovation were not high end, as all cabinets were purchased from IKEA and not custom made as wrongly stated by MPAC. According to her, the windows are also not custom made, they have plastic inserts and she did not carry out expensive detailing of the subject property. She further presented a sale listing of 176 Valley Road, stating that she only copied the front exterior of this property. Ms. Stiliadis advised the Board that the quality class of 176 Valley Road is 9.0.

19The Appellant questioned the 335 sales MPAC used to provide time adjustment factors. She submits that MPAC did not use sales on her streets and during cross-examination; Ms. Stiliadis explained that the 335 property sales were computer generated and not hand-picked as suggested by the Appellant. To show that MPAC’s time adjustment factors are flawed, she used MPAC’s comparable Sale 4, which sold in April 2016 for a time adjusted sale price of $2,457,000 (using MPAC’s time adjusted factor of 0.945). According to her this property sold again in July 2017, for a time adjusted sale price of $2,975,700. She questioned the difference of approximately $500,000 between these two amounts and if MPAC’s time adjustment factors are accurate, the two amounts should be the same, since the purpose of the time adjusted factors is to determine what a property would sell for on the valuation date of January 1, 2016.

20The Appellant further compared sales of houses west of Banbury Road and east of Banbury Road. She submits that houses west of Banbury Road are more valuable than properties east of Banbury Road where the subject property is located. She emphasized that 127 Denlow Boulevard, MPAC’s Sale 1, which MPAC presented as one of the most similar to the subject property is located west of Banbury Road. She further testified that properties located west of Banbury Road are ravine lots, with custom homes and larger buildings. She added that sales of properties on her street are about $1,000,000. The Board notes that Ms. Stiliadis testified that the inspection of all MPAC’s comparable properties revealed that there are no economic influences for the Appellant’s assertion.

21Furthermore, using sales of three properties on Misty Crescent, the Appellant submits that a new house sells higher per square feet than a renovated house. Using this, she concluded that the subject property is not a new built but a renovated house.

22The Appellant provided the Board with the sales of four properties, which according to her are the closest to the valuation date of January 1, 2016. Details of the four property sales as provided by the Appellant are summarized in Table 2 below:

Table 2

Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Building/ Size (sq. ft.)	Lot Size (acres)/sq.ft.	Year Built/Effective Year Built	Construction Quality
Subject Property 28 Bamboo Grove	2,820,000	N/A	N/A	3,934	0.15/6600	1969/ 2014	8.0
Sale 1 24 Tanbark Crescent		October 2015 (2,150,000)		3,187	?/7947	1973/
Sale 2 69 Tanbark Crescent		October 2015 (1,888,000)		3029	?/6050	1969/
Sale 3 9 Teakwood Grove		October 2015 (1,990,000)		2408	?/7635	1971/
Sale 4 6 Bamboo Grove		November 2015 (1,920,000)		2,253	?/6614	1969/

23The Appellant testified that the average sale price for the four sales is $1,987,000. She used MPAC’s time adjustment factor for October 2015, which is 1.044 or November 2015 which is 1.026 and obtained $2,050,000. The Board notes that using either of these time adjustment factors will not result to this current value. She submits that the current value of the subject property is $2,050,000.

Board’s Analysis – Current Value

24The best evidence of current value is the sale of the subject property on or close to the valuation date of January 1, 2016. The subject property was purchased on October 29, 2014. Not only is this sale far removed from the valuation date, the subject property was renovated with additional areas added to it. On January 1, 2016, the condition of the subject property was different from its condition on the date of purchase. Consequently, the October 2014 sale is not relevant to determine current value of the subject property as of the valuation date. The Board shall proceed to review the recent sale of other similar properties in the vicinity to determine its current value.

25The Board finds that the quality class of the subject property is 8.0, based on the evidence furnished by the parties.

26The Appellant argues that the quality class of the subject property should be 7.0. The pre-inspection quality class provided by MPAC was 8.5. According to Ms. Stiliadis, this disagreement was one of the reasons MPAC filed a motion for an inspection. An inspection is one of the tools that help to resolve such disputes. Ms. Stiliadis testified that during the inspection which was carried out with another MPAC staff, she reviewed the materials used in the subject property’s renovation, the window framing, the ceiling heights and interior finishes and concluded that the quality class of the subject property should be reduced to 8.0. The Appellant testified that there is a sky light on the second floor, since the subject property has no sun exposure, this was created like a tunnel from the second floor roof to allow light into the property and this is not vaulting. The Appellant also argues that there are no crown moldings, no coffered ceiling but she admitted that the height of the ceiling in a bedroom on the second floor is 14 feet.

27The Board considered the Appellant’s argument, however, from the pictures of the subject property, it is more probable than not that the subject property is 8.0. The Appellant provided pictures of 176 Valley Road, which according to MPAC is 9.0, which reveals a high end quality finished home. There is insufficient evidence furnished by the Appellant to determine that the subject property is quality class 7.0. The Appellant did not provide the quality class of the four properties she deems as closest to the valuation date. Ms. Stiliadis confirmed that she physically inspected the exterior of all MPAC’s comparables. During cross-examination, Ms. Stiliadis further admitted that although she did not carry out an interior inspection of MPAC’s comparables, but these comparable properties could have triggered an inspection through a sale, a request for reconsideration or if it is a new built. Ms. Stiliadis further concluded that from her years of experience as an assessor and her observation during inspection, the quality class of the subject property is in line with the six MPAC comparable property sales.

28The Appellant did not present the Board with pictures of her comparables as detailed in Table 2; neither did she have the quality class of these properties as she testified that the quality class was not available on MPAC’s website. However, MPAC had provided pictures in its post inspection report of the properties which the Appellant had initially communicated to MPAC were the most similar to the subject property. From the evidence of the Appellant, there is no basis for her determination that the subject property is 7.0, apart from her testimony that the subject property does not have high end finishing’s. None of the parties provided photographs of the interior of their comparables. The best evidence is the photographs provided by MPAC of all MPAC’s six comparables, including the Appellant’s initial choice of properties similar to the subject property and the Appellant’s pictures of the subject property. The Board finds that the subject property looks similar to MPAC’s comparables, excluding Sale 6, which has a quality class of 9.0.

29The Appellant submits that MPAC’s time adjustment factors are flawed, but offered no alternative and still used MPAC’s time adjustment factors to arrive at her determined current value for the subject property.

Current Value – Analysis

30The basis of comparison for the Appellant’s comparable property sales and the subject property was closeness to the valuation date. The Appellant’s four comparables are not similar to the subject property in terms of age and building size. The Board is unable to determine the quality class of these properties. For these reasons the Board will disregard these sales.

31In determining the current value for the subject property, the Board reviewed and used four of MPAC’s six comparable property sales. The Board reviewed the characteristics of each of the comparables and determines that MPAC’s Sale 6 is not comparable to the subject property. It is superior in terms of its lot size and building size and its quality class is 9.0. MPAC’s Sale 1 is also superior to the subject property, it has the largest lot size, with a swimming pool and the building size is 322 sq. ft. larger than the building of the subject property. The Board finds that MPAC’s Sale 2, 3, 4 and 5 are comparable with the subject property.

32Sales 2, 3, 4 and 5 all have building sizes that are within 10% of the subject property’s square footage, they all have a quality class of 8.0. Although Sales 3, 4 and 5 have effective year-builds ranging from 1985 to 1988, these three properties have the same quality class of 8.0 as the subject property. Sale 3 has a swimming pool and a bigger lot size than the subject property; this is accounted for in its age being 29 years older than the subject property. Sales 2 has an identical effective frontage with the subject property, a similar lot size and its building size is only 127 sq. ft. bigger than the subject property. Its effective year built is 2011 but is has the same quality class with the subject property. Sale 5 is located on a cul-de-sac, however, Ms. Stiliadis testified that there is no positive or negative value attributed to this feature in the area. Using the time adjusted sale per square feet for the four comparable property sales, the Board obtained the following values: Sale 2- $856.80, Sale 3 – $738.46, Sale 4 –$663.76, Sale 5 – $692.47. The median obtained is $715.46. Applying this against the subject property’s building size of 3,934 sq. ft. provides a current value of $2,815,000 (rounded).

33The Board determines that the correct current value of the subject property is $2,815,000 (rounded).

Equity Analysis

34Section 44.(3)(b) of the Act directs that after determining current value, the Board shall 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.”

35The Assessment to Sales Ratio (“ASR”) is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the Time Adjusted Sale (TAS) price.

MPAC’s Evidence

36MPAC’s assessor presented an equity analysis of 30 residential sales of single family detached homes from January 1, 2015 to December 31, 2017 within 2.5 kilometres of the subject property. Ms. Stiliadis presented a median ASR of 0.892. She submits that MPAC standards indicate that equity is achieved if the median ASR falls between 0.95 and 1.05, which is in line with the International Association of Assessing Officers standards, which state that the median ratio should fall between 0.90 and 1.10.

37Ms. Stiliadis applied the median ASR of 0.892 to her determined opinion of value of $3,434,000 and obtained a higher assessment of $3,063,128. She submits that since this is higher than the returned assessment, no equity adjustment is required. Mr. Mailer emphasized during his submission that MPAC is not seeking an increase in assessment of the subject property and would like the Board to reduce the assessment from $2,820,000 to the recommended value of $2,535,000, based on the data changes obtained after the inspection of the subject property.

Appellant’s Evidence

38The Appellant also used MPAC’s median ASR of 0.892 to her determined current value of $2,050,000 and she obtained an assessment of $1,828,600. She concluded that this should be the current value of the subject property to bring it in line with the sales of properties on the subject property’s street.

Board’s Analysis

39The Appellant did not dispute MPAC’s median ASR of 0.892, consequently, the best and only evidence on equity is presented by MPAC, due to a larger sample size. Accordingly, this evidence leads the Board to the conclusion that a reduction in the determined current value is necessary to make it equitable with the assessments of similar lands in the vicinity. The Board applied MPAC’s median ASR of 0.892 to its determined current value of $2,815,000 (rounded).

40The Board finds that the determined current value of the subject property is not equitable with the assessment of similar land in its vicinity and reduces the assessment from $2,820,000 to $2,511,000 (rounded).

CONCLUSION

41Based on all of the evidence, the Board determines that the correct current value of the subject property to be $2,815,000 (rounded) and determines that a reduction of the current value to $2,511,000 (rounded) is necessary in order to make the assessment of the subject property equitable with the assessment of similar properties in the vicinity.

42The Board reduces the assessment of the subject property from $2,820,000 to $2,511,000 for the 2017 and 2018 taxation years.