Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 21, 2019

FILE NO.: WR 157692

Assessed Person(s): Steven Joseph Stefanko, Lisa Eileen Stefanko

Appellant(s): Steven Joseph Stefanko

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 23

Respondent(s): City of London

Property Location(s): 18 Ravine Ridge Way

Municipality(ies): City of London

Roll Number(s): 3936-020-401-34800-0000

Appeal Number(s): 3235069 and 3312832

Taxation Year(s): 2017 and 2018

Hearing Event No.: 707172

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

Heard: December 3, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Steven Joseph Stefanko	Self-represented
MPAC	Tobin Edmunds
City of London	No one appeared

DECISION OF THE BOARD DELIVERED BY ANTHONY LaREGINA

Background

1Steven Joseph Stefanko (the “Appellant”) is the owner of 18 Ravine Ridge Way (the “subject property”), which is a 0.21 acre parcel of land containing a single family detached bungalow. The property has a total effective frontage of 92 feet and a total effective depth of 100 feet for a total land area of 9,200 square feet.

2The bungalow has an effective year built of 1988 and a quality of construction of 7.5. The total building area is 2,534 square feet on the main level and 2,589 square feet in the basement of which 1,650 square feet is finished space. The bungalow has three bedrooms, three and a half bathrooms, one fireplace and is listed as average condition. The property has an attached garage with 574 square feet of building area also built in 1988.

3Pursuant 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”).

4MPAC has assessed the current value of the subject property at $546,000.

5The Appellant has filed appeals for taxation years 2017 and 2018 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessment of current value is too high and that the correct current value is between $520,000 and $530,000. At this hearing, MPAC takes the position that its assessed value is correct.

6Pursuant to s. 40.(11) of the Act, the City of London 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 behalf of the City of London.

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.

8MPAC takes the position that an equitable reduction is not required. The Appellant has taken the position that a reduction in assessment is justified based on the assessment of three similar homes on the same street as the subject property.

9At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value for 2017 and 2018 tax years is $543,000. Pursuant to s. 44.(3)(b) of the Act, an equitable reduction of this value is not required.

Relevant Legislation

10The Act states:

1. “current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

40.(17) For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

44.(3) Same, 2009 and subsequent years. – For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

Current value

11The first issue to be determined on this appeal is the correct current value of the subject property for the taxation years 2017 and 2018.

MPAC’s Evidence

12Tobin Edmunds, representing MPAC, prepared both a Valuation and Equity Report respecting the subject property, dated August 17, 2017, which he submitted into evidence.

13Mr. Edmunds identified seven comparable property sales, including the subject property, which sold between 2013 and 2107 in the vicinity of the subject property. These properties are illustrated in the following table.

Feature	Subject Property	Property 2	Property 3	Property 4	Property 5	Property 6	Property 7
Address	18 Ravine Ridge Way	22 Exmoor Place	139 Carriage Hill Drive	6 Tetherwood Court	88 Tallwood	19 Tallwood	46 Tetherwood Court
Distance from Sub km’s	0	0.925	0.2162	0.8091	0.1794	0.2553	0.9278
Current Value Assessment	$546,000	$584,000	$506,000	$584,000	$588,000	$644,000	$715,000
Sale Date	04/30/2013	May 2017	Oct 2014	Nov 2016	Dec 2016	Aug 2013	Oct 2016
Sale Value $	$558,000	675,000	490,000	699,000	645,000	640,000	$825,000
TAS Value $	$605,911	566,448	512,419	644,422	586,730	688,225	$770,371
Effective Site Area - Acres	0.21	0.33	0.2	0.27	0.19	0.18	0.27
Year Built	1988	1996	1991	1993	1985	1985	1996
Eff Yr. Built	1988	1996	1991	1993	1985	1993	1996
Modifications	B, Year 2009
Quality	7.5	7.5	7.5	7.5	7.5	7.5	7.5
Total Building Area S.F.	2,534	2,492	2,181	2,645	2,736	2,739	3,221
1st Floor Area S.F.	2,534	2,492	2,181	2,645	2,736	2,739	3,221
Basement S.F.	2,589	2,526	2,220	2,696	2,702	2,700	3,320
Finished Basement S.F.	1,650	2,534	1,036	1,790	2,085	2,047	2,576
Basement Height FT	8	8	8	8	9	8	8
Secondary Structure	Attach Garage	Attach Garage	Attach Garage	Attach Garage	Attach Garage	Attach Garage	Attach Garage
Building Area S.F.	574	779	608	593	563	553	872
Secondary Structure				Outdoor Pool		Outdoor Pool
Building Area S.F.				512		512
Similar/Superior/Inferior		Similar	Similar	Similar	Similar	Similar	Similar

14Mr. Edmunds points out in his report that all six comparable property sales are similar to the subject property but in his oral testimony he stated that, other than the subject itself, the best comparable properties to the subject property are 22 Exmoor Place, 6 Tetherwood Court, and 88 Tallwood. These three have similar quality levels of 7.5, similar building areas, and are located within one kilometer of the subject property.

15Mr. Edmunds demonstrated that the time adjusted sale range of the three best comparable is between $566,448 and $644,442 therefore estimating that the current value of the subject property should be in the middle of the range at $600,000.

MPAC’s Submissions

16Relying on its evidence, MPAC’s submits that the correct current value for the taxation years 2017 and 2018 is $600,000.

17Mr. Edmunds submits that the sale of the subject property is also a good indicator of current value but he relies on the midpoint of the three best comparable sales as itemized in paragraph 15 in support of the market value and therefore the current value of the subject property as of January 1, 2016. He also points out that the sale of the subject property at $558,000 which occurred in April 2013, some 32 months before the valuation day, further supports the market evidence that the subject property would likely sell in the $600,000 range as of January 1, 2016.

Appellant’s Evidence

18The Appellant submitted no evidence in support of current value.

19The Appellant pointed out during cross-examination that two of Mr. Edmunds three best comparables are superior to the subject property. The Appellant demonstrated that 22 Exmoor Place has a 3 car garage instead of the subject property which has 2, is 8 years newer than the subject property, and has a lot area which is 50% larger than the subject property. He also demonstrated that 6 Tetherwood is also superior as it has an outdoor pool, is five years newer, and the lot is 28% larger.

Appellant’s Submissions

20The Appellant submits that in selecting and analysing the comparable sales MPAC did not consider the five factors of comparability which make up 85% of a property’s value: location, lot size, building area, quality of construction, and age. He also argues that it was quite clear from Mr. Edmunds evidence and cross-examination that the properties he presented are superior to the subject property.

21The Appellant requests that the Board not rely on the comparable property sales submitted by MPAC to establish the current value of the subject property.

Board’s Findings

22The Board has reviewed and analysed the six comparable property sales submitted by MPAC in support of current value and makes the following observations.

23The Board prefers to use sales of comparable properties which transacted as close as possible to the valuation date of January 1, 2016 to establish the current value of the subject property. In this case we have three properties which sold in 2016, 6 and 46 Tetherwood and 88 Tallwood.

24The Board agrees with the Appellant that 6 Tetherwood is superior to the subject property. This property has an outdoor pool, 28% larger lot, and larger building area and is therefore superior to the subject property. This property sold in November 2016 for a time adjusted sale value of $644,422. The subject property would likely have sold for considerably less than this $644,422.

25The Board also agrees with the Appellant that 46 Tetherwood is superior to the subject property as it has a building area which is 27% larger than the subject property, the lot size is 28% larger, and the structure is eight years newer. This property sold in October 2016 for a time adjusted sale value of $770,371. It is the Board’s view that the subject property would likely have sold for considerably less than this value.

26The best comparable to the subject property is 88 Tallwood which sold in December 2016 for a time adjusted sale value of $586,730. This property was built in 1985, three years before the subject property, has the same quality of construction of 7.5, a slightly larger building area and larger finished basement area than the subject property, while the subject property has a larger lot.

27The Board concludes that the best evidence to establish the current value of the subject property is the time adjusted sale value of 88 Tallwood of $586,730 with a downward adjustment for the difference in building area between 88 Tallwood and the subject property. Dividing the adjusted sale value of $586,730 by the building area of 2,736 square feet for 88 Tallwood gives us a value of $214.40 per square foot. Applying this value to the building area of the subject property at 2,534 square feet gives us a value of $543,290 for the current value of the subject property.

28The Board acknowledges that the finished area in the basement and basement height of 88 Tallwood are slightly larger than the subject property. But the Board also notes that the lot size of the subject property is approximately 10% larger than 88 Tallwood therefore balancing out the differences between 88 Tallwood and the subject property. Finally 88 Tallwood is the closest comparable sale to the subject property at 0.1794 kilometers.

29The Board will rely on the sale of 88 Tallwood which transacted within 12 months of the valuation day and therefore finds the current value of the subject property to be $543,000(rounded).

30Contrary to Appellant’s claims, the Board is satisfied that Mr. Edmunds considered the five factors of comparability, location, building area, lot area, construction quality, and year built when arriving at his conclusions for current value. These factors are clearly itemized on Appendix C of MPAC’s valuation report for each of the comparable sales Mr. Edmunds submitted in support of current value.

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 should the amount of this reduction be

MPAC’s Evidence

31Mr. Edmunds relies on his Equity Study showing a median Assessment to Sale Ratio (“ASR”) of 0.978 based on the arm’s length sales of 30 properties within 4 kilometers as the subject property. His positon is that the ASR is within the reasonable range of 0.95 to 1.05 and therefore an equity adjustment is not required.

32He concludes that MPAC is not requesting an increase in assessment and therefore the assessment of $546,000 as returned should be confirmed for the 2017 and 2018 taxation years.

Appellant’s Evidence

33The Appellant is of the opinion that the subject property is assessed too high. He proposes a lower assessed value in the range of $520,000 to $530,000. He referenced three neighboring properties, 14, 22 and 26 Ravine Ridge Way, with assessments of $535,000, $528,000 and $521,000, respectively that are lower than assessment of the subject property at $546,000. In addition the Appellant points out that 14, 22 and 26 Ravine Ridge Way have similar or slightly larger building areas of 2,850, 2,430 and 2,546 square feet as compared to the subject with 2,534 square feet.

34The Appellant concludes that the assessment of his property should be in the range of $520,000 and $530,000 reflecting the range of assessments of the three neighboring properties he believes are very similar to the subject property.

Board’s Analysis and Findings

35Section 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.”

36The purpose of equitable adjustment has been described as the equitable distribution of the tax burden according to the assessed value of property owned by taxpayers as follows by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) at page 2:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

37In addressing equity in assessment, the Court, at page 6, also noted that “an assessment made at the actual value of lands and buildings…would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred [emphasis added].”

38The term “vicinity” is not defined in the Act, but refers to the appropriate geographical area that will yield a meaningful number of comparables (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (ON CA) at page 6).

39The test set out in s. 44.(3)(b) of the Act, requires that the Board refer to similar lands in the vicinity. Use as a point of similarity, may be, but is not necessarily determinative of similarity. In determining whether other lands are similar, the Ontario Divisional Court, in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., 2017 ONSC 1299, applied the decision of the Ontario Divisional Court in Trizec Equities Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182. The Court stated at paragraph 23:

…All points of comparison must be considered. The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.

40The ASR analysis of a reasonable sample of sold properties is one method used to determine if properties in the vicinity are assessed below their current value. If other properties are assessed substantially below their current value then a reduction is required to make the assessment of the subject property 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 price.

41Mr. Edmunds relies on a median ASR of 0.978 based on the sample of 30 arm’s length sales of properties in the vicinity of the subject property.

42The Board finds that the median ASR of 0.978 falls within MPAC’s generally acceptable standard of 0.95 and 1.05 required to establish that the level of current value assessments of similar properties is in line with the level of sale prices in the vicinity.

43On the other hand, the Appellant takes the position that the subject property is assessed too high. He proposes a lower assessed value in the range of $520,000 to $530,000. He referenced the assessments of neighboring properties, 14, 22 and 26 Ravine Ridge Way, with assessments that are lower than the assessment of the subject property. The Appellant has not addressed the five points of comparability that he presented in his summations with respect to 12, 22 and 26 Ravine Ridge Way. The Board has no evidence with respect to lot size, quality of construction, age or any internal features of the three properties submitted in his evidence. In addition the Board has no way of determining the relationship of these three properties to the market value as they did not sell as compared to the subject property which sold for $558,000 in April 2013.

44The Board prefers MPAC’s larger sample of 30 sales as opposed to the assessments of the three neighboring properties submitted by the Appellant in support of an equity argument. The Board has also conducted a statistical analysis of the same 30 assessment to sales ratios. That analysis shows that the mean ASR is 0.964 with a confidence interval of 0.045. That means that the true mean is likely between 0.919 and 1.009. Any time the high end of the likely range is above 1.0 the Board cannot be confident that other property in the vicinity is under assessed. That statistical analysis further supports MPAC’s position that no equity adjustment is required.

45For these reasons, the Board finds that the evidence before it does not support the conclusion that an equity adjustment is required under s. 44.(3)(b) of the Act.

CONCLUSION

46The Board finds that the current value of the subject property, as of the January 1, 2016 valuation date, is $543,000. Furthermore, the Board finds that the evidence before it does not support the conclusion that an equitable adjustment is required under s. 44.(3)(b) of the Act.

47Therefore, the assessment of the subject property is reduced from $546,000 to $543,000 for the 2017 and 2018 taxation years.