Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 18, 2019

FILE NO.: WR 160992

Assessed Person(s): Vitina Pighin

Appellant(s): Vitina Pighin and Gianmario Pighin

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

Respondent(s): City of Toronto

Property Location(s): 32 Humberview Road

Municipality(ies): City of Toronto

Roll Number(s): 1914-081-210-01100-0000

Appeal Number(s): 3338657 and 3355066

Taxation Year(s): 2018 and 2019

Hearing Event No. 715765

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

Heard: June 10, 2019 in Toronto, Ontario

APPEARANCES:

Parties	Representative
Vitina Pighin and Gianmario Pighin	Gianmario Pighin
MPAC	Erin Comeau
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1Gianmario Pighin, (the “Appellant”) is the owner of 32 Humberview Road (the “Subject Property”). The subject property is a single-family detached home built in 1926. It had a major renovation in 2017, which the Municipal Property Assessment Corporation (“MPAC”) characterizes as a renovation code “D”, which according to MPAC’s assessor and representative, Erin Comeau, represents a “rebuilt new”. It has a lot with 29 feet of effective frontage, 100 feet of effective depth and an effective site area of 2,900 square feet (“sq. ft.”). On April 2, 2019, MPAC carried out an inspection of the subject property and revised its total building area from 2,907 sq. ft. to 2,822 sq. ft. It has an unfinished basement area of 1,000 sq. ft.

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 appeals the 2018 and 2019 (deemed) assessment of the subject property on the grounds that the assessment is too high. The Appellant argues that the correct current value should be $1,400,000. The subject property was assessed by MPAC at $1,700,000 for the 2018 taxation year. Mr. Comeau submits that due to the data changes on the subject property, MPAC’s position is that the correct current value is $1,667,000; however, MPAC’s valuation opinion is that the current value of the subject property is $1,703,526. Mr. Comeau advised the Board that MPAC is not seeking an increase in the value of the subject property; however, he requests that the Board either confirms the assessment of the subject property as returned at $1,700,000 or at $1,667,000.

4Pursuant to s. 40(11) of the Act, the Municipality, (in this case, the City of Toronto) is a party to this proceeding. However, the Municipality did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the Municipality’s behalf.

PRELIMINARY ISSUE

5The Appellant initially disputed MPAC’s revised measurement of the total building area of the subject property at 2,822 sq. ft. He argues that he hired qualified professionals to measure the building structure of the subject property and it was measured at 2,800 sq. ft. He later agreed that this is no longer an issue, since it is just a small difference and he is willing to proceed with the hearing.

6During the hearing, the Appellant alleged that he did not receive MPAC’s complete disclosure package prior to the hearing. Mr. Comeau submitted that it is impossible for the Appellant to receive part of the disclosure, when what he claims to have received is part of the complete disclosure that was served on him. Mr. Comeau advised the Assessment Review Board (the “Board”) that the complete disclosure package was either e-mailed or delivered personally by him to the Appellant. However, he stated that he could not remember how it was served, but he is certain that the Appellant was served. The Board advised the Appellant that it is contrary to the Board’s Rules of Practice and Procedure (the “Rules”) and the rules of procedural fairness for a party to be unaware of the case prior to the hearing. Parties should have had the opportunity to review the other party’s evidence prior to the hearing and there should be no avenue for surprises at the hearing. The Appellant confirmed that he understood this and that he was still willing to proceed with the hearing, since he knows MPAC’s case, as they had the mandatory settlement meeting prior to the hearing as required by the Schedule of Events in the Rules. Mr. Comeau provided the Appellant with copies of MPAC’s evidence at the hearing. The Board asked if the Appellant required time to review the evidence, he advised the Board that he was conversant with MPAC’s evidence and he was willing to proceed and that this was not an issue.

7The Appellant further wanted to introduce additional new evidence that was not disclosed to MPAC prior to the hearing. He argued that he should be allowed to do so, as MPAC had also provided him with its evidence at the hearing. MPAC objected to the admissibility of part of this new evidence on the basis that it is prejudicial to MPAC, since MPAC will need additional time to review the new evidence and prepare a response, which will require an adjournment. Mr. Comeau submits that MPAC’s disclosure package was provided to the Appellant on March 4, 2019 and it was filed with the Board two weeks after the mandatory settlement meeting. The Board ruled that part of the Appellant’s new evidence is inadmissible due to it being prejudicial to MPAC since it was not disclosed prior to the hearing. The Appellant also agreed to exclude it.

8At the completion of the hearing, the Board reserved its decision.

ISSUES

9The issues to be determined are:

i) What is the correct current value of the subject property for the 2018 and 2019 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

10The Board determines the correct current value of the subject property for the 2018 and 2019 deemed taxation years to be $1,667,000.

11The Board finds that this assessment at current value is equitable with the assessments of similar lands in the vicinity, and therefore no further reduction is required to achieve equity.

12The Board reduces the assessment of the subject property from $1,700,000 to $1,667,000 for the 2018 and 2019 taxation years.

REASONS FOR DECISION

Legislation

13In accordance with s. 44.(3)(a) of the 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 2018 and 2019 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.

14The second mandate of the Board is provided in s. 44.(3)(b) of the Act which provides:

… 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.

15Section 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.

16Section 40.(17) of the Act places “the burden of proof as to the correctness of current value” on MPAC.

Issue No. 1: What is the correct current value of the Subject Property for the taxation years 2018 and 2019

Current Value – Evidence and Analysis

MPAC’S Evidence

17Mr. Comeau prepared a valuation report respecting the subject property, dated February 28, 2019, which he submitted into evidence.

18Mr. Comeau testified that MPAC considers the subject property as a “rebuilt new”, due to the major renovation and additions undertaken on the subject property in 2017. He states that MPAC arrived at this conclusion despite the fact that the subject property still retained its old foundation and the old exterior brick walls. Furthermore, he argued that even if a wall in the house was still retained, MPAC will still consider it as a rebuilt new. He also submits that all the interior walls were torn down, new wiring installed, and the subject property is functionally brand new, and its depreciation would be from 100%. Mr. Comeau argues that this is different from a renovated house, where parts of the house like the kitchen or bathroom are renovated. Consequently, he presented sale properties that were either rebuilt or new, further emphasizing that within the subject property’s vicinity, old houses were being purchased, torn down and rebuilt.

19Mr. Comeau presented the Board with five property sales, which he testified are within the subject property’s vicinity and are comparable to the subject property. Details of the five property sales are summarized in Table 1 below:

Table 1

Property	Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Building/ Size (sq. ft.)	Lot Size (sq. ft.)	Year Built	Modification/ Year
Subject Property	32 Humberview Road	1,700,000	N/A	N/A	2,822	2,900	1926	Renovation “D” / 2017
Sale 1	38 Methuen Avenue	1,630,000	April 2016 (1,565,000)	1,498,975	2,087	2,125	2016	None
Sale 2	19 Methuen Avenue	1,875,000	May 2016 (1,875,000)	1,774,507	2,743	2,500	2015	None
Sale 3	47 Harshaw Avenue	1,491,000	August 2016 (1,695,000)	1,548,813	2,222	2,500	2013	None
Sale 4	57 Harshaw Avenue	1,540,000	May 2016 (1,800,000)	1,703,526	2,168	2,500	2016	None
Sale 5	69B Harshaw Avenue	1,685,000	April 2015 (1,775,000)	1,987,616	2,208	2,500	2013	None

20Mr. Comeau testified that the range of sales of these five property sales is from $1,498,975 to $1,987,616. He argued that according to the Act, the Board is to determine what the subject property would sell for as of January 1, 2016, based on the range of these sales. He emphasized that the subject property has a larger site area and building size, therefore he submits that the current value should tilt to the higher side of the range of the five property sales. He submits that the average and the median adjusted sale price per square foot of the five sales is $749.62 and $718.24 respectively. If this is applied against the building size of the subject property, it will provide a current value above $2,000,000. He utilised the median time adjusted sale price of the five property sales, which is Sale 4, at $1,703,526, to derive the current value of the subject property. He submits that the subject property is superior to Sale 4, consequently, MPAC is valuing the subject property below what it could have sold for on the valuation date.

Appellant’s Evidence

21The Appellant submitted into evidence real estate listings of sale properties he determined as comparable to the subject property, Google Map of the location of these properties and exterior pictures of MPAC’s five sale properties.

22The Appellant testified that the subject property was originally built in 1926 and it was renovated with a rear and top addition. He added that the exterior brick walls, foundation and basement are still original and that the front façade was not altered due to the City’s restrictions. He argues that MPAC is incorrect in its designation of the subject property as a rebuilt new and that in the real estate world it is a renovation with additions, since the basement and some other structures are original. Furthermore, he added that the interior finishes are of average grade, the rear of the subject property is incomplete, there is no landscaping, the front landscaping is incomplete and the exterior brick is tuck pointed in its original state and has never been altered. He submits that the subject property’s street is best described as semi arterial, a busy street and the only reason there are no speed bumps on it is because the City uses it as an emergency route.

23The Appellant referred to MPAC’s five property sales as being superior to the subject property since they are all new houses built from 2013 to 2016. He testified that he has also been inside each of MPAC’s five property sales and they all have superior finishes compared to the subject property. To corroborate his argument, he presented the exterior pictures of all MPAC’s sales. He further testified that each of MPAC’s sales have basement heights of 8 to 9 feet, while the subject property’s basement height is 6 feet 7 inches. He also testified that MPAC’s property sales on Harshaw Avenue have the benefit of backing unto Lessard Park, which according to him is a premium location. He added that he took a poll of 10 to 15 realtors and they stated that this premium should have a 10 to 15% positive adjustment. He further presented a map of the location of these properties to corroborate his argument. Furthermore, he submits that all MPAC’s five sales have a modern appeal, functional garages, while the subject property has a garage, but it is not functional, since a car cannot be parked into it, due to its location, at the rear of the subject property. He also added that MPAC’s sales have a curb appeal, superior landscaping and modern façade. He argues that MPAC used these five sales to arrive at the current value of the subject property without making a downward adjustment to the subject property due to their superior finishes, finished basement, higher basement height and modern façade.

24The Appellant further used MPAC’s property Sale 5 to argue that MPAC’s property sales are not comparable to the subject property. He applied 30% downward adjustment to the assessed value of this property. He submits that 8% is for being on a superior street, since it is a dead end street used by only local traffic, 12% is for backing unto Lessard Park (polls by realtors suggest 8 to 15%, he used 12% being the median) and 10% for its superior finishes. According to the Appellant, this provides a revised assessment of $1,179, 500. He advised the Board that although he is not submitting that this should be the assessment of the subject property, however, he maintains that it shows that Sale 5 is not comparable to the subject property.

25The Appellant presented a paired sale of two properties, 8 Humberview Road, which sold for $1,250,000 and 20 Lessard Avenue, sold for $1,350,000. He argues that the properties are the same and they both sold at an 8% price difference. During cross-examination, Mr. Comeau advised the Board that 8 Humberview Road abuts a commercial property, which the Appellant disagreed with. Mr. Comeau further drew the attention of the Appellant to the fact that the properties sold two months apart and if it is a paired sale comparison, it should be in the same month. The Appellant states that two months does not make any difference.

26The Appellant presented five property sales, which he testified are all renovated like the subject property. Mr. Comeau further presented as evidence, details of these sales, which are summarized in Table 2 below:

Table 2

Property	Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Building/ Size (sq. ft.)	Lot Size (sq. ft.)	Year Built	Modification/Year
Subject Property	32 Humberview Road	1,700,000	N/A	N/A	2,822	2,900	1926	Renovation “D”/ 2017
Sale 1	49 Humber Trail	1,260,000	July 2015 (1,296,000)	1,391,904	1,704	2,565	1926	Renovation “C” / 2015
Sale 2	305 Runnymede Road	1,404,000	June 2015 (1,380,000)	1,502,820	2,325	3,600	1916	Renovation “D” / 2014
Sale 3	32 Baby Point Road	1,590,000	Dec. 2015 (1,487,000)	1,495,922	2,433	5,800	1930	Renovation “B” / 2004
Sale 4	48 Baby Point Crescent	2,001,000	April 2015 (1,548,000)	1,733,760	3,010	6,500	1929	Renovation “D” / 2016
Sale 5	66 Baby Point Crescent	2,772,000	August 2015 (1,575,000)	1,669,500	4,086	8,294	1927	Renovation “D” / 2018

27The Appellant testified that Baby Point Road is superior to the subject property’s street. In his testimony he admitted that there are not many rebuilt houses in the subject property’s vicinity. He submits that the best comparable is Sale 2. He notes that although it is superior in finishing and lot size, has a higher basement and is on a slightly busier street, it is still the best comparable to the subject property. He concluded that based on his five comparable sales the correct current value of the subject property should be $1,400,000.

Findings on Issue 1

Board’s Analysis – Correct Current Value

28Under s. 44.(3)(a) of the Act, the Board must first determine “the current value of the land.” The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the property on the valuation date or close to it. If, as in this case, no such transaction took place, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

29MPAC presented sales data for five properties, which Mr. Comeau testified are built new, since the houses were not renovated. However, he was not certain whether the builders retained the old foundation of these properties or tore them down. He testified that even if a wall was retained in the subject property, MPAC will value it as a brand-new building. These sale properties were built from 2013 to 2016. The Board disagrees with MPAC that these properties are comparable to a renovated house with an original year built of 1926. Mr. Comeau testified that MPAC considers the subject property as a rebuilt new since the inside walls were all torn down. The exterior brick walls were retained as confirmed by both parties and the Appellant further testified that the old foundation and basement are original and have not been altered. A willing buyer will not purchase the subject property based on MPAC’s opinion of what a rebuilt new is, rather, on what the buyer has seen after reviewing the specific details of the subject property and compares it with the market price of other comparable properties. Furthermore, the Appellant presented exterior pictures of all MPAC’s five property sales. The Board agrees with the Appellant that they all have a modern appeal and look superior to the subject property. The Appellant also testified that he has inspected all MPAC’s property sales and they all have superior finishing than the subject property. Mr. Comeau made no objections to this, since he testified that he did not inspect these five properties but only drove by them. Some of MPAC’s property sales have functioning garages, while the subject property as confirmed by the parties has a garage but a car cannot be parked into it due to its location at the rear of the property. In addition, some of the sales also have superior landscaping compared to the subject property that has an uncompleted landscaping. These differences will definitely affect a willing buyer’s purchase price for the subject property. For these reasons, the Board finds that MPAC's proposed properties are not comparable to the subject property, as they are superior properties. Therefore, they are of limited assistance to the Board in determining the correct current value.

30The Board has considered the Appellant’s five property sales to determine the current value range of the subject property. The Board determines that the Appellant’s Sale 1 is inferior to the subject property as the effective site area and building size is smaller than the subject property. The Appellant admitted during cross-examination that the renovation code “B” on Sale 3 is different to that of the subject property. This renovation took place in 2004; the building is smaller than the subject property although the site area is bigger. For this reason, the Board also considers Sale 3 to be inferior to the subject property.

31The Appellant’s Sales 4 and 5 were sold prior to renovation. According to Mr. Comeau, this means that these two houses were sold for the land value. These properties cannot be compared to the subject property since the sale price was for old houses originally built in 1929 and 1927 respectively, which is different from the state and condition of the subject property as of January 1, 2016. During cross-examination, Mr. Comeau asked the Appellant how much he spent on renovation and additions made to the subject property, he responded just below $300,000. Mr. Comeau submits that if this amount is added to the time adjusted sale price of Sales 4 and 5, this will provide a value of over $2,000,000. Furthermore, Mr. Comeau advised the Board that for Sale 5, it sold with a building size of 2,445 sq. ft. and after renovation it was changed to 4,086 sq. ft., and this accounts for its assessed value of $2,772,000 as of January 1, 2016. In this regard, Mr. Comeau submits that MPAC’s opinion of value for the subject property is correct. The Board does not consider these two properties to be comparable to the subject property, as the Board cannot determine the current value of the subject property based on the speculation of what the purchase price of Sale 4 and 5 would have been if $300,000 was added to the sale price. These two sales were open market sales. Furthermore, the condition of these two properties on the date of sale was different from the state and condition of the subject property on the valuation date of January 1, 2016.

32The Board finds that Sale 2 is also inferior to the subject property. Although it has a larger site area, the building size is smaller. Mr. Comeau testified that this property has a 10% downward adjustment for medium traffic. The Appellant confirmed that he was not aware of this 10% adjustment. However, in the Appellant’s testimony, he testified that this street is slightly busier than the subject property’s street; this corroborates MPAC’s evidence of medium traffic. The Appellant further argued that the subject property is also on an arterial street but MPAC does not designate it as such. The Appellant did not produce any evidence to quantify this argument. The Board cannot speculate or arbitrarily assign a negative adjustment to this designation. The Appellant argued that MPAC did not also provide any evidence for the designation of Sale 2 as having medium traffic; however, the Appellant confirmed that this street is slightly busier than the subject property’s street in his testimony. If this 10% downward adjustment is added back to the time adjusted sale price of Sale 2, to make it comparable to the subject property it would provide a value of $1,653,102. The Appellant submits that this is the best comparable to the subject property. He testified that if a downward adjustment was made for lot size and for finishes, it will be similar to the subject property. This property sold in June 2015 for $1,380,000. The Appellant argues that the current value of the subject property should be $1,400,000. Although the Appellant argues that this sale is the best comparable and a downward adjustment should be made for lot size and its finishes, he arrived at a higher current value for the subject property. This means the Appellant also deems the subject property to be superior to this Sale. If the Appellant had used the time adjusted sale price of this Sale at $1,502,820, he may have arrived at a current value close to MPAC’s recommended value of $1,667,000.

33The current value range of the inferior Sales 1 and 2 is $1,391,904 to $1,502,820. On the balance of probabilities, the current value of the subject property should be higher than these two sales based on its superior building and land size compared to Sale 1 and the superior location and building size when compared to Sale 2. It is therefore reasonable to conclude that the current value of the subject property should fall slightly higher than Sale 2, and the Board determines it to be at $1,667,000, which is the recommended value by MPAC.

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

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

36Mr. Comeau presented an equity analysis of 30 residential sales of single-family detached homes from January 1, 2015 to December 31, 2016 within 0.3 kilometres of the subject property. He presented a median ASR of 0.992. He 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.

37He submits that based on this analysis in accordance to the Act, similar properties in the vicinity are being assessed at or near their current values and therefore an equitable reduction of the correct current value is not required.

Appellant’s Evidence

38The Appellant submits that MPAC’s equity analysis is flawed since none of the properties are located on the subject property’s street. Mr. Comeau argues that they are within the vicinity of the subject property. The Appellant provided the assessments of four rebuilt properties, which he submits have lower assessments and are within the neighbourhood of the subject property. Mr. Comeau argues that these four rebuilt properties are not within the vicinity of the subject property. The Appellant did not state what the equitable reduction to the current value should be.

Findings on Issue 2

Board’s Analysis- Equity

39The purpose of an equitable reduction has been described by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., [1968] 2 O.R. 388, 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 application of 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.

In 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]”.

40However, the 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. In this regard, the burden of proof rests with the party that alleges that it would be inequitable to assess the subject property at its current value, and in this appeal is the Appellant. The Appellant has to establish, on a balance of probabilities, that an equitable reduction is required.

41The Board prefers MPAC’s evidence based on its large sample size. A more representative sample size is preferred and will provide a general level of assessment of similar lands in the vicinity. This determination cannot statistically be made with just four properties. An equitable reduction of the current value of the subject property, pursuant to s. 44.(3)(b) of the Act, is not required.

CONCLUSION

42Based on all the evidence, the Board determines the correct current value of the subject property to be $1,667,000 and determines that this correct current value is equitable with the assessment of similar properties in the vicinity and therefore no equity adjustment is required.

43The Board reduces the assessment of the subject property from $1,700,000 to $1,667,000 for the 2018 and 2019 taxation years.