Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 06, 2019

FILE NO.: WR 161542

Assessed Person(s): Tam Van Lam and Nu Diep

Appellant(s): Tam Van Lam and Nu Diep

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 14

Respondent(s): City of Markham

Property Location(s): 42 Brookhaven Crescent

Municipality(ies): City of Markham

Roll Number(s): 1936-030-234-03662-0000

Appeal Number(s): 3266255 and 3303248

Taxation Year(s): 2017 and 2018

Hearing Event No.: 701781

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

Heard: August 07, 2018 in Markham, Ontario

APPEARANCES:

Parties	Counsel/Representative
Tam Van Lam and Nu Diep	Self-represented
MPAC	Tony Kroi
City of Markham	No one appeared

MEMORANDUM OF ORAL DECISION DELIVERED BY SUBUOLA AWOLERI ON AUGUST 07, 2018

INTRODUCTION

1Tam Van Lam and Nu Diep, (the “Appellants”) are the owners of 42 Brookhaven Crescent (the “Subject Property”). The Subject Property is a single-family detached dwelling built in 2001, with construction quality of 7.0. It has a lot with 41.99 feet of actual frontage, 98.43 feet of actual depth, an actual site area of 0.09 acres, and a building total area of 2,325 square feet (“sq. ft.”). It has an unfinished basement area of 1,065 sq. ft. Tony Kroi, MPAC’s assessor and representative advised the Board that MPAC made an error in the year built of the Subject Property. MPAC had initially stated in its valuation report that it was built in 2002, but this was corrected at the hearing to 2001 and further confirmed by the Appellants. The Subject Property abuts a utility box for which MPAC provided no adjustment, as Mr. Kroi testified that it does not affect the value of the Subject Property.

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 Appellants appealed the 2017 and 2018 assessment of the Subject Property on the grounds that the assessment is too high. The Appellants argue that the correct current value should be $875,000. The Subject Property was assessed by MPAC at $964,000 for the January 1, 2016 valuation date. Mr. Kroi submits that the current value of the Subject Property based on MPAC’s market analysis is $1,062,684, however, with a reduction for equity and other adjustments on the Subject Property, MPAC recommends a current value of $939,000 and he requested that the Board confirm this value.

4Pursuant to s. 40(11) of the Act, the Municipality, (in this case, the City of Markham) 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.

5At the completion of the hearing, the Board provided an oral decision. The Appellants thereafter requested written reasons for that oral decision.

ISSUES

6The 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

7The Board determines the correct current value of the Subject Property for the 2017 and 2018 taxation years to be $1,056,000 (rounded).

8The Board finds that a downward adjustment of the current value to $939,000 (rounded) is necessary to ensure that the assessment of the Subject Property is equitable with the assessments of similar lands in the vicinity.

9The Board reduces the assessment of the Subject Property from $964,000 to $939,000 (rounded) for the 2017 and 2018 taxation years.

REASONS FOR DECISION

Legislation

10In 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 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.

11The 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.

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 …:

4. 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.

Issue No. 1: What is the correct current value of the Subject Property for the taxation years 2017 and 2018

Current Value – Evidence and Analysis

MPAC’s Evidence and Submissions

14Mr. Kroi prepared a valuation report respecting the Subject Property, dated March 28, 2018, which he submitted into evidence.

15Mr. Kroi presented the Board with seven property sales, which he testified are within the Subject Property’s vicinity. He testified that the properties which he considered as inferior to the Subject Property required an upward adjustment to their sale prices, while those he considered superior to the Subject Property required a downward adjustment to their sale prices. Details of the seven property sales are summarized in Table 1 below:

Table 1

Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Building/ Size (sq. ft.)	Actual area Size (Acres)	Year Built	Quality of Construction
Subject Property 42 Brookhaven Crescent	964,000	N/A	N/A	2,325	0.09	2001	7.0
Sale 1 54 Brookhaven Crescent	925,000	September 2015 (1,000,000)	1,063,208	2,182	0.09	2002	7.0
Sale 2 10 Ridgecrest Road	998,000	May 2015 (980,000)	1,123,072	2,273	0.12	2002	7.0
Sale 3 225 Stonebridge Drive	908,000	March 2015 (963,000)	1,148,294	2,273	0.08	2001	7.0
Sale 4 32 Lauraview Crescent	958,000	October 2015 (1,023,400)	1,068,785	2,370	0.1	2000	7.0
Sale 5 37 Emery Hill Blvd.	962,000	November 2016 (1,368,000)	1,160,944	2,294	0.09	2002	7.0
Sale 6 66 Brookhaven Crescent	1,036,000	August 2016 (1,138,000)	1,009,407	2,191	0.15	2002	7.0
Sale 7 96 Cynthia Jean Street	982,000	July 2016 (1,200,000)	1,080,684	2,325	0.1	2002	7.0

16Mr. Kroi testified that Sales 1 to 5 are similar to the Subject Property although with minor differences to the building area and lot sizes and their time adjusted sales prices were further adjusted to account for the differences between these sales and the Subject Property. He submitted that Sale 6 is superior to the Subject Property due to its larger lot size, while Sale 7 is the most similar to the Subject Property being the same model home, with the same building area and there is only a slight downward adjustment required since Sale 7 has a slightly larger lot.

17He further testified that MPAC adjusted upwards or downwards to the time adjustment sale amount for the seven sales in order to make up the differences between these sales and the Subject Property. He provided the adjusted time adjusted sale amounts for the seven sales as: Sale 1 - $1,102,208, Sale 2 - $1,089,074, Sale 3 - $1,204,294, Sale 4 - $1,074,785, Sale 5 - $1,162,944, Sale 6 - $937,407 and Sale 7 - $1,062,684.

18Mr. Kroi submitted that the median for these seven sales is Sale 2 at an adjusted time adjusted sale of $1,089,074, while Sale 7 is the most comparable to the Subject Property at an adjusted time adjusted sale of $1,062,684. He testified that Sale 7 is the same model home as the Subject Property and it has the same building size of 2,325 sq. ft. as the Subject Property, and that the only difference between this Sale and the Subject Property is 0.01 acre. According to Mr. Kroi, due to this slight difference, the time adjusted sale amount of Sale 7 at $1,080,684 was adjusted downward by $18,000. Mr. Kroi testified that the $18,000 was derived from the difference in the current value assessment (“CVA”) of Sale 7 and the Subject Property. This provided an adjusted time adjusted sale amount for Sale 7 at $1,062,684, which he submitted makes the two properties equal in value.

19Mr. Kroi further testified that Sale 7 has a year built of 2002, while the Subject Property has a year built of 2001 and in order to recognise this difference, MPAC made a downward adjustment of $4,000 to the adjusted time adjusted sale amount for Sale 7 at $1,062,684. During cross-examination, Mr. Kroi admitted that during a meeting in July 2018 with the Appellants and the municipality, he had initially advised that in order to recognise the difference in the year built of the Subject Property and Sale 7, MPAC will make a deduction of $6,000 and not $4,000. Accordingly, Mr. Kroi corrected this deduction to $6,000 and he deducted this amount from the adjusted time adjusted sale amount for Sale 7 at $1,062,684 to obtain a current value of the Subject Property at $1,056,000 (rounded).

Appellants’ Evidence and Submissions

20The Appellants submitted into evidence real estate listings of MPAC’s Sale 1 dated June 2018 and another listing for 70 Brookhaven Crescent, which sold October 10, 2013 for $728,000, a tax bill and a prior notice of decision by the Board.

21The Appellants testified that MPAC’s Sale1 is the most similar to the Subject Property since it is on the same street. They further used the real estate listing for Sale 1 dated June 2018, to testify that when Sale 1 sold in September 2015, it was already upgraded with two kitchens, six bedrooms and four washrooms. They submitted that this is the reason it sold for $1,000,000.

22The Appellants deducted $50,000 from the CVA of Sale 1 of $925,000, which they submitted represented the upgrades to Sale 1 that the Subject Property does not have. They submitted that the correct current value for the Subject Property is $875,000.

23The Appellants admitted during cross-examination that they did not provide sales of similar properties to prove that the Subject Property’s current value should be $875,000.

Findings on Issue 1

Board’s Analysis – Correct Current Value

24Under 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 an 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.

25The Appellants did not present the Board with any sales to determine the correct current value of the Subject Property. The sale listing of 70 Brookhaven Crescent shows that it sold October 2013 for $728,000. This sale is too far removed from the valuation date and due to this and lack of details for this sale, the Board did not use it in determining the correct current value of the Subject Property. The Appellants used MPAC’s Sale 1 to provide the Board with what they believe is the correct current value of the Subject Property and made a $50,000 deduction to account for the upgrades in this property, which the Subject Property does not possess. They further provided a sales listing for Sale 1 dated June 2018, to show that Sale 1 has been upgraded and that it has a finished basement contrary to MPAC’s records. The Appellants did not provide the Board with evidence on how they quantified the upgrades of Sale 1 at $50,000 (if any). Furthermore, the real estate listing advertisement in 2018 for Sale 1 was not a sale and is not relevant to the determination of the correct current value of the Subject Property. The Appellants further testified that the listing of Sale 1 was provided to prove that it was upgraded in 2015, therefore the value of the Subject Property should be lower than Sale 1. The 2015 sale for Sale 1 does not corroborate the Appellants’ testimony. The Appellants did not provide any evidence to show that in 2015, Sale 1 was upgraded. Sale 1 is 143 sq. ft. smaller than the Subject Property and to account for the differences of the Sale and the Subject Property, MPAC provided an adjusted time adjusted sale amount for Sale 1 at $1,102,208.

26The Board has considered MPAC’s seven sales in determining the correct current value of the Subject Property. The Board finds that MPAC’s Sales 1 to 5 are relatively comparable to the Subject Property, Sale 6 is superior to the Subject Property due to its larger lot size and Sale 7 is the best comparable to the Subject Property. As Mr. Kroi testified, Sale 7 is the same model home as the Subject Property. It has an identical building size; the only slight difference is in the lot size. The Subject Property’s lot size is 0.09 acres, while the lot size for Sale 7 is 0.1 acres, the difference is 0.01 acre. MPAC provided an $18,000 downward adjustment for this difference and a further $6,000 downward adjustment for the difference in year built which was not opposed by the Appellants. The time adjusted sale for Sale 7 is $1,080,684. Applying MPAC’s downward adjustment of $18,000 and $6,000 provides a revised time adjustment of $1,056,000 (rounded) to make Sale 7 comparable and similar to the Subject Property.

27The Board notes that using the Appellants’ argument that Sale 1 is the best comparable to the Subject Property will provide a value higher than Sale 7. MPAC provided the adjusted time adjusted sale price for Sale1 as $1,102,208, after accounting for the difference between this Sale and the Subject Property. If the Board makes a deduction of $6,000 to account for the difference in year built, this would provide a value of $1,096,208, which is higher than the revised time adjusted sale amount for Sale 7 at $1,056,000.

28The Board finds that the correct current value for the Subject Property is $1,056,000 (rounded).

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) (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

29Section 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.”

30The 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

31Mr. Kroi presented an equity analysis of 30 residential sales of single-family detached homes from January 1, 2015 to December 31, 2016 within the same homogenous neighbourhood of the Subject Property. He testified that he also considered homes up to 2,900 sq. ft., with construction quality of 7.0. He presented a median ASR of 0.892, which he rounded down to 0.89. 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.

32Mr. Kroi submitted that for equity to be achieved there should be a 0.89 reduction in the current value of the Subject Property. Mr. Kroi applied the median ASR of 0.89 to his determined opinion of value of $1,062,684 to obtain $949,000 (rounded). He further deducted $6,000 being the difference in the year built of the Subject Property and Sale 7 to obtain a revised value of $ 939,000 (rounded). He submitted that $939,000 is the correct current value of the Subject Property.

Appellants’ Evidence

33The Appellants did not present any evidence for an equitable reduction neither did they state what the equitable reduction to the current value should be.

Findings on Issue 2

Board’s Analysis- Equity

34The 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 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]”.

35However, 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 that is the Appellants. The Appellants have to establish, on a balance of probabilities, that an equitable reduction is required.

36For equity, the comparables properties need not be similar as is needed in the determination of the correct current value. As determined by the Ontario Divisional Court in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., 2017 ONSC 1299, applying the decision in Trizec Equities Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182, “…All points of comparison must be considered…” Mr. Kroi presented a large sample of 30 single-family detached dwellings similar to the Subject Property, in terms of location; they are all within the D12 homogenous neighbourhood of the Subject Property, use; they are all single-family detached dwellings, have similar building size and the same quality of construction of 7.0 as the Subject Property. Accordingly, the Board determines that a reduction in the current value of the Subject Property is necessary, in order to make it equitable with the assessment of similar lands in the vicinity. The Board applied the median ASR of 0.89 to the determined current value of $1,056,000 (rounded) and obtained a value of $939,000 (rounded).

CONCLUSION

37Based on all the evidence, the Board finds the correct current value of the Subject Property to be $1,056,000 (rounded) and determines that a reduction of the current value to $939,000 (rounded) is necessary in order to make the assessment of the Subject Property equitable with the assessment of similar properties in the vicinity.

38The Board reduces the assessment of the Subject Property from $964,000 to $939,000 (rounded) for the 2017 and 2018 taxation years.