Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 8, 2019

FILE NO.:

WR 161645

Assessed Person(s):

Cruz Alvaro Mallarino

Appellant(s):

Cruz Alvaro Mallarino

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 9

Respondent(s):

City of Toronto

Property Location(s):

116 Ranleigh Avenue

Municipality(ies):

City of Toronto

Roll Number(s):

1904-105-150-07500-0000

Appeal Number(s):

3338170 and 3353974

Taxation Year(s):

2018 and 2019

Hearing Event No.:

720064

Legislative Authority:

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

Heard:

July 23, 2019 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Alvaro Mallarino

Self-represented

MPAC

Chin-Wei Li

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY JEAN-PAUL PILON

BACKGROUND

1Cruz Alvaro Mallarino (the “Appellant”) is the owner of 116 Ranleigh Avenue (the “Subject Property”) in the City of Toronto.

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 returned a current value of the Subject Property of $1,368,000 in 2018 and 2019. MPAC’s position at the hearing was that this was the correct current value of the Subject Property.

4The Appellant filed an appeal for the 2018 taxation year with the Assessment Review Board (the “Board”) and was deemed to have brought the same appeal with respect to the Subject Property for the 2019 taxation year pursuant to subsection 40(26) of the Act. His position was that MPAC’s assessment of current value was too high and that the correct current value was $1,100,000.

5Pursuant to subsection 40(11) of the Act, the City of Toronto was a party to the 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 its behalf.

6Subsection 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 possessed by each ratepayer.

7Both parties took the position that an equitable reduction was required. The Appellant did not contest MPAC’s evidence of what that equitable reduction should be.

8At the completion of this in-person hearing, the Board reserved its decision.

9For the reasons which follow, the Board finds that current value of the Subject Property for the 2018 and 2019 taxation years is $1,121,000 after the equitable adjustment referred to above made pursuant to subsection 44(3)(b) of the Act.

Relevant Legislation and Rules

10Section 1 of the 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.

11Section 19.(1) of the Act states:

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

12Section 40.(17) of the Act states:

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.

13Section 44.(3) of the Act states:

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.

Issue

14The issue to be determined is the correct current value of the Subject Property for the 2018 and 2019 taxation years.

EVIDENCE

MPAC’s Evidence

15MPAC’s representative Chin-Wei Li relied on his valuation report produced for the hearing in which he set out the details of 13 proposed comparable properties in close proximity to the Subject Property. All of these proposed comparable properties had been the subject of arm’s length sales transactions within the one-year period before and after the valuation date of January 1, 2016.

16MPAC adjusted the sale prices of these proposed comparable properties to account for the passage of time in order to estimate what the sale prices would have been on the valuation date. The Appellant did not contest these adjustments.

17To arrive at MPAC’s opinion of current value, Mr. Li took the time adjusted sale price of each proposed comparable property and divided these numbers by the square footage of the building area for each property. The resulting figure for each of these properties was the time adjusted sale price per square foot. The median of these 13 prices per square foot was $883.41 and the total building area of the Subject Property was 2,020 square feet. In multiplying those two numbers, MPAC arrived at a current assessment for the Subject Property of $1,784,000 (rounded).

18MPAC also compiled an equity study which determined that an equity adjustment of 0.939 should be applied. This was also not contested by the Appellant. The resulting equation was $1,784,000 multiplied by 0.939, which totaled $1,675,000. Neither MPAC’s valuation report, nor its equity report explained why MPAC recommended a current value of $1,368,000 at the hearing.

Appellant’s Evidence

19The Appellant testified that he has no access to the back of the Subject Property and that his driveway is subject to a right-of-way. He also testified that the Subject Property had been previously assessed at $1,020,000 and said he did not understand why MPAC’s current position of value was now so much higher.

20The Appellant, a real estate broker, submitted that the quantity of land should be the primary measure of comparison in the analysis, not the building site area as was used by MPAC, and produced a list of 11 proposed comparable properties of his own. He testified that his proposed comparable properties were not specifically chosen, as MPAC’s were, but that they represented all of the sales of semi-detached houses within approximately three kilometers of the Subject Property close to the valuation date, between October 2015 and February 2016.

21The Appellant focused on four of his proposed comparable properties as being most comparable to the Subject Property. He testified that he arrived at an average sale price of $1,050,000 from these, although it was also unclear how that was calculated. He also attempted to detach the values of land and houses from sales prices, but his method of doing so was unclear where he relied on figures and calculations that were not before the Board and were unsubstantiated.

ANALYSIS

22The first issue to be determined was whether the amount of land included in the Subject Property was incorrect as was argued by the Appellant. The Appellant relied on a survey at the hearing to support this position, but that document was unclear as to the rights of the Appellant and his neighbours to the parts of the Subject Property the Appellant said he had to share or had no access to. In addition, the documents registered on title referred to in the survey that might have provided clarification had not been retrieved. With that uncertainty, the Board accepted MPAC’s evidence as to the quantity of land attached to the Subject Property.

23The Appellant also argued that what MPAC referred to as the “effective built date” of 2006 was incorrect when the building was built in 1923 and where 40% of it had been recently renovated. The Appellant did not say, however, what the effective built date should have been, nor was the Board able to calculate it without knowing MPAC’s methodology for such calculations or without more detail as to the extent of the renovations which were not provided at the hearing. As a result, the Board was satisfied that MPAC’s 2006 date was reasonably correct.

24Although MPAC’s proposed comparable properties were, in general, geographically closer to the Subject Property than the Appellant’s proposed comparable properties, they were, for the most part, very different from the Subject Property. Every one of them, for example, included less land than the Subject Property, ranging from 1,656 square feet to 3,125 square feet, where the Subject Property included 3,588 square feet. The Subject Property was also newer (using effective built dates) than all of MPAC’s proposed comparable properties. In addition, the building on the Subject Property had more floor space than all of MPAC’s proposed comparable properties, 2,020 square feet, where the closest had 1,848 square feet. The remaining ones were substantially smaller, from 1,126 square feet to 1,649 square feet. All of MPAC’s proposed comparable properties were also inferior to the Subject Property.

25The Appellant’s proposed comparable properties were also very different from the Subject Property. All four proposed comparable properties the Appellant focused on at the hearing were inferior to the Subject Property in building size, lot size and age.

26In summary, the majority of MPAC’s proposed comparable properties were very different from the Subject Property and not at all comparable. The Appellant’s proposed comparable properties were farther away from the Subject Property and were based on values derived from land and building rates that were not before the Board.

27Rather than dividing sale prices with floor space or land areas, the Board determined the preferable approach in these circumstances would be to bracket sale prices. This involved determining correct current value by ascertaining the midpoint between properties both superior to, and inferior to the Subject Property.

28There was only one property superior to the Subject Property in all of the evidence before the Board, which appeared in the Appellant’s material but was not one of the four properties that were the focus of the Appellant’s submissions. Of all of the remaining inferior properties before the Board, two in particular in MPAC’s evidence were most comparable to the Subject Property. The mean adjusted sale values of these two inferior properties was used for that side of the equation. All of this evidence is summarized below.

Subject Property

MPAC 11 206 Bowood Avenue

MPAC 12 20 Roslin Avenue

Appellant 11 482 Lytton Boulevard

Land (sq. ft.)

3,588

3,125

3,125

3,708

Building (sq. ft.)

2,020

1,190

1,148

2,330

Built

2006

1966

1980

2011

Quality

7

6

6

7

Time Adjusted Sale Price

$1,041,035

$1,097,817

$1,318,476

Comparison to Subject Property

N/A

Inferior

Inferior

Superior

29The time adjusted sale price of the only superior property above is $1,318,476. The mean of the time adjusted sale prices of the two inferior properties, with time adjusted sale prices of $1,041,035 and $1,097,817, is $1,069,426. The mean of $1,318,476 and $1,069,426 is $1,193,951, and it is the best indication of current value of the Subject Property.

30As noted above, it was not contested that an equitable adjustment was required, nor was there a dispute that the correct equitable adjustment shown in MPAC’s equity report filed at the hearing was 0.939. Applied to the current value determination above of $1,193,951, it is therefore determined that the correct current value after the adjustment in equity is $1,121,119, rounded to $1,121,000.

DECISION

31The correct current value of the Subject Property is $1,193,951 for the 2018 and 2019 taxation years.

32An equitable reduction of the current value of the Subject Property pursuant to subsection 44(3)(b) of the Act is required. The current value of the Subject Property is reduced to $1,121,000 for the 2018 and 2019 taxation years.