Joanna Teresa Powell and Peter Owen Powell v. Municipal Property Assessment Corporation, 2019 CanLII 81687

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 30, 2019

FILE NO.:

WR 161192

Assessed Person(s):

Joanna Teresa Powell and Peter Owen Powell

Appellant(s):

Joanna Powell and Peter Powell

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”)

Region 09

Respondent(s):

City of Toronto

Property Location(s):

201 Shaver Avenue North

Municipality(ies):

City of Toronto

Roll Number(s):

1919-032-310-02100-0000

Appeal Number(s):

3339755 and 3350298

Taxation Year(s):

2018 and 2019

Hearing Event No.:

715074

Legislative Authority:

Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard:

May 28, 2019 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Joanna Powell and Peter Powell

Self-represented

MPAC

Elena Martinez

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property, located at 201 Shaver Avenue North, was purchased by Joanna Powell and Peter Powell (“the Appellants”) in 2016. After the transaction, the Appellants undertook a major renovation of the single-family dwelling. The additional value represented by the renovation was captured by MPAC through a supplementary assessment under s. 34 of the Assessment Act (the “Act”), R.S.O. 1990. C. A. 31 with an effective date of March 1, 2018. The value of that additional assessment was $623,000, for a total assessment of $1,507,000.

2The total assessment resulting was applied by MPAC for the 2019 taxation year at $1,507,000. The Appellants believed this assessment was too high and filed appeals of the 2018 supplementary assessment and the 2019 assessment to the Assessment Review Board (the “Board”).

3After these appeals were filed, MPAC conducted an additional review resulting from communication with the Appellants. Accordingly, at the outset of the hearing, MPAC recommended an assessment for the 2019 taxation year of $1,432,000.

4The Appellants believe the assessment should be approximately $1,267,000; the same as the assessment of a nearby property at 193 Shaver Avenue North.

5The Board must decide three things in these appeals. Firstly, the Board must determine the 2019 current value of the subject property. Once that decision is made, the Board must then determine if the current value found needs to be reduced for the purpose of equitable assessment, when reference is made to the assessments of similar properties in the vicinity. Once these two decisions are made for the 2019 taxation year, the Board must then determine the value of the supplementary assessment.

6There is no dispute with respect to the effective date of the supplementary assessment (March 1, 2018), or the value of the property returned for the 2018 taxation year, prior to the addition of the supplementary assessment ($884,000).

DECISION

7The Board finds the current value of the subject property is $1,432,000. The Board also finds that there is evidence to support a reduction in this amount to make it equitable with the assessments of similar lands in the vicinity.

8Accordingly, the assessment of 201 Shaver Avenue North for the 2019 taxation year is reduced from $1,507,000 to $1,291,000, in the Residential property class.

9The Board also finds that the value of the supplementary assessment applied to the subject property, effective March 1, 2018 is reduced from $623,000 to $407,000, in the Residential property class.

LEGISLATION

10In making its determination of these appeals, the Board must consider the relevant sections of the Act.

11Section 1 of the Act states:

“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.

12Section 19.(1) of the Act states:

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

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.

What is the Current Value of the Subject Property?

MPAC’s Case

14MPAC submitted a valuation report that considered the sales of seven properties in the City of Toronto that it deemed to be comparable with the subject property. These seven properties are located from 0.41 to 1.42 kilometres from the subject property. They sold between May 2015 and November 2016 for prices ranging from $1,310,000 to $1,750,000.

15MPAC describes the subject property as follows:

Lot dimensions/Area

42 feet by 216 feet/9,065 square feet

Effective Year Built

2015

Quality of Construction

7.5

Building Total Living Area (two storeys)

2,842 square feet

Basement Area/Finished Basement Area

1,411 square feet/1,128 square feet

Garage

Detached 440 square feet, Built 1955

16MPAC compared these characteristics of the subject property with the same characteristics of the seven properties selected for comparison. Four of these were determined by MPAC to be similar to the subject property, with one described as inferior and two described as superior. When these characteristics were compared, MPAC determined that the subject property’s current value should be equivalent to the median time-adjusted sale price of the four similar properties in its comparison. These four properties were described by MPAC as follows:

Comparable #1 64 Smithwood Drive

Comparable #2 2 Statler Avenue

Comparable #4 128 Laurel Avenue

Comparable #5 26 Cronin Drive

Lot Dimensions (feet)/Area (square feet)

54 x 103/5,555

47 x 150/7,019

60 x 135/8,070

50 x 111/5,525

Effective Year Built

2011

2013

2006

2010

Quality of Construction

7.5

7.5

7.5

7.5

Building Total Living Area (square feet)

2,716

2,608

3,026

2,758

Basement Area/ Finished Basement Area (square feet)

1,338/676

1,184/340

1,513/643

1,179/900

Garage

Basement garage; 436 square feet; built 1961

Attached garage; 240 square feet; built 1947

Detached garage; 465 square feet; built 1950

Attached garage; 519 square feet; built 2013

Sale Value/Date

$1,530,000/July 2016

$1,520,000/June 2016

$1,475,000/September 2015

$1,310,000/May 2015

Time Adjusted Sale (TAS) Values

$1,418,825

$1,425,487

$1,539,000

$1,440,211

17Comparable Sales #1, #2, #4 and #5 all sold within seven months of the January 1, 2016 valuation day stipulated in the Act for the two years under appeal. By applying the Time Adjusted Sale (TAS) values of these four sales, MPAC determined a range of value and submitted that the best evidence of the current value of the subject property was the median TAS value of these four best comparable properties. The result was $1,432,849; rounded to $1,432,000.

18MPAC concluded its case by acknowledging that the Appellant’s disputed the quality rating of 7.5 being applied to the subject property, but that inspection access had been denied to MPAC to confirm what this rating was, based on the detailed finishes of the property. For that reason, MPAC applied the most common quality rating in the area of 7.5.

Appellants’ Case

19The Appellants relied on a comparison of the assessments of other properties to arrive at a current value of the subject property. The Board’s consideration of that evidence follows under the ‘Equity of Assessment’ section of these reasons.

20In addition, the Appellants submitted that MPAC’s comparable properties were not sufficiently similar to the subject property to be meaningful indicators of the subject property’s current value. They submitted that:

• MPAC’s comparable properties numbered 1 through 3 and 5 through 7 do not experience the same nuisance impacts as the subject property, which is much closer to Burnhamthorpe Road, adding that cut through traffic uses the more northern part of Shaver Avenue North to avoid construction in the area.

• All but one of MPAC’s comparable properties, and all four of the ‘best comparables’ cited by MPAC have quality of construction ratings of 7.5 or higher. The Appellants maintain that the quality of construction rating for the subject property should be no higher that 7.0;

• The effective year built of 2015 for the subject property is inaccurate because the original building was built in 1955 and the Appellants only took possession in 2016. Further, the subject property underwent a renovation, not a ‘new build’;

• The area calculations provided by MPAC for the subject property are all too high, with an actual interior dimension calculation of 2,515 square feet rather than the 2,842 square feet shown by MPAC; and

• The renovations of the subject property are not yet complete, and the Appellants believe MPAC has assumed a certain level of completion of these renovations in its valuation.

Is a reduction in the current value necessary to achieve equitable assessment when reference is made to the assessments of similar properties in the vicinity?

21The Appellants submitted that s. 44.(3)(b) requires the Board to have reference to the assessments of similar properties and where necessary reduce the current value determined to make the subject property’s assessment equitable with those similar properties.

22In making their case, the Appellants referred to the details of 19 properties accessed through MPAC’s ‘My Neighbourhood – My Favourites’ data base. They submitted a summary of seven properties that they deemed to be sufficiently similar to the subject property with respect to assessment. The summary appears as Table A.

TABLE A

Lot Area (square feet)

Building Area (square feet)

Year Built

2016 CVA

2016 CVA (square foot)

Quality of Construction Rating

Notes

Subject Property

9,065

2842

1955

$1,432,000*

7.5

183 Shaver

10,649

2920

1955

$1,249,000

7

193 Shaver

9,058

2846

1955

$1,267,000

7

195 Shaver

9,058

2694

1955

$1,220,000

7

34 Burnelm

10,890

3,499

1958

$1,395,000

7

114 Wedgewood

9,528

2,930

2007

$1,357,000

7

204 Shaver

10,932

3,307

2012

$1,633,000

8

*Assessment recommended by MPAC at hearing

23The Appellants summarized their comments on this comparison as follows:

• 183 Shaver (renovation) is a larger house than the subject property and seems to be of similar construction quality. Assessment is $258,000 lower than the subject property.

• 193 Shaver (renovation) is very similar to the subject property in terms of quality of construction, property size and building size. Assessment is $240,000 less than the subject property.

• 195 Shaver (renovation) is very similar to the subject property in terms of quality of construction and property size. It has an inground pool and associated structures. It is assessed $287,000 lower than the subject property.

• 34 Burnelm (renovation) has a higher quality of construction (the exterior is all stone and brick) a larger lot, a larger house, an attached garage and sits on a quieter street. It has an assessment $112,000 less than the subject property.

• 114 Wedgewood (new build) is on a quieter street, has a larger lot, larger house a larger basement, has a higher build quality (all stone and brick) and nicer curb appeal. It has an assessment $150,000 less than the subject property.

• 204 Shaver (new build) has a larger home, larger lot, higher build quality and has an assessment only $126,000 higher than the subject property, which is a renovation.

24The Appellants submitted that the property that most closely resembles the subject property is 193 Shaver, with an assessment of $1,267,000. They submit that 193 Shaver has a quality class rating of 7.0, which is what they believe the subject property should have.

25MPAC submitted an equity analysis that compared the time adjusted sale value of 30 single-family dwellings in the vicinity of the subject property with their corresponding 2016 assessments. Comparisons of such assessments and time adjusted sale values are a common means of determining if similar properties in the vicinity are equitable assessed. The comparison of these assessments to time adjusted sale values is called the Assessment to Sale Ratio (“ASR”). The range of ASRs in MPAC’s sample was 0.855 to 1.936, with a median of 0.962.

26According to MPAC, no adjustment to the current value determined is required because the median ASR falls between 0.95 and 1.05. It is MPAC’s assertion that when the median ASR falls within this range, equity of assessment is demonstrated by the sample selected and no adjustments are warranted.

Board’s Analysis

Current Value

27The Appellants’ submissions focused on the perceived shortcomings of MPAC’s analysis. In their view, the properties used by MPAC for comparison were not suitably comparable. They cited the quality of construction rating of 7.5 applied by MPAC, suggesting it was too high and that the comparable properties used with the same 7.5 rating would therefore result in an artificially high value for the subject property.

28This may be the case. However, the Board has only the Appellants’ opinion in this regard because they did not allow MPAC entry into the subject property to confirm the level of finishes and other construction details that lead to the establishment of the proper construction quality rating. Consequently, MPAC was forced to assume a quality class rating and MPAC used the most prevalent one in the neighbourhood. I find that to be a reasonable and defensible approach, particularly as MPAC’s response could have been to seek a reversal of onus of burden of proof which was its option when access was denied.

29At the core of this dispute, the quality class rating is the key difference in the parties’ approaches to determining current value. The four sales considered to be most comparable by MPAC all have 7.5 ratings, while the majority of Appellant’s assessment comparable properties have quality ratings of 7.0.

30The Board finds that the approach taken by MPAC is the most reasonable in the circumstances for the following reasons:

• MPAC made its determination of current value based on the sales of comparable properties in the neighbourhood; and

• Faced with an inability to access the subject property, it made a reasonable assumption as to construction quality rating.

31By contrast, the Appellants provided MPAC's assessed values for the19 properties they submit are similar to the Subject Property. However, in conducting a comparable sales analysis, it is necessary to compare the sale price of a comparable property, not its assessed value. Utilizing the assessed value provides a far less reliable measure of current value. This is because the current value is defined as being the amount of money that would be exchanged between a willing seller and a willing buyer on the valuation day specified in the Act. Comparing assessments of other properties does not achieve the same level of confidence in the result as comparable sales do.

32Based on the above analysis, the Board accepts MPAC's evidence. Consequently, the Board finds that the correct current value of the subject property is $1,432,000.

Equity of Assessment

33The concept of reducing the current value determined by the Board to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.

34The Appellants’ case relied on the comparison of the assessments of nineteen similar properties in the vicinity of the subject property. As noted above, the information on the nineteen properties did not include sale values. The Appellants compared the assessments and characteristics of each property to the subject property. In advancing their case, the Appellants focused on seven of these similar properties.

35This approach allows similar properties of differing sizes to be compared on a common element; in this case, assessment per square foot.

36When the mean ($435.23) and median ($452.33) assessment per square foot values of the seven similar properties cited by the Appellant are applied to the subject property’s 2,842 square feet of living area, the resulting range is $1,236,924 to $1,285,522. This range ignores the other differences between the properties as compared to the subject property.

37MPAC’s equity analysis indicates that, when the assessments of 30 similar properties in the vicinity to the subject property are compared with their time adjusted sale values, the result shows that properties are generally assessed above their current value. MPAC relies on a median ASR to decide if the current value of a property should be reduced to arrive at an assessment that is equitable.

38In making its determination of any equity reduction, the Board must be convinced, by the best evidence available that the reduction is warranted. This case requires the Board to decide between two different approaches to determining whether an adjustment to the current value determined is necessary to achieve equitable assessment of the subject property.

39MPAC submitted an equity study that relies on the comparison between the assessments of 30 similar properties in the vicinity and their respective time adjusted sale prices. That is one method of determining the equity issue.

40The Appellant submitted a comparison of seven similar properties in the vicinity and, adjusting for the different building sizes of those six properties and the subject property, developed a range of value that the assessment of the subject property should fall within.

41Given these differing approaches, the Board must determine, in the circumstances of this case, the best method of determining if an equity adjustment is necessary under s. 44(3)(b) of the Act.

42In Municipal Property Assessment Corp v Schumacher, [2016] OJ No 3400, 2016 ONSC 3239, 267 ACWS (3d) 956, 56 MPLR (5th) 55, 90 OMBR 353, 2016 CarswellOnt 10197 (“Schumacher”), the Court found:

Section 44(3)(b) does not specify any particular methodology.

43The parties both believe their own method is the best of the two. Schumacher indicates that no methodology is superior to any other. For guidance in making such a decision, the Board turns to Trizec Equities Ltd v Ontario (Regional Assessment Commissioner, Region No. 27), [1988] OJ No 182, 27 OAC 203, 37 MPLR 175, 8 ACWS (3d) 399 (“Trizec”), where Justice Saunders stated:

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.

44This finding was confirmed in Municipal Property Assessment Corporation v. Loblaw Properties Limited, 2017 ONSC 1299 and is informative in this case, because it directs that any reasonable method that compares as many points of comparison as is available would be better, and that, while one point of comparison may be satisfactory in some cases, where multiple points are in evidence, they must be considered. Therefore, the Board must determine the probative value and the relative weight of these points of comparison.

45When considering what constitutes all points of comparison, the Board must do so in the context of the submissions of the parties. There are certain characteristics that can be closely matched when determining similarity.

46In this case, the quality of construction rating is a critical element. It was a point of dispute in the hearing and the evidence shows that the quality rating has a specific impact on values. For that reason, the Board finds that only properties with the quality of construction rating of 7.5 are suitable for comparing on all the remaining points in evidence.

47The Appellants submit that the Board should compare the assessments of their proposed seven most similar properties to the subject property, in terms of size, location and their respective assessments. Two of these, 94 Laurel and 96 Laurel are one-and-three-quarter- storeys and two-and-one-half-storeys respectively. The Board finds that these two properties are not suitably similar to the subject property, which is a two-storey dwelling. All the remaining five properties cited by the Appellants are also two-storey dwellings.

48The Appellants’ analysis took more points of comparison into account in their assessment comparison. In summary, the Appellant’s equity analysis shows a comparison of the square footage of living area of each property, their respective lot size and their assessments, as follows:

Similar Property

Assessment ($)

Lot size (Acres)

Dwelling size (Square Feet)

Assessment per Square Foot ($)

184 Shaver

1,746,000

0.26

3,860

452.33

122 Wedgewood

1,549,000

0.22

3,341

463.63

120 Wedgewood

1,685,000

0.22

4,730

356.24

92 Laurel

1,611,000

0.23

3,960

412.44

116 Wedgewood

1,626,000

0.22

3,431

473.91

49MPAC’s evidence included the same data for the four most comparable properties advanced in its determination for current value. That data is summarized as follows:

Similar Property

Assessment ($)

Lot size (Acres)

Dwelling size (Square Feet)

Assessment per Square Foot ($)

64 Smithwoods

1,315,000

0.13

2,716

484.17

2 Statler

1,300,000

0.16

2,608

498.47

128 Laurel

1,390,000

0.19

3,026

459.35

26 Cronin

1,344,000

0.13

2,758

487.31

50The Board finds that the range of points of comparison in this sample makes it superior to the larger sample submitted by MPAC, which only used ASR and local vicinity as selection criteria.

51The mean per square foot assessment of these nine properties with these same points of comparison is $454.21. When applied to the subject property’s 2,842 square feet of living area, the result is $1,290,865. This is lower than the current value determined of $1,432,000. Therefore, the Board finds that it is necessary to adjust the assessment of the subject property to make it equitable with that of similar lands in the vicinity. Accordingly, the Board finds that the assessment of the subject property should be reduced to $1,291,000 (rounded).

52As a result of this reduction, the value of the supplementary assessment is reduced. The reduced value of the supplementary assessment is the reduced assessment of $1,291,000 for 2019, minus the $884,000 uncontested returned value for 2018, which results of in a value of $407,000.

CONCLUSION

53The Board finds the current value of the subject property is $1,432,000. The Board also finds that there is evidence to support a reduction in this amount to make it equitable with the assessments of similar lands in the vicinity.

54Accordingly, the assessment of 392 Surrey Drive is reduced, for the 2019 taxation year, from $1,507,000 to $1,291,000 in the Residential property class.

55The Board also finds that the value of the supplementary assessment applied to the subject property, effective March 1, 2018 is reduced from $623,000 to $407,000 in the Residential property class.