Yan Tong v. Municipal Property Assessment Corporation, 2019 CanLII 83964

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

September 6, 2019

FILE NO.:

WR 161843

Assessed Person(s):

Yan Tong, Ganming Liu

Appellant(s):

Yan Tong, Ganming Liu

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 03

Respondent(s):

City of Ottawa

Property Location(s):

206 Stromness Private

Municipality(ies):

City of Ottawa

Roll Number(s):

0614-120-710-09785-0000

Appeal Number(s):

3338985 and 3345564

Taxation Year(s):

2018 and 2019

Hearing Event No.:

720864

Legislative Authority:

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

Heard:

August 14, 2019 in Ottawa, Ontario

APPEARANCES:

Parties

Representative

Yan Tong, Ganming Liu

Self-represented

MPAC

Jonathan Lapp

City of Ottawa

No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1Yan Tong and Ganming Liu (the “Appellants”) are the owners of 206 Stromness Private (the “Subject Property”), which is in the City of Ottawa.

2MPAC has assessed the current value of the Subject Property at $675,000 for the 2018 and 2019 taxation years.

3The Appellants have filed appeals for the 2018 and 2019 taxation years with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). It is their position that MPAC’s assessment of current value is too high. The Appellants take the position that the correct value should be $618,000. At this hearing, MPAC takes the position that the correct current value is $659,000 for the 2018 and 2019 taxation years.

4Section 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. MPAC takes the position that an equitable reduction is not required. The Appellants assert no position. Therefore, this issue is not in dispute.

5At the completion of the hearing, the Board reserved its decision. Based on the following evidence, the Board finds the correct current value of the Subject Property is $639,000 for the 2018 and 2019 taxation years. Therefore, the Board reduces the returned assessment from $675,000 to $639,000 for the 2018 and 2019 taxation years.

RELEVANT LEGISLATION

6Section 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.

7Section 19.(1) of the Act states:

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

8Section 19.2(1) of the Act states:

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 the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

9Section 40.(17) of the Act states:

40.(17) Burden of Proof - 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.

10Section 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.

ISSUES

11The issue to be determined in these appeals is:

The correct current value of the Subject Property for the 2018 and 2019 taxation years.

Description of the Subject Property

12The Subject Property is a two-storey detached single-family dwelling (not on water), located at 206 Stromness Private, in the City of Ottawa. The Subject Property backs on to green space, was built in 2016, with a total building area of 3,582 square feet (“sq. ft.”), and a total lot size of 0.13 acre.

DISCUSSION, ANALYSIS AND FINDINGS

The Correct Current Value of the Subject Property for the 2018 and 2019 Taxation Years

MPAC’s Evidence

13Jonathan Lapp presents a Valuation Report, dated March 20, 2019 (“Valuation Report”) which he prepared and testifies to the information contained therein.

14Mr. Lapp states that he inspected the Subject Property in October 2017, and confirmed that the data, and classification are correct. However, Mr. Lapp testifies that, in response to an issue raised in the Request for Reconsideration (“RfR”), he re-measured the total building area and revised it from 3,582 sq. ft. to 3,457 sq. ft.

15Based on the change in total building area, the returned assessment was revised from $675,000 to $659,000 for the 2018 and 2019 taxation years.

16Mr. Lapp testifies that the Subject Property was sold September 30, 2016 and that the registered (Deeded) sale price is $594,837. Mr. Lapp states that the sale of the Subject Property was a Builder’s sale and that the Purchase of Agreement and Sales reflects a sale price of $672,511.22 signed in December 2015, which is different than the registered sale price.

17In support of current value, Mr. Lapp relies on the Direct Comparison Approach to value and presents an analysis of the sales of four suggested comparable properties which occurred in 2015 and 2016. He states that these four suggested comparable properties are located in the same homogeneous neighbourhood as the Subject Property at 308 Lecanto Terrace, sold in 2016 for $653,000 (time-adjusted sale price $637,981); 636 Brookwood Circle, sold in 2016 for $640,000 (time-adjusted sale price $634,880); 346 Blackleaf Drive, sold in 2015 for $640,000 (time-adjusted sale price $666,240); and 600 Brookwood Circle, sold in 2016 for $627,500 (time-adjusted sale price $619,342). He states that these four suggested comparable properties are similar (but not identical) in total building area, total lot size and quality. When adjusted for differences with the Subject Property, he concludes that the correct current value of the Subject Property should be $659,000.

18On cross-examination Mr. Lapp was asked whether any consideration ( i.e. negative adjustment) was given to the assessed value of the Subject Property due to the following factors: impact of noise; improvements to the suggested comparable properties; pie-shaped lot; private road; and depreciation for the age of the suggested comparable properties. In response, Mr. Lapp testifies to the following:

(a) Noise from the white utility building on the golf course – Mr. Lapp states that no adjustment is given because the utility building is not located close enough to the Subject Property to warrant any adjustment;

(b) Improvements (interlocking brick work, deck and finished basement) made to three of MPAC’s suggested comparable properties – Mr. Lapp states that MPAC provides no adjustments for interlocking brick work and deck, because they are not assessable items. Regarding finished basement, Mr. Lapp states that finished basement is assessed and disclosed on the sales analysis report and was taken into consideration when compared to the Subject Property. He also states that MPAC has no record of permits taken out for improvement for any of the suggested comparable properties. He also indicates that improvements without a permit are captured through sales investigation of properties after they are sold;

(c) Pie shaped lot of comparable property at 636 Brookwood Circle - Mr. Lapp states that although this suggested comparable property is a pie-shaped lot it is relatively comparable in total site area to the Subject Property. Therefore, no adjustment is required;

(d) The Subject Property’s private road - Mr. Lapp states that no adjustments are given for private road; and

(e) Depreciation adjustment for the ages of MPAC’s four suggested comparable properties – Mr. Lapp testifies that the sale prices of the suggested comparable properties reflect the ages and other characteristics of the comparable properties. Therefore, no adjustments are necessary.

MPAC’s Submissions

19Based on the above evidence, MPAC argues that the current value is $659,000.

20Mr. Lapp also argues that the Builder’s sale of the Subject Property is not reflective of open-market sales, because it includes such things as rebates, bonuses etc. as shown on the Statement of Adjustments. In support of this argument, Mr. Lapp cited Nguyen v Municipal Property Assessment Corp, Region No. 3, [2003] O.A.R.B.D. No 319 (“Nguyen”).

Appellants’ Evidence

21The Appellants testify that the Subject Property is assessed too high as compared to the Builder’s sale of the Subject Property in 2016. They testify that the Builder’s sale is supported by the sale of one of MPAC’s suggested comparable properties at 600 Brookwood Circle, sold in 2016 at a time-adjusted sale price $619,342.

22The Appellants argue that MPAC's assessment fails to recognize the negative impact on the assessed value of the Subject Property because of noise from a utility building on the neighbouring golf course; and the fact that none of the properties have a private road, whereas the Subject Property does. However, the Appellants adduce no quantifiable evidence to demonstrate the negative impact of noise and the negative impact of a private road on the assessed value of the Subject Property.

23The Appellants also disagree that MPAC's proposed properties are comparable for the following reasons: three of MPAC’s suggested comparable properties have improvements (interlocking brick work, deck and finished basement); one property has a pie-shaped lot; and MPAC has not depreciated the sale prices of its suggested comparable properties due to age and condition. The Appellants are of the view that these factors negatively impact the Subject Property and that the returned assessment should be negatively adjusted to off-set these differences. The Appellants adduce no quantitative evidence to demonstrate any negative impact of these factors on the assessed value of the Subject Property.

24In support of their position on the correct current value, the Appellants present a copy of the Statement of Adjustments for the Subject Property, dated September 30, 2016 with a total cost of $672,511.22 (including a bonus of $10,363.80 for a private road; and HST rebate of $24,000). The Appellants argue that when these adjustments were made, they paid a total of $638,000 (rounded) to the vendor, Mattamy (Monarch) Limited. Based on the purchase price of $638,000 the Appellants testify that the time-adjusted purchase price is $618,000.

25The Appellants also testify that it is their view that MPAC’s suggested comparable property at 600 Brookwood Circle, which sold in 2016 for $619,342, is the most comparable property to the Subject Property. The Appellants state that it is the only property without improvements and it sold at a time-adjusted sale price that is approximately same as the Subject Property at $618,000.

26The Appellants confirm that they are not relying on any of the other suggested comparable properties contained in the documents they filed with the Board.

Appellants’ Submissions

27Based on the above evidence, the Appellants submit that the correct current value should be $618,000.

Findings on Current Value for 2018 and 2019 taxation years

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.

29For the reasons discussed below, the Board accepts that MPAC’s four suggested properties are sufficiently comparable to the Subject Property. On average these four suggested comparable properties have a lot size of 0.16 acre; total building area of 3,587 sq. ft.; quality 7 rating; year built 2008; with a sales range of $619,342 to $666,240 and sold at an average sale price of $639,000 (rounded). The Subject Property has a lot size of 0.13 acre; total building area 3,457 sq. ft.; quality 7 rating; and year built 2016.

30Based on the above evidence, the Board finds that the Subject Property would sell at the average sale price of $639,000 if it was listed on the open market, because it is sufficiently comparable to the suggested comparable properties as stated above.

31In reviewing the Builder’s sale of the Subject Property in 2016 in support of current value, the Board did not rely on this sale, because it was not an open market sale. The Appellants confirm they purchased the property directly from the Builder. It is also clear that the registered sale price of $594,831 is significantly different than the sale price shown on the Statement of Adjustments $672,511.22 (including private road bonus and HST rebate) paid directly to the Builder. The Board also observes that the private road bonus and HST rebate are not typical of open-market sales. For these reasons the Board rejects the Builder’s sale and relies on the open-market sales presented into evidence. This finding is also supported in the Nguyen case which states in Issue 1, page 6 that “When judging the weight to be given to the registered sale price for a property, the Board must consider more than just the facts that the sale was between willing parties and exposed to the open-market.” The definition is section 1 of the Act requires that the price paid be “the amount of money the fee simple, if unencumbered, would realize if sold…” In this case, the Subject Property was not exposed to the open-market and was purchased directly from the Builder at a price that included bonus and rebate adjustments as stated on the Statement of Adjustment report, which was different to the registered sale price stated above.

32The Appellants also state that MPAC’s suggested comparable property at 600 Brookwood Circle, sold in 2016 for $619,342 is the most comparable property to the Subject Property and that it supports their position that the correct current value is $618,000. The Board finds that one sale is not a true determinant of the open-market. As there are other open-market sales presented into evidence, the Board analyzes all relevant sales to determine the correct current value.

33Regarding the Appellants argument that MPAC fails to recognize the negative impact of noise and private road on the assessed value of the Subject Property, the Board finds that the Appellants adduce no evidence to quantify the negative impact of noise and a private road on the assessed value of the Subject Property. Therefore, the Board accepts MPAC’s explanation that the utility building is not located sufficiently close to the Subject Property to warrant any adjustment; and that any adjustment for the private road is unnecessary.

34Regarding negative adjustments for interlocking brick work, deck, pie-shaped lot and depreciation to MPAC’s four suggested comparable properties, the Board accepts MPAC’s evidence that these factors are not significant when determining current value. Therefore, they are not significant factors to be considered when determining whether a suggested property is comparable to the Subject Property. In making this finding, the Board notes that, although the Appellants assert these factors are significant, they adduced insufficient evidence to support their assertion.

35Based on the evidence, the Board finds the current value is $639,000.

DECISION

36The Board finds the current value of the Subject Property for the 2018 and 2019 taxation years is $639,000.

37Therefore, the Board reduces the returned assessment from $675,000 to $639,000 for the 2018 and 2019 taxation years.