Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 23, 2019

FILE NO.: WR 154304

Assessed Person(s): Michel Lozier, Joseph Jean Yves Dufour

Appellant(s): Michel Lozier

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

Respondent(s): City of Toronto

Property Location(s): 58 Inglewood Drive

Municipality(ies): City of Toronto

Roll Number(s): 1904-102-140-01400-0000

Appeal Number(s): 3256742 and 3293867

Taxation Year(s): 2017 and 2018

Hearing Event No.: 696565

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

Heard: June 27, 2018 in Toronto, Ontario

APPEARANCES:

Parties

Representative

Michel Lozier

Robert Baranowski

MPAC

Adriana Kim

City of Toronto

No one appeared

DECISION OF THE BOARD DELIVERED BY MARK SPRAGGETT

REASONS

Background

1Joesph Jean Yves Dufour and Michel Lozier (the "Appellant") are the owners of 58 Inglewood Drive (the "Subject Property"), a residential duplex 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").

3MPAC has assessed the current value of the Subject Property at $1,509,000 for the taxation years 2017 to 2018.

4The Appellant has filed an appeal for the taxation year 2017 with the Assessment Review Board (the "Board"), pursuant to s. 40 of the Act, and he has been deemed to have brought the same appeal with respect to the Subject Property for the 2018 and 2019 taxation years respectively, pursuant to s. 40(26) of the Act.

5Pursuant 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.

6Both parties agree that the correct current value is $1,509,000. Therefore, this ground of appeal is not in issue in this proceeding.

7Section 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.

8MPAC takes the position that an equitable reduction is not required. The Appellant takes the position that the correct current value of the Subject Property should be adjusted to $1,178,000 to make it equitable with that of similar lands in the vicinity.

9At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that for the 2017 to 2019 tax years and pursuant to s. 44(3)(b) of the Act, the Subject Property's correct current value does not require any reduction in order to be equitable with that of similar lands in the vicinity.

Relevant Legislation

10The Act:

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.

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

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 each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

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.

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

11The issue to be determined on this appeal is whether there should be an equitable reduction of the current value of the Subject Property pursuant to s. 44.(3)(b) of the Act, and, if so, what the amount of this reduction should be?

Description of the Subject Property

12The Subject Property is a detached two-storey legal residential duplex with three self-contained units, located in the City of Toronto. The total building area for the house on the Subject Property is 2,538 square feet ("sq. ft."). Situated on a lot of 0.09 acres, the building has an effective year built of 1966 and a construction quality rating of 6.5.

Discussion, Analysis and Findings

MPAC's Evidence

13Adriana Kim, a Valuation Analyst, represented and testified on behalf of MPAC. She submitted an equity study ("MPAC's Equity Study"), which concludes that an equity adjustment is not required.

14Ms. Kim relied on MPAC's corporate database to identify 30 property sales with mixed use residential property types including, single family use, townhouse/rowhouse, semi-detached properties, duplexes, three, four, five and six self-contained unit properties. The timeframe relied on for this search is from January 1, 2015 to December 31, 2016. The vicinity search area fell within 0.5 km of the Subject Property. She relied on the median assessment to sale ratio ("ASR") as the preferred measure to determine the level of appraisal ("LOA"), which is defined as the typical ratio at which a group of properties is assessed. For the test of equity among similar properties, Ms. Kim maintains that equity is achieved if the median ASR falls in between the range 0.95 and 1.05. In this instance the Ms. Kim indicates that the median ASR is 0.99, and therefore concluding that an equity adjustment is not required.

15Ms. Kim testified that 47% of the 30 property sales used in her equity study, fell within MPAC's accepted standard range for a LOA of 0.95 to 1.05 with 16 property sales (53%) falling outside this range. Ms. Kim testified that the error spread of MPAC's Equity Study is 28.4%.

MPAC's Submissions

16Relying on its evidence, MPAC submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is not required.

17MPAC disagrees with the Appellant's characterization that it "cherry picked" the 30 property sales within the 0.5 km radial search.

18In response to the Appellant's question of how many of the 30 properties fall under the 0.95 - 1.05 range, MPAC agreed that 16 properties are below this range.

Appellant's Evidence

19Robert Baranowski testified on behalf of and represented the Appellant. He stated his conclusion that an equity adjustment is required.

20Mr. Baranowski provided four options for current value after taking into consideration an equitable reduction. He relies on MPAC's six suggested comparable properties to calculate the time adjusted as well as non-time adjusted ASR values.

21Mr. Baranowski disagrees with MPAC's Equity Study results, citing the lack of transparency in the selection criteria of the 30 properties and therefore the reliability of the results. He states that three of the six suggested comparable properties are not included in the Study, raising doubts about the credibility of the selection process.

22Mr. Baranowski testified that he agrees with the returned value of $1,509,000 as being the correct current value according to s. 44.(3)(a) of the Act. He applies a time adjusted ASR value of 0.86 to $1,509,000 to adjust for equity, arriving at a current value of $1,297,740. Mr. Baranowski also proposes in the alternative, a non-time adjusted ASR value of 0.88 he applies, which would result in a reduced current value of $1,327,920.

23Although the Appellant is not disputing that the correct current value of the Subject Property is $1,509,000, Mr. Baranowki undertook an analysis to examine whether an equitable reduction would still be required if a lower current value is considered. In identifying what this lower current value would be, Mr. Baranowski posited that of MPAC's six comparable properties, the best comparable property to the Subject Property is 173 St. Clair Avenue East. Relying on this comparable property, he calculates a rate per sq. ft. of $540 (by dividing this property's time adjusted sale price of $1,867,405 by its total building area of 3,453 sq. ft.). Mr. Baranowski applies this value to the Subject Property's total building area of 2,538 sq. ft., thereby arriving at a current value of $1,370,520. Mr. Baranowski then calculates the mean ASR's for MPAC's six suggested comparable properties based on their time adjusted sale values. This mean value is 0.86 he applies as his derived time adjusted ASR value to the lower assumed current value, which would result in a reduced value of $1,178,000. As an alternative, Mr. Baranowski also proposes a non-time adjusted ASR value of 0.88 be applied, which would result in a reduced value of $1,205,600.

Appellant's Submissions

24The Appellant submits that there are more than 30 property sales in the vicinity that were not accepted, raising concerns over the lack of any consistent criteria in the selection process.

25The Appellant submits that there is insufficient information available to establish whether MPAC's 30 property sales are similar to the Subject Property and therefore useful for determining any equitable reduction.

26The Appellant submits that MPAC's arbitrary selection of a 0.5 km distance from the Subject Property from which to select property sales for MPAC's Equity Study, is without any methodology and, therefore, is not credible.

27The Appellant submits that because not all of the comparable properties are within the 0.5 km radius, that the Board should not rely on MPAC's Equity Study.

28The Appellant also argues that MPAC's derived ASR values may be inaccurate if the property samples are flawed, and that selecting values based on the median is an inappropriate measure as it always results in a middle value result.

29The Appellant asks the Board to disregard MPAC's Price Change Over Time data alleging the trend line is overstating the overall change in the market by 10%.

Findings on Issue

30The 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.

31In 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]."

32However, 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 Appellant to establish, on a balance of probabilities, that an equitable reduction is required.

33The term "vicinity" is not defined in the Act, but refers to the appropriate geographical area that will yield meaningful comparable properties (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (ON CA) at page 6.

34The Board finds that MPAC's criteria for selecting the 30 property sales used in its equity analysis, namely character, form and function is reasonable. The Board is not persuaded by the Appellant's argument that insufficient information is available about the properties. The Appellant provided no evidence to convince the Board these properties are not a suitable sample. The Board finds that MPAC has provided a broad search criteria of properties as depicted by the variety of property codes, demonstrating similarities to the Subject Property. The Board is satisfied from the diversity of property codes that these properties are similar to the Subject Property and, therefore, it is appropriate for the Board to consider them when determining whether an equitable adjustment is required.

35The Board is not persuaded by the Appellant's allegation that MPAC's 30 properties are not representative of the Subject Property because only 14 of the properties, less than 50% of the total, fall within its desired ASR range between 0.95 - 1.05. The Board notes that the remaining 16 properties fall within the International Association of Assessing Officers (IAAO) standard range between 0.90 - 1.10, which suggests that no equitable adjustment is required.

36The Board is not persuaded by the Appellant's assertion that MPAC's trend line is flawed and that its Time Adjusted Factors ("TAFs") are in error. The Appellant provided no evidence to support these assertions. The Board finds that MPAC's TAFs are based on market conditions over time for 238 property sales, representing a 27.21% change in the market. The Board finds that the TAFs reflect a reasonable measure for the purposes of establishing a consistent baseline from which the Board can make a determination regarding the issue before it.

37Regarding the Appellant's alternative analysis based on an assumption of a lower correct current value, the Board finds that this analysis is of no assistance. Section 44(3)(b) requires that the Board compare the correct current value of Subject Property to the assessed value of similar lands in the vicinity, not a hypothetical current value of the Property.

38The Board also rejects the Appellant's use of non-time adjusted ASR values. The Act requires that the valuation be conducted as of a specific valuation date. The Appellant provided insufficient evidence or analysis to substantiate that it would be appropriate to utilize sale values as of dates other than the valuation date.

39In summary, the Board notes that all parties agree that the correct current value of the Subject Property is $1,509,000. The Board rejects the Appellant's ASR values as they are not credible given the small sample size from which they are derived. The Board finds that MPAC's ASR values are more credible given its' larger sample size. For these reasons the Board relies on the larger sample size as the best evidence and, on the basis of this evidence finds that no equitable reduction is required.

DECISION

40An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.