Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

October 10, 2019

FILE NO.:

WR 160497

Assessed Person(s):

Jean Whistler

Appellant(s):

Jean Whistler

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 32

Respondent(s):

City of Thunder Bay

Property Location(s):

Unit 1503, 2280 Sleeping Giant Parkway

Municipality(ies):

City of Thunder Bay

Roll Number(s):

5804-010-001-17045-0000

Appeal Number(s):

3327165 and 3368192

Taxation Year(s):

2017 and 2018

Hearing Event No.:

713584

Legislative Authority:

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

Heard:

May 15, 2019 in Thunder Bay, Ontario

APPEARANCES:

Parties

Representative

Jean Whistler

Ian Wallace

MPAC

Thomas Pesek

City of Thunder Bay

No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

OVERVIEW

1Jean Whistler (the ‘Appellant”) is the owner of Unit 1503, 2280 Sleeping Giant Parkway in the City of Thunder Bay (the “Subject Property”), which is a residential single storey condominium located in a high-rise building.

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’s has returned an assessment of $502,000 for the 2018 and deemed 2019 taxation years.

4The Appellant filed an appeal for 2018 taxation year with the Assessment Review Board (the “Board”) pursuant to s. 40 of the Act. It is the Appellant’s position that MPAC’s assessment of current value is too high and that the correct current value is $464,000. MPAC took the position at the hearing that the assessed value is correct.

5Pursuant to s. 40.(11) of the Act, the Municipality is a party to this 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.

6Section 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. The Appellant argued that an equitable reduction is required however MPAC takes the position that it is not.

7At the completion of the hearing, I reserved my decision. For the reasons that follow, I find that for the 2018 and 2019 taxation years, the current value of the Subject Property is $464,000. Pursuant to s. 44.(3)(b) of the Act, an equitable reduction of this value is not required.

Relevant Legislation

8The Act states that:

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:

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

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.

Issues

9The issues to be determined on this appeal are:

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

2. 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.

DISCUSSION, ANALYSIS AND FINDINGS

What is the correct current value of the Subject Property for the 2018 and 2019 taxation years?

MPAC’s Evidence

10Thomas Pesek represented MPAC and gave evidence in support of the assessment corporation. He entered into evidence his Valuation Report dated December 31, 2018 as well as an undated Equity Report.

11The Subject Property is located in a two-tower condominium development built by the same builder. Although each tower is a separate corporation, the two towers are considered a unique market in Thunder Bay. Mr. Pesek described the Subject Property as a single storey condominium unit built in 2014. It is located on the fifth floor of a seven-story building and has a southern aspect with a panoramic view of Lake Superior. It is 1,290 square feet (sq. ft.) in size with two bedrooms and two bathrooms. MPAC has assigned it a 7 out of 10 quality of construction. Mr. Pesek said the unit was purchased from the builder in August 2015 for $436,340. The parties agree that the purchase price included two indoor parking spaces. The parties also agree that each unit sold included one indoor parking space and that additional indoor parking spaces are valued at $30,000 each and outdoor parking spaces are $15,000 each.

12Mr. Pesek used the direct sales comparisons method in order to support MPAC’s assessed value of $502,000. All of his six sales are ‘03’ units which are the same model and the same size as the Subject Property and all of the sales are located within the two condominium buildings. There are some differences among his sales which include the number and type of parking space, whether a unit has a fireplace, and one unit has only one bedroom. Five of the six sales are builder sales. Mr. Pesek acknowledges that the values between the two buildings are different. MPAC’s sales and calculations are summarized in the table below.

MPAC’s Comparable Sale Properties

Sale Number

Address

Sale Date and Initial sale value with Gross HST

Rebated Builder Sale Value

Resale Value

Assessed Value

Variances

Subject Property

1503-2280 Sleeping Giant Parkway

August 2015 $491,769

$463,852

N/A

$502,000

Two indoor parking spaces.

1

1303 – 2280 Sleeping Giant Parkway

August 2015 $489,447

$461,549

N/A

$489,000

Fireplace, one indoor and one outdoor parking space.

2

1403 – 2280 Sleeping Giant Parkway

August 2015 $480,626

$452,798

N/A

$472,000

One indoor parking space.

3

1603 – 2280 Sleeping Giant Parkway

August 2015 $484,294

$456,437

N/A

$474,000

Fireplace, one indoor parking space.

4

2403 – 2260 Sleeping Giant Parkway

June 2016 $605,566

$581,566

N/A

$532,000

Two indoor and two outdoor parking spaces.

5

2503 -2260 Sleeping Giant Parkway

June 2016 $549,076

$525,076

N/A

$462,000

One bedroom and two indoor parking spaces.

6

P2603 – 2260 Sleeping Giant Parkway

June 2016 $576,629

$552,629

December 2017 $600,000

$505,000

Two indoor parking spaces.

MPAC’s Submissions

13Relying on its evidence, MPAC submits that the correct current value for the taxation years 2018 and 2019 is the assessed value of $502,000.

14In referencing two Board decisions, Rogers v. Municipal Property Assessment Corp. Region No. 13, 2009 CarswellOnt 7377 (“Rogers”) and Roitman v. Municipal Property Assessment Corp. Region No. 9, [2013] O.A.R.B.D. No. 138 (“Roitman”), Mr. Pesek argues that the best evidence of current value is derived from open market resales and not from builder sales unless resales are not available. He argues that the Subject Property’s purchase price of $436,340 in August 2015 does not reflect the total sale value because it was a builder sale.

15He argues that the best evidence of current value is Sale 6 which is the only resale property of this suite type in the two buildings. Mr. Pesek argues that there is little discrepancy between his calculated time adjusted sale price $577,865 and the rebated builder sale value of $552,629. He also points out that the assessed value of $505,000 reflects the value of the fireplace which is the only difference between it and the Subject Property.

16In response to the Appellant’s argument that Sale 6 is an outlier, Mr. Pesek pointed out that the assessment to sale ratios (“ASR”) of the six sales range from 0.88 to 1.06 with a median ASR of 0.98 which, he argues, eliminates the outliers and indicates that MPAC’s model is tending to assess properties in these two buildings satisfactorily.

Appellant’s Evidence

17The Appellant represented herself and was also represented by her neighbour, Ian Wallace.

18Both Ms. Whistler and Mr. Wallace testified that, initially, the sale values for these condominium units were high. However, as problems with the two buildings became apparent sales dropped off as did the sale prices. Ms. Whistler testified that the developer promised a luxury building and improved access over the nearby rail tracks but neither has been provided. Both Ms. Whistler and Mr. Wallace testified that both condominium corporations have ongoing issues and disputes with the new home warranty provider TARION regarding structural problems related to a leaky garage. Mr. Wallace testified that the TARION process may take up to one year, that the cost to cure is $2,000,000, and that the structural issues are well known in the city and have affected sales. They testified that the builder continues to advertise unsold units at the 2014 values however they presented no evidence to support this statement.

19Ms. Whistler testified that many unit owners cannot sell their units; some have resorted to renting them out. She submitted a chart listing unit numbers and details about listings, some assessments and some sales.

Appellant’s Submissions

20Relying on her evidence, the Appellant submits that the correct current value for 2018 and 2019 taxation years is the rebated initial builder sale value plus costs which she submits is $465,000.

21Mr. Wallace said he read both of the cases submitted by MPAC but argues that this situation should be an exception with regard to builder sales. He argues that the assessed value of $502,000 is inflated. What they want to establish is that there is no upward bias in the property values and that Ms. Whistler will settle for her costs and ride out the TARION issues and the resulting market issues. He argues that the perception that there is a healthy market for these units currently, or even a year ago, is misleading. He argues that what Ms. Whistler is seeking is relatively small but that it sets a precedent establishing that there is no appreciation from the original purchase prices for the majority of owners, including those who own the same model as the Subject Property, notwithstanding Sale 6 which, they argue, is an outlier.

22The Appellant argues that the values of the units in the two towers have not increased since 2014 which is reflected in the listing price by the builder however, as mentioned above, no evidence was presented to support this statement.

23The Appellant argues that each floor has a different appeal but did not give details of what each floor’s appeal might be. MPAC said it has adjusted the assessed values upwards for higher floors and downward for lower floors.

24The Appellant argues that she is unable to sell her unit for a number of reasons. Besides the unfulfilled promise of luxury accommodation and the structural issues, she argues that the number of rentals (12 of 51 units) and that her annual taxes exceed $8,000 hamper her ability to sell her unit.

Findings on Current Value

25The Board’s task is to determine the current value of the Subject Property as of January 1, 2016. The best evidence of the current value of a residential property is an arm’s length sale of that property on or near the valuation day. When that evidence is not available, arm’s length sales of similar properties on or near the valuation day are the next best evidence.

26In terms of the Appellant’s claim that sales in the two buildings have stagnated recently, that the values are decreasing due to the builder failing to provide the advertised luxury buildings and the known structural issues, I find I cannot make any conclusions from the evidence she presented. Her chart lacked sufficient data to draw any conclusions as to the Subject Property’s current value. The listing prices of properties offered for sale do not assist in the determination of current value because they do not indicate at what price, if any a property sold for. Where sales occurred, I was provided with insufficient details such as the dates of sales, sizes of units and number and types of parking spaces to make a meaningful comparison to her unit.

27In addition, I give her arguments regarding the number of rental units no weight. On cross-examination, she stated there are no restrictions in the buildings regarding renting the units. I cannot see into the minds or intentions of the owners and none were called as witnesses.

28Furthermore, I give no weight to her argument that the unit would be easier to sell if the taxes were below a certain threshold. I have no jurisdiction to establish current value based on the amount of taxes.

29The Appellant also presented 18 properties for the purpose of equity which I also reviewed for current value because most of these properties have sales. Again, there is insufficient data to determine the Subject Property’s current value because the data on parking was not provided. Two of the sales appear to be the same model as the Subject Property (03 units) however I was not provided with parking or fireplace data. Therefore, I decline to use these two sales in my analysis of current value.

30MPAC presented six sale properties located in 2260 and 2280, all of which are the same model as the Subject Property. The first five are builder sales and the sixth is a resale.

31MPAC’s evidence indicates that the sale values in 2260 Sleeping Giant Parkway are higher than the values in those in 2280 which suggests it is the superior or more desirable of the two buildings. MPAC also testified that upward adjustments are made for higher floors and downward adjustments are made for lower floors.

32The single resale, Sale 6, is a penthouse unit in 2260. It is not a good indicator of current value for the Subject Property because it is in a superior building and it is located on a higher floor. The only conclusion I can draw from this superior unit is that the Subject Property would sell for less that its time adjusted resale value of $557,856.

33The Board is generally reluctant to consider builder sales as indicators of current value because, as noted by the Board in Roitman and Rogers, builder sale prices can be distorted by incentives such as low financing rates, upgrades, appliance packages and other inducements and frequently do not include taxes which results in too many uncertainties about the total consideration paid. However, in both decisions, the Members conclude that, in the absence of reliable open market re-sale evidence, builder sales are often the next best evidence.

34The Appellant purchased the Subject Property from the builder in August 2015, which is very near the valuation day, for $436,340. MPAC’s undisputed calculations are that this value plus the gross HST results in a value of $491,769 and the net amount (i.e. less tax rebates) is $463,852.

35In reviewing the first five of MPAC’s sales, I find that Sales 1, 2 and 3 are inferior to the Subject Property due to their floor location, number of parking space or both. Therefore, I find that the Subject Property would not sell for less than the highest value of $461,549. I further find that Sales 4 and 5 are superior to the Subject Property due to their floor location, number of parking spaces or both. Therefore, I find that the Subject Property would not sell for more than the lowest value of $525,076.

36The Subject Property’s net sale value falls within this range as does its assessed value. However, I find that the sale value, which occurred very near to the valuation day, is the best indicator of current value for the Subject Property. The current value of the Subject Property is $464,000, rounded.

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(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

Appellant’s Evidence

37Ms. Whistler presented the data for 18 units located in the two condominium buildings. All have two bedrooms and two bathrooms. She submits that the data illustrates that the assessments are lower than the Subject Property and that sale values are lower than assessments.

Appellant’s Submissions

38The Appellant submits that that an equitable reduction is required because 13 of the 18 properties have assessments lower than Subject Property.

MPAC’s Evidence

39Mr. Pesek presented an Equity Report which included 30 sales of condominium units which occurred between January 2014 and December 2017. All are located within two kilometres of the Subject Property. Mr. Pesek compared the assessments to the time adjusted sale values and the median level of assessment was 0.975 with a 12.0 coefficient of dispersion. All sales within the equity report are open market sales, that is, none are builder sales.

MPAC’s Submissions

40Relying on its evidence, MPAC submits that an equitable reduction of the current value for the 2018 to 2019 taxation years is not required. MPAC takes the position that a median ASR falling between 0.95 and 1.05 indicates that equity has been achieved. MPAC also takes the position that a coefficient of dispersion of less than 15 for residential properties implies “good appraisal uniformity among individual properties.”

Findings on Equity

41The 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.

42The data contained in the Appellant’s evidence is insufficient to make a finding of whether the Subject Property is inequitably assessed. Of the 18 properties, the Appellant did not identify which of the properties are builder sales and which are open market re-sales. Nor did she identify the number and type of parking spaces for each of the units which, she agrees, affect value. Some of the units are located on lower floors which may reflect a lower assessment. Some may not have a waterfront vista comparable to the Subject Property which may also reflect a lower assessment. I also note that three of the 13 ‘lower’ assessments are $501,000 which is, in my view, the same as Subject Property’s.

43As a general rule, assessments alone and, in particular, without open market sales, are not strong evidence of whether MPAC is assessing similar lands equitably. A better measure of equity is to compare assessments to open market sales.

44MPAC presented an analysis of 30 condominium open market sales located within 2 kilometres of the Subject Property. The median ASR is 0.95 and I calculate that the average or mean ASR is 0.96. Both measures of central tendency fall within MPAC’s target range of 0.95 to 1.05. Further, the coefficient of dispersion for the median is 12, which falls below the acceptable value of 15 for residential properties.

45In addition to MPAC’s analysis of the data, I extracted the six sales from the two condominium buildings from MPAC’s report. This is because the parties agreed that the two condominium buildings are a unique market in Thunder Bay. All six of these sales occurred between July 2016 and December 2017. The median ASR is 0.95 and the average is 0.96.

46Based on the evidence before me, I find that no adjustment is required to for the purpose of equity.

DECISION

47An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.

48Accordingly, the assessment is reduced from $502,000 to $464,000 for the 2018 and 2019 taxation years.