Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 18, 2019 FILE NO.: WR 155294A AMENDED DECISION ISSUED ON: February 5, 2019

Assessed Person(s): Mark Denomme, Paris Denomme Appellant(s): Mark Denomme, Paris Denomme Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 27 Respondent(s): City of Windsor Property Location(s): 3538 Bruce Avenue Municipality(ies): City of Windsor Roll Number(s): 3739-080-290-07101-0000 Appeal Number(s): 3266056 and 3313709 Taxation Year(s): 2017 and 2018 Hearing Event No.: 701979

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

Heard: August 7, 2018 in Windsor, Ontario

APPEARANCES:

Parties	Representative
Mark Denomme, Paris Denomme	Self-represented
MPAC	Janice Hunter-Desjarlais
City of Windsor	Jose Mejalli

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

Amended pursuant to Rule 114 of the Assessment Review Board’s Rules of Practice and Procedure, effective April 1, 2017

1The subject property, located at 3538 Bruce Avenue, has an assessment of $332,000 for the 2017 and 2018 taxation years. Mark and Paris Denomme (the “Appellants”) believed this assessment was too high and filed an appeal. They believe the assessment should be approximately $260,000, equivalent to the price paid for the property in June of 2014.

2The Assessment Review Board (the “Board”) must decide two things in these appeals. Firstly, the Board must determine the current value of the subject property. Once that decision is made, the Board must then determine if the current value needs to be reduced for the purpose of equitable assessment.

DECISION

3The Board finds the current value of the subject property is $315,000. The Board also finds that there is evidence to support a reduction in this amount in order to make it equitable with the assessments of similar lands in the vicinity.

4Accordingly, the assessment of 3538 Bruce Avenue for the 2017 and 2018 taxation years is reduced from $332,000 to $301,000, in the Residential property class.

LEGISLATION

5In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”).

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 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 Evidence

9MPAC submitted a valuation report that considered six properties in the City of Windsor that it deemed to be comparable with the subject property. These six properties are located from 0.14 to 2.6 kilometres from the subject property. They are all single-family dwellings that have either a single-storey or that are described as a split level.

10MPAC testified that the range of the time adjusted sale values of the six properties in their sample was $301,000 to $374,000 (both rounded).

11MPAC’s conclusion was that the range represented by the sample of six properties shows the returned value of the subject property of $322,000 is at the low end of the range and is reasonable.

Appellant’s Evidence

12The Appellants submitted that the sale of the subject property is the best indicator of its value. They disagreed with MPAC that the sale by an Estate is unreliable. They testified that they approached the estate trustees in early 2014 and began a negotiation for the subject property at that time. Later in 2014, and before the sale date, the trustees consulted with a real estate agent to determine a listing price.

13Prior to listing, the Trustees communicated with the Appellants again, indicating there were other interested potential purchasers, and that the price of $260,000 would either have to be accepted by the Appellants, in short order, or the subject property would be offered for sale to another interested party.

14The Appellants submit this time line and communication have all of the marks of a normal negotiation and purchase and sale agreement process. The only thing missing was an actual MLS® listing. There were other interested potential purchasers and the sale took place at the beginning of June 2014; approximately eight months after the death of the previous owner.

15The Appellants concluded by adding that at no time did the trustees behave as though they were in a hurry to dispose of the subject property. In fact they took all reasonable steps to sell it for a fair market price.

Board’s Analysis

The Subject Sale – June 2014

16The best evidence of current value is a sale of the subject property that occurred on or near the applicable valuation day. The Parties disagree about the validity of the June 2014 sale of the subject property. MPAC believes that, because the vendor was an estate, the sale cannot be relied upon to meet the definition of current value in the Act. Specifically, it submits that an estate sale cannot be interpreted as a transaction between a willing buyer and a willing seller because estate sale values are inherently impacted by emotional and other aspects of the transaction that affect the price.

17In contrast, the Appellants described the sale process as being between two willing parties, negotiating in good faith, in an open market that included at least one other interested purchaser.

18The Board finds the testimony of the Appellants to be most compelling on this point. They related the details of a normal negotiation and transaction. MPAC was not able to refute the details of the transaction. The Board finds the sale of the subject property to be a valid indicator of its current value.

Time Adjustment

19The concept of adjusting sale prices to account for changes in value over time is a common means of comparing sale values that occurred on different dates. To account for these changes, MPAC typically provides a table of time changes over time. Each month over a period of time (in this case from January 2015 through December 2017) has a Time Adjustment Factor (“TAF”) applied. Any sale within a specific month in this time span would be multiplied by the TAF assigned to that month, to arrive at an estimated sale value as of the January 1, 2016 valuation day stipulated in the Act.

20MPAC testified that the TAFs in its valuation report were based on the sales of 411 residential properties in the City of Windsor from January 2015 through December 2017. The 411 sales were grouped by sale month and a trend line was created to indicate the value change of residential properties from month to month.

21The January 2015 TAF in MPAC’s valuation report is 1.211, meaning that for a sale in that month to be compared to its current value on the January 1, 2016 valuation day, it would have to be multiplied by a factor of 1.211. There is no TAF in evidence for June 2014. The earliest TAF in evidence is the January 2015 TAF.

22In the absence of TAFs earlier than January 2015, the Board finds the best TAF in evidence is the January 2015 TAF of 1.211. When applied to the subject sale value of $260,000, the result is $315,000 (rounded).

23Accordingly, the Board finds that the current value of the subject property is $315,000.

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?

24The Appellants did not make a submission on the specific question of equity of assessment. However, they did cite the assessments of MPAC’s six comparable properties, noting that all but one (3490 Bruce Street) have assessments that are below their corresponding time adjusted sale values.

25MPAC submitted an equity analysis that compared the time adjusted sale value of 33 single-family dwellings in the vicinity of the subject property with their corresponding 2017 assessments. Comparisons of such assessments and time adjusted sale values are a common means of determining if similar properties in the vicinity are equitably assessed. The comparison of these assessments to time adjusted sale values is called the Assessment to Sale Ratio (“ASR”). The range of ASRs in the sample was from 0.715 to 1.135, with a median of 1.005.

26MPAC’s analysis did not include the ASRs of four of the six properties it used to determine current value. MPAC’s properties 3 through 6 have ASRs of 0.896, 0.992, 1.022, and 0.874 respectively.

27The median ASR, according to MPAC, means that properties that are similar to the subject property, in the same vicinity, are assessed at approximately 100.5% of their current value as determined through sales. MPAC’s analysis stated that a resultant median ASR that is between 0.95 and 1.05 means current values are representative of assessment and therefore, no adjustment is required.

Board’s Analysis

28The concept of reducing the current value determined 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.

29The Appellants submitted that the assessments of MPAC’s six comparable properties indicate that assessments are below their corresponding current values and a downward adjustment to the current value determined would be necessary.

30MPAC’s equity analysis indicates that, when the assessments of 33 similar properties in the vicinity of the subject property are compared with their time adjusted sale values, the result shows that properties are generally assessed slightly above their current value. However, the data from four properties in evidence was not included in this analysis. 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.

31In making its determination of any equity reduction, the Board must be convinced, by the best evidence available, that the reduction is warranted. The Board finds that the mean ASR using all properties in evidence is the best evidence of whether or not a reduction in current value is required to achieve equitable assessment. When the four additional properties in MPAC’s valuation report are added to the list of 33 properties in its equity analysis, the results are:

• Mean ASR – 0.955
• Standard Deviation – 0.110
• 95% Confidence Range – 0.035
• Low End of the Confidence Range – 0.919
• High End of the Confidence Range – 0.990

32These results indicate that it is highly likely that similar single-family dwelling properties in the vicinity are generally assessed below their current value. Based on this sample, the Board can be 95% sure that the true average level of assessment of similar properties in the vicinity is between 91.9% and 99% of their current values. That is strong evidence that similar property in the vicinity is, on average, assessed below its current value. The Board finds that this is the best evidence of whether or not the current value determined for the subject property should be reduced, and applies the mean ASR of 0.955 to the current value determined.

33Accordingly, the current value determined of $315,000 is reduced by a factor of 0.955, for a reduced value of $300,825 ($301,000 rounded), for the purposes of achieving equitable assessment.

CONCLUSION

34The Board finds the current value of the subject property is $315,000. The Board also finds that there is evidence to support a reduction in this amount for the purposes of equitable assessment.

35Accordingly, the assessment of 3538 Bruce Avenue for the 2017 and 2018 taxation years is reduced from $332,000 to $301,000, in the Residential property class.