Tribunals Ontario

Assessment Review Board

ISSUE DATE: December 18, 2020 FILE NO.: WR 167592

Assessed Person(s): Toktam Ghahramani Appellant(s): Toktam Ghahramani and Kamran Hajebi Respondent(s): Municipal Property Assessment Corporation Region 14 Respondent(s): Town of Richmond Hill

Property Location(s): 89 Trailwood Crescent Municipality(ies): Town of Richmond Hill Roll Number(s): 1938-050-059-23900-0000 Appeal Number(s): 3395006 Taxation Year(s): 2020 Hearing Event No.: 737273

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

APPEARANCES:

Parties	Representative
Toktam Ghahramani and Kamran Hajebi	Kamran Hajebi
Municipal Property Assessment Corporation	Julie Landon
Town of Richmond Hill	No one appeared

HEARD: December 1, 2020 by telephone conference call

ADJUDICATOR(S): Jean-Paul Pilon, Member

DECISION

OVERVIEW

1Toktam Ghahramani and Kamran Hajebi (the "Appellants") appealed the assessment of their residential property at 89 Trailwood Crescent in the Town of Richmond Hill (the "Subject Property") for the 2020 taxation year pursuant to section 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the "Act").

2Appellant Kamran Hajebi represented both Appellants at the hearing. The Municipal Property Assessment Corporation ("MPAC") was represented by Julie Landon at the hearing. The Town of Richmond Hill did not participate in any stage of the proceeding.

3MPAC returned a current value assessment of $3,177,000 for the Subject Property and requested at the hearing that it be confirmed by the Assessment Review Board (the "Board"). MPAC did not serve a notice that it would seek a higher assessment pursuant to Rule 40 of the Board's Rules of Practice and Procedure (the "Rules") despite its position at the hearing that the correct current value of the property was $3,500,000. The Appellants' position was that the correct current value of the Subject Property was $2,400,000.

4MPAC relied on sales data from five proposed comparable properties within one kilometre of the Subject Property in its valuation report using the direct comparison approach to determine current value. The Appellants argued that MPAC's proposed comparable properties were not, in fact, comparable to the Subject Property and relied on their own evidence of nine proposed comparable properties. In addition, by reference to the current value assessment of their proposed comparable properties, the Appellants indirectly took the position that there should be an equitable adjustment to the correct current value of the Subject Property. MPAC argued there should be no such adjustment.

Issues for the Hearing

5At issue in this proceeding is:

1. the current value of the Subject Property considering the parties' proposed comparable properties; and
2. whether there should be an equitable reduction in the current value of the Subject Property.

Result

6The Board finds that the correct current value of the Subject Property is $3,500,000, that there should be no adjustment in equity, and that the returned current value assessment of $3,177,000 should be confirmed.

ANALYSIS

Description of Subject Property

7The Subject Property comprises 1.97 acres of land along with a single-family detached house built in 2018 of 5,210 square feet ("sq. ft.") that includes an indoor pool, a private elevator and an attached garage. The Appellants argued that the Subject Property also has a smaller setback than other properties in the neighbourhood, that it is subject to an easement and that there is a limitation on new construction because of a protected butternut tree behind the house.

Issue 1 – Correct Current Value

MPAC's Comparable Properties

8As noted above, MPAC's valuation report listed five proposed comparable properties, but MPAC's representative testified that only two of these properties were relatively comparable to the Subject Property. Of the other three proposed comparable properties, MPAC's representative testified two were inferior and one superior to the Subject Property.

9The first of the two proposed comparable properties MPAC submitted was relatively comparable to the Subject Property was 69 Ridgewood Drive. Notably, however, that property sold in August, 2014 where in this appeal the valuation date was January 1, 2016.

10The second of these relatively comparable proposed comparable properties was 355 Forest Ridge Drive which sold on September 8, 2016 for $3,975,000. MPAC applied time adjustments to the sales prices of their proposed comparable properties and, in the case of 355 Forest Ridge Drive, that adjustment meant a fairly substantial decrease in the sale price to $3,499,343. MPAC's representative testified that the adjusted sale price of this property was why MPAC's position at the hearing was that the correct current value of the Subject Property was $3,500,000.

11355 Forest Ridge Drive had more land than the Subject Property (2.44 acres to 1.97 acres) but the house on that property was older than the one on the Subject Property (built in 2007 compared to 2019). The house on that property also had similar square footage as the one on the Subject Property and an older attached garage, but it did not have a pool or an elevator.

12The Board concurred with MPAC and the Appellants in determining that the rest of MPAC's proposed comparable properties were too substantially inferior or superior to the Subject Property to be useful for comparison. In addition, the Board determined that the sale transaction of 69 Ridgewood Drive was too far removed from the valuation date to be accurately reflective of the correct current value of the Subject Property.

13The Appellants argued that 355 Forest Ridge Drive was also inferior to the Subject Property. However, that submission might logically have led the Board to the conclusion that the correct current value of the Subject Property exceeded the adjusted sale price of 355 Forest Ridge Drive of $3,499,343. The Appellants further argued that the real estate market at the time of that sale was different than it is now but, as noted earlier, the valuation date or "the day as of which land is valued for the taxation year," was January 1, 2016 pursuant to section 19.2(1)4. of the Act. The Board finds that current market conditions are not relevant to the question to be determined here.

14The Appellants also noted three other issues relating to the Subject Property and a fourth relating 355 Forest Ridge Drive.

15First, they submitted that the Subject Property had a setback of 11 meters which, quoting from their written submission, "is significantly less than all the above similar properties in the neighbourhood which has a significant negative impact on the value" of the Subject Property.

16Second was a road water storm easement and, third, a limitation caused by a protected butternut tree which created "a restricted area for any present or further construction on the back of the (Subject Property) with a radius of 30 m by the Ministry of Natural Resource (sic) and conservation authority…"

17Fourth, the Appellants argued that 355 Forest Ridge Drive had been extensively renovated and landscaped and that it was situated in a better neighbourhood than the Subject Property, even though it is only 500 meters from the Subject Property.

18The existence of these four issues was not contested by MPAC, nor did MPAC attempt to adjust the sale price of 355 Forest Ridge Drive or the current value assessment of the Subject Property to take these issues into account. The Appellants did make that attempt by adjusting the unadjusted purchase price of 355 Forest Ridge Drive by $1,300,000 to account for these issues, arriving at a value of $2,675,000. However, the Board did not accept that this sizeable adjustment could be accurate because there was no evidence to support it.

19The Appellants made a further attempt to adjust the sale price of 355 Forest Ridge Drive to make it more comparable as follows, in an analysis which was also rejected by the Board. In this calculation, the Appellants took the unadjusted sale price of 355 Forest Ridge Drive ($3,975,000) and divided it by its current value assessment for 2019 which the Appellants said was $3,145,000, even though the appeal before the Board was for the 2020 taxation year. That calculation resulted in a ratio of 1.26 which, when divided with the adjusted purchase price above of $2,675,000, resulted in a final value of $2,123,000.

20The flaw in this analysis was that it was based on a current value assessment where the determination of the current value assessment of the Subject Property was the purpose of the appeal. In essence, the Board found this approach to be circular, not based on sales data and ultimately not indicative of correct current value. The question of whether the assessment was equitable is addressed in more detail below.

Appellants' Proposed Comparable Properties

21The Appellants submitted nine unique properties of their own as proposed comparable properties in two separate charts.

22The first chart, showing five proposed comparable properties as well as a sixth included in MPAC's analysis, was titled a "comparison of similar properties to (the Subject property) based on MPAC assessed value." Only one of these properties, however, had been the subject of a recent sales transaction where sales are necessary in the use of the direct comparison method to determine value. The sixth of these had been the subject of a sale but that sale was in 2012, well before the valuation date, and not therefore useful in this analysis.

23The Appellants' second chart listed five proposed comparable properties, one of which had been included in MPAC's analysis. This list had a similar flaw where all four of the remaining properties transacted on unknown dates in 2018 and 2019, again far from the valuation date of January 1, 2016. In addition, there was little information in the chart to indicate how comparable they were to the Subject Property. It was clear, however, that none of them were all that similar to the Subject Property since the Appellants also applied further unsupported adjustments to the purchase prices of these properties of between $200,000 and $500,000.

24The Board determined that MPAC's evidence focused on a much more similar property to the Subject Property at 355 Forest Ridge Drive that transacted within one year of the valuation date. Therefore, the Board did not need to resort to considering these less comparable properties that had transacted farther from the valuation date or that might have required substantial adjustments to make them comparable.

Findings on Issue 1

25The best evidence of the value of the Subject Property was in the sale price of 355 Forest Ridge Drive in a transaction that occurred only nine months after the valuation date. There were differences between the Subject Property and 355 Forest Ridge Drive but there was no evidence before the Board to indicate the value of any adjustments that could have been applied to address those differences. While MPAC and the Appellants submitted evidence of other proposed comparable properties that had been the subject of sales transactions, in some cases those transactions were too far removed from the valuation date. In others, the properties were too different from the Subject Property to be considered comparable.

26As a result, the Board finds the correct current value of the Subject Property to be $3,500,000.

Issue 2 - Equity

27Section 44(3)(b) of the Act provides that the "the Board shall… 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 assessment would result in a reduction to the assessment of the land."

28MPAC produced an equity report using sales data from 30 similar properties in the vicinity of the Subject Property. MPAC's representative testified that no adjustment in equity was required because the assessment to sale ratio ("ASR") was 0.962, where it is generally accepted that only an ASR of less than 0.95 would warrant an adjustment to an assessment downward.

29The Appellants made no specific submissions on equity, although they did suggest that there was an inequity of assessment through their use of their sale to assessment ratio in their submission on correct current value. However, where the question was the inequity of assessment, the numerator in the fraction (the top number) needed to be the top number with the denominator being the sale price, because the focus is on the equity of assessments and not sales prices.

30In fact, all of MPAC's proposed comparable properties to which the Appellants assigned that ratio were among the 30 properties used by MPAC in its report, including the property at 355 Forest Ridge Drive which alone had an assessment to sale ratio of 0.938. The Appellants' proposed comparable properties could not have been added to MPAC's uncontested list of 30 properties used in MPAC's equity report because they had not been the subject of sales transactions and, as determined above, they were substantially different from the Subject Property.

Finding on Issue 2

31There should be no equitable adjustment to the correct current value of the Subject Property.

CONCLUSIONS

32The Board finds that the correct current value of the Subject Property is $3,500,000.

33No equitable reduction of the correct current value of the Subject Property pursuant to section 44(3)(b) of the Act is required.

34MPAC did not serve a notice of intention to seek a higher assessment as would have been required by Rule 40 and its representative indicated at the hearing that MPAC was not seeking a higher assessment. Therefore, the assessment of the Subject Property at $3,177,000 is confirmed for the 2020 taxation year.

ORDER

35The Board orders that the assessment of 89 Trailwood Crescent, Richmond Hill is confirmed at $3,177,000 in the residential property class for the 2020 taxation year.