Tribunals Ontario

Assessment Review Board

ISSUE DATE: December 24, 2020 FILE NO.: WR 166898 Assessed Person(s): Angelo Baratta and Raffaela Baratta Appellant(s): Angelo Baratta and Raffaela Baratta Respondent(s): Municipal Property Assessment Corporation Region 15, City of Mississauga Property Location(s): 1111 Rowan Court Municipality(ies): City of Mississauga Roll Number(s): 2105-030-092-76104-0000 Appeal Number(s): 3393072 and 3405214 Taxation Year(s): 2019, and 2020 Hearing Event No.: 736181 Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Representative
Angelo Baratta and Raffaela Baratta	Self-represented
Municipal Property Assessment Corporation	Tanya Janeczek-Boyle
City of Mississauga	No one appeared

HEARD: November 4, 2020 by telephone conference call

ADJUDICATOR(S): Pierre R. Lavigne, Member

DECISION

OVERVIEW

1Angelo Baratta and Raffaela Baratta (the “Appellants”) appeal pursuant to s. 34 of the Assessment Act R.S.O. 1990, c. A.31 (“Act”) against a supplementary assessment, for the 2019 tax year arising out of alterations to the subject property. A further appeal for 2020 has been deemed pursuant to s. 40. The 2016 base year assessment for the subject property was for $803,000. The supplementary assessment added $61,000, resulting in a total of $864,000 for the 2019 tax year assessment.

2The subject property is a two-storey single detached home with a total building area of 2,666 square feet (“sq. ft.”) built in 1983. The reason for the increase in value by the supplementary assessment concerns the value added by alterations to the kitchen and living area.

Issues for the Hearing

3At issue in this proceeding are the following questions:

1. What is the current value of the subject property with the alterations for the 2019 and 2020 taxation years?
2. Is an equity reduction necessary pursuant to s. 44(3) of the Act because of the assessment of similar lands in the vicinity?

Result

4For the reasons that follow, the Assessment Review Board (“Board”) finds the current value of the subject property to be $850,000 for the 2019 and 2020 taxation years, effective as of the date of the Supplementary Assessment.

PRELIMINARY MATTERS

5The Municipal Property Assessment Corporation (“MPAC”) introduced evidence that a reasonable opportunity to inspect the subject property had been denied by the Appellants. It suggested that the Appellants should bear the onus of proving the correct value of the subject property as a result of a denial of a reasonable opportunity to inspect. The Appellants testified that they were out of the country at the time of the proposed or actual inspection.

6This appeal is in the Summary Proceedings Stream. There is no evidence that the Special Notice, required by Rule 40(c) of the Board’s Rules of Practice and Procedure, in Summary Proceedings, was given to the Appellants. Such a Notice is required to invoke the reverse onus provisions of s. 40(18) of the Act. In the absence of such Notice, the question of whether there was a denial of inspection, which the Board does not decide, is of no consequence.

7The burden of proof as to the correctness of the current value remains with MPAC pursuant to s. 40(17) of the Act.

ANALYSIS

Issue 1 – What is the current value of the subject property with the alterations for the 2019 and 2020 taxation years?

8Section 34(1)(a) of the Act provides for a supplementary assessment when:

(a) an increase in value occurs which results from the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof that commences to be used for any purpose;

9The Appellants claimed that since the modifications did not rise to the level of a “major renovation” there should be little or no value added. However, s. 34(1)(a) is clear that a supplementary assessment can be made as a result of any “alteration” that increases the value. It is not necessary that an alteration amount to a major renovation to justify a supplementary assessment. In this appeal there is no dispute that there was alteration to the structure.

10The Appellants testified that the cost of the alterations in 2019 was approximately $47,000, including a new kitchen window, the opening of a load bearing wall to give direct access and line of sight between the kitchen and the living area, new kitchen cabinets and other kitchen work.

11Section 19.2(1) paragraph 4 of the Act stipulates that, for the taxation years from 2017 to 2020, the day as of which land is valued for taxation is January 1, 2016. Because of this specified valuation day, the value of the alterations made in 2019 is determined by comparing the value of similar properties, with similar alterations, in existence at or near the valuation day of January 1, 2016.

12MPAC’s evidence of the value of the subject property as of January 1, 2016, was by direct comparison of sales of comparable properties, in the vicinity, at or near the January 1, 2016 valuation date.

Proposed Comparable Properties

13MPAC identified six proposed comparable properties that were sold within seven months of the valuation day and within 1 km of the subject property, reproduced in the following table:

14The subject property was described as having undergone a “Modification B in 2019.” Sales 1 to 3 had no modifications. Sale 4 had a “Modification B in 2004”, while Sale 5 had a “Modification C in 2011” and Sale 6 had a “Modification C in 2009.”

15MPAC’s witness stated that, in her opinion, Sales 1 to 3 without modifications were inferior in value to the subject property because they had no evidence of modifications since initial construction. In her opinion, Sales 4 to 6 were similar in value to the subject property because they had modifications. She calculated the time-adjusted median price per sq. ft. of the total building areas for Sales 4 to 6 at $326.56 per sq. ft. The application of this value to the 2,666 sq. ft of total building area of the subject property produced an indication of value of $870,609, which supported the supplemental assessment of $864,000.

16MPAC’s witness was also of the opinion that the alterations had improved the effective age of the property from its actual construction year of 1983 to an effective year built of 2001.

17The sales submitted by MPAC were comparable in structure type, neighbourhood, year built, lot size, building area and quality. In order to provide an indication of value for the subject property, as altered, MPAC was seeking a finding that otherwise comparable properties that have had “modifications” have higher value regardless of the type or extent of the “modifications.”

18The subject property is described as having undergone a “modification B” in 2019. Of the 3 Sales (4 to 6) MPAC used to derive a time-adjusted median price per sq. ft. of the total building areas, two (5 and 6) had a “modification C” and Sale 4 had a “modification B”. The use of a median value of the three sales resulted in choosing the time-adjusted median price per sq. ft. of Sale 5 which had a “modification C.” No evidence was submitted by MPAC to describe what “Modifications B” or “Modifications C” were. Nor was any evidence provided to demonstrate how the subject property’s alterations improved the structure from a year built of 1983 to an effective year built of 2001.

19The evidence presented by MPAC is insufficient to permit the Board to determine whether the comparable sales are in fact inferior, similar or superior to the subject property because of the absence of evidence as to the nature of Modifications B and C. Similarly, the Board in unable to conclude that the alterations so rejuvenated the property that its effective year built became 2001 because of the absence of evidence demonstrating how this effective year built was calculated. Accordingly, the Board can give no weight to the median price per sq. ft. of comparable Sales 4 to 6. Sales 1 to 3 are not evidence of value of the supplementary assessment as these sales had no modifications at all. They would accordingly only indicate the value of similar property before any alterations.

20The Appellants presented evidence of the assessment values of properties comparable to theirs. Assessment values of properties that have not sold at or near the valuation day are not evidence of current value. The assessment valuation of these properties has been derived from actual market sales of similar properties at or near the valuation day. Assessment values are not always correct and can be corrected on reconsideration by MPAC or on appeal by this Board. It is actual sales, at or near the valuation day, that are evidence of value. No sales evidence was presented by the Appellants. Accordingly, the Board can give no weight to assessment values of the Appellants’ comparables as evidence of valuation day value.

21Because the Board has given no weight to the value of the sales presented by MPAC and because the Appellants presented no sales evidence, the Board finds that the best evidence of the value added by the alterations is the costs of the alterations given in evidence by the Appellants.

22Angelo Baratta is 71, and both he and his wife are retired. The Appellants testified that the opening of the kitchen to the living area to provide accessibility and line of sight were only done to improve safety. The cost of the wall opening and the new window was estimated at $17,000. The cost of the new cupboards and other kitchen changes was $30,000. In the absence of any evidence of depreciation of such alterations the Board will add their cost as the increase in value caused by the alterations.

23Together the alterations increased the value of the property by $47,000, which when added to the prior assessment of $803,000 would produce a new current value of $850,000.

24In his evidence and submissions Mr. Barretta was concerned that the supplementary assessment would apply retroactively to the valuation day of January 1, 2016 and he would not benefit from the phase-in provisions of s. 19.1(4) of the Act. This is not the case. The increase in value will only apply as of the date of the supplementary assessment and will be phased in as indicated in the MPAC’s Property Assessment Change Notice of May 8, 2019 but with the new value of $850,000 as found by the Board.

Findings on Current Value

25The Board finds the correct current value of the subject property as altered in 2019 to be $850,000.

Issue 2 – Is an equity reduction necessary pursuant to s. 44(3) of the Act because of the assessment of similar lands in the vicinity?

26The only evidence the Appellants presented was the assessed values of the comparable properties mentioned previously. As there were no sales of these properties, there was no evidence that they were underassessed in relation to their sale prices.

27MPAC presented an equity study which established that 30 similar properties, sold between January 1, 2015 and December 31, 2016, within 1.8 kilometers of the subject property were assessed at between 78.6% and 109% of their time-adjusted sale prices with a median level of appraisal of 95%.

28The evidence of MPAC was that:

The level of appraisal (“LOA”) measures the overall or typical ratio at which a group of properties is assessed. LOA is established by determining the median Assessment to Sales ratio (“ASR”) in the sales sample. The median is a measure of central tendency. It is the midpoint of the ratios when stratifying or listing them from lowest to highest. The median ASR is the preferred measure to determine LOA because it is not affected by very low or high ratios.

The International Association of Assessing Officers (IAAO) standards state the LOA for all property types should fall between 0.90 – 1.102. For purposes of the equity test, MPAC takes the position that equity is achieved if the median ASR falls between 0.95 – 1.05.

29The Board finds that there is no requirement for an equity adjustment because MPAC’s equity evidence establishes on probative statistical evidence that similar properties in the vicinity are not, on the whole, underassessed. The Appellants provided no evidence that properties were underassessed compared to their sale prices at or near the valuation day.

Findings on Equity

30In the absence of evidence of inequity, the Board makes no adjustment pursuant to s. 44(3).

CONCLUSION

31The Board finds the assessment of the subject property, as of the January 1, 2016 valuation date, to be $850,000.

ORDER

32The Board reduces the assessment from $864,000 to $850,000 for the 2019 and 2020 taxation years.