Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: March 27, 2020
Assessed Person(s): Syed Moeen Khurshid
Appellant(s): Syed Khurshid
Respondent(s): Municipal Property Assessment Corporation Region 15
Respondent(s): City of Brampton
Property Location(s): 72 Antibes Drive
Municipality(ies): City of Brampton
Roll Number(s): 2110-080-011-77130-0000
Appeal Number(s): 3381763
Taxation Year(s): 2019
Hearing Event No. 728873
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
| Parties | Representative |
|---|---|
| Syed Khurshid | Self-represented |
| Municipal Property Assessment Corporation | Olga Avdeeva, William Cottingham |
| City of Brampton | James Lee |
HEARD: February 10, 2020 in person
ADJUDICATOR(S): Subuola Awoleri, Member
DECISION
OVERVIEW
1Syed Khurshid, (the “Appellant”) appeals the 2019 assessment of 72 Antibes Drive (the “Subject Property”) to the Assessment Review Board (“the “Board”) on the grounds that the assessment is too high. He submits that the Subject Property has construction defects, which reduce its value.
2The Municipal Property Assessment Corporation (“MPAC”) and the Appellant agree that the construction defects in the Subject Property reduce the current value assessment (“CVA”) of the Subject Property to $753,000.
3James Lee, representing the City of Brampton (the “City”), objects to this reduction. The assessment of the Subject Property was returned at $797,000 for the 2019 taxation year. Mr. Lee requests that the Board confirms this assessment as returned.
Issues for the Hearing
4The issues to be determined are:
- What is the correct current value of the Subject Property for the 2019 taxation year?
- Is the current value as determined by the Board equitable in reference to the assessments of similar lands in the vicinity?
RESULT
5The Board determines the current value of the Subject Property for the 2019 taxation year to be $766,000.
6The Board finds that this assessment at current value is equitable with the assessments of similar lands in the vicinity, and therefore no further reduction is required to achieve equity.
7The Board reduces the assessment of the Subject Property from $797,000 to $766,000 for the 2019 taxation year.
PRELIMINARY MATTER
8At the commencement of the hearing, Mr. Lee raised an objection on the admissibility of post-inspection evidence from MPAC and the Appellant. He argued that the inspection of the Subject Property was carried out by MPAC without notice to the City.
9Mr. Lee submitted that it was at the mandatory meeting between the parties that he was advised by MPAC that there was an inspection of the Subject Property. Accordingly, MPAC had further settlement discussions with the Appellant, without the knowledge of the City. He argued that this is contrary to Rule 9 of the Board’s Rules of Practice and Procedure (the “Rules”), which provides:
All communication with the Board in relation to any proceeding must be copied to, or in the presence of, all other parties to the proceeding.
10The Board determined that Rule 9 is not applicable to the facts. MPAC was not communicating with the Board and it is not mandated by the Rules to advise the Board when it conducts inspections of properties under appeal. Olga Avdeeva, MPAC’s Assessor and witness, advised the Board that the Appellant had initially refused an inspection of the Subject Property and had only agreed to an inspection before the mandatory meeting after he was informed about the benefits of an inspection. She further added that MPAC had filed and served its disclosure prior to the inspection as mandated by the Rules in the schedule of events.
11The Board ruled that the post-inspection evidence is relevant to the determination of the correct current value of the Subject Property and admitted it into evidence. Inspections are tools used to resolve issues regarding the physical aspects of the property, condition and age. Further, since the Board has the obligation to determine the current value of the property, the Board has the discretion to determine what evidence it requires to enable it to discharge this obligation. In this case, as it was not disputed that Mr. Lee was invited by the Appellant to attend the inspection, and Mr. Lee elected not to attend, the Board finds that the Appellant would suffer more prejudice if the post-inspection evidence was not admitted as evidence. There is no prejudice to the City as the City confirmed that the post-inspection evidence was received and reviewed by the City prior to the hearing.
ANALYSIS
Description of the Subject Property
12The Subject Property is a two-storey single-family detached home built in 2015. It has a lot with 38.06 feet (“ft”) of effective frontage and 103.8 ft of effective depth for an effective site area of 0.09 acres. It has a total building area of 3,258 square feet (“sq. ft.”), with construction quality of 6.5 and an unfinished basement area of 1,518 sq. ft. It abuts green space.
Issue 1 - What is the correct current value of the Subject Property for the 2019 taxation year?
13In accordance with s. 44(3)(a) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), the first mandate of the Board is to determine “the current value of the land.” Section 1 of the Act defines current value as “…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.” That is, for the 2019 taxation year, the Board must determine what the Subject Property would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by the Act.
14In this appeal, MPAC and the City are not disputing the market value of the Subject Property based on comparable sale properties which sold at or near the valuation date of January 1, 2016. Ms. Avdeeva testified that the CVA of the Subject Property as returned at $797,000 should not be reduced based on the sales of the six comparable properties presented by MPAC, which are identical to the Subject Property. Ms. Avdeeva argues that the CVA as returned should be reduced based on construction deficiencies in the building structure through what MPAC terms as unfinished allowance. This unfinished allowance is only temporary and will be removed when the deficiencies have been repaired.
15MPAC and the City presented market evidence for the determination of the current value of the Subject Property. The Appellant did not present any comparable sale properties. He only presented photographs to show the construction deficiencies in the Subject Property.
16I find that MPAC’s six comparable property sales are identical to the Subject Property in terms of lot and building size, year built, quality of construction, structure, number of baths (3.5) and they all have unfinished basements like the Subject Property. The structure of comparable property Sale 4 is 3,268 sq. ft., which is still almost identical to the Subject Property’s structure of 3,258 sq. ft. These comparable sales are all located within the same homogenous neighbourhood as the Subject Property. The Subject Property abuts green space and to account for this, MPAC made a positive adjustment of 2% to the time adjusted sale prices of these six comparable property sales. Ms. Avdeeva used the median Time Adjusted Sales (“TAS”) price per square foot of these six sales at $253.5 per sq. ft. against the total building area of the Subject Property of 3,258 sq. ft. and provided the Board with a value of $825,903.
17The City presented six comparable property sales, which I find are similar to the Subject Property. Mr. Lee also used one of MPAC’s comparable property sales. The total building area of these sales range from 2,947 to 3,258 sq. ft. All the sales excluding Sale 2 were built in 2014. Mr. Lee provided the median TAS price per sq. ft of these six sales as $261 per sq. ft. He applied it to the total building area of the Subject Property and provided a value of $850,000.
18MPAC and the City agree that there should be no increase in the value of the Subject Property since MPAC did not serve a notice of increase in assessment as required by the Rules. Mr. Lee asked the Board to confirm the assessment as returned. Ms. Avdeeva requested that the Board find that the current value of the Subject Property to be the value as returned at $797,000, with a further $44,000 reduction for construction deficiencies.
Findings on Issue 1 – Current Value
19The first legislative mandate of the Board is to determine the current value of the Subject Property. The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the property on the valuation date or close to it. If, as in this appeal, no such transaction took place, the next best measure of current value is an arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.
20I accept MPAC’s comparable property sales as the best evidence to establish the current value of the Subject Property. These comparable sales are identical to the Subject Property, compared to the City’s comparable Sales 1, 3, 4 and 6 which are similar to the Subject Property. Ms. Avdeeva further applied a 2% positive adjustment to MPAC’s six sales to account for green space. She did not present any market evidence to show the difference in the selling price of properties that abut green space and properties that do not have this feature. The City did not make this adjustment to its comparable properties. The Board does not accept this adjustment. These six properties transacted in open market without the benefit of abutting green space. The TAS prices of these six comparable sales range from $745,429 to $843,499. The median TAS price per square foot is $248.62 per sq. ft., when applied to the total building area of the Subject Property at 3,258 sq. ft., it provides a current value of $810,000 (rounded).
Construction Deficiencies in the Subject Property
21The main dispute between the Appellant and the City is the reduction MPAC applied to the assessed value of the Subject Property based on construction deficiencies in the Subject Property, which MPAC terms as unfinished allowance.
22I find that based on the post-inspection evidence and submissions furnished by the Appellant and MPAC, the Subject Property would not command the same price in an open market as MPAC’s six comparable sales. MPAC’s evidence provides what the Subject Property would sell for on the valuation date, however, due to the peculiar details as revealed from the post-inspection evidence and the submissions of the Appellant and MPAC, the current value as determined by the Board requires further downward adjustment to account for construction deficiencies in the Subject Property.
23Ms. Avdeeva testified that on December 16, 2019, during the inspection, which was carried out by her and William Cottingham, another MPAC Assessor, who was also present at the hearing, the following were observed in the Subject Property:
- a big yellow stain on the ceiling of the family room with a long crack line;
- a cloth was put under the door leading to the backyard, to prevent water from flowing into the Subject Property when it rains;
- the floors on the main floor were unevenly installed, there are gaps between the baseboard and the floor, and;
- stains on the walls of the hallway and family room, which Mr. Cottingham testified looked like moisture damage, although it was not wet.
24Ms. Avdeeva testified that the “average” condition of the Subject Property was not altered post-inspection. However, MPAC had to make a 10% deduction of $44,000 from only the value of the structure, valued by MPAC at $447,868 as unfinished allowance. Ms. Avdeeva argued that based on her experience, these are construction deficiencies, which MPAC applied as unfinished allowance. She further testified that MPAC had applied this allowance in similar situations where the properties, though occupied like the Subject Property, were still deemed unfinished.
25Mr. Lee disagreed with MPAC, arguing that if the property is unfinished it would not be useable and the taxpayer can apply for a rebate with the municipality. Furthermore, he submits that the Appellant was using the Subject Property despite his claim of construction deficiencies and that these deficiencies were only cosmetic. In addition, he stated that the Appellant did not provide the cost to cure these deficiencies. The Appellant testified that the builder did not provide any quote to cure these defects. Mr. Lee also stated that the Subject Property still has a warranty with Tarion and the Appellant would be compensated for these deficiencies. The Appellant testified that he contacted Tarion and there has been no response and the warranty on the Subject Property has expired.
26I disagree with Mr. Lee’s argument. I accept Ms. Avdeeva’s testimony that MPAC has made reduction to properties based on unfinished allowance even though the properties are being used. I also accept MPAC’s submission of this reduction. MPAC and not the City carried out the inspection and as testified by Ms. Avdeeva, based on her experience, she believes this reduction is necessary. The Act has charged MPAC with the role of assessing properties in Ontario. MPAC inspected the Subject Property and observed that it has construction deficiencies and would not command the same price with the six comparable sales it presented. These issues are not cosmetic, they are defects as revealed in the photographs presented by the Appellant. The Board finds that a willing buyer will not pay the same price for the Subject Property and MPAC’s six comparable sales. These construction deficiencies will affect the purchase price that the Subject Property would command in open market.
27Mr. Lee also relied on MPAC’s data as revealed during cross-examination. The details of the comparable property sales he presented in the City’s evidence was obtained from MPAC. Mr. Lee admitted that he did not inspect all six comparable property sales. He relied on MPAC’s data to argue that they are similar to the Subject Property. Accordingly, the City acknowledges that it is more probable than not that MPAC provided accurate information about these properties since Mr. Lee did not carry out any investigation on these sales and he had no personal knowledge about these properties. Likewise, MPAC’s post-inspection evidence and submission reveals construction defects in the Subject Property, corroborated by photographs presented by the Appellant, which necessitated a $44,000 reduction to the assessment of the Subject Property. On the balance of probabilities, I find that this reduction is justified.
28I accept MPAC’s evidence of this reduction and applied the $44,000 reduction to the determined current value of $810,000 to provide a correct current value of $766,000.
Issue 2 - Is the current value as determined by the Board equitable in reference to the assessments of similar lands in the vicinity?
29Section 44(3)(b) of the Act directs that after determining current value, 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 adjustment would result in a reduction of the assessment of the land.”
30The Assessment to Sales Ratio (“ASR”) is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the TAS price.
31I accept both MPAC and the City’s equity analysis and determine that an equity adjustment is not necessary to the determined current value of $766,000. MPAC and the City presented median ASR’s of 0.97. Mr. Lee presented 50 sales of residential properties sold between January 2015 to December 2016. MPAC presented an equity analysis study of 30 single-family detached dwellings sold from January 2015 to December 2016 within 2.0 kilometers of the Subject Property with building structures between 2,500 sq. ft and 3,500 sq. ft. built between 2013 to 2016. This provided a median ASR of 0.979.
Findings on Issue 2 – Equity Adjustment
32The median ASR of 0.97, does not give rise to an equity adjustment, it shows that similar properties in the vicinity are being assessed at or near their current value.
CONCLUSION
33The current value of the Subject Property is $766,000 with no adjustment for equity. This reduces the assessment of the Subject Property from $797,000 to $766,000 for the 2019 taxation year.
"Subuola Awoleri"
SUBUOLA AWOLERI MEMBER Assessment Review Board A constituent tribunal of Tribunals Ontario - Environment and Land Division Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248```