Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 16, 2020

FILE NO.: WR 163342

Assessed Person(s): Sathish Pathak, Damyanti Savita Pathak

Appellant(s): Sathish Pathak, Damyanti Savita Pathak

Respondent(s): Municipal Property Assessment Corporation Region 15

Respondent(s): City of Mississauga

Property Location(s): 5113 Montclair Drive

Municipality(ies): City of Mississauga

Roll Number(s): 2105-040-159-14900-0000

Appeal Number(s): 3340584 and 3358446, 3406947

Taxation Year(s): 2018, 2019 and 2020

Hearing Event No.: 720572 and 725627

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

APPEARANCES:

Parties	Counsel*/Representative
Sathish Pathak, Damyanti Savita Pathak	Robert Baranowski
Municipal Property Assessment Corporation	Maria Covello
City of Mississauga	No one appeared

HEARD: September 18 and December 12, 2019

ADJUDICATOR: Tyrone D. Skanes, Member

DECISION

OVERVIEW

1Sathish Pathak and Damyanti Savita Pathak (the “Appellants”) filed an appeal for the 2018 taxation year with the Assessment Review Board (the “Board”) pursuant to section 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”). Pursuant to s. 40(26) of the Act, the Appellants are deemed to have brought the same appeal in respect of the 2019 and 2020 taxation years.

2It is the Appellants’ position that the Municipal Property Assessment Corporation (“MPAC”) return on the roll value of $1,397,000 should be the current value and that any equity adjustment ought to be applied to that value. The Appellants also advanced other arguments that will be identified below. At the hearing MPAC took the position that the return on the roll value is developed by its appraisal model using the mass appraisal system and it indicates an assessed value of a property relative to the valuation date. MPAC said that it determined a current value of $1,569,000 for the subject property (“subject property”) but determined that an adjustment for equity was required. An Assessment to Sales Ratio (“ASR”) of 0.921 was applied to the current value and returned an adjusted current value of $1,445,000. However, MPAC advised that it had not applied for a higher assessment, per the Board Rules, and was therefore recommending that the Board confirm the return on the roll value of $1,397,000 as the subject property’s current value.

Background

3Sathish Pathak and Damyanti Savita Pathak are the owners of the subject property located at 5113 Montclair Drive.

4Pursuant to s. 40(11) of the Act, the City of Mississauga is a party to this proceeding. However, it took no position on the issues raised in the appeals and no one appeared at the hearing on behalf of the City of Mississauga.

Areas of Agreement

5The parties agree that the return on the roll value of $1,397,000 ought to be confirmed as the current value. The parties disagree on whether the ASR should be applied to this value in determining an equity adjusted current value.

Issues for the Hearing

6There are six issues for the Board’s consideration and determination:

1. Has MPAC met its burden of proof under s. 40(17) of the Act?

2. Has MPAC contravened s. 14(1) and s. 31(1) of the Act?

3. Does s. 37(6) of the Act make it illegal for MPAC to find a higher current value than the value returned on the roll?

4. Does the Board’s obligation under s. 44(3)(a) of the Act to determine the current value mean that it has to accept the roll return as the correct current value?

5. What is the correct current value of the subject property?

6. Is the correct current value equitable with the assessments of similar lands in the vicinity?

RESULTS

7The Board finds that:

1. MPAC has met its burden of proof under s. 40(17) of the Act.

2. MPAC has not contravened s. 14(1) and s. 31(1) of the Act.

3. Section 37(6) of the Act does not make it illegal for MPAC to find a higher current value for the subject property than the value returned on the roll.

4. Section 44(3)(a) of the Act only requires the Board to determine the current value of the land. It makes no reference to the return on the roll value.

5. The correct current value of the subject property is $1,646,000 (rounded).

6. The correct current value is inequitable with the assessment of similar lands in the vicinity and an adjustment for equity is required. The Board accepts MPAC’s equity analysis where an ASR of 0.921 was developed. The Board applied this ASR to the current value of $1,646,000 (rounded) and this returned an adjusted current value of $1,516,000 (rounded).

ANALYSIS

Description of Subject Property

8The subject property is a single-family detached two-storey home located in the City of Mississauga. The house is situated on a lot measuring 0.22 of an acre. The house measures 5,014 square feet (“sq. ft.”) and was used by the parties to determine current value, using a per sq. ft. cost. The construction quality is 7.5 and the subject property has an effective year built of 1990.

Issue 1 – Burden of Proof

9Mr. Baranowski, representing the Appellants, raised several issues for the Board’s consideration. The first issue was whether or not MPAC had met its statutory burden under s. 40(17) of the Act. It was his position that MPAC had not met its burden as the return on the roll value is different than MPAC’s opinion of value as determined by its analysis.

10Section 40(17) states that: “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.”

11The Board rejects this submission and finds that MPAC has met its burden under the Act. The roll return value is a snapshot in time, relative to the valuation date of January 1, 2016, and determined by MPAC’s use of its mass appraisal model to arrive at an assessed value. On appeal, given that the question of current value is opened, MPAC can bring evidence of comparable sales to find the current value. These properties are similar in nature to the subject property in proximity and in property characteristics, such as lot and building size, age of construction and other relevant characteristics.

12The Board finds that these comparable properties, to be outlined below, are far more similar to the subject property than dissimilar and are acceptable comparatives to the subject property for the purpose of determining current value.

Issue 2 – Contravention of s. 14(1) and s. 31(1) of the Act

13Mr. Baranowski submitted that MPAC had contravened both s. 14(1) and s. 31(1) of the Act. Section 14(1) deals with MPAC’s responsibility to prepare an assessment roll return and one of the sub-responsibilities is to determine the current value of the land. Section 31(1) of the Act deals with any change in information and MPAC’s responsibility to issue a change notice to the parties.

14Mr. Baranowski did not identify how exactly MPAC had contravened these sections, other than to say that as it was proposing a higher current value than the return on the roll value, then it must be in contravention of these two sections.

15The Board does not accept this submission. There is a distinct difference between the assessed value returned on the roll and the current value. The assessed value is determined by using MPAC’s mass appraisal model and arriving at a value relative to the valuation date. “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. The current value is determined by using the recent sales of comparable properties that tend to demonstrate the market value of the subject property in comparison to those comparable properties. The Board dismisses this issue.

Issue 3 – Does s. 37(6) of the Act make it illegal for MPAC to find a higher current value than the value returned on the roll?

16This section of the Act deals with adjustment of taxes as the result of an appeal and how overpayments are to be refunded. The Board rejects the Appellants’ submissions on this issue, as a decision has not been rendered so that taxes can be adjusted, if necessary, and any overpayment applied. The Board finds that this section is not relevant to the determination of current value in this matter, as it is about the process for adjustments and payment of taxes. MPAC made no comment on this issue.

Issue 4 – Does the Board’s obligation under s. 44(3)(a) to determine the current value mean that it has to accept the roll return value as the correct current value?

17The Board’s obligation under this section is to find the current value. The Board has defined above how current value is determined. The Board must also consider the entirety of the section as these are not read in isolation. This section deals with determining current value for the purpose of considering the equity issue under s. 44(3)(b), hence the use of the conjunction “and” between the clauses. There is certainly no mention of a roll return value or the Board’s obligation to consider it. This is, at best, a specious argument. MPAC made no comment on this issue. The Board dismisses this issue.

Issue 5 – Current Value

18This issue deals with the determination of the correct current value of the subject property for the 2018, 2019 and 2020 taxation years. Pursuant to s. 19(1) of 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 of January 1, 2016. Current value is defined in the Act as meaning “… 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. This translates into the market value of the subject property as of January 1, 2016.

19In order to determine the market value of the subject property MPAC has utilized the direct sales comparison approach and submitted into evidence the recent sales of comparable properties in the vicinity of the subject property. Comparable properties rarely sell on the valuation date and therefore their sale values are time adjusted to greater or lesser values depending on whether the date of the sale occurred before or after the valuation date.

20The Appellants did not enter any comparable properties into evidence for the Board’s consideration, instead choosing to accept MPAC’s evidence on comparable properties.

Comparable Properties

21The Board has considered the four comparable properties submitted by MPAC. These properties are all located within one kilometer of the subject property and sold in either 2015 or 2016. They are reflected in the table below:

Table 1

Property	Building Area (Sq. ft.)	Lot Size (acres)	Year Built	Quality of Construction	Time Adjusted Sale Price (“TAS”)	2016 Assessed Value	Inferior, Relatively Comparable or Superior
Subject Property	5,014	0.22	1990	7.5	$1,397,000	N/A
MPAC
Sale 1	4,841	0.23	1993	7.5	$1,686,009	$1,503,000	R.C.
Sale 2	5,496	0.24	1993	7.5	$1,693,783	$1,605,000	Superior
Sale 3	5,170	0.28	1989	7.5	$1,605,638	$1,515,000	R.C.
Sale 4	4,728	0.23	1993	7.5	$1527,836	$1,509,000	R.C.

22Maria Covello, for MPAC testified that she used comparable properties three and four, in her analysis and determination of current value, as they were the most similar to the subject property. She said that she used a per sq. ft. cost analysis in determining the current value. She said that the median cost per sq. ft is $312.96 and, when applied to the square footage of the subject property, returned a value of $1,569,000, which she opined was the current value of the subject property.

23The Board agrees that those two properties are good comparators to the subject property but believes that comparable properties one and two are equally good comparators to the subject property and should be included in the analysis. They are located in close proximity to the subject property and all of the primary property characteristics, including lot and building size, age of construction and quality of construction, are far more similar than dissimilar in relation to the subject property.

24The Board utilized the cost per sq. ft. analysis that MPAC employed and was agreed to by the Appellants. Utilizing all four comparable properties returned a cost per sq. ft. of $322.53. Applying this value to the square footage of the subject property returned a value of $1,646,193.

25The Appellants did not enter any comparable properties for the Board’s consideration and advised that they accepted MPAC’s recommendation that the Board confirm the return on the roll of $1,397,000.

26The Board finds the current value of the subject property to be $1,646,193 or $1,646,000 (rounded).

Issue 6 – Equitable Reduction in Assessed Value

27Section 44(3)(b) of the Act requires 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.

28The purpose of equitable adjustment has been described as the equitable distribution of the tax burden according to the assessed value of property owned by taxpayers as follows by the Ontario Court of Appeal in Re Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) at pages 3-4:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the application of a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

29In addressing equity in assessment, the Court, at page 13, also noted that

an assessment made at the actual value of lands and buildings in compliance with the provisions of s. 35(1) would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred

30The test set out in s. 44(3)(b) of the Act, requires that the Board refer to similar lands in the vicinity. The term “vicinity” is not defined in the Act but refers to the appropriate geographical area that will yield a meaningful number of comparables. See Ontario Regional Assessment Commissioner, Region No. 3 v Graham, 1993 CanLII 8621 (ON CA) at page 6.

31The ASR analysis of a reasonable sample of similar property sales in the vicinity of the subject property is typically used to determine if properties in the vicinity are assessed below their current value. If other properties are assessed substantially below their current value, then a reduction is required to make the assessment of the subject property equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time adjusted sale price.

32Ms. Covello relied on her Equity Study showing a median ASR of 0.921 based on the sales of 30 properties located within one kilometer of the subject property. Her position is that the ASR is below MPAC’s usual acceptance of a range of 0.95 to 1.05 and believes that an equity adjustment is required.

33Ms. Covello applied the ASR of 0.921 to her determination of current value at $1,569,000 and returned an adjusted value of $1,445,000.

34Ms. Covello opined that $1,445,000 is the correct current value for the subject property.

35Mr. Baranowski recommended that the ASR of 0.921, as developed by MPAC, ought to be applied to the return on the roll value of $1,397,000, realizing a current value of $1,286,637. He said that MPAC was in agreement with and was recommending that the Board ought to confirm the return on the roll of $1,397,000. He asked the Board to similarly consider his request to accept the return on the roll value but to apply the equity adjustment to that value.

36The Board is not bound by any value either as a return on the roll or proposals from any of the parties. The Board is bound by s. 44(3)(a) of the Act in that it shall determine the current value. This is usually done by considering the evidence placed before it by the parties.

37In this instance, the only comparative sales evidence before the Board for consideration was that entered by MPAC. Mr. Baranowski chose to accept MPAC’s evidence and in fact, in his summation, advised that he had “no major disagreements with MPAC’s evidence”.

38However, the Board is free to consider the evidence put before and it can accept or reject submissions from the parties within its discretion. The sole responsibility for the Board is to adhere to the legislation based on the evidence put before it.

39Ms. Covello chose to only use two comparable properties in her analysis. The Board did not see any reason for excluding the other two comparable properties, as they too were excellent comparators to the subject property. Therefore, the Board chose to use all four comparable properties in its analysis.

40Having determined that the current value is $1,646,000 (rounded) the Board must now turn to the question of equity. The Board accepts Ms. Covello’s equity analysis and determines that an equity adjustment is required.

41The Board will apply the ASR of 0.921 to its determination of current value at $1,646,000, which returns a value of $1,515,966 or $1,516,000 (rounded).

CONCLUSION

42The Board finds that the current value of the subject property is $1,646,000 (rounded), reduced for equity to $1,516,000 (rounded).

ORDER

43The Board orders that the current value of the subject property be set at the equity adjusted value of $1,516,000 (rounded) for the 2018, 2019 and 2020 taxation years.