Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 28, 2020

FILE NO.: WR 164100

Assessed Person(s): Mohan Roopchand

Appellant(s): Mohan Roopchand

Respondent(s): Municipal Property Assessment Corporation Region 14

Respondent(s): City of Markham

Property Location(s): 8272 McCowan Road

Municipality(ies): City of Markham

Roll Number(s): 1936-030-222-63903-0000

Appeal Number(s): 3376357 and 3403712

Taxation Year(s): 2019 and 2020

Hearing Event No.: 729310

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

APPEARANCES:

Parties	Representative
Mohan Roopchand	Robert Baranowski
Municipal Property Assessment Corporation	Tong Li
City of Markham	No one appeared

HEARD: February 24, 2020 in person

ADJUDICATOR(S): Subuola Awoleri, Member

DECISION

OVERVIEW

1Mohan Roopchand, (the “Appellant”) is the owner of 8272 McCowan Road (the “Subject Property”). The Appellant appeals the 2019 assessment of the Subject Property to the Assessment Review Board (the “Board”) under s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) on the grounds that the assessment is too high. The Appellant argues that the current value of the Subject Property should be $200,000 or in the alternative, $315,031.17. Pursuant to s. 40(26) of the Act, the Appellant is deemed to have brought the same appeal in respect of the 2020 taxation year.

2The Subject Property was assessed by the Municipal Property Assessment Corporation (“MPAC”) at $3,176,000 for the 2019 taxation year and at $3,173,000 for the 2020 taxation year. MPAC requests that the Board reduce the current value to $2,441,000.

Areas of Agreement

3The Appellant agrees with the time adjustment and equity analysis provided in MPAC’s evidence. The parties agree that the Subject Property is located within a regulated area by the Toronto and Region Conservation Area (“TRCA”) and within a floodplain.

Issues for the Hearing

4The issues to be determined are:

1. What is the correct current value of the Subject Property for the 2019 taxation year?
2. 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 correct current value of the Subject Property to be $1,261,000 (rounded).

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 $3,176,000 to $1,261,000 for the 2019 taxation year and from $3,173,000 to $1,261,000 for the 2020 taxation year.

ANALYSIS

Description of the Subject Property

8The Subject Property is a one-storey residential dwelling, located in the City of Markham (the “City”). The structure was built in 1948 and has an effective year built of 1955. It has a low construction quality of 5.0. The Subject Property has a lot with 295.93 feet of effective frontage with 491.64 feet of effective depth for an effective site area of 3.34 acres. Its total building area is 1,013 square feet (“sq. ft.”), with a basement area of 1,013 sq. ft. of which 384 sq. ft. is finished. It has a detached garage, a shed and a barn.

9The Subject Property benefits from a negative 6% adjustment for heavy traffic and a positive 4% adjustment for abutting green space. There are other adjustments made by MPAC in the assessment of the Subject Property, which shall be addressed later in this decision.

Issue 1 - What is the correct current value of the Subject Property for the 2019 taxation year?

10In accordance with s. 44(3)(a) of 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.

Proposed Comparable Property Sales

11The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the Subject Property on the valuation date or close to it. If, as in this case, no such transaction took place, the next best measure of current value is 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.

12The Board reviewed the parties’ proposed comparable property sales and determines that MPAC’s comparable property Sale 1 is the best comparable property to the Subject Property.

13Tong Li, MPAC’s assessor and witness, testified that the Subject Property is a unique property and in order to find comparable property sales, MPAC had to expand to other neighbourhoods. MPAC’s comparable property Sale 1 is 2.5536 kilometers from the Subject Property. Ms. Li further testified that it is also within the conservation area as is the Subject Property. It is also similar in terms of structure, building size and lot size. Using the Subject Property’s year built of 1955, it is 7 years newer than the Subject Property. This sale benefits from the following negative adjustments: 7% for extreme heavy traffic, 10% for non-desirable neighbourhood, 20% for commercial impact, and 9% for proximity to railway.

14The Board finds that MPAC’s proposed comparable property Sale 2 is not comparable to the Subject Property and it is superior to it. Although the lot size is smaller than the Subject Property, the building is 24 years newer and 932 sq. ft. larger than the Subject Property. The basement area is 2,019 sq. ft. of which 1,817 is finished. It also has a higher quality of construction of 6.5.

15The details of MPAC’s proposed comparable property sales are provided in Table 1.

Table 1

Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time Adjusted Sale ($)	Building Size (sq. ft.)	Lot Size (Acres)	Year Built/Effective Year Built	Quality of Construction
Subject Property 8272 McCowan Road	3,176,000	N/A	N/A	1,013	3.34	1948/1955	5.0
Sale 1 4217 Highway 7	2,100,000	November 2015 (2,065,000)	2,117,145	1,191	3.35	1962/1962	6.0
Sale 2 57 River Bend Road	1,852,000	November 2016 (3,100,000)	2,644,128	1,945	1.13	1963/1979	6.5

16The Board determines that the Appellant’s 15 proposed comparable property sales are not comparable to the Subject Property. The lot sizes range from 19.54 acres to 109.27 acres, with sale dates ranging from 2001 to 2016.

Locational and On-Site Features

17The main dispute between the parties is the locational and on-site features of the Subject Property and their corresponding adjustments that may have an impact on the current value of the Subject Property.

18MPAC applied the following adjustments to the returned assessment of the Subject Property:

i) negative 20% for floodplain; ii) negative 20% for development restrictions; iii) positive 65% for market shift (Ms. Li testified that the assessment of Subject Property did not reflect the neighbourhood market); iv) negative 6% for heavy traffic; v) deduction of $2,664.00 for shed value; and, vi) negative 4% for green space (the positive 4% adjustment was removed by MPAC, as Ms. Li testified that the Subject Property does not enjoy this feature).

Ms. Li testified that the adjustments for floodplain and market shift were already accounted for in the returned assessment of the Subject Property.

19MPAC was unable to provide the Board with corroborating documentary evidence to support the source of some of the adjustments it made to the assessment of the Subject Property. Therefore, the Board was unable to use these adjustments in the determination of the current value of the Subject Property.

20During cross-examination, apart from Ms. Li’s testimony, she was unable to provide the Board with corroborating documentary evidence to support MPAC’s positive 65% adjustment for market shift, a negative 20% for development restriction and the deduction MPAC made for the shed value. Ms. Li admitted that some of the adjustments were part of MPAC’s model and the others were contained in its database.

21At the hearing, the Appellant presented as evidence, MPAC’s document titled “Market Valuation Report: Residential Properties, Market Area: Urban South- Markham” (“MVR”), which MPAC admitted forms part of the disclosure it provides to taxpayers and is the source of MPAC’s adjustments. However, upon reviewing the document, Ms. Li was unable to direct the Board to the adjustments for market shift and development restriction.

22The Appellant presented maps, corroborated by an e-mail from Michelle Bates, a Planner and employee of TRCA, which shows that the Subject Property is within a floodplain. MPAC did not object to this evidence. This justifies MPAC’s 20% negative adjustment for floodplain. The adjustments for heavy traffic and green space were provided in MPAC’s MVR.

23The Appellant argues that the Subject Property should also benefit from a further 60% negative adjustment for conservation authority land and another 60% for its designation as open space as provided in MPAC’s MVR.

24MPAC does not dispute that the Subject Property is in an area regulated by the TRCA and that it is designated as open space. However, MPAC disagrees with the Appellant’s corresponding proposed adjustments. Ms. Li testified that the Subject Property is assessed as a residential property and not conservation land, therefore the negative 60% adjustment should not be applied. She further added that it is only when a property is owned by the conservation authority that the 60% negative adjustment is applied to it. Furthermore, Ms. Li submits that the additional 60% negative adjustment for open space was not applied, since the adjustment for open space is only applied based on use of the property. She concluded that the Subject Property is not used as an open space such as a park, therefore MPAC did not apply the 60% negative adjustment.

25The Board finds that the negative 60% adjustment for conservation authority land should not be applied to the current value of the Subject Property. Ms. Li testified that MPAC’s comparable market sales are all in areas regulated by the conservation authority. Mr. Baranowski did not make any objection to this. The Board finds that this adjustment for areas regulated by the conservation authority is reflected in the sales of these properties.

26The Board also finds that the negative 60% adjustment for land designated as open space should not be applied to the current value of the Subject Property. The Appellant presented the Board with a letter from David Johnston, a Zoning Examiner with the City, which provides that the Subject Property is zoned O1 (open space), under by-law 304-87, which restricts the use of the Subject Property. Attached to this letter is a copy of the amended by-law. Section 12.1 – Open Space One Zone provides:

No person shall hereafter change the use of any land, BUILDING or STRUCTURE or ERECT and use any BUILDING OR STRUCTURE in the Open Space One Zone (O1) shown on Schedule “A”, except in accordance with the following provision…

27The Appellant submits that apart from the fact that the whole Subject Property is zoned as open space, using MPAC’s argument that assessment of the Subject Property is based on its use, the Subject Property is not used, and the by-law has also restricted any further use, except as permitted in the by-law. Therefore, the negative 60% adjustment for open space should be applied.

28The Appellant further argues that compared to MPAC’s Sale 1, which has three zonings: RR1- Rural Residential (does not prohibit building on the land, however, owner must consult with City ), A1 (commercial activities allowed) and O1 (open space), the Subject Property has only one designation as open space, which completely restricts its permitted uses.

29During the hearing, Mr. Baranowski obtained from a City staff the apportionments for the three different zonings for Sale 1. These apportionments were written on a piece of paper. MPAC argues that the Board should not admit it into evidence since Mr. Baranowski has not presented the City staff as a witness to be cross-examined by MPAC. The Board agrees with MPAC. The evidence was not disclosed prior to the hearing. In order to achieve procedural fairness at this hearing, parties should have an opportunity to present their evidence and submissions and equally respond to the other party’s evidence and submissions.

30The Board determines that the 60% negative adjustment for land designated as open space should not be applied to the current value of the Subject Property. The fact that there is no one living in the building of the Subject Property is irrelevant to the determination of its current value. The Appellant did not present an issue regarding the classification of the Subject Property. The building is still on the land and the amended by-law does not alter its present use as a residential dwelling. The Appellant still has access to the building. The Appellant will require a permit from the City to change its use, but this does not change the fact that it is valued as a residential dwelling, as of January 1, 2016. No evidence to the contrary was presented by the Appellant.

Findings on Current Value

31The Board used MPAC’s comparable property Sale 1 in determining the current value of the Subject Property. The Board determines that the current value of the Subject Property is $1,261,000 (rounded).

32The Board finds that MPAC’s approach in arriving at the current value of the Subject Property does not meet the definition of current value and it is unacceptable by the Board.

33MPAC made various adjustments to the assessed value of the Subject Property at $3,176,000 as identified at paragraph 18 of this decision. MPAC provided the Board with a manual calculation of an opinion of value at $2,437,122. MPAC submits that a computer-generated calculation provides a value of $2,441,000. A copy of this computer calculation was not presented in evidence. MPAC did not use its comparable property sales in providing the Board with its proposed current value of the Subject Property.

34The Board also finds that the Appellant’s first approach in arriving at the current value of $200,000 does not satisfy the definition of current value and it is unacceptable by the Board. Mr. Baranowski testified that on April 25, 2014, the City paid the Appellant the amount of $50,000 for the purchase of approximately one acre of part of the Subject Property for the purpose of an easement. Mr. Baranowski applied this amount to the total lot size of the Subject Property at 3.34 acres and provided the Board with a value of $167,000. In addition, he arbitrarily added $33,000, which he testified is an estimate of the value of the building to provide a current value of $200,000. He submits that this should be the current value of the Subject Property.

35The sale to the City does not qualify as a market tested sale, since it did not have market exposure. As it was decided in Tong v. Municipal Property Assessment Corp., Region 3, [2019] O.A.R.B.D. No. 304 at paragraph 31, the Board citing the case of Nguyen v. Municipal Property Assessment Corp, Region No. 3 [2003] O.A.R.B.D. No. 319, where it was determined that:

When judging the weight to be given to the registered sale price for a property, the Board must consider more than just the facts that the sale was between willing parties and exposed to the open market. The definition in section 1 of the Act requires that the price paid be "the amount of money the fee simple, if unencumbered, would realize if sold ..." [emphasis added]

36In the Appellant’s second approach in arriving at the current value of the Subject Property, the Appellant submitted the time adjusted sale price of MPAC’s comparable Sale 1 of $2,117,145 and with - the following adjustments: 7% negative adjustment for heavy traffic, 60% negative adjustment for conservation authority land, and 60% negative adjustment for land designated as open space providing for a value of $315,031.17.

37Having determined that there should be no adjustment for conservation authority land and land designated as open space, the Board will use the time adjusted sale price per sq. ft. of MPAC’s comparable property Sale 1 at $1,777.61 and apply it to the total building area of the Subject Property of 1,013 sq. ft. This provides a current value of $1,800,718.93.

38In accordance with the evidence and submissions furnished by the Appellant and MPAC, the Subject Property will not command the same price in an open market as MPAC’s comparable property Sale 1, due to its locational and on-site features. Therefore, the current value of $1,800,718.93 as determined by the Board requires further downward adjustment to account for these features.

39The Board applies the following adjustments to the current value: a negative 6% for heavy traffic, a negative 20% for flood plain (which is not present in MPAC’s comparable property Sale 1) and a negative 4% for green space, which Ms. Li testified that the Subject Property does not enjoy. This provides a correct current value of $1,261,000 (rounded).

Issue 2 - Whether there should be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be.

40Section 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”.

Findings on Equitable Adjustment

41The Appellant does not dispute MPAC’s evidence that similar properties in the vicinity have been assessed at or near their current value, therefore an equity adjustment is not necessary.

CONCLUSION

42The Board determines that the current value of the Subject Property is $1,261,000 (rounded) with no adjustment for equity.

ORDER

43The Board orders that the assessment of the Subject Property is reduced from $3,176,000 to $1,261,000 for the 2019 taxation year and from $3,173,000 to $1,261,000 for the 2020 taxation year.