Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 08, 2020

FILE NO.: WR 164342

Assessed Person(s): Ashteck Capital Developments

Appellant(s): Ashteck Capital Developments Inc.

Respondent(s): Municipal Property Assessment Corporation Region 18

Respondent(s): City of Thorold

Property Location(s): 1837 Merrittville Hwy

Municipality(ies): City of Thorold

Roll Number(s): 2731-000-027-10400-0000

Appeal Number(s): 3322855, 3394265, 394266 and 3407906

Taxation Year(s): 2017, 2018, 2019 and 2020

Hearing Event No. 729599 and 731474

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

Parties	Representative
Ashteck Capital Developments Inc.	Arun Anand
Municipal Property Assessment Corporation	Kyle Duncan, Kyle Petterson
City of Thorold	No one appeared

HEARD: March 19 and May 6, 2020 by telephone conference call

ADJUDICATOR(S): Subuola Awoleri, Member

DECISION

OVERVIEW

1Ashteck Capital Developments Inc. (the “Appellant”), appeals the 2017 assessment of 1837 Merrittville Hwy (the “Subject Property”) to the Assessment Review Board (the “Board”) on the grounds that the assessment is too high. Pursuant to s. 40(26) of the Assessment Act, R.S. O. 1990, c. A.31 (the “Act”) the Appellant is deemed to have brought the same appeal in respect of the 2018, 2019 and 2020 taxation years. The Appellant submits that the Subject Property’s current value assessment (“CVA”) should be reduced to $300,000.

2The Subject Property was assessed by the Municipal Property Assessment Corporation (“MPAC”) at $389,000 for the 2017 to 2020 taxation years. MPAC submits that its opinion of value based on a market sale is $421,582.34. MPAC did not serve a notice of increase in assessment in accordance to Rule 40(b) of the Board’s Rules of Practice and Procedure (the “Rules”), consequently, it requests that the Board confirm the assessment as returned at $389,000 for the 2017 to 2020 taxation years.

3On May 6, 2020, the Board reconvened the hearing to clarify the evidence that was presented by MPAC in its valuation report on March 19, 2020. MPAC and the Appellant were represented at the May 6, 2020 hearing.

Issues for the Hearing

4The issues to be determined are:

1. What is the correct current value of the Subject Property for the 2017, 2018, 2019 and 2020 taxation years?

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 current value of the Subject Property for the 2017, 2018, 2019 and 2020 taxation years to be $422,000 (rounded).

6MPAC did not serve a notice of increase in the assessment of the Subject Property, therefore the Board confirms the assessment as returned at $389,000 for the 2017, 2018, 2019 and 2020 taxation years.

7The 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.

ANALYSIS

Description of the Subject Property

8The Subject Property is a vacant commercial land located in the City of Thorold. It has an effective and actual site area of 3.48 acres. The Subject Property has a structure (garage) on it. MPAC advised the Board that the structure is not relevant to the overall use of the property, as a result, it assessed the Subject Property as a vacant commercial land.

Issue 1 - What is the correct current value of the Subject Property for the 2017 to 2020 taxation years?

9In 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 2017 to 2020 taxation years, 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.

10The 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.

11The Subject Property sold in May 2014, for $375,000, which is 20 months from the valuation date of January 1, 2016. MPAC advised the Board that it did not present this sale in establishing the current value of the Subject Property, since it is outside the shoulder years of the valuation date of January 1, 2016, which is 12 months before and after the valuation date.

12The Board did not use this sale in the determination of the current value of the Subject Property. The further a sale is from the valuation date, the less likely it reflects the market on the valuation date. It is also the practice of the Board not to rely on sales outside the shoulder years, if there are market tested sales within the shoulder years.

13The sale of the Subject Property did not transact within the shoulder years. 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.

Proposed Comparable Properties

14MPAC presented only one comparable property sale, which Kyle Petterson, MPAC’s witness, testified as being similar to the Subject Property in terms of its lot size and location. He added that this comparable property sale is located opposite the Subject Property.

15The Appellant did not present the Board with any comparable property sales. Arun Anand, who is acting as an advocate and witness for the Appellant, argues that MPAC’s comparable property sale is not comparable to the Subject Property based on economies of scale and location. He disagrees with MPAC that MPAC’s comparable property sale is located opposite the Subject Property. However, he admits that MPAC’s comparable property sale is located within the same homogenous neighbourhood as the Subject Property.

16The Board finds that MPAC’s comparable property sale is the best evidence to establish the current value of the Subject Property. This sale is only 0.1996 kilometers from the Subject Property. Its location within the same homogenous neighbourhood as the Subject Property will make it attract the same market force as the Subject Property. Its lot size of 2.48 acres is also similar to the Subject Property’s lot size of 3.48 acres. It sold December 15, 2015, 17 days to the valuation date of January 1, 2016, as a commercial vacant land for $300,000. The time adjusted sale (“TAS”) price is $300,438.

Expropriation of Part of the Subject Property

17Mr. Anand testified that in 2011, the Regional Municipality of Niagara (the “Municipality”) expropriated part of the Subject Property in order to widen the highway. The Municipality paid the Appellant $60,000. Mr. Anand argues that MPAC did not consider the expropriation in the assessment of the Subject Property. He submits that MPAC had assessed the Subject Property at its returned value of $389,000 before it was aware of the expropriation.

18MPAC disagrees with the Appellant and submits that the CVA is reflective of the state and condition of the Subject Property after expropriation. MPAC submits that there was a hearing before the Board in 2013 and the issue of the expropriation should have been addressed.

19The Board finds that the issue of the expropriation of part of the Subject Property is irrelevant in the determination of the current value of the Subject Property for the taxation years under appeal. The Appellant did not present any evidence to show that the CVA of the Subject Property includes the expropriated land by the Municipality. Furthermore, Mr. Anand admits that the expropriated land is not part of the 3.48 acres of the Subject Property. This is the size of the lot after the expropriation. MPAC’s site inspection of the Subject Property on January 20, 2020, further confirmed that the remaining land after expropriation is 3.48 acres. This is the portion of the Subject Property MPAC assessed and further presented similar market evidence to show what the Subject Property would sell for on the valuation date of January 1, 2016.

20The Appellant further submits that there are issues with the septic tank on the Subject Property. Mr. Anand testified that the septic tank is close to the frontage of the Subject Property and a new septic system would cost $120,000. He added that this was the reason for the initial offer to the Municipality as the cost for the purchase of the expropriated land. The Appellant argues that MPAC should have deducted the amount of $120,000 from the returned assessment of the Subject Property. MPAC provided as part of its disclosure the offer to settle and full and final release between the Appellant and the Municipality. Paragraph 2 of this agreement provides:

“The Owner hereby offers to accept as full compensation, subject to Section 5 and 6, in respect of the Expropriation and the Owner’s interests in the Expropriated Lands: (a) the sum of SIXTY THOUSAND ($60,000.00) DOLLARS (the “Compensation”) payable to the Owner by the Region, which sum is comprised of compensation for land for the reconstruction of Regional Road 50, easement for the relocation of Hydro One’s utility, contribution to the relocation of the septic system and injurious affection”.

The Appellant did not present the Board with any documentary evidence regarding the cost to replace the septic tank. Furthermore, the contract with the Municipality further indicates that the payment by the Municipality included more than just the compensation for the expropriated land, it also included the relocation of the septic tank.

21The Appellant further submits that the current value of the Subject Property should be $300,000 based on his discussions with different sales agents. No evidence was presented to the Board as to how this value was determined.

Findings on Issue 1 - Current Value

22The Board used MPAC’s comparable property sale to determine the current value of the Subject Property. The TAS price of the comparable sale is $300,438. The rate per acre is $121,144.35. Applying this rate per acre to the total site area of the Subject Property at 3.48 acres, provides a value of $421,582.34. The current value of the Subject Property is $422,000 (rounded).

23MPAC did not serve a notice of increase in assessment as mandated by the Rules, therefore the Board confirms the value as returned at $389,000.

Issue 2 - Is the current value as determined by the Board equitable in reference to the assessments of similar lands in the vicinity?

24Section 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”.

25The burden of proof rests with the party that alleges that it would be inequitable to assess the Subject Property at its current value, and in this appeal that party is the Appellant. The Appellant must establish, on a balance of probabilities, that an equitable reduction is required. The Appellant did not present this as an issue.

Findings on Issue 2 - Equity

26The Appellant did not present any evidence to justify an equitable reduction. MPAC advised the Board that the Appellant did not present this as an issue, therefore MPAC did not present any evidence or submissions in this regard. The Board finds that there is no evidence to prove that an equitable reduction is required.

CONCLUSION

27The Board determines that the current value of the Subject Property is $422,000 (rounded). MPAC did not serve a notice of increase in assessment, therefore the Board confirms the assessment as returned at $389,000 for the 2017 to 2020 taxation years.

ORDER

28The Board orders that the assessment as returned at $389,000 is confirmed for the 2017, 2018, 2019 and 2020 taxation years.