Kisenko v. Municipal Property Assessment Corporation Region 19, 2020 CanLII 35837

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 20, 2020

FILE NO.: WR 164442

Assessed Person: Natalya Kisenko

Appellant: Natalya Kisenko

Respondent: Municipal Property Assessment Corporation Region 19

Respondent: City of Hamilton

Property Location: 369 Brookview Court

Municipality: City of Hamilton

Roll Number: 2518-140-230-25904-0000

Appeal Numbers: 3384782 and 3408251

Taxation Years: 2019 and 2020

Hearing Event No.: 729481

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

APPEARANCES:

Parties

Counsel*/Representative

Natalya Kisenko

Alexander Tyutyunnik

Municipal Property Assessment Corporation

Tim Oberle

City of Hamilton

No one appeared

HEARD: March 30, 2020 by telephone conference call

ADJUDICATOR(S): Dan Weagant, Member

DECISION

OVERVIEW

1Natalya Kisenko (the “Appellant”) appealed the 2019 assessment of the Subject Property because she believed that assessment was 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 2020 taxation year.

2The Municipal Property Assessment Corporation (“MPAC”) returned the 2019 assessment at $679,000. After the assessment was appealed, MPAC reviewed its position and confirmed its opinion that the assessment was correct when compared to other properties with the same or similar attributes.

3The Appellant believes the correct current value is $564,000 when the Subject Property is compared to the most similar properties in the market area.

Areas of Agreement

4The Parties agree that the best method of determining the current value of the Subject Property is the direct comparison approach to value, whereby the Subject Property is compared to other properties that are the same or similar in size, character, age, condition and location.

Issues for the Hearing

5At issue in this proceeding is:

1. The current value of the Subject Property; and,

2. Whether or not a reduction of the current value determined should be made, when reference is made to the assessments of similar properties in the vicinity, for the assessment to be equitable.

Result

6The Assessment Review Board (the “Board”) finds that the current value of the Subject Property is $640,000. The Board also finds that there is no evidence to support a reduction in this value for the purposes of equity when reference is made to the assessments of similar properties in the vicinity.

7Accordingly, the assessment of 369 Brookview Court is reduced, from $679,000 to $640,000 in the residential property class. This same result applies to the deemed 2020 appeal.

ANALYSIS

Description of Subject Property

8The Subject Property is a single-family dwelling, described as a 1 ¾ storey building in the ‘Cape Cod’ style. It sits on a 0.41-acre lot, on a cul-de-sac. The building comprises 2,297 square feet of living area. The Appellant purchased the property in July 2014 for $641,000. The dwelling was constructed in 1985.

Issue 1 – What is the current value of the Subject Property?

9Upon the appeal of the assessment, MPAC made a comparison of the Subject Property to three other properties in Hamilton that it deemed to be sufficiently comparable to determine the Subject Property’s current value.

10These three properties were sold between March 2015 and April 2016 for between $599,000 and $700,000. They comprise 1 ¾ storey single-family dwellings with living areas of between 2,000 and 3,000 square feet.

11MPAC submitted adjustments to each sale in its sample to account for their respective locational differences when compared to the Subject Property. All three sales were adjusted upward by 2% to account for the fact that the Subject Property is on a cul-de-sac whereas the comparable properties are not. In addition, MPAC made a further increase of 2% to one of the three comparable properties to account for the fact it is a corner lot.

12When comparing the Subject Property to these three properties, MPAC adjusted their respective sale prices to account for the change in market values due to the passage of time. These adjustments were made using time adjustment factors (“TAFs”). MPAC does this so a sale price for a similar property can be compared to other sale prices and the Subject Property as though they all sold on the valuation day. For the 2019 and 2020 taxation years, the valuation day is January 1, 2016.

13The TAFs used were derived from a Sales Ratio Trend Analysis undertaken by the assessor that analysed the sales of 176 vacant and improved residential properties in the Subject Property’s neighbourhood occurring in the 23 months from January 2015 and December 2016. The Sales Trend Analysis results in a TAF for each month in this 23-month span, based on the changing market.

14As a result of its analysis, MPAC submitted that sale prices that occurred before January 1, 2016 would need to be increased to reflect a rising market. Conversely, MPAC submitted that sale prices after January 1, 2016 would have to be reduced to reflect the impacts of the rising market.

15MPAC applied its results of the time adjusted and locational adjusted sale values and determined a value per square foot of each of the three comparable properties in its sample, as follows:

1. 17 Summerdale Place - $ 349.61

2. 204 Fallingbrook Drive - $ 313.54

3. 180 Lloyminn Avenue - $ 290.18

16By applying these values per square foot to the square footage of the Subject Property of 2,297, MPAC settled on a value range between $666,543 and $803,054, with a median value of $720,201. MPAC’s view was that the median value of $720,000 rounded indicated that the returned value of $679,000 was reasonable and fair and as a result, should be confirmed.

17The Appellant compared the Subject Property with four properties that sold in the same geographic area of the Subject Property. Two of these properties were the same as two properties used for comparison by MPAC (17 Summervale Place and 204 Fallingbrook Drive).

18To account for the differences between the Subject Property and these four comparable properties, the Appellant first adjusted the sale prices to account for the effects on prices over time. Like MPAC, the Appellant developed TAFs. The source of these TAFs was sales data for residential dwellings that took place in the Ancaster area of the Realtors Association of Hamilton-Burlington (“RAHB”). These sales took place in 2015 and 2016.

19The Appellant identified 26 sales that took place in 2015 for an average sale price, according to RAHB of $518,469. For the same Ancaster area, there were also 26 sales in 2016 with an average sale price of $542,673. This represents a 4.67% change year over year which, according to the Appellant, indicates a monthly change in value for residential properties in Ancaster of 0.39% per month.

20By applying this monthly percentage change to the sales in the Appellant’s sample of four sales, the adjusted sale values range from $520,000 to $668,215, with a median of $564,122. The Appellant submitted that this is the best evidence of the current value of the Subject Property when the most comparable properties in evidence are considered.

Findings on Current Value

Location Adjustments

21The Parties acknowledged that the Subject Property is dissimilar from the comparable properties in terms of location and size. MPAC applied slight increases to its comparable properties to account for these differences, testifying that the adjustment percentages were derived from macro calculations from a volume of sales.

22The Appellant submitted that since the source of these adjustments was not in evidence, the adjustments cannot be relied on to determine current value. In addition, the Appellant submitted that, in this case, being on a cul-de-sac should be considered as a negative adjustment to value because of the short rear yard resulting from the setback required from the road allowance.

23The Board finds that both Parties made compelling and reasonable submissions on these locational and physical differences as they relate to value. What their collective submissions lack however, is an evidence-based quantitative adjustment. The Board agrees with the Appellant that the source of MPAC’s adjustments are not available to the Board. Likewise, the Appellant’s assertion that the Subject Property’s value should be adjusted downward to reflect its presence on a cul-de-sac is not supported with sales evidence. The Board rejects these submitted adjustments in determining current value in this case.

Time Adjustments

24When the direct comparison approach to value is used, the sales of comparable properties are used to determine the value of the Subject Property. The Parties agree on this approach. What the Parties do not agree on is the method and source of determining time adjustment factors. Time adjustment is a common method used by assessors and appraisers to equalize sales data so that individual property sales can be compared to one another as though they sold on the valuation day of January 1, 2016.

25MPAC cites its Sales Ratio Trend Analysis, based on 176 sales that occurred in 2015 and 2016. The Appellant cites sales information from the RAHB. That source presents average sale prices for 2015 and 2016 in the Ancaster sub-market, where the Subject Property lies. The Ancaster sub-market is one of 14 areas that RAHB collects data on.

26The Board does not accept MPAC’s time adjustment approach because the area of sales is ill-defined in MPAC’s analysis, and the sales cited include vacant properties that would have no relevance to the issues to be determined in this proceeding.

27The Board does not accept the Appellant’s proposed time adjustment approach because the average increase presented is based on a sliding or rolling 12-month average between January 2015 and January 2016. There is no way to determine the time from which the Appellant derives the resulting monthly price change in this time frame. There is also no analysis of the source of the sales data in the RAHB sample. The 52 sales that occurred in 2015 and 2016 are not distinguished between housing types, so no comparability to the Subject Property is in evidence.

28The elimination of these time adjustment factors leaves the Board with the unadjusted sale values of comparable properties to arrive at Current Value. The Board has accepted five comparable properties in total advanced by the Parties with a range of sale prices from $599,000 and $700,000.

29The Subject Property sold for $641,000 in 2014. The purchase and sale agreement indicated that $1,000 of this price was for chattels included in the sale. The Appellant submitted the actual price paid for the Subject Property was $640,000. MPAC did not dispute this adjustment.

30The Board finds that the actual sale prices of the five comparable properties in evidence provide a reasonable range of value of 1 ¾ storey properties in Ancaster. In the absence of reliable time adjustment factors in this case, the Board also finds that the best evidence of where the Subject Property lands within the range established by the comparable sales in the actual sale price of the Subject Property.

31The Board finds that the current value of the Subject Property is $640,000.

Issue 2 – When reference is made to the assessments of similar properties in the vicinity, is a reduction in the current value determined necessary for it to represent equitable assessment?

32The Appellant submitted that when the assessments of the four sales in her sample are compared to their respective time-adjusted sale values, the result is, on average, an Assessment to Sale Ratio (“ASR”) of 1.08. ASRs are a common method of determining whether a certain segment of the tax base is being assessed at or near its respective, collective current value, as determined by sales. She submits that this means Cape Cod style 1 ¾ storey dwellings are over-assessed by approximately 8%.

33MPAC submitted an Equity Analysis that compared the assessments of 30 residential properties that sold within 12 months of the valuation day. These assessments were compared to the time-adjusted sale value of each property to arrive at their respective ASRs.

34MPAC’s equity analysis indicated that the ASR of the 30 properties in its sample showed a median ASR of 0.982, meaning that similar properties in the vicinity are assessed at 98.2 % of their respective current values, as indicated by their sale values. MPAC’s analysis indicated further that when the median ASR determined by a sample of 30 properties or more is between 0.95 and 1.05 there is no necessity to adjust the current value. It bases this assertion on the position of the International Association of Assessing Officers, that a median ASR within a range of 0.9 and 1.1 indicates that properties of a similar type, in the vicinity of the Subject Property, are essentially assessed at their current value.

35MPAC submits that this median ASR means there is no evidence to support a reduction in the current value determined for that value to reflect equitable assessment.

Findings on Equitable Adjustment

36The Appellant submits that Cape Cod style houses in the vicinity are assessed at a value 8% higher than their respective sale prices. This suggests that for the assessment at the current value determined for the Subject Property to be considered equitable, it ought to be increased by 8% above the current value determined. The Act doesn’t permit this. The Board, when considering if a current value is equitable can only reduce the current value determined to do so.

37MPAC’s equity analysis indicated that when the sale values of 30 similar properties in the vicinity are compared with their respective assessments for the 2019 and 2020 taxation years, the result shows that similar properties in the vicinity are assessed at a level that is very close to their respective sale values.

38For the Board to make a downward adjustment to the current value to achieve equity there must be compelling evidence to do so. The Appellant submitted evidence that would have required the Board to increase the assessment for equity, based on a very small sample of similar properties. MPAC submitted a sample of 30 similar properties in the vicinity indicating that assessments were very close to the current values demonstrated by sales. The Board finds that neither of these approaches constitute compelling evidence that the current value determined does not represent equitable assessment.

CONCLUSION

39The Board finds that the current value of the Subject Property is $640,000. The Board also finds that there is no evidence to support a reduction in this value for the purposes of equitable assessment when reference is made to the assessments of similar properties in the vicinity.

ORDER

40The Board orders that the assessment of 369 Brookview Court is reduced from $679,000 to $640,000 in the residential property class. This same result applies to the deemed 2020 appeal.