Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 26, 2020

FILE NO.: WR 164843

Assessed Person(s): Antonina Scarpazza

Appellant(s): Fil Scarpazza

Respondent(s): Municipal Property Assessment Corporation Region 05

Respondent(s): City of Kingston

Property Location(s): 91 Aragon Road

Municipality(ies): City of Kingston

Roll Number(s): 1011-080-270-12400-0000

Appeal Number(s): 3375258 and 3397863

Taxation Year(s): 2019 and 2020

Hearing Event No.: 729872

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

Parties	Representative
Fil Scarpazza	Self-represented
Municipal Property Assessment Corporation	Kalin Doucet
City of Kingston	No one appeared

HEARD: April 1, 2020 by telephone conference call

ADJUDICATOR(S): Jennifer Griffith, Member

DECISION

OVERVIEW

1Antonina Scarpazza is the owner of 91 Aragon Road (the “Subject Property”) in the City of Kingston (the “City) and Fil Scarpazza (the “Appellant”) is her son. The Appellant filed an appeal for the 2019 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”). 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.

2It is the Appellant’s position that the Municipal Property Assessment Corporation’s (“MPAC”) current value assessment of $523,000 is too high and that the correct current value should be $372,843. MPAC takes the position that the correct current value is $523,000

3Pursuant to s. 44(3)(b) of the Act, MPAC takes the position that an equitable reduction of the current value is not required. The Appellant asserts that an equity reduction is required and believes that the equitable value should fall within the range of $382,300 and $415,785.

4Pursuant to s. 40(11) of the Act, the City is a party to this proceeding however, no one appeared on behalf of the City.

Issues for the Hearing

5At issue in this proceeding is:

1. A determination of the current value of the Subject Property for the 2019 and 2020 taxation years; a. Direct Comparison Approach based on sales; b. Negative Impacts on Value of Subject Property.
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.

Result

6The Board finds the correct current value of the Subject Property is $489,000 for the 2019 and 2020 taxation years for the reasons set out below.

7Pursuant to s. 44(3)(b) of the Act, the Board finds that an equity reduction is not required. Therefore, the Board reduces the returned assessment from $523,000 to $489,000 for the 2019 and 2020 taxation years.

ANALYSIS

Description of Subject Property

8The Subject Property is a one-storey residential dwelling. The Property Code is 313 Single Family Detached on Water, with an effective site area of 1.32 acres, a total building area of 2,095 square feet, with a quality of construction rating of 6.5 and built in 1974.

Issue 1 - A determination of the current value of the Subject Property for the 2019 and 2020 taxation years;

Issue 1a – Direct Comparison Approach based on sales

9In determining the correct current value, the Board references s. 19(1) of the Act, which states that the assessment of land shall be based on its current value, which is defined 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”. In other words, what is the current value in an arm’s length and market-tested sale of the property on the valuation date or close to it. The valuation date for the 2017 to 2020 taxation years is January 1, 2016.

10In reviewing the following evidence presented in support of current value, the Board finds the best evidence and most similar comparable properties are four sales presented by MPAC at 2161 Gibraltar Road; 1658 Daylan Avenue; 2739 Lakefield Drive; 2687 Lakefield Drive; and one sale by the Appellant at 99 Aragon Road, with an average time-adjusted sale price of $489,000. The Board finds the time-adjusted sale price of $489,000 represents the best evidence of arm’s length transaction between a willing buyer and a willing seller pursuant to s. 19(1).

MPAC’s Proposed Comparable Properties

11Mr. Doucet, a representative for MPAC presents a Valuation Report, dated October 21, 2019 which he prepared and testifies to the information contained therein.

12In support of current value, MPAC relies on the following nine sales of suggested comparable properties, which occurred over the period 2015 and 2018. Mr. Doucet provides both the actual and time-adjusted sale prices and relies on the Direct Comparison Approach. This approach estimates the current value of the Subject Property by adjusting the sale price of other sold properties for differences in property characteristics between the Subject Property and other sold properties. The following is the analysis of the nine suggested comparable properties:

MPAC’s Sales Analysis

9 SUGGESTED COMPARABLE PROPERTIES	LOT SIZE (acres)	TOTAL BUILDING AREA PER SQUARE FOOT (“sq. ft.”)	YEAR BUILT	SALE DATE	SALE PRICE	TIME ADJUSTED SALE PRICE (“TAS”)	TAS PRICE PER sq. ft.
125 Nina’s Lane	1.68	1,449	1976	2018	$530,000	$449,369	$310.12
1215 Allen Point Drive	2.89	2,352	2002	2016	$700,000	$667,673	$283.87
2161 Gibraltar Road	2.15	1,759	1999	2017	$595.000	$530,082	$301.35
1658 Daylan Avenue	0.26	2,196	1967	2015	$403,500	$411,708	$187.48
2739 Lakefield Drive	1.04	2,875	1970	2017	$612,000	$548,008	$190.61
2687 Lakefield Drive	1.01	2,036	1993	2017	$580,000	$535,750	$263.13
10 Rudd Avenue	0.41	1,788	1930	2015	$440,000	$456,917	$255.54
1587 St. Lawrence Avenue	0.51	1,060	1975	2016	$450,000	$424,604	$400.56
2338 Horning Road	4.8	1,437	1975	2015	$455,500	$478,676	$333.10
Median	0.66	1,487	1965	2016	$472,500	$428,360	$283.87
Subject Property 91 Aragon Road	1.32	2,095	1974	nil	nil	Assessed Value $523,000 or ($249.64 per sq. ft.)

13Based on the above analysis, MPAC takes the position that the most comparable properties in terms of land, structure and location on Colonel By Lake or further north on smaller lakes (total of 5) to the Subject Property are 125 Nina’s Lane; 2161 Gibraltar Road; 1658 Daylan Avenue; 2739 Lakefield Drive; and 2687 Lakefield Drive with a median time-adjusted sale price of $263.23 per sq. ft. When the median sale price is applied to the Subject Property, it results in a current value of $551,000 rounded ($263.13 x 2,095 sq. ft. of total building area for the Subject Property). However, MPAC is not seeking a higher value and is asking to have the returned value of $523,000 confirmed.

Issue 1b – Negative Impacts on Value of the Subject Property

14Mr. Doucet testifies that the Subject Property was originally assessed as having a quality of construction rating of 7 and it was changed to 6.5 because of a prior Board decision. He submits that the impact of the change on the assessed value resulted in a reduction of $52,000, which is included in the returned assessment of $523,000 that is under appeal.

Appellant’s Proposed Comparable Properties

15In support of current value, the Appellant presents three suggested comparable properties which sold in 2016 and 2017 on the same street as the Subject Property. The Appellant relies on the actual sale prices as opposed to the time-adjusted sale prices. The following is a sales analysis of the three sales:

Appellant’s Sales Analysis

3 SUGGESTED COMPARABLE PROPERTIES	LOT SIZE (acres)	TOTAL BUILDING AREA PER SQUARE FOOT (“sq. ft.”)	YEAR BUILT	ASSESSED VALUE	SALE DATE	SALE PRICE and TIME ADJUSTED SALE PRICE (TAS)	SALE PRICE PER sq. ft.
17 Aragon Road	4.32	2,409	1964	$238,000	2017	$351,500 (TAS $308,032)	$145.91
85 Aragon Road	1.73	1,441	1968	$427,000	2018	$300,000 (TAS $251,659)	$208.18
99 Aragon Road	1.22	1,496	1964	$367,000	2017	$370,000 (TAS $335,289)	$247.32
Median	1.73	1,496	1964	$367,000	2017	$351,000 (TAS $308,032)	$208.18

** TAS is provided by MPAC

16Regarding the above sales analysis, the Appellant offers his view of what he believes the current value should be, based on each sale:

1. Although 17 Aragon Street is a farm property (Property Type 262) which sold at $145.91 per sq. ft., the Appellant argues that this is a good suggested comparable property, because the home and one acre of land are in the residential tax class. Based on this argument, the Appellant submits that the Subject Property should have a current value of $305,683 ($145.91 x 2,095 sq. ft. based on total building area for the Subject Property);
2. The Appellant submits that the Subject Property when compared to 85 Aragon Road which sold at $208.33 per sq. ft. should have a value of $436,458.33 ($208.33 x 2,095 sq. ft. based on total building area for the Subject Property). Because the sale occurred in 2018, the Appellant further applies a 7.5% inflation adjustment to $436,458.33 to arrive at a current value of $403,723 for the Subject Property; and
3. The Appellant submits that 99 Aragon Road is located beside farmland and only has one neighbour and that the impact of its location on the assessed value could be 10% premium. Based on his assumption, the Appellant is of the view that the current value of the Subject Property should be $470,700 (returned assessment of $523,000 less 10%).

Negative Impacts on Value of the Subject Property

17The Appellant submits that although MPAC had changed the quality of construction rating from 7 to a 6.5 in a previous appeal, he is of the view that the rating is still too high and should be a rating of 6.

18The Appellant submits that MPAC’s methodology is flawed because MPAC is unfairly over-assessing older homes as compared to newly built homes in the neighbourhood.

19Based on the above evidence, the Appellant is of the view that the current value should be $372,843.

Findings on Current Value

20In reviewing evidence presented in support of current value, the Board finds the best evidence is the four sales presented by MPAC at 2161 Gibraltar Road; 1658 Daylan Avenue; 2739 Lakefield Drive; 2687 Lakefield Drive; and one sale by the Appellant at 99 Aragon Road, with an average time-adjusted sale price of $233.33 per sq. ft. These five comparable properties have on average a frontage of 178 feet, site area of 1.15 acres, building area of 2,072 sq. ft., quality of construction rating of 6.3, year built 1978 and a cost per sq. ft. of $233.33 based on total building area. This is compared to the Subject Property with a frontage of 102 feet, site area 1.32 acres, building area of 2,095 sq. ft., quality rating 6.5, year built 1974 and assessed at $249.64 per sq. ft. based on total building area. The Board finds that on average, these four comparable properties are the most similar in terms of structure, site area, quality and age to the Subject Property and best evidence for the determination of current value.

21When the average rate of $233.33 is applied to the Subject Property, it results in a current value of $489,000 rounded. Based on this analysis, the Board finds the average time-adjusted sale price of $489,000 represents the best evidence of current value pursuant to s. 19(1).

22The Board did not rely on MPAC’s five other sales at:

I. 125 Nina’s Lane, because it is a Seasonal/Recreational Dwelling (Property Type 391), whereas, the Subject Property is a Property Type 313 (Single Family Detached on water); II. 1215 Allen Point Drive was excluded, because both parties agreed that this property is superior to the Subject Property and the Board agrees; and III. 10 Rudd Avenue; 1587 Lawrence Ave; and 2338 Horning Road are non-waterfront properties (Property Type 301) again different to the Subject Property which is a waterfront property as stated above.

23The Board also did not rely on the Appellant’s two other sales at:

IV. 17 Aragon Road, it is not similar to the Subject Property and is Property Code 262 (Land owned by a farmer improved with a non-farm residence with a portion being farmed) and assessed differently under s. 19(5) of the Act, whereas, the Subject Property is a Property code 313 (Single family detached on water) and assessed under s. 19(1); and V. 85 Aragon Road was not relied on because it was a private sale between two neighbours of 38 years, at a sale price significantly lower than other comparable properties on the same street as the Subject Property (shown in the Appellant’s sales analysis). The Board agrees that there are times when private sales have shown to be true reflection of current value when supported by open market sales evidence, however in this case, similar properties sold in the open market are significantly higher than this suggested comparable property.

24Regarding the Appellant’s argument that the quality of construction rating of 6.5 for the Subject Property is too high and should be a rating of 6. The Board finds that the Appellant presents no factual evidence (appraisal, cost-to cure etc.) to demonstrate that the Subject Property should have a quality of construction rating 6. Therefore, the Board puts no weight on this issue.

25Regarding the Appellant’s argument that MPAC’s methodology is flawed, the Board accepts MPAC’s methodology because it is used consistently throughout Ontario in the preparation of the assessment roll, regardless of whether a property is newer or older. This appeal process is to test whether the returned assessment of $523,000 is correct. In this case, the Board reviewed all the evidence presented in support of current value and finds that the correct current value is $489,000 which is lower than the returned assessment of $523,000.

26Based on the evidence presented in support of current value, the Board finds the correct current value is $489,000 based on the sales of similar properties in the vicinity.

Issue 2 - Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html#sec44subsec3_smooth)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be.

27MPAC presents an Equity Analysis Report in which the assessments of 30 comparable properties are compared to their respective sale prices to determine the Assessment to Sales Ratio (“ASR”). The ASR is computed by dividing the assessed values of the property sold, by its sale price.

28MPAC states that these 30 comparable properties are Property Codes 313 – Single Family Detached on Water and Property Code 391 – Seasonal / Recreational Dwelling – First Tier on water; sold in 2015 and 2016; and located within 25.0 kilometres of the Subject Property.

29The analysis of the sale of these 30 comparable properties shows a Level of Appraisal (“LOA”) of 1.002 and a Coefficient of Dispersion (“CoD”) 21.2. Based on this analysis, MPAC is of the opinion that an equity reduction is not required, because the findings fall within MPAC’s standards of 0.95 to 1.05 for the LOA and a CoD of 20.

30Based on this finding MPAC is of the view that the equitable value is $523,000.

31The Appellant presents an equity analysis based on the sale of one comparable property located at 80 Kenwoods Circle with an assessed at $693,000, sold for $1,000,000 in 2015 and with an ASR of 0.69. Using the ASR of 0.69, the Appellant calculates a range of equitable values within which the equitable value of the Subject Property should fall.

32To establish the range of equitable values, the Appellant first applies the ASR of 0.69 to the returned assessment value of ($523,000) for the Subject Property to arrive at an equitable value of $360,870 ($523,000 x 0.69). The Appellant uses this equitable value as the “minimum value” in the equitable range.

33Relying on two sales which were presented in support of current value, the Appellant calculates the equitable value for 85 Aragon Road to be $382,300 (the average of the minimum value of $360,870 and the current value of $403,723); and the equitable value for 99 Aragon Road to be $415,785 (the average of the minimum value of $360,870 and the current value of $470,700).

34Based on these two sales the Appellant is of the view that the equitable value for the Subject Property should fall within the range of $382,300 and $415,785.

Findings on an Equitable Reduction

35In reviewing the equity analyses presented above, the Board finds that MPAC presents the best evidence with a median LOA of 1.002 based on 30 sales of similar property types, which occurred in 2015 and 2016 and located in the same vicinity as the Subject Property. However, the Board finds that the LOA of 1.002 does not support an equity reduction because it falls within MPAC’s acceptable standard of a LOA of 0.95 and 1.05.

36The Board rejects the Appellant’s equitable values, because the ASR of 0.69 is based on one sale. The Board finds that an ASR based on one sale is statistically not a reliable sample size for determining equity, because there are numerous factors that can affect the sale of a property which influences the ASR. The Board finds that an ASR finding based on a larger sample size (e.g. MPAC’s 30 sales) is more reliable.

37Based on the evidence, the Board finds that an equity reduction is not required.

CONCLUSION

38The Board finds the correct current value of the Subject Property is $489,000 for the 2019 and 2020 taxation years. The Board also finds that an equity reduction is not required pursuant to s. 44(3)(b).

ORDER

39The Board orders that the assessment is reduced from $523,000 to $489,000 for the 2019 and 2020 taxation years.