Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 28, 2020

FILE NO.: WR 165743

Assessed Person(s): 1076556 Ontario Inc., Chai-Po Man, Chiu Hung Yeung

Appellant(s): Chiu Hung Yeung

Respondent(s): Municipal Property Assessment Corporation Region 09

Respondent(s): City of Toronto

Property Location(s): 2685 Yonge Street

Municipality(ies): City of Toronto

Roll Number(s): 1904-104-330-00100-0000

Appeal Number(s): 3267663, 3299659, 3354722 and 3401844

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

Hearing Event No.: 730021

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

APPEARANCES:

Parties	Representative
1076556 Ontario Inc.	Daniel Attard
Municipal Property Assessment Corporation	Sarah Moll
City of Toronto	No one appeared

HEARD: August 10, 2020 by telephone conference call

ADJUDICATOR(S): Joanne Laws, Member

DECISION

OVERVIEW

11076556 Ontario Inc. (the “Appellant”) is the owner of the Subject Property, located at 2685 Yonge Street, Toronto. It was assessed by the Municipal Property Assessment Corporation (“MPAC”) at $8,760,000 in the Commercial Property Class for the 2017, 2018, 2019 and 2020 taxation years.

2MPAC takes the position that the correct current value is $10,676,000 but it is not seeking an assessment which is higher than the amount returned.

3It is the Appellant’s position that the correct current value should be between $4,250,000 or $5,840,000.

4The Appellant submitted an Equity Study however it was withdrawn at the hearing. Accordingly, equity, pursuant to s. 44(3)(b) of the the Assessment Act (“Act”), is not an issue.

5Pursuant to s. 40(11) of the Act, the City of Toronto is a party to this proceeding. However, no one appeared on its behalf.

Preliminary Issue

6MPAC’s advocate, Sarah Moll, sought to have Chin-wei Li, an MPAC Property Analyst, qualified as an expert witness to give opinion evidence on the issue of comparable sale properties. Both MPAC and the Appellant used the Direct Sales Comparison approach to value in their analyses of the Subject Property’s current value.

7Mr. Li testified he has worked as a Property Valuation Analyst for MPAC since 2012, dealing with Requests for Reconsiderations and property assessment appeals, that he is an accredited member of the Institute of Municipal Assessors and that he has appeared before the Assessment Review Board (“Board”) as an expert witness. Ms. Moll argued that the Board requires Mr. Li’s opinion evidence in order to have a proper understanding of MPAC’s position regarding comparable properties.

8The Appellant’s advocate Daniel Attard objected to Mr. Li being qualified as an expert witness. Mr. Attard took the position that expert opinion is not required to assist the Board in determining which properties are comparable to the Subject Property. He further argued that Mr. Li failed to identify a specific area of expertise that he possessed.

9The role of an expert is to assist the Board in matters that require special knowledge beyond what the Board Member can grasp from the evidence submitted. I agree that determining comparability among properties is relevant for these appeals. However, I was not satisfied that expert opinion evidence on this issue is necessary in order to determine the facts. Further, based on Mr. Li’s Curriculum Vitae and his oral testimony, I was not satisfied that Mr. Li possesses special knowledge regarding comparability beyond that of a trier of fact. I was not satisfied that Mr. Li possessed any particular expertise on the issue of comparability or that I would require expert opinion to draw conclusions as to which properties are comparable to the Subject Property. Therefore, I accepted Mr. Li as a witness but not as an expert witness.

Issues for the Hearing

10At issue in this proceeding is:

1. A determination of the current value;
2. Whether an equity reduction in the current value should be made?

Result

11At the completion of the hearing, I reserved my decision. For the reasons that follow, I find that:

a. The total current value for the 2017, 2018, 2019 and 2020 taxation years is $8,807,800 in the Commercial Property Class. b. However, MPAC did not provide notice that it was seeking a higher value than the assessment as required pursuant to the Board’s Rule 38(7). Therefore, I confirm the assessment of $8,760,000. c. No adjustment for equity is required.

ANALYSIS

Description of Subject Property

12The Subject Property is a corner lot located on Yonge Street between Eglinton and Lawrence Avenues. It has a single storey building measuring 2,636 square feet (“sq. ft.”) occupied by two restaurants. The lot has 68 feet of frontage and 99.5 feet of depth for a total area of 6,766 sq. ft. It is zoned for commercial use.

13A sale for a 50% partial interest in the amount of $1,501,500 occurred in November 2016. Neither Party is relying on the sale to determine current value. However, the Appellant argues it should provide some indication that MPAC’s assessment of $8,760,000 is too high.

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

14Pursuant to the provisions of the Act, the assessment of land shall be based on its current value. The Act also provides that for the taxation years under appeal, the valuation day is January 1, 2016.

15Section 1 of the Act defines current value as “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.”

16MPAC’s assessed value of $8,760,000 was determined using the cost approach to value. This method of valuing property considers the value of the land plus the cost of replacing the existing improvements, less negative influences such as depreciation. MPAC’s initial assessment was $5,840,000 comprising of a building value of $527,581 and a lot value of $5,312,431. MPAC then applied a 50% market increase adjustment to the total amount, based on locational sales. MPAC submits that this market adjustment was applied to all Yonge Street properties with frontages exceeding 30 feet.

17MPAC’s witness, Chin-wei Li, presented 6 sale properties, summarized in Table 1, to support his conclusion that the current value is $10,672,000 as of the January 1, 2016 valuation day. The sale properties are located within one kilometre from the Subject Property and are less than 10,000 sq. ft. All are zoned Commercial Residential. However, MPAC is not seeking a higher assessment but a confirmation of the assessment as returned of $8,760,000. The six sales are summarized in Table 1.

Table 1: MPAC’s Proposed Sales for Determining the Current Value

	Subject Property	2637 Yonge Street	2444 Yonge Street	2434 Yonge Street	2430 Yonge Street	2329 Yonge Street	2440 Yonge Street
Sale Price ($) and Sale Date	N/A	8,900,000 06/2015	14,500,000 01/2016	10,850,000 June 2015	7,890,000 01/2015	8,500,000 03/2016	9,300,000 09/2015
Time Adjusted Sale Price ($)	N/A	9,148,170	14,464,328	11,152,544	8,277,878	8,936,464	9,416,108
Assessed Value ($)	8,760,000	8,895,000	9,604,000	11,021,000	6,849,000	7,462,000	3,136,000
Frontage (feet)	68	29.5	70	59.75	38.25	39.82	40
Depth (feet)	99.5	105	140	139.66	139.66	143.01	140.79
Total Lot Area (sq. ft.)	6,766	5198	9800	6948	5342	5695	5632
Corner Lot	Yes	No	Yes	No	No	No	No
Description	Single storey retail, Zoned Commercial Residential	Single storey retail.	Multi-residential vacant lot	Commercial with residential units.	Single storey retail.	Single storey retail.	Single storey retail.
Time-adjusted value/sq. ft. of lot area ($)		1,760	1,476	1,605	1550	1474	1672

18Mr. Li submits that 2430, 2329 and 2440 Yonge Street are inferior to the Subject Property because of their smaller lot sizes and that the best comparable property is 2637 Yonge Street because it is the closest sale at 0.16 kilometres.

19However, Mr. Li submits that using the median time-adjusted sale value per sq. ft. of lot area for the six sales results in his conclusion of value at $10,672,000. He submits that the value per sq. ft. of the lots is an appropriate indication of value because properties in the area tend to be sold for re-development.

20Mr. Li did not say he inspected the Subject Property but assumed that at least one of its two restaurants has been renovated due to occupant turnover.

21The Appellant argues that MPAC should have adjusted its sales values for location, density and similarity factors such as corner lots. On cross-examination, MPAC acknowledged no adjustments were made for these factors.

22For example, the Subject Property is located midway between Lawrence Avenue to the north and Eglinton Avenue to the south. MPAC’s six sales are all located south of the Subject Property, nearer to Eglinton Avenue than to Lawrence Avenue. The Appellant argues that the Eglinton and Yonge area is more desirable than the Lawrence and Yonge area due to new property developments, shopping and a cross-town Metrolinx LRT line that is currently under construction. The Appellant submits that because it is more desirable, the properties located closer to this intersection are superior to the Subject Property and, therefore, have more value.

23Regarding density, the Appellant noted that three of MPAC’s sales are zoned for high density use and are, therefore, superior to the Subject Property which does not have that zoning.

24The Appellant is relying on MPAC’s cost valuation to assist in the calculation of current value. The Appellant’s witness, Andrew Attard, calculated that, based on MPAC’s assessment data, MPAC allocated 91% of the value to the land. Based on this allocation, Mr. A. Attard calculates the Subject Property’s assessed land rate is $50,000,000 per acre and the depreciated building value is $792,000.

25The Appellant presented three sales located very near the Subject Property to determine the land portion. Two of the sales, 2676 and 2665 Yonge Street, are located across the street from the Subject Property, one to the west and one to the south, and the third, 2704 Yonge Street, is located next door to 2676 Yonge Street. Mr. A. Attard submits that he is not relying on the second sale, 2665 Yonge Street, because he no longer considers it a strong comparable property. The sales are summarized in Table 2 below.

Table 2: Appellant’s Proposed Sales for Determining the Current Value

	Subject Property	2676 Yonge Street	2665 Yonge Street	2704 Yonge Street
Sale Price ($) and Sale Date	N/A	5,750,000 06/2014	25,612,533 03/2016	6,700,000 12/2017
Time Adjusted Sale Price ($)	N/A
Assessed Value ($)	8,760,000	8,895,000	9,604,000	6,849,000
Frontage (feet)	68	30	259	116
Depth (feet)	99.5	119	161	N/A
Total Lot Area (Acres)	0.16	0.24	0.96	0.31
Corner Lot	Yes
Description	Single storey retail	Rental apartments located across the street from the Subject Property	Large retail building located immediately south of the Subject Property	Medium density residential land
Time-adjusted value/acre of lot area ($)		23,958,333	26,679,722	21,612,903

26The Appellant’s estimation of current value, based on 2676 Yonge Street and 2704 Yonge Street, is $4,437,000. The Appellant argues that these two properties are relatively similar to the Subject Property. The average land value is $22,785,618 per acre. Applied to the Subject Property’s 0.16 acres results in a land value of $3,645,000. Adding MPAC’s depreciated building value of $792,000 results in an overall value of $4,437,000.

27The Appellant’s preferred estimation of current value uses only one sale, 2704 Yonge Street, which Mr. A. Attard considers the most comparable to the Subject Property because of its size, its use, and, because it is located on a corner lot. The building, a funeral home, was demolished after the sale. The Appellant argues that because the sale appears to be for development purposes, it reflects the value of the land. The Appellant concludes that using this single sale indicates a total current value of $4,250,000 for the Subject Property ($21,612,903 sale price per acre applied to the Subject Property’s lot size of 0.16 acres = $3,458,064, plus MPAC’s assessed value of the building at $792,000).

28Mr. A. Attard presented the following oral evidence regarding 2704 Yonge Street:

• This property was assessed at $15,108,000, more than double the sale value of $6,700,000.
• After the sale MPAC reduced the assessment to $5,829,000.
• This represents a 13% discount from the sale price.
• The lot size is twice as large, yet it sold for less than the Subject Property’s assessed value.

29The Appellant further argues that there is no need to adjust this third sale value for 1) density because the zoning permits residential development, 2) location because it is located in the immediate vicinity of the Subject Property, or, 3) both properties are located on a corner lot. The Appellant argues that MPAC’s sales were not adjusted for these factors and, therefore, do not accurately reflect a market value for the Subject Property.

Findings on Current Value

The 50% Interest Sale of the Subject Property

30Although the 50% sale of the Subject Property was not relied upon by either party to determine its current value, the Appellant argued that it is an indication that MPAC’s assessed value is too high. The Appellant provided a “Retail Transaction Summary” obtained from RealNet Canada Inc. outlining the 50% sale.

31It is appropriate to investigate a sale when valuing a property. Rule 45 requires all parties to disclose all relevant documents in their possession, control and power, except for privileged documents or documents that cannot be disclosed by law. There was no reason given why appropriate sale documents, such as the purchase and sale agreement, were not disclosed. Because the evidence does not indicate whether the 50% sale is unencumbered, I cannot find that it is, in and of itself, an indication that the assessed value exceeds the current value.

Which Sales are Comparable to the Subject Property?

32MPAC’s first sale, 2637 Yonge Street, is proximately closest to the Subject Property. On balance, I find that it is inferior to the Subject Property because it has less frontage, a smaller lot and is not located on a corner. A corner lot would provide more exposure and added access to a commercial property and, therefore, would likely increase its desirability. This property’s time-adjusted sale price is $1,760 per square foot of lot area, compared to the Subject Property’s assessment of $1,295 per square foot.

33Despite MPAC’s Sales 2 through 6 being located less than a kilometre from the Subject Property, they are all located nearer to Eglinton Avenue than the Subject Property. I accept the Appellant’s testimony that proximity to Eglinton Avenue is desirable for commercial properties due to the current development occurring at or near that intersection.

34I do not find Sale 2, 2444 Yonge Street, which is a vacant corner lot and is zoned Multi-Residential, is comparable to the Subject Property, which is zoned Commercial Residential. Although MPAC suggested that the Subject Property could obtain the same zoning, I received no evidence to support that suggestion.

35Sale 3, 2434 Yonge Street, is superior to the Subject Property. It has a superior location, it has been developed with retail/office space with residential portions and has a slightly larger lot. It has a time-adjusted sale price of $1,605 per square foot of lot area.

36Sales 4, 5 and 6 (2430, 2329 and 2440 Yonge Street) are, on balance, similar to the Subject Property. They are improved similarly to the Subject Property with single storey retail, they are in a superior location but are slightly smaller and are not corner lots. The time-adjusted sale prices, per square foot of lot area, are $1,550, $1,474 and $1,672. Applied to the Subject Property’s lot area of 6,766 sq. ft. results in the following values: $10,487,300, $9,973,084 and $11,312,752.

37I agree with the Appellant that the sale price of 2740 Yonge Street reflects the value of the land because the building was razed after the sale. I also consider the value put forward for the Subject Property’s improvements is reasonable and it was uncontested by MPAC.

38The best indications of current value are MPAC’s three properties which I found to be similar to the Subject Property, 2430, 2329 and 2440 Yonge Street, and the Appellants calculations based on the sale price of 2740 Yonge street plus MPAC’s cost valuation of the Subject Property’s improvements.

39It is reasonable, with the limited data of only four properties, to take the mean rather than the median value. The mean value is $8,807,800. This is the current value of the Subject Property.

ORDER

40The total current value for the 2017, 2018, 2019 and 2020 taxation years is $8,807,800 in the Commercial Property Class.

41The Board did not receive notice that any party was seeking a higher value than the assessed value, as required pursuant to the Board’s Rule 38(7). Therefore, I confirm the assessment of $8,760,000.

42No adjustment for equity is required.