Sagar v. Municipal Property Assessment Corporation, Region 15, 2020 CanLII 97411

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

November 30, 2020

FILE NO.:

WR 167242

Assessed Person(s):

Bebe Sagar and Stephen Sagar

Appellant(s):

Bebe Sagar and Stephen Sagar

Respondent(s):

Municipal Property Assessment Corporation, Region 15

Respondent(s):

City of Brampton

Property Location(s):

1603 Hallstone Road

Municipality(ies):

City of Brampton

Roll Number(s):

2110-140-097-20846-0000

Appeal Number(s):

3395259

Taxation Year(s):

2020

Hearing Event No.:

736162

Legislative Authority:

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

APPEARANCES:

Parties

Representative

Bebe Sagar and Stephen Sagar

Haseena Hanuman

Municipal Property Assessment Corporation

Olga Avdeeva

City of Brampton

No one appeared

HEARD:

November 19, 2020 by telephone conference call

ADJUDICATOR(S):

Joanne Laws, Member

DECISION

OVERVIEW

1Bebe Sagar and Stephen Sagar (the “Appellants”) are the owners of 1603 Hallstone Road, Brampton (the “Subject Property”) and were represented at the hearing by Haseena Hanuman. They filed an appeal for the 2020 taxation year with the Assessment Review Board (the “Board”), pursuant so s. 40 of the Assessment Act, R.S.O. 1990, c.A.31 (the “Act”).

2It is the Appellants’ position that the Municipal Property Assessment Corporation (“MPAC”) has incorrectly assessed the value of the Subject Property at $904,000 and that the correct and equitable current value for the 2020 taxation year should be lower.

3MPAC was represented at the hearing by Olga Avdeeva. MPAC takes the position that the correct current value is the returned amount of $904,000.

4No one appeared for the City of Brampton

5Pursuant to s. 44(3)(b) of the Act, MPAC takes the position that an equitable reduction of the current value is not required while the Appellants take the position that an equitable reduction is required.

Issues for the Hearing

6At issue in this proceeding is:

1. a determination of the current value of the Subject Property;
2. whether an equity reduction in the current value should be made.

Result

7The current value of the Subject Property is $786,000 in the residential property class.

8No adjustment for equity is required.

ANALYSIS

Description of Subject Property

9The Subject Property is a single-storey detached residence. The lot size is 6,600 square feet (“sq. ft.”). The residence was built in 2005 and is 2,293 sq. ft. in size with an unfinished basement measuring 2,343 sq. ft. There is also an attached garage measuring 368 sq. ft. MPAC has allocated a 7.5 out of 10 quality of construction to the residence.

ANALYSIS

Issue 1 – Current Value

10Section 19(1) of the Act provides that the assessment of land shall be based on its current value. 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.” Section 19.2 provides that for 2020 taxation year the valuation day is January 1, 2016.

11Based on the above, the best evidence of current value is an arm’s length and market-tested sale of the Subject Property on or near the valuation day. When no such sale has occurred, the next best evidence is often sales occurring near the valuation day of similar properties located near the Subject Property.

12The main issue in dispute is what constitutes a similar property, specifically in terms of finished and unfinished basements.

13Ms. Avdeeva testified that as a result of the Request for Reconsideration process, which preceded this hearing, an adjustment was made reducing the assessed value from $904,000 to $898,000 to reflect an unfinished basement. She stated that MPAC would not recommend the corrected current value because it was rejected by the Appellants prior to this hearing.

14MPAC presented three sales of single-storey detached properties located between 2 and 6 kilometres from the Subject Property. These sales occurred in 2015 or 2016 which is a range close to the January 1, 2016 valuation day. MPAC argues that all three sales are directly comparable to the subject property because:

a. MPAC’s assessment data for these sale properties indicate that none have finished basements,

b. they have comparable lot and building sizes,

c. the buildings are single-storey detached residences of a similar age, and,

d. MPAC has applied the same 7.5 quality of construction as it applied to the Subject Property.

15MPAC took the median time-adjusted sale value per square foot of building area of the three sales and applied that value to the Subject Property’s square foot of building area resulting in a value of $918,000. MPAC is not seeking an assessment higher than the assessment as returned and, therefore, requests that the assessment as returned of $904,000 be confirmed. The data for these sales is set out in the chart below.

16Ms. Hanuman testified that she visited all three of MPAC’s sale properties near their sale dates and that each had finished basements. She testified that some had separate entrances and either did or could generate rental income. She argued that due to the differences between the three sales and the Subject Property, the sale properties are superior to the Subject property and would have higher market values.

17Ms. Avdeeva testified that MPAC has not inspected its three sale properties but takes the position that its data showing the basements are unfinished is correct. She argued that unless MPAC’s data is updated by a ‘trigger’, such as a building permit, its data that the basements are unfinished is correct and, therefore, the sale properties are directly comparable to the Subject Property.

18The Appellants presented four sales of two-storey properties on Hallstone Road. However, all four sales occurred in 2018 or 2019 which are too far from the valuation day to be reliable when determining a property’s current value as of January 1, 2016.

19At the hearing the Appellants presented a fifth sale, 19 Neapolitan Road. The Appellants take the position that it is similar to the Subject Property in quality and because the residence is a single storey. Ms. Avdeeva responded that she reviewed this sale in preparation for this hearing but eliminated it because she deemed it to be inferior quality to the Subject Property. The Board has not included this sale in its analysis of current value for two reasons. The first is that it is not referenced in the Appellants’ exhibits and written submissions disclosed to MPAC was not submitted to the Board in compliance with the Schedule of Events. The second is that, although MPAC was prepared to address this property during the hearing, there is insufficient data to make a meaningful comparison to the Subject Property; the Board was not provided with details such as the lot size, building age and size, etc.

Table 1: Relevant Sales of Single-Storey Properties

Subject Property

9 Radial Street

75 Nova Scotia Road

11 Grouse Lane

Sale Price and Sale Date

N/A

$913,000

July 2015

$1,020,000

August 2016

$799,000

February 2016

Time Adjusted Sale Price

N/A

$944,180

$883,158

$786,022

Assessed Value

$904,000

$869,000

$975,000

$799,000

Lot Size

(sq. ft.)

6,600

7,644

5,750

4,730

Number of Storeys

1

1

1

1

Building Date

2005

2003

2004

2005

Building Size

(sq. ft.)

2,293

2,084

2,681

1,962

Number of Bathrooms

2.5

4

3

4

MPAC’s Quality of Construction

7.5

7.5

7.5

7.5

Basement Area

(sq. ft.)

2,343

2,084

2,681

1,962

Finished Basement

No

Yes

Yes

Yes

Time adjusted sale value per square foot of building area

N/A

453.06

338.49

400.62

Findings on Issue 1

20The Board accepts Ms. Hanuman’s testimony that MPAC’s three sale properties have finished basements because she viewed all three near the time of their sale dates.

21The Board does not agree with the proposition that MPAC’s data is correct despite it being inaccurate. It is possible that building permits are not sought before renovating. Regardless, the criteria here is determining current value based upon arm’s length and market tested sales of similar properties, not on assessments. It is reasonable to conclude that properties with finished basements, and finished basements that either produce income or have the potential to produce income, are superior to an otherwise similar property and that such differences will be reflected in the sale prices.

22The Board further finds that MPAC’s calculation of time-adjusted sale values per square foot of building area is not reliable due to the differences between these sales and the Subject Property. This method of determining current value is only reliable when the sale properties are very similar to the Subject Property.

23The best evidence the Board received for determining current value are MPAC’s three sales because they have many similarities and the sales occurred near the valuation day.

249 Radial Street has a slightly smaller building area but it is, on balance, superior to the Subject Property because it has a larger lot size, more bathrooms and a finished basement. The Board finds that the Subject Property would sell for less than its time-adjusted sale price of $944,180.

2575 Nova Scotia Road has a slightly smaller lot but it is, on balance, superior to the Subject Property because it has a larger building area, three full bathrooms and a larger and finished basement. The Board finds that the Subject Property would sell for less than the time-adjusted sale price of $883,158.

2611 Grouse Lane is inferior in terms of lot size, building size and basement area. The superior features are the number of bathrooms and the finished basement. In the Board’s opinion, the superior features offset the inferior features, making this property the most comparable of the three. Accordingly, the Subject Property’s current value would not exceed the time adjusted sale price of $786,022.

27Based on this analysis, the Subject Property’s current value would not exceed $786,022. This is the current value of the Subject Property.

Issue 2 – Is the Current Value Equitable in relation to similar lands in the vicinity?

28There are different methods of determining whether a property is equitably assessed in relation to similar lands in the vicinity.

29The Appellants take the position that their property is inequitably assessed in relation to other properties on their street and submitted the assessment details of 23 residential properties on Hallstone Road. The majority are two-storey residences, with only three being single-stories. The Appellants argue that the Subject Property is assessed similarly to larger buildings which indicate that there is a disparity with assessments.

30In analyzing the Appellants’ data, the Board notes that the average assessment of the 23 properties is $997,000 (rounded) and the median is $915,000. The assessed values of the three single-storey properties are $903,000, $921,000 and $931,000. These values do not lead the Board to conclude that the Subject Property is inequitably assessed.

31Another method of determining whether an equitable reduction is required is by comparing assessments to sales of similar properties, known as an Assessment to Sale Ratio (“ASR”).

32MPAC presented an Equity Report of 30 properties using the following criteria: residential, single family detached, located within 5 kilometres of the Subject Property which sold between January 2015 and December 2016 (a period close to the January 1, 2016 valuation day). MPAC’s analysis shows a median ASR is 1.006 with a coefficient of dispersion of 4.2. MPAC takes the position that a median ASR falling between 0.95 and 1.05 and a coefficient of dispersion not more than 15 for residential properties indicates that equity is achieved.

Findings on Issue 2

33Based on the above, the Board finds that an equitable reduction is not required.

CONCLUSION

34The Board finds that the current value of the Subject Property is $786,000, rounded, in the Residential Property Class. The Board also find that no adjustment for equity is required.

ORDER

35The Board orders that the assessment of $904,000 is reduced to $786,000 for the 2020 taxation year.