Tribunals Ontario

Assessment Review Board

ISSUE DATE: December 24, 2021 FILE NO.: WR 175394

Assessed Person(s): Dmitri Kanovich and Olga Kanovich Appellant(s): Dmitri Kanovich and Olga Kanovich Respondent(s): Municipal Property Assessment Corporation Region 09 Respondent(s): City of Toronto

Property Location(s): 19 Sunnydene Crescent Municipality(ies): City of Toronto Roll Number(s): 1908-081-080-09500-0000 Appeal Number(s): 3435303 and 3441296 Taxation Year(s): 2020 and 2021 Hearing Event No.: 753393

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

APPEARANCES:

Parties	Representative
Dmitri Kanovich and Olga Kanovich	Surin Toor
Municipal Property Assessment Corporation	Carlo Bassi
City of Toronto	No one appeared

HEARD: November 17, 2021 by telephone conference call

ADJUDICATOR(S): Jennifer Griffith, Member

DECISION

OVERVIEW

1Dmitri Kanovich and Olga Kanovich the (“Assessed Persons/Appellants”) are the owners of 19 Sunnydene Crescent (the “Subject Property”) in the City of Toronto (the “City”). The Subject Property is a Single-Family Detached (not on water) dwelling, Property Code 301. The Appellants filed appeals for the returned assessment of $4,422,000 for the 2020 and 2021 taxation years with the Assessment Review Board (the “Board”), pursuant to 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’s (“MPAC”) current value assessment of $4,422,000 is too high and that the correct current value should be $3,605,602 based on sales evidence, although other scenarios of what the current value should be were proposed. MPAC takes the position that the correct current value should be $5,564,000 based on sale evidence. However, MPAC is not seeking an increase in the correct current value and is asking the Board to confirm the returned assessment of $4,422,000. No one appeared on behalf of the City.

3Pursuant to s. 19(1) of the Act, the assessment of land shall be based on its current value; and s. 19.2(1)4 provides that, for the 2020 and 2021 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016.

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

5Pursuant 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.

Issues for the Hearing

6The issues to be determined on this appeal are:

1. What is the determination of the current value of the Subject Property for the 2020 and 2021 taxation years based on a direct comparison approach?

2. Whether there should be an equitable reduction of the current value pursuant to s. 44(3) of the Act, and, if so, what the amount of this reduction should be.

Result

7The Board finds the correct current value for the Subject Property at the valuation date January 1, 2016 is $4,224,000, which is applicable to the 2020 and 2021 taxation years.

8The Board also finds that an equity reduction pursuant to s. 44(3)(b) is not required.

9Therefore, the Board orders that the returned assessment of $4,422,000 be reduced to $4,224,000 for the 2020 and 2021 taxation years.

ANALYSIS

Issue 1 - What is the determination of the current value of the Subject Property for the 2020 and 2021 taxation years based on a direct comparison approach?

Direct Comparison Approach Based on Sales

10The Direct Comparison Approach estimates the market value by comparing the sale prices of similar properties (in terms of lot size, total building area, year built, quality of construction etc.) that have sold within a reasonable timeframe of the valuation date to the Subject Property. In this case the valuation date is January 1, 2016.

11In 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”.

12For the reasons discussed below, the Board finds the correct current value at the valuation date of January 1, 2016 is $4,224,000.

13Reviewing the evidence in support of current value, the Board finds the two sales of ravine type 1 comparable properties like the Subject Property, in the same homogeneous area and presented by MPAC is the best evidence of current value.

MPAC’s Evidence in Support of Current Value

14MPAC’s Representative presents a Valuation Report dated April 28, 2021, which he prepared and testifies to the information contained in the report.

15MPAC’s Representative testifies that the Subject Property is located in the Lawrence Park neighbourhood of Toronto and is one of the most affluent neighbourhoods, along with Rosedale, The Bridle Path, and Forest Hill.

16He testifies that the Lawrence Park neighbourhood is located in a very peaceful and tranquil setting that includes amongst other things, gently rolling hills, several parks, a ravine, and lush topography. Lawrence Park was one of Toronto’s first planned garden suburbs with a variety of architectural style houses including English Cottage, Tudor Revival, Georgian and Colonial designs. Most of these homes were built between 1910 and the late 1940s. Over the last few years parts of Lawrence Park have been redeveloped with newer and bigger high-quality homes.

17MPAC’s Representative also testifies that the Subject Property abuts a ravine type 1, which represents a positive adjustment of ten percent to the current value. He further explains that the adjustments for abutting educational institution is a negative five percent; and corner lot is a negative one percent.

18MPAC’s Representative testifies that the Subject Property was sold on May 31, 2012 in the open market for $3,800,000, however, it was not relied on in the determination of current value.

19In support of current value, MPAC’s Representative relies on the Direct Comparison Approach and presents 16 proposed comparable properties, sold in 2014 and 2016 located in the same homogeneous area (C70) as the Subject Property; and in the adjacent neighbourhood C66.

20MPAC’s Representative provides both the actual and time-adjusted sale prices and relies on the time-adjusted sale prices in his analysis. The following Table 1 is the analysis of the 16 proposed comparable properties:

Table 1 MPAC’s Sales Analysis

16 PROPOSED COMPARABLE PROPERTIES	LOT SIZE (square foot (sq. ft.)	TOTAL BUILDING AREA (sq. ft.)	QUALITY RATING	YEAR BUILT	SALE DATE	SALE PRICE ($)	SALE PRICE (time adjusted (TAS) ($)	TAS ($) (adjusted for site variables ravine, educational institution, and corner lot) per sq. ft. based on total building area)
22 Blyth Hill Road	7,450	4,625	9	2012	2014	4,900,000	5,674,434	1,227
67 Blyth Hill Road	7,752	4,152	9	2001	2015	3,650,000	3,838,598	925
66 Blyth Hill Road	10,104.95	3,773	9	2000	2015	3,925,000	4,224,829	1,120
19 Blyth Hill Road	8,200	4,598	9	2008	2026	5,195,000	4,900,711	1,172
17 Blanchard Road	7,500	4,058	9	2003	2016	3,920,000	3,697,937	1,002
1 Stratheden Road	9,594	5,699	9	2007	2016	5,200,000	4,855,418	980
19 Stratheden Road	9,240	5,629	9	2002	2015	5,450,000	6,080,710	1,188
41 Daneswood Road	12,080.80	4,497	9	1969	2016	4,782,000	4,420,056	1,081
261 St Leonard’s Avenue	7,500	4,639	9	2016	2016	5,250,000	4,710,035	1,117
205 St Leonard’s Avenue	7,500	4,327	9	2016	2016	5,225,000	4,829,526	1,228
248 Dawlish Avenue	7,500	4,694	9	2013	2015	5,125,000	5,389,812	1,275
41 St Leonard’s Avenue	7,448	4,890	9	2015	2016	5,500,000	5,135,538	1,155
115 Rochester Avenue	7,500	4,499	9	2010	2015	4,575,000	5,231,917	1,279
135 Rochester Avenue	7,500	4,637	9	2014	2016	5,600,000	5,124,427	2,216
151Rochester Avenue	7,500	5,036	9	2008	2016	4,420,000	4,004,627	883
132 Rochester Avenue	7,500	4,752	9	2010	2016	4,750,000	4,724,210	1,094
Median								1,137
Subject Property	11,500	4,894	9	1960	NIL	N/A	N/A	N/A

21Based on the above analysis, MPAC’s Representative is of the view that the median adjusted TAS per square foot (“sq. ft”) of $1,137 of all 16 sales to be the best evidence. When this rate is applied to the Subject Property it results in a current value of $5,564,478 ($1,137 x 4,894 sq. ft. of total building area for the Subject Property).

22Therefore, MPAC’s Representative is of the opinion that current value of the Subject Property is $5,564,478.

23MPAC’s Representative confirms that he has not adjusted for differences in characteristics such as lot size, total building area, quality, and year built. Instead, he relies on the median time-adjusted sale price per sq. ft. adjusted for ravine lot, corner lot and abutting educational institution property.

Appellants’ Evidence in Support of Current Value

24In support of current value, the Appellants’ Representative relies on the Direct Comparison Approach, and presents a spreadsheet analysis of three sales which occurred in 2015 and 2016, with two sales located in the same homogeneous area C70 as the Subject Property and one sale in the adjacent homogeneous area identified as C66. The Appellants’ Representative provides both the actual and time-adjusted sale prices and relies on the time-adjusted sale prices in his analysis. The following Table 2 is the analysis of the three proposed comparable properties:

Table 2 Appellants’ Sales Analysis

3 PROPOSED COMPARABLE PROPERTIES	LOT SIZE (square foot (sq. ft.)	TOTAL BUILDING AREA (sq. ft.)	QUALITY RATING	YEAR BUILT	SALE DATE	SALE PRICE ($)	SALE PRICE (time adjusted (TAS)	TAS (adjusted for ravine 10% (comp 2) and 5% additional ravine adjustment, 3% traffic (comp 1) and 4% traffic (comp 3) sq. ft. based on total building area) ($)
2 Blyth Hill Road	10,720	4,500	9	1951	2016	3,550,000	3,347,650	766.24
41 Daneswood Road	12,080.8	4,497	9	1969	2016	4,782,000	4,418,568	1,080.81
4 Ridgefield Road	10,519	4,769	8.5	1998	2015	3,125,000	3,575,000	779.62
Median								779.62
Subject Property	11,500	4,894	9	1960	NIL	N/A	N/A	N/A

25The above analysis shows that these three proposed comparable properties when the time-adjusted sale prices per sq. ft. is further adjusted for ravine type 1, and for traffic, result in a median adjusted sale price of $779.62 per sq. ft. When this median adjusted sale price is applied to the Subject Property it results in a current value of $3,815,460 ($779.62 x 4,894 sq. ft. based on total building area).

26On cross-examination the Appellants’ Representative testifies that the Subject Property is located in a very unique area that is negatively impacted by the noises of ambulances because it is located very close to a hospital and also traffic. Therefore, he applied a negative 3 and 4% to comparable properties at 2 Blyth Hill Road and 4 Ridgefield Road respectively, a 10% adjustment to the comparable property at 41 Daneswood Road for ravine type 1 to reflect the same adjustment as the Subject Property and an overall 5% ravine adjustment to the overall value, reflecting a median rate of $779.62 per sq. ft. as stated above

27Based on the evidence, the Appellants’ Representative is of the opinion that the current value should be $3,815,460.

Finding of the current value of the Subject Property for the 2020 and 2021 taxation years

28Reviewing the evidence presented in support of current value, the Board finds the best evidence is the two sales of ravine type 1 comparable properties which occurred in 2015 presented by MPAC that are located in the same homogeneous area. These two comparable properties are located at 67 Blyth Hill Road, sold in 2015 at a time-adjusted sale price of $3,838,598; and at 66 Blyth Hill Road, sold in 2015 at a time-adjusted sale price of $4,224,829. The sale prices of these two comparable properties range from $3,838,598 - $4,224,829.

29These two comparable properties have on average a year built of 2000, a lot size of 8,928 sq. ft., a quality rating of 9, a total building area of 3,962 sq. ft., finished basement of 1,413 sq. ft., a time-adjusted sale price of $4,031,713, are ravine type 1 properties, located in the same homogeneous area (C70) and exposed to the same market influences as the Subject Property. This is compared to the Subject Property with a year built of 1960, a lot size of 11,500 sq. ft., a total building area of 4,894 sq. ft., with finished basement of 2,279 sq. ft., a quality rating of 9 and undergone major renovation (Type D) in 2009 making its effective year built 2007.

30The Board finds that although the above two comparable properties are similar ravine type 1 properties as the Subject Property, they are on average smaller in total lot size, significantly smaller in total building (932 sq. ft. smaller), newer built homes and with smaller finished basements than the Subject Property. Therefore, the Board did not rely on the average time-adjusted sale price and finds that the Subject Property would sell at the higher end of the time-adjusted sale price range of $4,224,000 (rounded), because the Subject Property is significantly larger in total building area, with a larger finished basement and larger in total lot size than these two comparable properties.

31Based on the above analysis, the Board finds that the time-adjusted sale of $4,224,000 represents the best evidence of an arm’s length transaction between a willing buyer and a willing seller pursuant to s. 19(1) of the Act. Therefore, the Board determines the correct current value to be $4,224,000 rounded.

32In regard to the sales of the remaining fourteen comparable properties presented by MPAC (shown in the above analysis), the Board did not rely on these sales for the following reasons:

I. the comparable property at 22 Blyth Hill Road was sold in 2014 which the Board finds it too far removed from the valuation date of January 1, 2016 to be a true test of current value. Therefore, the Board relies on the two sales of ravine type 1 comparable properties as is the Subject Property, that sold in 2015 and located in the same homogeneous area as being a more reliable test of current value;

II. the remaining thirteen sales of comparable properties are not ravine type 1 properties as is the Subject Property and eleven are from a different homogeneous area indicated as C66, whereas, the Subject Property is in C70. As stated above, the Board relies on the two comparable properties which are ravine type 1, that sold in 2015 as the best evidence of current value; and

III. they are on average significantly newer, smaller site areas, similar in total building areas, with smaller finished basement areas, and a number of these comparable properties require adjustments (negative/positive) for ravine type 1, corner lot, and abutting educational institution property.

33Based on the above reasons, the Board finds that these varied differences in characteristics to the Subject Property would require substantial adjustments in order to make them similar to the Subject Property. As no quantifiable evidence was adduced before this Board to adjust for the majority of these differences, the Board relies on the two comparable properties (ravine type 1 same as the Subject Property) located in the same homogeneous area and subject to the same market influences as the Subject Property, which the Board finds to be the best evidence of current value.

34In reviewing the Appellants’ three sales in support of current value at 2 Blyth Hill Road, sold in 2016 at a time-adjusted sale price of $3,347,650; at 41 Daneswood Road, sold in 2016 at a time-adjusted sale price of $4,418,568 and at 4 Ridgefield Road, sold in 2015 at a time-adjusted sale price of $3,575,00, the Board did not rely on the sales of these three comparable properties, because they would require substantial adjustment for not ravine type 1, and other adjustments for nuisances of traffic, ravine type 2 and noises associated with ambulances. As no quantifiable evidence was adduced before this Board to support the adjustment for the majority of these differences, the Board relies on the two comparable properties (ravine type 1) located in the same homogeneous area and subject to the same market influences as the Subject Property, which the Board finds to be the best evidence of current value.

35Based on all the evidence, the Board finds the correct current value is $4,224,000.

Issue 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

36Section 44(3)(b) of the Act provides that “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.” In essence, the Board looks to similar lands in the vicinity to determine whether their assessed values are lower than their current values. If so, then it would be equitable to lower the assessed value of the Subject Property by a proportionate amount.

MPAC’s Evidence

37MPAC presents an Equity Analysis Report in which the assessments of 30 similar comparable properties (similar in general nature, character and function as the Subject Property) are compared to their respective sale prices to determine the Assessment to Sales Ratio (“ASR”). The ASR is computed by dividing the assessed value of the property sold by its sale price.

38MPAC states that these 30 comparable properties with Property Code 301- Single-Family Detached (not on water) are similar property type residential homes as the Subject Property, sold over the period January 1, 2015 to December 31, 2016 and located within 1.0 kilometre of the Subject Property.

39MPAC states that the analysis of the sales of these 30 comparable properties shows a Level of Appraisal (“LOA”) of 0.95 and a Coefficient of Dispersion (“COD”) of 8.7.

40MPAC explains that the LOA measures central tendency and the mid-point of the ASR ratios, and the median ASR is the preferred measure to determine the LOA, because it is not affected by very low or high ratios. MPAC also explains that the COD measures appraisal uniformity by determining the average deviation from the median ASR. Based on this finding, MPAC’s opinion is that an equity reduction is not required.

Appellants’ Evidence

41In support of Equity, the Appellants’ Representative relies on 299 residential sales that were used by MPAC to compute the Time Adjustment Factor for adjusting sale prices to the valuation date of January 1, 2016. The report shows that these sales are from the neighbourhood and adjoining neighbourhoods.

42The report also shows that these 299 sales occurred over the period 2014 to 2016 with a median ASR of 0.964; when the ASR is capped at an ASR of 1.70 it reflects a median ASR of 0.95; and when an error rate of 50% (plus or minus) analysis was done it reflects a median ASR of 0.945. Based on this error rate approach with an ASR 0.945, the Appellants’ Representative is of the opinion that an equity reduction is required.

43On cross-examination, the Appellants’ Representative states that the 299 sales used in his report include all residential properties (town houses, semi-detached, single family) except for (condominiums) and was unable to say exactly which neighbourhood the sales were from, and how far away they are located in relation to the Subject Property.

Findings on Equity

44Based on the above evidence, the Board finds that MPAC presents the best evidence in support of equity, with the analysis of 30 sales of similar type properties Property Code 301 – Single-Family Detached (not on water) as is the Subject Property. They are similar in nature, character and function; and located within 1.0 kilometre of the Subject Property.

45The analysis shows that these 30 sales of similar properties have a LOA (ASR) of 0.95 which falls within MPAC’s standard of 0.95 – 1.05 and within the International Association of Assessing Officers (“IAAO”) standard of 0.90 – 1.10 which the Board accepts and finds that this evidence does not support an equity reduction.

46The Board rejects the Appellants’ equity analysis of 299 proposed comparable properties for the following reasons:

I. the sales are from distances not defined in the report, which does not demonstrate their locations in relation to the Subject Property;

II. the sales include residential properties such as townhouses and semi-detached that are not similar to the Subject Property, which is a single-family detached home; and

III. the Appellants’ Representative relies on the median ASR of 0.945 which is based on an error rate of 50% (plus or minus) of the sales, as opposed to the median of all 299 sales with an ASR of 0.964 which does not support an equity reduction. The Board finds that this approach of ASR based on 50% error rate seems to demonstrate a lack of confidence in the report presented in support of an equity reduction.

47Based on the above evidence, the Board finds that an equity reduction is not required.

CONCLUSION

48The Board finds the correct current value for the Subject Property at the valuation date January 1, 2016 is $4,224,000. Therefore, the Board reduces the returned assessment from $4,422,000 to $4,224,000 for the 2020 and 2021 taxation years.

49The Board also finds that an equity reduction pursuant to s. 44(3)(b) is not required.

ORDER

50The Board orders the returned assessment of $4,422,000 be reduced to $4,224,000 for the 2020 and 2021 taxation years.