Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
March 30, 2021
FILE NO.:
WR 167843
Assessed Person(s):
Melynda E. A. Layton and Gregory Sean Terris
Appellant(s):
Melynda Layton
Respondent(s):
Municipal Property Assessment Corporation Region 03
Respondent(s):
City of Ottawa
Property Location(s):
2200 Prince of Wales Drive, Units 401 and 402
Municipality:
City of Ottawa
Roll Number(s):
0614-120-515-00120-0000 and 0614-120-515-00121-0000
Appeal Number(s):
3421908 and 3421909
Taxation Year(s):
2016
Hearing Event No.:
736974
Legislative Authority:
Section 33 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties
Counsel
Melynda Layton
Self represented
Municipal Property Assessment Corporation
Melissa Wright
City of Ottawa
No one appeared
HEARD:
December 15, 2020 by video conference
ADJUDICATOR(S):
Pierre R. Lavigne, Member
DECISION
OVERVIEW
1These are appeals of the assessment of current value for the 2016 taxation year of two commercial condominium units located at 2200 Prince of Wales Drive, Units 401 and 402 (“subject properties or subject units”) in the City of Ottawa.
Background
2These newly built condominium units did not appear on the assessment roll compiled in 2015 for the 2016 taxation year. Property Assessment Change Notices for omitted assessments, pursuant to s. 33 of the Assessment Act (“Act”), were issued May 13, 2016, for each unit, with an effective date of January 1, 2016. They assessed the current value at $324,000 for Unit 401 and $330,000 for Unit 402, in the Commercial Vacant Property class. Property Assessment Change Notices were also issued to change the classification to New Construction Commercial Property class, effective February 8, 2016, the closing date of the purchase of the subject units. Classification is not an issue in this hearing.
3The Municipal Property Assessment Corporation (“MPAC”) submits the correct current value is $324,000 for Unit 401 and $330,000 for Unit 402. As MPAC is not seeking a higher assessment, it asks that the assessments be confirmed. Melynda Layton (the “Appellant”) seeks a correct current value finding of $204,667 for each unit. She also asks the Board to order the City of Ottawa to reconcile her accounts and strike any penalties.
Issues for the Hearing
4At issue in this proceeding is:
- a determination of the correct current value of each unit;
a. the identification of Comparable Properties;
b. the determination of correct current value.
whether an equity reduction in the current value should be made?
whether any of the other relief claimed by the Appellant should be granted?
Result
5The Board orders that the assessment of current value for Unit 401 be reduced from $324,000 to $309,400. The Board orders the assessment of current value for Unit 402 be reduced from $330,000 to $315,900.
ANALYSIS
Description of Subject Properties
6The subject properties are two commercial condominium units in a newly constructed three-storey building of 24 units, plus parking spaces. Unit 401 is a ground floor unit of 1,190 square feet (“sq. ft.”) with three parking spaces. Unit 402 is a second-floor unit, of 1,215 sq. ft. with three parking spaces.
Issue 1 - What is the correct current value of each unit?
The Governing Statutory Scheme
7Section 36(1) of the Act requires land to be assessed annually. Section 19(1) of the Act requires the assessment to be based on current value.
8Section 19.2(1) paragraph 3 of the Act requires that all properties be valued as of the same date, January 1, 2012, for the four taxation years from 2013 to 2016.
9Pursuant to s. 40(17) of the Act, the onus is on MPAC to prove the correct current value of the subject properties.
10Section 44(3)(b) provides for an equity adjustment reduction, if warranted, after determination of correct current value.
State and Condition Date
11Annual assessments of the current value of real property are based on the state and condition of the subject property, on the assessment roll return date, the second Tuesday in the December immediately preceding any given taxation year. This is referred to as that taxation year’s State and Condition date. See Kenora v Municipal Property Assessment Corporation, Region 32, 2015 CanLII 58800 (ON ARB) at paragraphs 9-12.
12In this hearing, the question to be determined is the value of the Subject Property based on sales, on or near January 1, 2012, of properties that were comparable to the Subject Property in the condition it was in on the state and condition date of December 8, 2015.
MPAC’s Evidence
13Leanne Field was called as a witness for MPAC. She has been a designated Associate of the Institute of Municipal Assessors for 22 years and a valuation analyst for 20 years. She was qualified as an expert witness in the valuation of industrial and commercial condominiums.
14In the normal course of investigating new property registrations, MPAC learned of the registration of the condominium. Ms. Field conducted a site visit on March 18, 2016. Construction of the building had been completed in 2015, with the condominium plan registered July 17, 2015.
15As these newly created units were not on the assessment roll compiled in 2015 for the 2016 taxation year, new assessments were issued May 13, 2016, pursuant to s. 33 of the Act as assessments for land omitted from the assessment roll. The effective date of the omitted assessments was January 1, 2016.
16The Appellant testified that she occupied Unit 401 under interim occupancy from the Vendor in October of 2015 and that she had a tenant in Unit 402 as of January 2016 also under interim occupancy.
17The Appellant’s closing of the agreement of purchase and sale occurred on February 8, 2016. A further assessment was made, changing the classification from Commercial (Vacant Land) to New Construction Commercial. The effective date of this assessment was February 8, 2016. These classifications are not in issue in this proceeding.
Comparable Sales
18Ms. Field used the direct comparison approach to derive indications of value for each unit. She testified that the direct comparison approach is the valuation method used for all condominiums, be they residential, industrial or commercial. She indicated that there were a limited number of sales outside of the building housing the subject units. While she thought none were similar, they did provide information. She analysed the sales based on Assessment Sales Ratio per square foot. In her opinion, this measurement generally minimizes the margin of error that can result from differences between properties being compared.
19Her evidence with respect to comparable sales at or near the valuation date of January 1, 2012, is summed up in the following table:
Roll Number
Address
Level
Unit
Year Built
Sq. Ft. Area
Parking Spaces
2012 CVA
Sale Date
Sale Price
Sale Price/ Sq. Ft.
2012 CVA/ sq. ft.
ASR/ Sq. Ft.
0614 095 302 54052
2725 Queensview Dr Unit 300
1
3
2006
3,500
$810,000
Nov 30, 2011
$835,000
$239
$231
0.97
0614 095 302 54054
2725 Queensview Dr Unit 500
1
5
2006
3,500
$810,000
Nov 12, 2010
$800,000
$229
$231
1.01
0614 095 302 54054
2725 Queensview Dr Unit 500
1
5
2006
3,500
$810,000
Nov 30, 2012
$905,000
$259
$231
0.90
0614 120 695 01471
500 Claridge Dr Suite 102
1
2
2010
1,256
2
$300,000
Dec 9, 2013
$330,000
$263
$239
0.91
0614 120 695 01472
500 Claridge Dr Suite 103
1
3
2010
1,093
2
$265,000
Sept 20, 2010
$290,000
$265
$242
0.91
Median
$800,000
$259
$231
0.91
20She testified that each condominium building is, as it were, its own neighbourhood, and that the best comparable sales are those in the actual condominium building in which each of the subject units is located. For a comparison of sales within the building, she only used units on the ground and second floor for comparison.
21Her evidence of sales within the condominium building is summed up in the following table:
Roll Number
Address
Level
Unit
Year Built
Sq. Ft. Area
Parking Spaces
2012 CVA
Sale Date
Sale Price
Sale Price/ Sq. Ft.
2012CVA/sq. ft.
ASR/Sq. Ft.
0614 120 515 00120
401-2200 Prince of Wales Dr.
1
4
2015
1,190
3
$324,000
Feb 8,2016
$755,000
$314
$272
0.87
0614 120 515 00121
402-2200 Prince of Wales Dr.
2
4
2015
1,215
3
$330,000
$314
$272
0.87
0614 120 515 00111
101-2200 Prince of Wales Dr.
1
1
2015
1,500
4
$423,000
Aug 14,2015
$499,000
$333
$282
0.85
0614 120 515 00112
102-2200 Prince of Wales Dr.
2
1
2015
1,570
4
$428,000
Aug 13,2015
$905,761
$329
$273
0.83
0614 120 515 00115
202-2200 Prince of Wales Dr.
2
2
2015
1,180
4
$337,000
$329
$286
0.87
0614 120 515 00114
201-2200 Prince of Wales Dr.
1
2
2015
1,160
3
$317,000
Aug 13,2015
$348,278
$300
$273
0.91
0614 120 515 00117
301-2200 Prince of Wales Dr.
1
3
2015
1,160
3
$317,000
Aug 14,2015
$356,680
$307
$273
0.89
0614 120 515 00118
302-2200 Prince of Wales Dr.
2
3
2015
1,180
3
$322,000
Sept 3,2015
$364,900
$309
$273
0.88
0614 120 515 00123
501-2200 Prince of Wales Dr.
1
5
2015
1,190
3
$324,000
Aug 14,2015
$378,900
$318
$272
0.86
0614 120 515 00124
502-2200 Prince of Wales Dr.
2
5
2015
1,210
3
$329,000
Sept 2,2015
$378,900
$313
$272
0.87
0614 120 515 00126
601-2200 Prince of Wales Dr.
1
6
2015
1,160
4
$332,000
Oct 20,2015
$358,900
$309
$286
0.93
0614 120 515 00127
602-2200 Prince of Wales Dr.
2
6
2015
1,180
4
$337,000
Mar 29,2016
$360,000
$305
$286
0.94
0614 120 515 00129
701-2200 Prince of Wales Dr.
1
7
2015
1,160
3
$317,000
Sept 11,2015
$347,700
$300
$273
0.91
0614 120 515 00130
702-2200 Prince of Wales Dr.
2
7
2015
1,180
3
$286,000
April 22,2016
$364,900
$309
$242
0.78
0614 120 515 00132
801-2200 Prince of Wales Dr.
1
8
2015
1,220
3
$331,000
Aug 14,2015
$388,900
$319
$271
0.85
0614 120 515 00133
802-2200 Prince of Wales Dr.
2
8
2015
1,235
4
$312,000
June 30,2016
$451,733
$366
$253
0.69
Median
$371,900
$314
$273
0.87
22Note for comparison, that the first sale within the building: Roll Nos. 0614-120-515-00120-0000 (Unit 401) and 0614-120-515-00121-0000 (Unit 402) are the two subject properties under appeal, purchased together for $755,000.
23Ms. Field was of the opinion that the best comparables were sales within the condominium building containing the subject units. In her evidence, she opined that the median Assessment to Sales Ratio (“ASR”) derived from the five sales in buildings other than where the subject properties are located was 0.91. She then applied this ratio of underassessment to the median sale price per square foot of sales within her condominium building of $314 per square foot. This produced a value of $287 per square foot ($314 x 0.91). She then applied the $287 per square foot value to the area of the subject properties to produce indications of value as follows:
If the Subject Properties were assessed at the same level of these 5 comparable sales (Table 1), at 0.91 the 2012 CVA/Sq. Ft. would be $287.
Suite 401 is 1190 sq. ft. x $287 = $340,000
Suite 402 is 1215 sq. ft. x $287 = $348,000
24Ms. Field also relied upon the Appellant’s September 2013 agreement of purchase and sale of the units as an indication of value. The price was agreed at $755,000. The square foot price would be $755,000/2,405 sq. ft. = $313.93. Allocated proportionally to the square footage of each unit would produce an indication of value of $373,576 for Unit 401 and $381,424 for Unit 402. It is her opinion that this 2013 sale was the best indication of value of the units.
Evidence of the Appellant
25The Appellant introduced evidence of other sales of commercial condominiums as indications of value at the January 1, 2012 valuation day.
26She relied upon the following sales:
Sale Group
Roll Number
Address
Level
Unit
Year Built
Sq. Ft. Area
Parking Spaces
2012 CVA
Sale Date
Sale Price
1
0614 073 701 75607
99 Holland Ave. Unit 104
2
4
1988
1,034
2
$306,000
Dec 21,2012
$265,000
2
0614 073 602 12402 0614 073 602 12403
1433 Wellington St. W . 1433 Wellington St. W.
1 1
2 3
2012 2012
1,075 1,050
$460,000 $450,000
June 18,2012 June 21,2012
$500,000 $750,000
3
0614 120 615 01805
1884 Merivale Rd. Unit 6
1
6
2009
1,033
2
$206,000
Mar 4,2011
$225,000
0614 120 615 01807
1884 Merivale Rd. Unit 7
1
8
2009
1,011
2
$202,000
Mar 3,2011
$450,000
0614 120 615 01808
1884 Merivale Rd. Unit 9
1
9
2009
1,011
2
$206,000
0614 120 615 01809
1884 Merivale Rd. Unit 10
1
10
2009
1,011
2
$202,000
Mar 4,2011
$225,000
0614 120 615 01810
1884 Merivale Rd. Unit 11
1
11
2009
1,011
2
$202,000
Mar 1,2011
$250,000
0614 120 615 01811
1884 Merivale Rd. Unit 12
1
12
2009
1,033
2
$206,000
Mar 4,2011
$440,000
0614 120 615 01812
1884 Merivale Rd. Unit 13
1
13
2009
1,011
2
$202,000
0614 120 615 01813
1884 Merivale Rd. Unit 14
1
14
2009
1,011
2
$202,000
Mar 4,2011
$690,000
0614 120 615 01814
1884 Merivale Rd. Unit 15
1
15
2009
1,033
2
$206,000
0614 120 615 01815
1884 Merivale Rd. Unit 16
1
16
2009
1,011
2
$202,000
27She also testified that though the above units were unfinished, she estimated the cost of finishing the units to be between $40 and $50 per sq. ft.
Analysis of Comparable Sales
28It is important to note that the use of a valuation day four years earlier than the taxation year does not result in retroactive taxation. The taxes for 2016 are based on the December 2015 state and conditions of the subject properties at 2012 values. For previous taxation years, which are not before us, the assessment would be based on the state and condition of the subject properties on the state and condition dates for those taxation years, not as a completed condominium building. I raise this as it was an initial concern of the Appellant.
29The object of this direct comparison valuation exercise is to analyse indications of value from sales, at or near the valuation day of January 1, 2012, of properties comparable to the subject units in their state and condition on December 8, 2015. The further a valid sale is from the valuation day the less it provides evidence of value for the valuation day. In order to consider the most probative evidence the Board will usually consider comparable sales within 1 year of the valuation day, the shoulder years (see Manchester Court Land Holdings II ULC v Municipal Property Assessment Corporation, Region 15, 2018 CanLII 14229 (ON ARB) paragraph 24). For this reason, the Board will not consider sales before 2011 or after 2012.
30This excludes as indications of value, MPAC’s 2010 sale at 2725 Queensview Drive, both 2010 and 2013 Claridge Drive Sales, as well as all sales of units in the condominium building itself at 2200 Prince of Wales Drive which were 2015 and 2016 sales. This leaves us with the 2011 and 2012 Queensview Drive sales to derive indications of value.
31MPAC’s counsel relied upon Oladeji v Municipal Property Assessment Corporation, Region 09, 2018 CanLII 89426 (ON ARB), at paragraph 25 and 26 for the proposition that in some case, the best evidence of value of sale is when the sale agreement was negotiated and not the closing date. That decision does not stand for that proposition. In that case the condominium agreement of purchase and sale was negotiated in 2005 and the subject property’s transfer was in May 2013. This 2005 negotiated price was tendered as an indication of value for the January 1, 2012 day. The Board rejected the Appellant’s argument that a such prior agreement of purchase and sale price was any indication of value at closing or for the 2012 valuation day. In any event, even if we were to consider the date of the agreement of purchase and sale, it would still be outside the period of one year from the valuation date.
32With respect to the sales in the condominium building itself, MPAC submitted that builder sales can be considered as the Board did in Gladwin v Municipal Property Assessment Corporation, Region 02, 2019 CanLII 16522 (ON ARB) (“Gladwin”). At paragraph 45 of that decision the Board stated:
In this instance, the Board is presented with only Builder Sales as evidence by both parties. The Board recognizes the limitations of Builder Sales of not necessarily reflecting market determined sale prices. However, the fact that all the comparable properties by both parties are the result of Builder Sales and from the same condominium project, the Board sees merit in consistency of location and property type, thereby mitigating the short comings of non-market derived sales. The Board, therefore, finds that in this instance, Builder Sales are the best evidence from which it can determine current value.
33The present case is distinguishable from Gladwin. In Gladwin, there were only builder sales available for comparison. Both parties relied on condominium pre-construction contracts negotiated from 2008 to 2013, closing in 2014 and 2015 to determine the 2012 valuation date value of units constructed in 2013. The condominium declaration was registered in 2014. In Gladwin the Board was compelled, by the absence of comparable sales of finished units within the valuation day range, to use builder sales. In the present case, the Board has sales evidence of comparable properties within one year of the valuation day to provide an indication of value.
34We now turn to the sales evidence relied upon by the Appellant. Though they are within one year of the valuation day, the sales are all of unfinished condominium unit shells. They are not comparable to the subject properties which were finished condominiums on the state and condition day. Though the Appellant gave an estimate of $40 to $50 per square foot as the cost of bringing these unfinished shells to a finished state, there was no independent evidentiary support for this estimate Accordingly, the Board will not rely on these sales as comparable.
35MPAC’s 2011 and 2012 sales at 2725 Queensview Drive are of some assistance. The building was built in 2006 by the same builder of the subject properties and are very similar, except in the condominium description of unit sizes. The condominium declaration at 2725 Queensview Drive divided the three-storey building into eight units, consisting of vertical stacks of three floors each, the lower level, the ground level and the second level. This was described as a townhouse style commercial condominium. Each unit, consisting of three floors, had a total area of 3,500 sq. ft.
36The same builder constructed the virtually identical building at 2200 Prince of Wales Drive in 2015. However, this time he decided to also divide the building by floor, thus creating 24 units of approximately 1,200 sq. ft. Instead of being compelled by the condominium declaration to purchasing one unit of three stacked floors, each floor could be purchased individually.
37The Appellant purchased the subject properties, a ground level and the unit above, in a single agreement of purchase and sale in November 2013 for $755,000. This transaction closed in February 2016 after construction of the building and registration of the condominium declaration in 2015.
38The buildings at 2725 Queensview Drive and 2200 Prince of Wales Drive are virtually identical and in this respect are physically, very comparable. The unit sizes, however, are not comparable. Though the Appellant testified with respect to locational differences in relation to noise and traffic, there was no evidence that would support the value of any adjustment based on noise or traffic for commercial condominiums.
39Because of economies of scale, the sales of the 2725 Queensview Drive units of 3,500 sq. ft. would have a lower square foot value than the approximately 1,200 sq. ft. subject units. Unit 300-2725 Queensview Drive sold on November 30, 2011 for $835,000 at $239 per sq. ft. Unit 500-2725 Queensview Drive, sold in November 30, 2012 for $905,000 at $259 per sq. ft. The average of these two values is $249 per sq. ft. The subject units would sell for a higher value per square foot because they did not benefit from these economies of scale.
40The units at 2725 Queensview Drive were six years old at the valuation day and had undergone some physical depreciation. The subject units were newly constructed at the December 8, 2015 state and condition day. In these circumstances, on the evidence available, the Board finds that a reasonable 2012 per square feet value for the subject units would be $260 per sq. ft. This value is higher than the average comparable sales’ square footage value and recognizes that those comparables had some depreciation and benefited from economies of scale. There is no evidence which would substantiate a higher value. This would indicate a current value of $309,400 for Unit 401 ($260 x1,190 sq. ft.) and $315,900 for Unit 402 ($260 x 1,215 sq. ft.).
Findings on Issue 1
41The Board finds the January 1, 2012 correct current value for Unit 401 to be $309,400. The Board finds the January 1, 2012 correct current value for Unit 402 to be $315,900.
Issue 2 - Whether an equity reduction in the current value should be made?
42Pursuant the s. 44(3) of the Act, the Board is required to have reference to similar lands in the vicinity to ascertain whether the lands are equitably assessed and adjust the assessment if the adjustment would result in a reduction. The Board is statutorily required to consider this reduction where there is evidence of inequity in assessment. Both parties provided some evidence with respect to equity of assessment based on ASR of their respective comparables.
43MPAC has attempted to demonstrate equity by calculating ASRs of condominium units in the building. It derived these ASRs by dividing the 2012 assessments by 2015 and 2016 sale prices. This is not a fair measure of equity because it does not compare assessments based on a 2012 valuation day with 2012 current values of similar properties in the vicinity. An ASR study in meant to demonstrate that similar properties in the vicinity are underassessed in relation to their valuation day values, in this case January 1, 2012. As determined previously, 2015 and 2016 sale prices in the condominium building are not a reflection of 2012 current values. Accordingly, MPAC’s ASR calculations are of little assistance.
44The units within a condominium building form a natural neighbourhood and vicinity. It is reasonable to compare the assessments of similar units within a single building to determine equity. Unit owners with similar units would expect significant variations in assessments for similar units to be inequitable. For this reason, the Board will have reference to the 2016 assessment values of units within the condominium building. Equity between properties that are very similar may be compared on an assessment per square foot basis. (See Rennick v Municipal Property Assessment Corporation, Region 28, 2019 CanLII 14341 (ON ARB) at paragraph 16).
45MPAC’s evidence identified the 2012 assessments per square foot of 12 units within the building, in the 1,160 to 1,235 sq. ft. range, other than the subject units. These assessments per square foot varied between $242 and $286 with an average value of $272 and a median value of $273. The Board has found the correct current value of the subject units to be $260 per sq. ft., a value below both the average and median values. Section 44(3) only permits an equity adjustment when it would result in the reduction of the assessment to make it equitable. As the current value found is below the equitable value there is no adjustment to be made.
Findings on Issue 2
46The Board finds that no equity adjustment pursuant to s. 44(3) of the Act is warranted.
Issue 3 - Whether any of the accessory relief claimed by the Appellant should be granted.
47With respect to the Appellant’s request that the Board order the City of Ottawa to reconcile her accounts and strike any penalties, the Board has no jurisdiction to make such orders.
CONCLUSION
48The Board finds that the correct January 1, 2012 current value of Unit 401 is $309,400. The Board finds that the correct January 1, 2012 current value of Unit 402 is $315,900.
ORDER
49The Board orders that the assessment of current value for the 2016 taxation year for Unit 401 be reduced from $324,000 to $309,400. The Board orders the assessment of current value for the 2016 taxation year for Unit 402 be reduced from $330,000 to $315,900.
"Pierre R. Lavigne"
PIERRE R. LAVIGNE
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb
Telephone: 416-212-6349 Toll Free: 1-866-448-2248