Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 30, 2021

FILE NO.: WR 169392

Assessed Person(s): Sydenham Properties Inc.

Appellant(s): David Rak

Respondent(s): Municipal Property Assessment Corporation Region 25

Respondent(s): City of Owen Sound

Property Location(s): 80 9th Street East Suite 204

Municipality(ies): City of Owen Sound

Roll Number(s): 4259-040-030-03110-0000

Appeal Number(s): 3419671 and 3448539

Taxation Year(s): 2020 and 2021

Hearing Event No.: 742369

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

APPEARANCES:

Parties	Representative
David Rak	Self-represented
Municipal Property Assessment Corporation	Grayham Santin
City of Owen Sound	No one appeared

HEARD: March 17, 2021 by telephone conference

ADJUDICATOR: Anthony LaRegina, Member

DECISION

OVERVIEW

1David Rak (the “Appellant”), representing himself as the current property owner, filed a property assessment appeal for the 2020 taxation year with the Assessment Review Board (the “Board”) regarding his condominium property located at No. 80, 9th Street East Suite 204 (“Subject Property”) in the City of Owen Sound (“City”). Pursuant to s. 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), the Appellant is deemed to have brought the same appeal in respect of the 2021 taxation year.

2Pursuant to the provisions of the Act, the Municipal Property Assessment Corporation (“MPAC”) conducted a general reassessment of the Subject Property and determined that its current value assessment was $352,000. It is the Appellant’s position that the MPAC’s current value assessment is too high based on the condition of the common elements in the building. At this hearing, MPAC has taken the position that the current value assessment should be confirmed at $352,000.

3Pursuant to s. 40(11) of the of the Act, the City is a party to this proceeding. No one appeared at the hearing on behalf of the City, and no evidence was submitted on its behalf.

4The Subject Property was purchased by the Appellant on March 24, 2014 from the builder for $408,140 and took occupancy of the unit on January 3, 2020. The purchase is categorized in MPAC’s evidence as an open market sale, and there is no evidence to dispute the validity of the sale.

Issues for the Hearing

5At issue in this proceeding is:

1. a determination of the current value of the Subject Property; and
2. whether an equity reduction in the current value should be made to compensate for the assessment of similar lands in the vicinity.

Result

6The Board finds that the correct current value of the Subject Property for the 2020 taxation year is $367,000. Pursuant to s. 44(3)(b) of the Act, no further equitable reduction is required to compensate for the assessment of similar lands in the vicinity. MPAC is not requesting an increase in assessment, and therefore the Board confirms the returned assessment value of $352,000 for the 2020 taxation year.

Description of Subject Property

7The Subject Property is a residential condo in a median high-rise building, located at No. 80, 9th Street East in the downtown area of Owen Sound. The Subject Property has a building area of 1,240 square feet and is located on the second floor with a north west exposure and a balcony directly overlooking the river. The effective year built is 2019. The Subject Property has been returned at $352,000 for the 2020 taxation year.

ANALYSIS AND FINDINGS

Issue 1 – A determination of the current value of the Subject Property

8The first issue to be determined on this appeal is the correct current value of the Subject Property for the 2020 taxation year. Pursuant to s. 19(1) of the Act, the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”). As defined in the Act, “current value means 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.”

9To determine market value, MPAC has utilized the direct sales comparison approach and submitted into evidence the sale of comparable properties in the vicinity of the Subject Property. The comparable properties rarely sell on the valuation day of January 1, 2016, and therefore their sale values are time-adjusted to greater or reduced values depending on whether the date of the sale occurred before or after the valuation day. According to the time-adjusted evidence submitted by MPAC, there was a 54.36% increase in market value over an 84-month period starting January 18, 2013 and ending January 31, 2020. MPAC created a time adjustment factor table and graph by month covering the same period and applied these values to time-adjust the comparable sales provided in evidence.

MPAC’s Comparable Properties

10The Board has reviewed the sale of the Subject Property as well as the three suggested comparable property sales, sold between 2013 and 2019 in the same building as the Subject Property, submitted by MPAC (see Table 1 below).

Table 1 - MPAC’s Comparable Property Sales

	Subject Property	Property 1	Property 2	Property 3
Address	80 9th Street East Suite 204	80 9th Street East Suite 404	80 9th Street East Suite 304	80 9th Street East Suite 201
Property Code and Description	(370) Residential Condominium	(370) Residential Condominium	(370) Residential Condominium	(370) Residential Condominium
Current Value Assessment $	352,000	352,000	348,000	353,000
Occupancy/Date	January 2020	September 2020	November 2019	January 2020
Agreement of Purchase and Sale Date	March 2014	March 2019	November 2013	November 2013
Sale Value $	$408,140	$482,919	$351,965	$297,212
TAS sale value $	416,711	350,116	359,356	303,453
Total Building Area – Square Feet	1,240	1,240	1,240	1,294
Floor Level	2	4	3	2
Structure Code and Description	(353) Condo Apt in Med/High Rise Corner Unit more than one open balcony	(353) Condo Apt in Med/High Rise Corner Unit more than one open balcony	(353) Condo Apt in Med/High Rise Corner Unit more than one open balcony	(353) Condo Apt in Med/High Rise Corner Unit open balcony, Unit abuts stairs
Bedrooms	2	2	2	2
Bathrooms	2	2	2	2
Fireplace	1	1	0	1
MPAC’s Opinion of Comparability to Subject Property		Superior, higher floor, better view, similar unit. Higher price	Similar, same building area, balconies and view. Subject has gas fireplace while this unit does not.	Inferior, location faces south east rather than the river. The unit also abuts a stairwell and only has one balcony.

11MPAC has taken the position that the upper limit of current value should be the time adjusted sale price of the Subject Property of $416,711. In this case, MPAC has made an additional 10% downward adjustment to reflect the incomplete state of the Subject Property and the common elements within the building’s structure to a value of $375,000.

12MPAC has estimated the breakdown of the 10% adjustment as follows: 5% for internal plumbing, 2% for miscellaneous and paint issues for unfinished items within the interior and 3% for unfinished common elements. The common element adjustment is based on the 34 suits in the subject building resulting in each suite being responsible for 3% of the overall cost. MPAC did not address the quantum of the 3% other than to apply it to the current value of the Subject Property and assume it would be enough to pay for the outstanding unfinished common elements beyond the amount covered by Tarion Warranty Corporation (“Tarion”).

13MPAC further submits that the Appellant has not entered any evidence to quantify the amount of money required to complete the outstanding common elements, thus making it very difficult for MPAC to quantify a proper adjustment to compensate for the completion of the common elements in the building.

14MPAC requests that the Board find the current value to be $375,000 based on the 10% negative adjustment for unfinished items within the unit and the building.

15In support of the $375,000 value, MPAC refers to Suite 404 located directly above the Subject Property, which sold in March 2019 for $482,919 - that is $72,000 greater than the $408,140 paid by the Appellant 5 years earlier.

The Appellant’s Evidence

16The Appellant submits that on March 10, 2020, the builders went into insolvency, creating many delays to completing the interior of the suites as well as the common elements. In fact, the Appellant asserts that his shower was finally completed the week before the hearing. However, during cross examination, the Appellant admitted that the only item left to complete within his suite is the replacement of a gable on the vanity which has already been ordered.

17The Appellant further submitted that when he purchased his suite, the building was advertised as having an exercise room, media room, sauna, lockers, rooftop terrace, floating dock, guest suite, riverside patio and guest parking, all of which have yet to be completed. According to the Appellant, once the builder filed for bankruptcy, Tarion’s program kicked in to assist in ensuring that the building would be completed.

18As of March 10, 2020, the owners of 22 of the 34 suites had taken possession of the property. As to the remaining suites, most of them were on the 6th floor and were purchased directly from the Trustee by North Ridge Builders in December 2020. North Ridge Builders would complete the remaining work in the twelve suites and either lease or sell them.

19The Appellant also submitted that a list of all the deficiencies and outstanding items was presented to Tarion by the Engineers and Architect without a detailed costing to complete the work. According to the Condo Association Lawyers, Tarion would pay up to $1,500,000 to complete the work, but any overages would likely have to be absorbed by the 34 owners.

20The Appellant argues that MPAC’s quantum to complete the deficiencies needs to be discounted by something greater than 3% to deal with all the unfinished common elements. Furthermore, the Appellant submits that there have been no sales on the open market since the March 10, 2020 insolvency date, and therefore there is no market evidence of the value of the condo in its current state. Furthermore, the Appellant stresses that during the completion of the common elements, the noise, dirt and dust will affect his quality of life and enjoyment which will also negatively impact the value of the Subject Property during this period.

Findings on Issue 1 - A determination of the current value of the Subject Property

21In support of establishing a current value for the Subject Property, the Board has always held that the best evidence is the sale of the Subject Property. In this case the Subject Property sold in March 2014 for $408,140. There is no evidence to suggest the sale was not a legitimate arms length transaction. Therefore, the Board will rely on the sale of the Subject Property to establish the current value as of January 1. 2016.

22Based on the price-change-over-time graph showing little or no change for the 2014 and 2015 period, the Board finds that the March 2014 sale value of $408,140 is the best evidence of current value of the Subject Property. The Board will therefore make no further time adjustment to the March 2014 sale value. To further support the validity of the sale value, MPAC has shown that a very similar Suite 404 in the same building located directly above the subject property was sold for $482,919 in July 2019, five years after the sale of the Subject Property. According to MPAC, the building already had substantial problems which were visible to the purchaser of Suite 404, but these issues did not deter him from purchasing the suite.

23MPAC has made a downward adjustment of 7% for interior suite finishes and an additional 3% reduction to compensate for the finish of the common elements. The Board notes that the Appellant requested a larger reduction than 3% for common element deficiencies for overages beyond the $1,500,000 that would be paid by Tarion. At the same time the Appellant admitted during cross examination that the interior of his unit was totally complete except for the replacement of the gable on the vanity.

24The Board notes that the Appellant has provided no quantitative evidence to support the value of completing the deficiencies in the common elements, leaving MPAC to estimate a downward adjustment of 3% based on experiences with similar situations. Based on the interior of the Subject Property being pretty much complete, it would stand to reason that the 10% adjustment made for overall deficiencies equating to $40,814 is substantially greater than the 3% and can all be applied to complete the common elements. Accordingly, in the absence of any other quantitative evidence, the Board will accept MPAC’s adjustment of 10% of current value in order to complete the unfinished areas within the building. Therefore, the correct current value of the Subject Property would be $367,326, resulting from adjusting the sale price of $408,140 by $40,814 (10%) to compensate for the unfinished common elements.

25The Board also agrees with the Appellant that there have been no sales since the insolvency date of March 10, 2020, and therefore there is no evidence of the market value of the condo suites since that date. Regardless, even though a unit has not been sold, there is no evidence to suggest that this building is not in demand. The additional units are being completed and sold or leased by North Ridge Builders, and the remaining parts of the building are being finished with Tarion’s financial support and oversight services. There is no evidence to suggest that this building will not be completed, in fact it is currently being completed.

26Based on the best available evidence, the Board finds the correct current value of the Subject Property to be $367,000 based on a January 1, 2016 valuation day.

Issue 2 – Whether an adjustment to the assessment of the land should be made to compensate for the assessment of similar lands in the vicinity

27Section 44(3)(b) directs that, after determining current value, 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.”

28The Assessment to Sales Ratio (“ASR”) of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If other properties are assessed below their current value, a reduction in the assessment below current value is required to make the assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by comparing the assessment as returned to the time-adjusted sale price, expressed as a mathematical ratio.

29MPAC presented an equity analysis of 30 property sales of residential condominiums with a property code of 370 that occurred from January 1, 2014 to January 31, 2017, located within five kilometres of the Subject Property. This equity analysis of 30 properties results in a median ASR of 0.965 with a Coefficient of Dispersion (“COD”) of 5.9. MPAC submits that its standards indicate that for residential properties, the median ASR should fall between 0.95 and 1.05, and the COD should be less than 15. If the median ratio falls within this range, this reveals that the current value assessments are reflective of sales prices in the vicinity and therefore, no further adjustment is required. In this case, the median ASR falls within the range at 0.965 and the COD is 5.9. Therefore, MPAC recommends that no further downward adjustment is required to the current value of the Subject Property.

30The Appellant has not entered any evidence in support of an equity adjustment.

Findings on Issue 2 - Equitable Reduction in Assessed Value

31The Board finds that based on MPAC’s equity study which resulted in the ASR of 0.965 and a COD of 5.9, no additional downward adjustment is warranted to the current value of the Subject Property to ensure that the assessment is equitable with the assessment of similar properties in the vicinity.

CONCLUSION

32The Board finds that the correct current value of the Subject Property is $367,000 for the 2020 taxation year. Furthermore, the Board finds that no equitable reduction is required under s. 44(3)(b) of the Act.

ORDER

33MPAC has not requested an increase in assessment value, therefore the Board orders that the assessment of the Subject Property be confirmed at $352,000 for the 2020 and 2021 taxation years.