Harry Battu and Ramandeep Battu v. Municipal Property Assessment Corporation Region 15 and City of Mississauga, 2021 CanLII 88754

Tribunals Ontario Tribunaux décisionnels Ontario Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: September 15, 2021 FILE NO.: WR 172942

Assessed Person(s): Harry Battu and Ramandeep Kaur Battu Appellant(s): Harry Battu and Ramandeep Battu Respondent(s): Municipal Property Assessment Corporation Region 15 Respondent(s): City of Mississauga Property Location(s): 1329 Meredith Avenue Municipality(ies): City of Mississauga Roll Number(s): 2105-070-162-18000-0000 Appeal Number(s): 3420793, 3435691 and 3444747 Taxation Year(s): 2019, 2020 and 2021 Hearing Event No.: 749481

Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties Harry Battu and Ramandeep Battu Municipal Property Assessment Corporation City of Mississauga

Representative Self-represented Laurie DeWinter No one appeared

HEARD: June 10, 2021 and August 5, 2021 by telephone conference call

ADJUDICATOR(S): Dan Weagant, Member

DECISION

OVERVIEW

1Prior to the 2019 taxation year, Harry and Ramandeep Battu (the “Appellants”) constructed a single-family dwelling on the subject property on Meredith Avenue, at the corner of Delco Avenue.

2Prior to the construction of the dwelling, the land value was assessed by the Municipal Property Assessment Corporation (“MPAC”) at $623,000. There is no dispute regarding the land value prior to the house being constructed. Effective January 1, 2019, MPAC applied a supplementary assessment to the subject property to reflect the value of the new single-family dwelling. The value of this supplementary assessment was $1,601,000. When added to the land value established prior to the supplementary assessment, the total assessment applied by MPAC for the 2020 and 2021 taxation years is $2,224,000.

Background

3Upon receiving MPAC’s initial assessment, post-construction, the Appellants believed the amount was too high and filed an appeal. The Appellants believe the correct current value, including the improvements, should be in the range of $1,800,000 to $1,850,000 for the 2020 and 2021 taxation years.

Issues for the Hearing

4At 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; and
3. The resulting value attributed to the supplementary assessment applied by MPAC, effective January 1, 2019.

Result

5The Assessment Review Board (“Board”) finds that the value of the supplementary assessment, effective January 1, 2019 is $1,437,000. When added to the undisputed land value of $623,000, the current value of the subject property at 1329 Meredith Avenue, for the 2020 and 2021 taxation years is $2,060,000, in the Residential Property Class.

6The Board also finds that there is no evidence to require a reduction in this value for it to represent equitable assessment when reference is made to the assessments of similar properties in the vicinity.

ANALYSIS

Issue 1 – What is the current value of the subject property?

MPAC’s Case

7To determine the current value of the subject property, MPAC selected two properties that sold in 2016 with characteristics comparable to the subject property. The data attributed to the two comparable properties and the subject property are summarized as follows:

	Subject Property - 1329 Meredith Avenue	MPAC Comparable No. 1 - 1383 Broadmoor Avenue (“Broadmoor”)	MPAC Comparable No. 2 - 1305 Northaven Drive (“Northaven”)
Lot Area	0.19 acres (Corner Lot)	0.38 acres (Regular Lot)	0.18 acres
Living Area (square feet)	4,402	4,491	3,554
Quality of Construction	8.5 as returned	8.5	8.5
Bathrooms	6.5 (corrected to 4.5)	4.5	6.5
Bedrooms	4	4	4
Finished basement area (square feet)	2,298	2,107	1,864
Garage size (Square Feet)	636	757	402
Sale Price and Date	N/A	$2,800,000 / March 2016	$2,150,000 / July 2016
Time Adjusted Sale (TAS) price	N/A	$2,711,604	$1,945,748
2016 current value assessment (“CVA”)	$2,224,000	$2,861,000	$2,031,000
TAS / Square Foot	N/A	$603	$547
CVA / Square Foot	$505	$637	$571

8Having determined that these two properties were suitably comparable to the subject property, MPAC determined the Time Adjusted Sale (“TAS”) price, per square foot for each. The results for Broadmoor and Northaven were $603 and $547, respectively.

9MPAC then applied the average of these two values per square foot to the 4,402 square feet (“sq ft”) of living area at the subject property to arrive at a current value of $2,531,150.

10MPAC acknowledged that this value is higher than the value returned and confirmed that it was not seeking an increase in the assessment for the years under appeal. It is MPAC’s position that this higher value supports the value of $2,224,000 applied to the 2019 and subsequent years.

Appellants’ Case

11The Appellants advanced a range of value of $1,800,000 to $1,850,000, based on the results of two separate appraisals prepared for the subject property in 2019. These appraisals were prepared by two separate financial institutions. The Appellants testified that the appraisals were prepared for the purpose of financing of the subject property and the costs accumulated over the construction period. The Appellants did not produce these documents. Neither author was available at the hearing for to answer questions about those appraisals or the findings.

12In addition, the Appellants submitted as comparisons, four real estate listings for properties in the local neighbourhood. Those real estate listings indicated asking prices in the $1,700,000 to $1,795,000 range, with one sale reported in 2020, of $1,838,000.

13To support their position, the Appellants also submitted their testimony and photographic evidence of the subject property in its finished state. They submitted that the level of finish, workmanship and overall quality was at a lower level of the two properties used for comparison by MPAC. Given these differences in quality, the Appellants believe the quality rating applied by MPAC of 8.5 is too high and that a lower rating should apply to the subject property.

14Lastly, the Appellants submitted that the two comparable properties used by MPAC are in a different neighbourhood than the subject property and therefore are unreliable indicators of current value. They did not quantify the difference in values between the two neighbourhoods.

Findings on Issue 1

15The best indication of the current value of any property is a sale of that property in the open market, on or near the valuation day set in the Assessment Act R.S.O. 1990, c. A.31. The next best indicator of a property’s current value is the sale or sales of other properties that can be reasonably compared to the subject property and, where necessary, adjusted for differences in characteristics.

16In this case, there is no open market sale of the subject property. The Appellants acted as their own general contractor in completing the subject dwelling. For that reason, there is no reliable, timely, open market sale of the subject property to use to determine its correct current value.

17MPAC chose two sales that occurred in 2016 as being comparable to the subject property for the purpose of determining its current value. These two properties, Broadmoor and Northaven are in a different neighbourhood than the subject property.

18The Appellants advanced no actual sales of properties for comparison. Their comparison to the subject property was in the form of a number of undated real estate listings and one sale that took place in 2020. That sale was not adjusted for the effects of time on the sale and given it occurred in 2020. It is of no value in comparing it to the subject property because:

• It occurred four and a half years after the valuation day;
• There is no data attached to the sale to determine the property’s age, condition, quality or size; and
• There is no indication if it was an open market sale.

19MPAC’s reason for its selection of Broadmoor and Northaven was the lack of comparable properties in the Subject Property’s immediate neighbourhood. Indeed, of the 30 sales advanced by MPAC in its equity analysis, only four of these sold for more than $1,000,000 (including the two comparable properties).

20The Appellants viewed this as a flaw in MPAC’s analysis and submitted that MPAC’s chosen comparable properties are not appropriate because they are assessed as having quality of construction ratings of 8.5 and the subject property’s rating is lower than that.

21They submit instead that two bank appraisals undertaken in 2019 should be considered the best evidence of current value. Neither appraisal document was in evidence. There was no evidence as to their purpose, or the intention of the respective authors as to the findings. The results of the appraisals are of no assistance to the Board in determining what the subject property would have sold for, on the open market, in a transaction between a willing seller and a willing buyer, on the valuation day of January 1, 2016.

22Accordingly, the Board prefers to consider the comparable sales of Broadmoor and Northaven. These two sales were in an open market, made between willing market participants and occurred in proximity to the valuation day. They also share many of the same features and characteristics as the subject property.

23In previous decisions, the Board has held that in order for a property to be used for current value comparison, it needn’t be identical; it only needs to be reasonably comparable so that meaningful comparisons and adjustments can be made in the process of arriving at a current value for the subject property.

24Northaven, upon further consideration is not comparable enough for determining the current value of the subject property. Its living area is approximately 20% smaller that the subject property, it has more interior amenities and a smaller attached garage.

25Broadmoor has a larger and wider lot and is six years older than the subject property, but the remaining characteristics of Broadmoor are very similar. The number of bedrooms, bathrooms and fireplaces are the same and the square footage of living area differs by only 89 sq ft. The Board finds that the Broadmoor comparable property advanced by MPAC is the best comparison to use in making its finding of the current value of the subject property.

26Two areas of comparison need to be accounted for before the current value of the subject property can be determined:

• quality of construction; and
• lot size.

Quality of Construction

27There was a great deal of evidence at the hearing related to the quality of construction of the subject property and that of Broadmoor. MPAC applied a quality rating of 8.5 to both properties and described this level as reflecting custom construction, higher grades of finishes and amenities above what is expected in standard construction.

28The Appellants submitted that there were significant differences in the level of construction between the subject dwelling and Broadmoor and these differences indicate the subject property is not at the same quality of construction. Photographic evidence at the hearing showed the different flooring, moldings, exterior finishes, cabinetry, ceiling heights and other amenities that MPAC considers when applying various quality of construction ratings.

29The Appellants were not able to demonstrate either what the lower quality of construction would be, nor were they able to quantify, in current value terms, what the difference in value would be when that lower quality of construction is applied.

30The Board finds that the subject property does not have the same level of construction finishes as Broadmoor. The evidence indicates a lower quality of construction for the subject property. Broadmoor, therefore, represents a property that, with all other things being equal, would have a higher current value than the subject property.

Lot Size

31The only direct evidence of lot value available at the hearing was the agreed-to land value of the subject property before the addition of the subject dwelling. That value is $623,000 for 0.21 acres, corner lot with 60 feet of frontage. The Broadmoor lot is a regular lot of 0.38 acres with 100 feet of frontage.

32Given that corner lots are of lesser value in the marketplace (as confirmed by MPAC at the hearing), a slight adjustment to both lot size and frontage of the subject property would result in a lot of approximately half the size and value of the lot at Broadmoor. By doubling the agreed-to land value for the subject property the resultant land value portion of the time adjusted sale price of Broadmoor is approximately $1,246,000.

33When this land value is deducted from the time adjusted sale price of $2,711,604 for Broadmoor, the result is $1,465,604; representing that portion of the time adjusted sale price attributed to the dwelling. By dividing that value by Broadmoor’s 4,491 sq ft of living area, the result is $326.34 per square foot.

34When this, per square foot value is applied to the subject property’s 4,402 sq ft, of living area, the result is $1,436,549 or $1,437,000, rounded. While this result for the dwelling does not literally account for the differences in quality of construction, the Board notes that Broadmoor is six years older than the subject property. The Board finds the age of Broadmoor serves to offset the difference of value attributed to the difference in quality of construction.

35By adding the value of the subject dwelling to the agreed-to land area of $623,000, the result is $2,060,000. The Board finds this represents the best indication of current value, based on the evidence available at the hearing.

Issue 2 – Should the current value determined be reduced to achieve equitable assessment when reference is made to the assessments of similar properties in the vicinity?

36The Appellants made no submissions on the equitable assessment of the subject property when reference is made to the assessments of similar properties in the vicinity.

37MPAC provided an equity study that compared the assessments of 30 single family dwellings in the vicinity that sold in 2015 or 2016, to their respective time-adjusted sale values. From this comparison, MPAC determined that similar properties in the vicinity sold at or very near to their assessed values. It concluded that no reduction in the current value determined for the subject property was necessary for that value to reflect equitable assessment.

38The Board finds that there is no evidence to support a reduction of the current value determined is necessary for it to reflect equitable assessment.

ORDER

39The Board orders that the value of the supplementary assessment applied by MPAC, effective January 1, 2019 is reduced from $1,601,000 to $1,437,000. The Board also finds that the assessment of the subject property is reduced from $2,224,000 to $2,060,000 in the Residential Property Class for the 2020 and 2021 taxation years.