Tribunals Ontario

Assessment Review Board

Issue Date: November 22, 2022 File No.: WR 181998A Amended Decision Issued: February 28, 2023

Assessed Person(s): Urban Lease Corp.; H & M Designer Inc. Appellant(s): Urban Lease Corp.; Nakhim Nakhimov Respondent(s): Municipal Property Assessment Corporation Region 14; City of Vaughan Property Location(s): 7250 Keele Street Municipality(ies): City of Vaughan Roll Number(s): See Schedule A Appeal Number(s): See Schedule A Taxation Year(s): See Schedule A Hearing Event No.: 776671

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

Appearances:

• Urban Lease Corp. and Nakhim Nakhimov: Elina Fish (Representative)
• H & M Designer Inc.: No one appeared
• Municipal Property Assessment Corporation: Charmaine Siddle (Representative)
• City of Vaughan: Jaroslaw Wowk (Representative)

Heard: October 4, 2022 by telephone conference call Adjudicator(s): Carly Stringer, Member

AMENDED DECISION

In accordance with Rule 99 of the Assessment Review Board’s Rules of Practice and Procedure, effective April 1, 2021, related to the correction of minor errors and in accordance with Section 21.1 of the Statutory Powers and Procedure Act regarding the correction of errors, this Amended Decision is issued to correct calculation error(s) in the Decision at paragraphs 5, 31, 33, and 34. The amendments have been underlined for ease of reference. There are no other changes in this Amended Decision.

OVERVIEW

1Urban Lease Corp. (the “Appellant”) filed appeals with the Assessment Review Board (the “Board”) relating to nine commercial units located at 7250 Keele Street (the “Subject Properties”, listed in Schedule A hereto) in the City of Vaughan (“Vaughan”) for the 2020 to 2022 taxation years. The Appellant argues that the returned assessments are too high. The Appellant submits that the Subject Properties should be valued as of January 1, 2020 rather than January 1, 2016.

2The Municipal Property Assessment Corporation (“MPAC”) is a responding party to these appeals. MPAC submits that the Subject Properties should be valued at $304,000 each for the applicable taxation years. MPAC submits that the legislated valuation day of January 1, 2016 applies and the Board does not have jurisdiction to apply another valuation day.

3The City of Vaughan is a statutory party to these appeals. The City of Vaughan asks the Board to deny the Appellant’s request to apply a 2020 valuation date to these appeals.

Issues for the Hearing

[4] At issue in this proceeding is:

1. What is the applicable valuation day?
2. What are the current values of the Subject Properties on the applicable valuation day?
3. Is the current value equitable with the assessments of similar lands in the vicinity?

Result

5For the reasons that follow, the Board determines that the applicable valuation day is January 1, 2016; that the correct current values of the Subject Properties are $294,000 each for the applicable taxation years; and that no reduction is required to make this current value equitable with the assessments of similar lands in the vicinity, resulting in a final value of $294,000 for each Subject Property.

ANALYSIS

Background and Description of Subject Properties

6The Subject Properties are nine commercial condominium units located at 7250 Keele Street in Vaughan. The Subject Properties are part of a commercial shopping mall complex focused on home improvement products and services. The Subject Properties are all 430 square feet (“sq. ft”) in size; are located on the first floor; have 14-foot ceilings; have a construction quality of 6; and were built in 2015.

7The Appellant purchased the Subject Properties pursuant to builder agreements executed between 2012 and 2013. While the Appellant testified that they paid roughly $330,000 per unit, MPAC’s expert provided evidence that the purchase prices varied per unit from between $275,000 and $330,000. The Appellant provided evidence that the sale prices were set by the developer and were non-negotiable. The Subject Properties were built subsequent to these agreements, and the Appellant took possession in 2016.

8In April 2021, the Appellant sold one unit for $205,000. In March 2022, the Appellant sold three units for $170,000, $195,000 and $195,000 respectively.

Issue 1 – What is the applicable valuation day?

Evidence and Submissions of the Parties

9The Appellant submits that the assessed values are incorrect because MPAC valued the properties as of January 1, 2016. The Appellant submits that the Subject Properties should be valued as of January 1, 2020. The Appellant submits that the Subject Properties are exempt from the province-wide extension of the assessment cycle. The Appellant submits that the postponement of the assessment cycle was a direct response to the unprecedented challenges of the pandemic and to provide stability to taxpayers. The Appellant submits that it could not have been the government’s intention to increase property taxes during the pandemic and make a taxpayer overpay in property taxes. In support of this position, the Appellant cites the Ontario Minister of Finance’s March 2020 Economic and Fiscal Update, entitled the “Ontario Action Plan 2020: Responding to COVID-19”.

10MPAC submits that the valuation day is January 1, 2016 pursuant to statute and regulation, and the Board does not have jurisdiction to change the legislated valuation day. The City of Vaughan agrees with this submission.

Findings on Issue 1

11The Board determines that the applicable valuation day is January 1, 2016, for the following reasons:

a. Section 19.2(1) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”) is explicit in instructing how to determine the day as of which land is valued for each taxation year. Paragraph 4 of that section stipulates that land is valued as of January 1, 2016 for the period consisting of the four taxation years from 2017 to 2020. Paragraph 5 states that after 2020, “for each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year that precedes the period by two years.”

b. Section 19.2(5) of the Act further provides that subsection (1) does not apply if the Minister prescribes a different day as of which land is valued for a specific taxation year.

c. The Minister prescribed a different valuation day for the 2021, 2022 and 2023 taxation years. Section 48.6 of O. Reg. 282/98 provides that “[f]or the purposes of section 19.2 of the Act, January 1, 2016 is prescribed as the day as of which land is valued for the 2021, 2022 and 2023 taxation years.”

d. The Act and regulations thereunder could not be clearer that properties are to be valued as of January 1, 2016 for the 2020, 2021, 2022 and 2023 taxation years. Neither the Act nor regulations thereunder provide for exemptions to this valuation day.

e. The Appellant has provided no basis in law to support the Board applying a valuation day other than that prescribed in statute and the regulations thereunder.

12The Board will apply the provisions of the Act and regulations thereunder. The legislation and regulations are clear that the valuation day for the applicable taxation years is January 1, 2016, without exception.

Issue 2 – What are the current values of the Subject Properties on the applicable valuation day?

Applicable Law

13In accordance with s. 44(3)(a) of the Act, the Board must first determine “the current value of the land”. 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”.

14Accordingly, the Board must determine what the Subject Properties would have sold for in an arm’s length transaction on the statutory valuation day. As outlined in relation to Issue 1 above, s. 19.2(1) of the Act confirms that the valuation day for the applicable taxation years is January 1, 2016.

Evidence and Submissions of the Parties

15MPAC’s expert opined that the current value of each of the Subject Properties as of January 1, 2016 is $304,000. In support of this opinion, MPAC’s expert provided evidence regarding the sales of 11 other condominium units at 7250 Keele Street. These proposed comparable units were almost identical to the Subject Property in that all were on the first floor; construction quality code of 6; effective year built of 2015; and unit height of 14 feet. MPAC’s expert applied a time adjustment to the sale prices of these 11 units to determine what these properties would have sold for on January 1, 2016.

MPAC’s Proposed Comparable Properties and Sales Information

Unit #	Sale Date	Time Adjusted Sale Amount	Time Adjust Rate Per Sq. Ft.
319	September 2017	$362,623	$843.31
13	May 2017	$416,814	$969.33
5	July 2017	$404,286	$940.20
69	July 2017	$304,972	$709.24
346	June 2017	$294,426	$684.71
192	March 2017	$318,375	$740.41
356	September 2017	$362,623	$843.31
91	May 2017	$261,617	$608.41
228	October 2017	$273,871	$636.91
90	August 2017	$304,874	$709.01
222	June 2017	$279,485	$649.97

16The proposed comparable units varied in time adjusted sale price per sq. ft. from $608.41 to $969.33. MPAC’s expert determined a median time adjusted sale price per sq. ft. of $709.24 for the above-noted properties. MPAC’s expert then multiplied this median rate per sq. ft. by the 430 sq. ft. size of each of the Subject Properties to arrive at an opinion of value of $304,000 (rounded).

17The Appellant stated that they do not dispute the 2016 value. In contrast to this submission, however, the Appellant presented evidence that several of the Subject Properties sold in 2021 and 2022. The Appellant argued that these 2021 and 2022 sale prices indicate a decline in value and a current value far lower than $304,000 suggested by MPAC. The Appellant did not take a position on the precise current value of the Subject Properties.

Findings on Issue 2

18The Board finds that MPAC’s proposed comparable properties are nearly identical to the Subject Properties in terms of location, size, unit height, quality of construction, and year built. For that reason, the Board is satisfied that MPAC’s proposed properties are sufficiently comparable to be used in the valuation of the Subject Properties.

19However, the Board notes that six of MPAC’s proposed comparable sales sold more than 18 months past the January 1, 2016 valuation day. In general, the Board prefers sales of comparable properties within 12 months on either side of the valuation day, referred to as the “shoulder years”. The rationale behind this is that the further a sale is from the valuation date, the less confident the Board can be that it reflects the market value on the valuation day. From time to time, the Board has accepted sales evidence from as far as 18 months on either side of the valuation day: see for instance Allen v Municipal Property Assessment Corporation Region 15, 2021 CanLII 44157 (ON ARB) at paragraph 26.

20Therefore, the Board accepts MPAC’s evidence relating to sales that occurred within 18 months of the valuation day, being the sales of units 13, 346, 192, 91 and 222, as the best evidence of current value. The Board finds that the remaining sales are too far from the valuation day for the Board to be confident they are reliable indicators of market value as of January 1, 2016.

21Sales occurring in 2021 and 2022, such as those of the Subject Properties as referenced by the Appellant, are simply too far from the valuation day for the Board to be confident they are reliable indicators of market value as of January 1, 2016. For this reason, the Board will not rely on the Appellant’s evidence of sales of the Subject Properties in 2021 and 2022.

22Relying on evidence of the sale amounts of units 13, 346, 192, 91 and 222, the Board finds that the median time adjusted rate per sq. ft. is $684.71. Applying this rate to the Subject Properties’ 430 sq. ft results in a current value per unit of $294,425.30 or $294,000 rounded.

23Sales information can also be useful insofar as it provides a range of reasonable values. In this instance, the comparable properties of units 13, 346, 192, 91 and 222 range in time adjusted sale price from $279,485 to $416,814. A current value of $294,000 rounded, as calculated above, fits comfortably within that range.

24Based on the best available evidence, the Board finds that the current value of each of the Subject Properties for the applicable taxation years is $294,000 rounded.

Issue 3 – Is the current value equitable with the assessments of similar lands in the vicinity?

Applicable Law

25Section 44(3)(b) of the Act 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”.

Submissions of the Parties

26The Appellant has not provided evidence or made submissions relating to equitable assessment.

27MPAC submits that equity was not raised in the Appellant’s Statement of Issues, nor has the Appellant provided evidence to suggest an equity adjustment is warranted. MPAC also submits that none of the evidence its expert put forward suggests an equity adjustment is required, since all comparable properties were assessed similarly to the Subject Properties.

Findings on Issue 3

28While the Appellant did not raise equitable assessment in their Statement of Issues, this Board has held that it has a statutory duty to consider equitable assessment pursuant to s. 44(3)(b) regardless of whether or not the parties have raised equitable assessment as an issue in dispute: see General Motors of Canada Company v St. Catharines (City), 2021 CanLII 77584 (ON ARB) at paragraph 45. In this instance, the Board must determine whether it has sufficient evidence before it to determine whether an equitable adjustment is required and, if there is sufficient evidence, decide whether or not it supports a reduction in the current value.

29The Board has accepted MPAC’s evidence of the sales of five comparable properties being units 13, 346, 192, 91 and 222. MPAC has also provided evidence of the current value assessments of these properties. Units 13, 346 and 192 were assessed at $325,000, while units 92 and 222 were assessed at $305,000. The Board determines this is sufficient evidence to determine whether an equitable adjustment is warranted using an Assessment to Sale Ratio (“ASR”) analysis.

30The 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 sold properties are assessed below their current value, a reduction in the subject assessment below current value is required to make the subject 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.

31Analyzing the ASRs of units 13, 346, 192, 91 and 222 results in a median ASR of 1.09. The Board finds this ASR suggests that these comparable properties, which are similar to the Subject Properties and in the same vicinity, are being assessed higher than their respective current values as determined through their sales. The Board finds therefore that no reduction to the current value of $294,000 for the Subject Properties should be made.

CONCLUSION

32The Board finds that the applicable valuation day is January 1, 2016.

33The Board finds the current value of each Subject Property is $294,000. The Board also finds that no reduction in this amount is required for the purposes of equitable assessment.

ORDER

34The Board orders that the assessments of each of the Subject Properties for the 2020, 2021 and 2022 taxation years be reduced to $294,000.

"Carly Stringer"

CARLY STRINGER MEMBER Assessment Review Board

Website: www.tribunalsontario.ca/arb

SCHEDULE A

SCHEDULE A - Continued