9333533 Canada Inc. v. Municipal Property Assessment Corporation Region 09, 2022 CanLII 34932

Assessment Review Board

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

ISSUE DATE: April 25, 2022 FILE NO.: WR 177642

Assessed Person(s): 9333533 Canada Inc. Appellant(s): Shaoping Gao Respondent(s): Municipal Property Assessment Corporation Region 09 Respondent(s): City of Toronto

Property Location(s): 3662 Midland Avenue Municipality(ies): City of Toronto Roll Number(s): 1901-114-015-04950-0000 Appeal Number(s): 3458558 and 3487272 Taxation Year(s): 2021 and 2022 Hearing Event No.: 762171 and 765376

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

APPEARANCES:

Parties	Representative
9333533 Canada Inc; Shaoping Gao	Self-represented
Municipal Property Assessment Corporation	Alexander Kupisz and Mark Kane
City of Toronto	No one appeared

HEARD: February 4, 2022 and March 23, 2022 by telephone conference call

ADJUDICATOR(S): Anthony LaRegina, Member

DECISION

OVERVIEW

1The property owner, Shaoping Gao (the “Appellant”), filed a property assessment appeal on behalf of 9333533 Canada Inc. for the 2021 taxation year with the Assessment Review Board (the “Board”) regarding the property located at 3662 Midland Avenue (the “Subject Property”) in the City of Toronto (the “City”). Pursuant to s. 40(26) of the Act, the Appellant is deemed to have brought the same appeal in respect of the 2022 taxation year.

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), the Municipal Property Assessment Corporation (“MPAC”) conducted a general reassessment of the Subject Property and determined that its current value assessment (“CVA”) is $1,539,000 for the 2021 taxation year. It is the Appellant’s position that MPAC’s CVA is too high and that the correct CVA should be reduced to $949,048. At this hearing, MPAC takes the position that the CVA should be confirmed at $1,539,000 for the 2021 taxation year.

3Pursuant to s. 40(11) of the of the Act, the City is a party to this proceeding as the municipality in which the Subject Property is located. No one attended on behalf of the City.

4Pursuant to s. 44(3)(b) of the Act, MPAC takes the position that an equitable reduction of the CVA is not required. The Appellant asserts that an equity reduction is required.

Issues for the Hearing

5The issues in this proceeding are:

1. a determination of the correct current value of the Subject Property; and
2. whether a reduction in the current value should be made to make it equitable with the assessment of similar lands in the vicinity.

Result

6The Board finds that the correct current value of the Subject Property for the 2021 and 2022 taxation years is $1,539,000. 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.

Description of Subject Property

7The Subject Property is a 1.03 acre lot classified as vacant commercial land located at 3662 Midland Avenue in the City of Toronto. The Subject Property is located at the corner of Midland Avenue and McNicoll Avenue and has a 201.58 foot frontage and 223.1 foot depth. The property is zoned as employment lands.

ANALYSIS AND FINDINGS

Issue 1 – A determination of the correct 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 2021 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 2021 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016. 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.”

MPAC’s Evidence

9MPAC submitted two exhibits as part of its evidence package: Exhibit 1, the Statement of Response and Exhibit 2, an Equity Report.

10To arrive at the assessed value, MPAC relies on the sale of the Subject Property that occurred on May 16, 2016, as well as comparable properties that sold in the vicinity of the Subject Property.

11According to MPAC, the Subject Property sold on the open market just five months after the valuation day for $3,338,888. MPAC submits both the buyer and seller were not related and therefore, this sale constitutes an arm’s length transaction. MPAC submits that the property was already zoned employment, which allows for many uses, but was purchased specifically so the owner could build a gas station. MPAC also asserts that the Appellant/Owner met with the City in advance of the closing date and was assured that the application for a gas station would be approved.

12MPAC submitted the following four vacant commercial land sales in support of its assertion that the CVA should be confirmed.

Address	Prop. Code	CVA $	Sale Date	Sale Amount $	Time-Adjusted Sale (TAS) $	Site Area (Acres)	TAS Price/Acre $	Zoning
Subject 3662 Midland Avenue	105 Vacant Land	1,539,000	5/16/2016	3,338,888	3,205,332	1.03	3,111,972	Employment
Property 1 3101 Kennedy Road East	105 Vacant Land	4,405,000	07/31/2015	4,300,000	4,477,925	3.36	1,332,716	Employment
Property 2 2855 Markham Road	105 Vacant Land	1,802,000	12/20/2016	1,100,000	1,024,855	1.23	833,215	Employment
Property 3 2150 McNicoll Avenue	105 Vacant Land	8,000,000	01/13/2016	8,000,000	8,000,000	8.6	930,233	Employment
Property 4 2185 Markham Road	105 Vacant Land	1,084,000	04/05/2016	1,600.000	1,575,277	1.48	1,064,376	Employment

13MPAC submits the vacant commercial land sales are all inferior to the Subject Property demonstrating a median price per acre of $1,064,376. MPAC further submits that the best comparable is Property 1 at a sale price of $1,332,716 per acre as it is the closest location to the Subject Property but, because this property is 3.36 acres as compared to the Subject Property, which is 1.03 acres, the value per acre for the Subject Property should be higher due to the economies of scale and the fact that the Subject Property is a corner lot.

14MPAC submits that based on the May 2016 purchase by the Appellant the current value of the Subject Property should be the time adjusted sale value of $3,205,000. However, in the valuation report MPAC states that its opinion of value is $1,539,000. MPAC is not requesting an increase from the returned CVA of $1,539,000.

The Appellant’s Evidence

15The Appellant submitted Exhibit 3, Assessment Appeal Report for 3662 Midland Avenue, into evidence.

16The Appellant submits that the Subject Property is located on Midland Avenue which is a quiet street in a residential use area with low visibility commercial activity.

17The Appellant explains that he purchased the lot on July 20, 2016 for $3,338,000, but this price was far greater than the market value of the property. In fact, he claims there are no similar properties in the City that sold in that price range regardless of location, size and neighbourhood. The Appellant argues that he was a new immigrant to Canada and therefore ill informed about the Toronto Real Estate market and mistakenly contacted the listing agent to represent him in the transaction which resulted in him paying an inflated price for the lot. The Appellant claimed that he wanted to start a lawsuit against the listing agent but his lawyer advised him not to proceed as he had 16 months to make a decision between the time of his offer and the closing date making it difficult to argue his case.

18During cross-examination the Appellant explains that the lot was listed at $3,600,000 and that he offered $3,338,000 in March 2015 and that he took out a mortgage of $1,250,000 on May 16, 2016 to close the deal. He admits that the property was zoned employment and therefore preapproved for a plaza but not for a gas station. He also acknowledges that on February 11, 2016, he had a meeting with the City to discuss the possibility of building a gas station and, in August 2016 shortly after the closing, submitted the application for approval of a gas station. The Appellant confirmed that he received final approval from the City in 2018 but to date the property is still a vacant lot.

19The Appellant clarifies during cross examination that the transaction closed on May 16, 2016 and not July 20, 2016.

20The Appellant confirms during cross-examination that there is a large plaza and a retirement home across the street from the Subject Property.

21The Appellant also confirms that he arrived in Canada in 2012 and, that while he was known as a developer in his native country, this was his first development in Canada and was unfamiliar with the real-estate market.

22The Appellant argues that while he has not supplied evidence of comparable property sales in support of the current value, the market value of the Subject Property is much lower than the inflated selling price.

Findings on Issue 1 - Current Value of the Subject Property

23To determine a current value for the Subject Property, the Board has analysed the evidence submitted by both parties and concludes that the best evidence in support of the current value of the Subject Property is the four comparable vacant land sales submitted by MPAC with a TAS range per acre between $833,215 and $1,332,716. These properties are all in the vicinity of the Subject Property and are all vacant commercial land with the same employment zoning similar to the Subject Property.

24The Board agrees with MPAC that the four sales on a price per acre basis are inferior to the Subject Property when taking the economies of scale into consideration. Of the four vacant land sales, Property 1 at 3101 Kennedy Road East, is located at Kennedy Road East and McNicoll Avenue the shortest distance away from the Subject Property located at Midland Avenue and McNicoll Avenue. Property 1 is 3.36 acres and sold for a TAS value per acre of $1,332,716. The Subject Property is 1.03 acres, which is only one third the size of 3101 Kennedy Road East, and therefore, based on the economies of scale as suggested by MPAC, the Board agrees the Subject Property would likely sell for a higher value per acre than $1,332,716.

25The Board finds that the returned value of $1,539,000 represents a 15.5% increase in value per acre over the TAS sale price per acre of $1,332,716 for 3101 Kennedy Road East, which represents the top of the adjusted sale range of comparable properties. The 15.5% upward adjustment in value is very reasonable considering the differences in lot size and the fact that the subject property is also a corner lot.

26The Board therefore finds that based on the best available evidence the correct current value of the Subject Property is $1,539,000 which reflects MPAC’s opinion of value and the returned CVA.

27The Board rejects the sale of the Subject Property for the purposes of establishing the correct current value. Given what the Appellant has testified to, the circumstances surrounding the purchase, and the per acre pricing of the four comparable properties ranging from $833,215 to $1,332,716, it appears that the Appellant likely overpaid for the Subject Property at $3,111,972 per acre. The Board therefore finds the sale of the Subject Property to be unreliable for the purposes of establishing the correct current value of the Subject Property.

28The Board finds that as of January 1, 2016, the Subject Property was a vacant parcel of commercial land, zoned employment land, similar to the comparable properties in evidence. The final approval was given from the City to build a gas station in 2018 more than two years after the valuation day and to date, according to the Appellant, the Subject Property is still a vacant commercial lot.

29Based on the best available evidence the Board finds the correct current value of the Subject Property to be $1,539,000 for the 2021 taxation year based on the valuation day of January 1, 2016.

Issue 2 – Whether a reduction in the current value should be made to make it equitable with the assessment of similar lands in the vicinity

30Section 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.”

31The Assessment to Sales Ratio (“ASR”) of a sample of sold properties is a tool typically used to determine if a property in the vicinity is assessed above or 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 TAS price, expressed as a mathematical ratio.

32MPAC presented an equity analysis of 30 property sales of vacant commercial land with a property code of 105 located in the vicinity of the Subject Property that occurred between January 1, 2015 and December 31, 2016. This equity analysis of the 30 properties results in a median ASR of 0.99 with a Coefficient of Dispersion (“COD”) of 18.4. MPAC submits that its standards indicate that for vacant land properties, the median ASR should fall between 0.95 and 1.05, and the COD should be less than 25. In this case, both the median ASR and the COD are within the acceptable ranges, and therefore, MPAC submits that no downward adjustment to the current value is necessary to make it equitable with the assessments of similar properties in the vicinity.

33In support of an equity adjustment, the Appellant introduced the assessments of three comparable properties located in the vicinity of the Subject Property.

Location	2016 CVA	Lot Size S.F.	Assessment per S.F.	Remarks
Subject Property 3662 Midland Avenue	$1,539,000	44,431	$34.64	Vacant Commercial Land
2150 McNicoll Avenue	$8,000,000	374,616	$21.36	Vacant Commercial Land
2181 McNicoll Avenue	$1,521,000	100,624	$15.12	Vacant Commercial Land
3101 Kennedy Road East	$4,405,000	146,361	$30.09	Vacant Commercial Land
Median			$21.36

34The Appellant submits that the Subject Property is over-assessed by 62% when comparing the Subject Property’s assessed value per square foot of $34.64 versus the median assessed value per square foot of the three comparable properties of $21.36.

35The Appellant submits that the assessed value of the Subject Property should be $949,048 based on applying the median assessed value per square foot of $21.36 to the total lot area of 44,431.1 square feet.

Findings on Issue 2 - Equitable Reduction in Assessed Value

36The Board finds that the best evidence in support of an equitable reduction in the assessment value is MPAC’s equity study of 30 property sales with the same general nature, character and function as the Subject Property as compared to the assessments of three individual properties presented by the Appellant. MPAC’s study results in an ASR of 0.99 and a COD of 18.4, which are both within the acceptable parameters. Based on the ASR of 0.99, the Board agrees with MPAC that 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.

37The Appellant provided the assessment value per square foot of three properties and submits that an equity adjustment is warranted based on a median assessed value of the three properties at $21.36 per square foot. When using the assessed value per square foot methodology as opposed to the ASR to address equity, it is very important to ensure that the comparable properties used are very similar to the Subject Property in the absence of a sale of the property. The lot sizes of the three comparable properties are 226% to 843% larger than the Subject Property therefore artificially reducing the median price per square foot and therefore making the assessed value per square foot approach much less reliable. Additionally, two of the three properties presented by the Appellant in support of his equity argument, 3101 Kennedy Road East and 2150 McNicoll Avenue, both sold in the shoulder years and are included in MPAC’s equity study. These two properties have ASRs of 98.37% and 100% further supporting no equity adjustment is required.

38Based on the Equity Study presented by MPAC with an ASR of 0.99 resulting from the sale of 30 similar properties in the vicinity of the Subject Property which includes two of the three properties presented by the Appellant, the Board will make no further downward adjustment to the correct current value to compensate for the assessments of similar properties in the vicinity.

CONCLUSION

39The Board finds the correct current value of the Subject Property to be $1,539,000 for the 2021 and 2022 taxation years. Furthermore, the Board finds that no equity reduction is required under s. 44(3)(b) of the Act.

ORDER

40The Board orders that the assessment of the Subject Property be confirmed at $1,539,000 for the 2021 and 2022 taxation years.