2134672 Ontario Limited v. Municipal Property Assessment Corporation Region 09, 2022 CanLII 34935

Tribunals Ontario / Tribunaux décisionnels Ontario

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: April 28, 2022

FILE NO.: WR 178192

Assessed Person(s): 2134672 Ontario Limited

Appellant(s): 2134672 Ontario Limited

Respondent(s): Municipal Property Assessment Corporation Region 09

Respondent(s): City of Toronto

Property Location(s): 305 South Kingsway

Municipality(ies): City of Toronto

Roll Number(s): 1904-011-310-00100-0000

Appeal Number(s): 3456260 and 3487610

Taxation Year(s): 2021 and 2022

Hearing Event No.: 765078

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

APPEARANCES:

Parties	Representative
2134672 Ontario Limited	Robert Baranowski
Municipal Property Assessment Corporation	Mauro Pistillo
City of Toronto	No one appeared

HEARD: April 13, 2022, by telephone conference call

ADJUDICATOR(S): Jennifer Griffith, Member

DECISION

OVERVIEW

12134672 Ontario Limited (the “Appellant”) is the owner of 305 South Kingsway (the “Subject Property”) in the City of Toronto (the “City”). The Appellant filed an appeal for the returned assessment of $2,025,000 for the 2021 taxation year and returned assessment of $1,899,000 for the 2022 taxation year, with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”).

2Pursuant to s. 19(1) of the Act, the assessment of land shall be based on its current value; and s. 19.2(1)4 provides that, for the 2017 to 2022 taxation years, Municipal Property Assessment Corporation (“MPAC”) is required to assess this value as of the valuation date, January 1, 2016.

3It is the Appellant’s position that MPAC’s current value assessment (“CVA”) is too high and that the correct current value should be $1,504,000 based on the time adjusted sale of the Subject Property which occurred in June 20216. MPAC takes the position that the correct current value based on sales should be $1,964,000.

4Pursuant to s. 40(11) of the Act, the municipality in which the land is located is a party to this proceeding; however, no one appeared on behalf of the City.

5Pursuant to s. 44(3)(b) of the Act, MPAC takes the position that an equitable reduction of the current value is not required. The Appellant asserts that equity is not at issue. As the onus to demonstrate that an equitable reduction is required rests with the Appellant, the Board accepts the Appellant’s assertion that equity is not at issue.

Issues for the Hearing

6At issue in this proceeding is:

1. A determination of the correct current value of the Subject Property based on:

a. Sale of the Subject Property; and

b. Direct Comparison Approach.

Result

7The Board finds the correct current value of the Subject Property is $2,154,000 as of the valuation date January 1, 2016, which is applicable to the 2021 and 2022 taxation years for the reasons set out below. However, MPAC is not seeking a higher assessment, therefore, the Board will not increase the returned assessments.

8The Board also finds that equity pursuant to s. 44(3)(b) is not at issue and no further reduction is required.

9Therefore, the Board orders the following:

i. The returned assessment of $2,025,000 is confirmed for 2021 taxation year, and the following apportionment breakdown is changed as stated below;

ii. Residential Tax Class From $530,700 To $0.

iii. Commercial Tax Class From $1,494,300 To $2,025,000.

iv. The returned assessment of $1,899,000 is confirmed for the 2022 taxation year.

ANALYSIS

Description of the Subject Property

10The Subject Property is a residential dwelling. The structure has been converted to a Property Code 303, used solely as a Commercial Business. The Subject Property is situated on a lot size of 6,586 square feet (“sq. ft.”), with a total building area of 2,971 sq. ft., finished basement of 1,808 sq. ft. and had undergone extensive renovation in 2017.

Issue 1 - A determination of the current value of the Subject Property for the 2021 and 2022 taxation years.

11For the reasons discussed below, the Board finds the correct current value at the valuation date of January 1, 2016, is $2,154,000 for the 2021 and 2022 taxation years.

Issue 1a - Sale of the Subject Property

12Robert Baranowski acts as both the Appellant’s Representative and Witness. The Appellant’s Representative submits that the current value of the Subject Property on the valuation date of January 1, 2016, should be determined by reference to the sale price of $1,610,000 of the Subject Property on June 30,2016 which occurred on the open market.

13On cross-examination, the Appellant’s Representative confirmed that the Subject Property had undergone renovation in 2017 and estimates that the Appellant has spent in the range of $500,000 to $800,000 to date. He further testifies that this value could be more because the renovation is not fully completed.

14The Appellant’s Representative argues that no s. 34 Supplementary Assessment Notice was issued by MPAC to the Appellant to demonstrate the change in returned assessment value for the 2021 and 2022 taxation years.

15Mauro Pistillo, MPAC’s Representative called Erin Comeau as MPAC’s Witness and he presents a Valuation Report dated September 21, 2021 and testifies to the information contained in the report.

16MPAC’s Witness testifies that the Subject Property was sold in the open market on June 30, 2016, as Property Code 303 - Residential with a Commercial/Industrial Unit at a sale price of $1,610,000, and when the sale price was time adjusted to the valuation date of January 1, 2016, it results in a time-adjusted sale price of $1,504,000.

17MPAC’s Witness testifies that he inspected the Subject Property in February 2016 and confirmed that the Subject Property no longer had any residential apportionment, and the use was Commercial (Full). MPAC’s Witness testifies that together with another MPAC’s employee they inspected the Subject Property in January 2018 and at that time the Subject Property was occupied by a doctor, and the second floor was used for storage and was renovated. He also testified that the estimated cost of the renovation as provided by the Appellant’s Representative is in the range of $500,000 and $800,000.

18MPAC’s Representative testifies that after the sale, the Subject Property had undergone extensive renovation in 2017 changing the use from Residential with a Commercial/Industrial Unit, to Commercial (full). As a result, assessment notices with a returned assessment of $2,025,000 for the 2021 taxation year and returned assessment of $1,899,000 for 2022 taxation year were issued in accordance with s. 36(2) of the Act. In support of this argument, the MPAC’s Representatives cited three cases, the most relevant of which will be cited below in the Board’s determination.

19MPAC’s Representative argues that the time-adjusted sale price of the Subject Property is not representative of the State and Condition for the 2021 and 2022 taxation year. He submits that even if the estimated cost of renovation (range of $500,000 - $800,000) was to be added to the sale price of $1,610,000 for the Subject Property in 2016, it would result in a current value higher than the returned assessment. Based on the evidence MPAC’s Representative argues that the correct current value should be $1,964,000, based on sales evidence determined by the Direct Comparison Approach.

20In reviewing the evidence in support of current value, the Board finds that the sale of the Subject Property was an open market transaction between a willing buyer and a willing seller in the valuation year of 2016, and that there is no dispute of this fact by the parties.

21The Board agrees that the sale of the Subject Property in the open market is generally accepted as the best evidence of current value. However, in certain circumstances, it is not automatically accepted.

22The Board finds that in situations where the State and Condition and use of the Subject Property have changed during the valuation period (2017 - 2022 taxation years), the degree of the renovation and change in use will definitely impact the returned assessments for the years in question for the Subject Property. The Board finds that it is clear that the Appellant was aware of the returned assessments for the 2021 and 2022 taxation years, because Property Assessment Notices with a returned assessment of $2,025,000 for the 2021 taxation year and returned assessment of $1,899,000 for 2022 taxation year were issued in accordance with s. 36(2) of the Act, which are the subject of these appeals today before this Board. This finding is supported by the following two cases:

Simmatis v Municipal Property Assessment Corp., Region No. 6 [2017] CanLII 39816 (ON ARB) at paragraph 15 which states:

Property is assessed each year as it was when the tax roll was returned to the municipality. The roll must be returned by the second Tuesday following December 1 of the previous year, so the state of the property on that date is determinative of the

assessment. This is known as the state and condition date. For the 2016 taxation year, the state and condition date is December 15, 2015.

Canadian Tire Corp. Ltd. v. Municipal Property Assessment Corp., Region No. 9, [2021] O.A.R.B.D. No.139 at paragraph 18 which states:

State and Condition Date

As confirmed by the Board … “[t]he law in Ontario is well established that the state and condition of a property on the roll return date determines how that property is assessed for the following”

The roll return date is defined in s. 36(2) of the Act as “no later than the second Tuesday following December 1 in the year in which the assessment is made.” This is also referred to as a taxation year’s “state and condition date.” …

23The Board also finds that consideration must be given to all evidence presented by the parties and not only the sale of the Subject Property in determining the correct current value. Therefore, it would be necessary to test whether the time-adjusted sale price is reflective of other sale prices in the open market at or around the valuation date of January 1, 2016, between a willing buyer and a willing seller pursuant to s. 19(1) of the Act.

24Regarding the Appellant’s argument that MPAC failed to send out s. 34 Supplementary Assessment Notice for the 2021 and 2022 taxation years, the Board finds that there was no requirement to issue Supplementary Assessment Notice pursuant to s. 34 of the Act, because no changes in the returned assessment occurred, after MPAC issued Property Assessment Notices for the 2021 and 2022 taxation years pursuant to s. 36(2) of the Act, which is the subject of this appeal.

25Based on the evidence the Board accepts the oral testimony of the parties and finds that the average estimated cost of $650,000 ($500,000 + $800,000)/2) is warranted for the renovation and change in use. This estimated cost is based on the range provided into evidence by the parties. Therefore, the current value is the time-adjusted sale price, plus the average estimated cost of renovation ($1,504,000 + $650,000) which result in a current value of $2,154,000.

26The Board finds the current value based on the adjusted sale price is $2,154,000.

Issue 1b - Direct Comparison Approach Based on Sales

27The Direct Comparison Approach estimates the market value by comparing the sale prices of similar properties (in terms of lot size, total building area, year built, quality of construction etc.) that have sold within a reasonable timeframe of the valuation date to the Subject Property. In this case the valuation date is January 1, 2016.

28In determining the correct current value, the Board references s. 19(1) of the Act, which states that the assessment of land shall be based on its current value, which is defined 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.”

MPAC’s Evidence in Support of Current Value

29In support of current value, MPAC’s Witness presents the following five proposed comparable properties, which sold in 2015 and 2016 in homogeneous neighbourhoods identified as E04, E13 and D17. The Subject Property is in homogeneous neighbour E04.

30MPAC’s Witness testifies that properties abutting heavy traffic receive a negative 14% adjustment, medium traffic receives a negative 10% adjustment, and properties within proximity to educational institution, commercial building, multi-residential building receive a negative 4% adjustment.

31MPAC’s Witness provides both the actual and time-adjusted sale prices; however, he relies on the time-adjusted sale prices in his analysis, utilizing the Direct Comparison Approach to value. The following Table 1 is an analysis of the five proposed comparable properties:

Table 1

MPAC’s Sales Analysis

5 SUGGESTED COMPARABLE PROPERTIES	LOT SIZE (sq. ft.)	TOTAL BUILDING AREA (sq. ft.)	YEAR BUILT	SALE DATE	SALE PRICE	SALE PRICE (time adjusted) ("TAS")	TAS adjusted for site variables per sq. ft. based on total building area.
35 Kennedy Avenue	3275	1,942	1913	2015	$1,680,000	$1,885,150	$795.99
120 Roncesvalles Avenue	3,920.4	2,484	1890	2016	$1,750,000	$1,634,878	$684.48
347 Windermere Avenue	2,275	1,564	1924	2016	$1,512,500	$1,333,268	$784.27
372 Runnymede Road	3,987.5	2,686	2016	2016	$2,110,000	$1,947,898	$696.19
371 Parkside Drive	4,880	2,973	1910	2015	$1,750,000	$1,807,864	$583.77
Median							$696.19
Subject Property	0.28	835	1930	NIL	N/A	N/A	N/A

32Based on the above analysis MPAC’s Witness testifies that the median sale price per sq. ft. based on total building area is $696.19. When this median rate is applied to the Subject property it results in a value of $2,068,380 ($696.19 x 2,971 based on total building area). However, MPAC’s Witness accepts the Appellant’s Representative argument that the flooring of the second floor of the Subject Property is not completely finished and adjusted the value determined by the sales by a negative 5%, which results in an adjusted value of $1,964,961($2,068,380 – $103,419).

33On cross-examination, MPAC’s Witness testifies that the sale prices of the proposed comparable properties were not adjusted for differences in characteristics such as quality, economy of scale, vicinity etc. however, the sales were adjusted for differences in site variances (e.g., traffic patterns, proximity to commercial buildings, to multi-residential buildings and to educational institutions.

Appellants’ Evidence in Support of Current Value

34The Appellant’s Representative presents no other sales evidence in support of current value to be determined under the Direct Comparison Approach. At the hearing, the Appellant’s Representative states that he is not relying on the disclosure documents filed with the Board.

Finding of Current Value of the Subject Property for the 2021 and 2022 taxation years

35Reviewing the evidence presented in support of current value, the Board did not rely on the five sales presented by MPAC for the following reasons:

I. The four sales of comparable properties at 35 Kennedy Avenue, sold in 2015, 347 Windermere Avenue, sold in 2016, 372 Runnymede Road, sold in 2016, and 371 Parkside Drive, sold in 2015, because they are Single-Family detached (Not on Water) different than the Subject Property, which is assessed as a commercially used property for the 2021 and 2022 taxation years.

II. The fifth comparable property at 120 Roncesvalles Avenue, sold in 2016, was not relied on because it is older, built in 1890, with different use (Residential with Commercial/Industrial Unit, is a two and a quarter storey property, with smaller in site area and smaller in total building area, and renovated in 2010. Whereas, the Subject Property is fully used as a commercial building, with larger site and building areas, newer renovated in 2017 and built in 1931.

36The Appellant’s Representative presents no evidence of sales to be determined by the Direct Comparison Approach.

37Based on all of the evidence, the Board finds the best evidence of correct current value is the time-adjusted sale price of the Subject Property, sold in 2016, further adjusted for renovation which took place in 2017 for a total correct current value of $2,154,000 as stated above.

CONCLUSION

38The Board finds the correct current value for the Subject Property at the valuation date is $2,154,000. However, MPAC is not seeking an increase in assessment, therefore, the Board will not increase the returned assessment for the 2021 and 2022 taxation years.

39The Board also finds that equity pursuant to s. 44(3)(b) is not at issue and no further reduction is required.

ORDER

40Therefore, the Board orders the following:

i. The returned assessment of $2,025,000 is confirmed for 2021 taxation year, and the following apportionment breakdown is changed as stated below;

ii. Residential Tax Class From $530,700 To $0.

iii. Commercial Tax Class From $1,494,300 To $2,025,000.

iv. The returned assessment of $1,899,000 is confirmed for the 2022 taxation year.