Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: May 27, 2022
Assessed Person(s): Building Block Holdings Inc
Appellant(s): Building Block Holdings Inc; Brendan Charters
Respondent(s): Municipal Property Assessment Corporation Region 09
Respondent(s): City of Toronto
Property Location(s): 1189 Lawrence Avenue West
Municipality(ies): City of Toronto
Roll Number(s): 1908-042-240-00900-0000
Appeal Number(s): 3415475, 3415473, 3415474, 3415472, 3491762, 3491763, 3491764
Taxation Year(s): 2018, 2019, 2020, 2021, 2022
Hearing Event No.: 763669
Legislative Authority: Section 33 and Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
| Parties | Representative |
|---|---|
| Building Blocks Holdings Inc Brendan Charters |
Brendan Charters |
| Municipal Property Assessment Corporation | Mauro Pistillo |
| City of Toronto | No one appeared |
HEARD: April 20, 2022 by telephone conference call
ADJUDICATOR(S): Dan Weagant, Member
DECISION
OVERVIEW
1For the 2018 and 2019 taxation years, the Municipal Property Assessment Corporation (“MPAC”) applied two omitted assessments to the subject property in accordance with section 33 of the Assessment Act R.S.O. 1990, c. A.31 (the “Act”). The value of these two omitted assessments was $970,000. This value was added to the previous returned value of $548,000 for a total assessment, effective July 1, 2018, of $1,518,000.
2The omitted assessments applied by MPAC were to recognize a change in value resulting from a renovation and addition to the existing structure.
3For the 2020 taxation year, MPAC re-assessed the subject property to reflect the renovation and addition that occurred to the original structure and that was part of the overall project that concluded in 2018, and the change in the market value from those changes. That additional value was $412,000 resulting in a new assessment of $1,930,000 for the 2020 and 2021 taxation years.
4As part of the appeal process initiated by the Appellant, certain corrections to data were made, including an adjustment to land area and to building area. These adjustments resulted in a reduced assessment of $1,865,000 for the 2022 taxation year.
5The Appellant, believing the omitted assessments were too high, appealed those additional omitted values. In doing so, the Appellant set the stage for statutory deeming of appeals from one year to the next, in accordance with s. 40(26) of the Act. That is what gave rise to the deemed appeals for 2020, 2021 and 2022.
6MPAC believes its approach to the assessment of the subject property for the years under appeal is correct and seeks confirmation of the assessments returned. The Appellant believes the assessments are all too high and seeks a reduction in current value for all years under appeal to $1,227,000.
Areas of Agreement
7The parties agree that the effective date of the omitted assessments is July 1, 2018 and that the correct assessment of the subject property prior to those omitted assessments was $548,000.
Issues for the Hearing
8At issue in this proceeding is:
A determination of the current value of the subject property for the years under appeal, including a determination of the most appropriate method of determining current value;
Whether an equity reduction in the current value determined is necessary for it to be equitable when reference is made to similar lands in the vicinity; and
The value of the omitted assessments applied by MPAC for the 2018 and 2019 taxation years.
Result
9The Assessment Review Board (“Board”) finds that the current value of the subject property for the 2020, 2021 and 2022 taxation years is $1,679,000.
10The Board also finds that a downward adjustment to the current value determined is necessary for it to represent equitable assessment when reference is made to the assessments of similar lands in the vicinity.
11Therefore, the assessment of the subject property at 1189 Lawrence Avenue West, for the 2020 and 2021 taxation years, is reduced from $1,930,000 to $1,588,000. For the 2022 taxation year, the assessment is reduced from $1,865,000 to $1,588,000. For the 2020, 2021 and 2022 taxation years the assessment is apportioned as follows:
In the Residential property class: $145,600
In the Commercial property class: $1,442,400
12The value of the omitted assessments applied by MPAC, effective July 1, 2018, and effective date January 1, 2019 are amended as follows:
In the Residential property class, from $136,600 to $145,600;
In the Commercial property class, from $833,400 to $894,400.
ANALYSIS
Description of Subject Property
13The subject property is a mixed-use building containing commercial offices on the first two floors and a residential apartment on the third floor. Total floor area comprises approximately 6,180 square feet (“sq. ft.”) including 4,248 sq. ft. of commercial space on the first and second storeys and a residential apartment on the third storey of 1,973 sq. ft. The basement comprises 2,000 sq. ft. with 1,800 sq. ft. finished.
14The subject structure was originally constructed in 1956. The 2018 renovation / addition was the only change to the subject property on record since it was originally constructed.
Issue 1 – What is the current value of the subject property for the 2020, 2021 and 2022 taxation years?
MPAC’s Case
15MPAC compared the subject property with four proposed comparable properties on Lawrence Avenue West, Eglinton Avenue West and St. Clair Avenue West. MPAC expanded its search area to five kilometres from the subject property in order to obtain these four sales. They range from1.63 kilometres to 4.35 kilometres distant from the subject property.
16The comparable sales cited by MPAC have lot sizes ranging from 2,524 sq. ft. to 9,612 sq. ft. All four are two storeys in height and are on streets with what MPAC describes as a heavy traffic pattern.
17Time adjusted sale (“TAS”) values of the four proposed comparable properties ranged from $1,636,942 to $3,045,340, with a median of $3,079,172. TAS values per square foot of building area ranged from $303.59 to $557.75 with a median of $412.49.
18To determine the current value of the subject property from this data, MPAC took the median TAS price per square foot of building area ($412.56) and applied it to the 6,180 sq. ft. at the subject property for a final opinion of value of $2,549,590.
19MPAC submitted that this calculated value supports the latest current value assessment returned of $1,865,000 and asked the Board to confirm the values attributed to the omitted assessments in 2018 and 2019 and to set the overall assessment for 2020, 2021 and 2022 at $1,865,000, with $1,697,200 in the Commercial property class and $167,800 in the Residential property class.
Appellants’ Evidence
20The Appellant submitted that the subject property was unique in the area and that comparisons with the sales of other properties as a means of determining current value was limited by the differences in character between the subject property and other properties. The Appellant concluded that the direct sales comparison approach was not a suitable method of determining the current value of the subject property.
21The Appellant preferred the cost approach to value which adds the value of the land upon which the building is situated to the value of the improvements to the land represented by the subject building. To support that approach, the Appellant produced a cost ledger, itemizing the costs accrued during construction to bring the subject structure up to its completed state in 2018; the year in which MPAC applied its omitted assessments.
22The cost ledger was a detailed accounting of all the components of the renovation / addition project, with a total cost attributed of $1,452,872. In response to questions from the Board, the Appellant confirmed that this total included a ‘starting value’ of the building before construction began, of $321,370. The Appellant explained that this was an accounting approach that attributed a portion of the property’s overall value to the building. The renovation / addition project costs were added to this starting value to arrive at a value of the subject improvements.
23When the starting value of the structure is removed from the total, improved value of $1,452,872 the result is $1,131,502. According to the Appellant, this amount represents the best indication of the value of the renovation / addition.
Findings on Issue 1
24Newly renovated properties in the vicinity of the subject property are not numerous. The Parties had difficulty developing a list of properties to compare the subject property with to arrive at a comparable value.
25MPAC advanced its case, based on the per square foot, time adjusted sale values of four commercial properties in Toronto. It determined that each of the four were inferior in value when compared to the subject property. That determination was made because each of the four proposed comparable properties were smaller that the subject property, older than the subject property and had not undergone recent renovations like the subject property had.
26The four comparable properties proposed by MPAC have very little in common with the subject property. They are all two-storey structures, whereas the subject property has three storeys. MPAC’s proposed comparable properties are smaller than the subject structure, ranging from 69% to 88% of the subject structure size.
27While the subject property is a stand-alone structure, the four comparable properties advanced by MPAC are all connected to their neighbours, in a traditional “main street” configuration. Photographic evidence provided at the hearing confirms that the overall function and character of these four comparable properties are different from the subject property.
28The Appellant submitted that, in order to derive a correct current value for the subject property, the best way was to consider the actual costs of the renovation and add that amount to the current value of the subject property prior to the renovations. The Appellant accounted for the costs of the renovation / addition project and added that value to the original value of the subject property prior to the project.
29The Board finds that the proposed comparable properties advanced by MPAC are not suitably comparable to the subject property to derive a correct current value.
30The Board also finds that the best approach to value in this case is the cost approach, as demonstrated by the Appellant. That approach takes the value of the property before the improvements, adds the cost of improvements and results in the new value, after renovation. This is a clear and logical path.
31The Appellant’s evidence indicates that the cost value of the renovation / addition project, net of the previous assessed value and the value of land was $1,131,502. When this amount is added to the current value assessment before the renovation / addition of $548,000, the total is $1,679,502 ($1,679,000, rounded).
Issue 2 - Does the current value determined need to be reduced for it to be equitable when reference is made to the assessments of similar lands in the vicinity?
32The Appellant made a direct comparison of the subject property’s returned assessment to the assessments of four properties in the immediate neighbourhood. Those four properties were 480 Lawrence Avenue West, 1139 Lawrence Avenue West, 1145 Lawrence Avenue West and 1024-1026 Caledonia Road. These four properties had site areas ranging from 4,800 sq. ft. to 7,227 sq. ft., whereas the subject site has a site area of approximately 5,000 sq. ft.
33The current value assessments of these four properties range from $937,000 to $1,863,000. The Appellant submitted that since these four properties were close to the subject property and that their respective land areas were similar, their respective assessment value indicate a range of assessment value for the subject property.
34The Appellant further submitted that when the value of the renovations at the subject property are considered the result is approximately $1,227,000, and that an assessment of that amount would be equitable.
35MPAC prepared an Assessment to Sale Ratio (“ASR”) study that compared the assessments of 30 similar properties in the vicinity of the subject property to their respective time-adjusted sale values. This approach requires that sales occurred for each of the similar properties identified. The ASR study is a common method of determining equitable assessment.
36MPAC’s result was a median ASR of 0.962, meaning that among the 30 properties in its sample, there were the same number of ASRs above 0.962 as there were below that figure. MPAC compared that result with its own standards, suggesting that any median ASR in such a study that falls within a range of 0.95 and 1.05 indicates that equitable assessment is being achieved in the vicinity of the properties within the sample.
37MPAC concluded that, since its study resulted in an ASR of 0.962, equitable assessment was being achieved in the vicinity of the subject property and therefore, a reduction in the current value determined was not necessary.
Findings on Issue 2
38The concept of equitable assessment, and a finding of an adjustment in current value for that purpose, includes two components in the legislation. Those two components are similarity and vicinity. To apply any test of equitable assessment, both components must be considered.
39There is no doubt that the four properties cited by the Appellant are both similar to the subject property and in the same vicinity. However, there is insufficient data in the Appellant’s evidence regarding the improvements present on those four properties. Only land areas are shown and it was clearly not the Appellant’s position that only land area should be taken into account when setting the assessment of the subject property. The Appellant’s evidence on an adjustment in current value to achieve equitable assessment is inconclusive.
40MPAC’s study of 30 properties provides ASR’s ranging from 0.708 to 1.337. The Board notes that the 30 properties all have the same property code as the subject property. That is good evidence that the sample is made up of similar properties.
41MPAC’s study was accompanied by a location map, showing where each of the 30 properties in the sample are located in relation to the subject property. Twenty-one of these properties are within the area bounded by Allen Road, Eglinton Avenue West, Caledonia Road and Lawrence Avenue West. Given the geography of the area, the Board finds that those properties cited in MPAC’s equity study that lie north of the 401 and west of Caledonia Road are demonstrably outside of the defined vicinity of the subject property.
42When these nine properties lying outside the vicinity of the subject property are removed from the sample, the resulting median ASR is 0.946. noting that 2/3 of the 21 remaining ASRs are below 1.00. This is clear evidence that, on a balance of probabilities, similar commercial properties in the vicinity of the subject property are assessed at an amount just below 95% of their respective current values, as determined by sales data.
43When the median ASR of the amended sample of 0.946 is applied to the current value determined for the subject property ($1,679,000), the result is $1,588,000 (rounded).
Issue 3 – What are the values of the omitted assessments applied by MPAC, effective July 1, 2018?
44Using the equitable assessment value, the Board must determine the values of the omitted assessments applied by MPAC in 2018 and 2019. Those omitted assessments totalled $970,000. The Residential component of that total was $136,000 (14%), with $833,400 (86%) being applied to the Commercial component of the subject property for 2018 and 2019.
45When the previous assessment, prior to the application of these omitted assessments ($548,000) is deducted from the new assessment determined herein ($1,588,000) the result is $1,040,000. By applying the same percentage to both the Residential and Commercial components of the omitted assessments when they were applied by MPAC, the Board finds that the values of the omitted assessments in 2018 and 2019 are:
In the Residential property class (14%): $145,600
In the Commercial property class (86%): $894,400
CONCLUSION
46The Board finds that the current value of the subject property is $1,679,000.
47The Board also finds that a reduction in the current value determined is necessary for it to represent equitable assessment. Accordingly, the assessment of the subject property is $1,588,000.
48The Board finds that the combined value of the omitted assessments applied by MPAC for the 2018 and 2019 taxation years is $1,040,000.
ORDER
49The Board orders that the assessments of the subject property are amended in accordance with Schedule A attached.
"Dan Weagant"
DAN WEAGANT
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb
Schedule A
| Appeal Number / Taxation Year | Section of the Assessment Act | Returned Value | Board Order Value |
|---|---|---|---|
| 3415475 - 2018 | 33 | $ 136,600 | $ 145,600 |
| 3415473 - 2018 | 33 | $ 833,400 | $ 894,400 |
| 3415474 - 2019 | 33 | $ 833,400 | $ 894,400 |
| 5415472 - 2019 | 33 | $ 136,600 | $ 145,600 |
| 3491762 – 2020 | 40 | $1,930,000 | $1,588,000 |
| 3491763 - 2021 | 40 | $1,930,000 | $1,588,000 |
| 3491764 - 2022 | 40 | $1,865,000 | $1,588,000 |