Tribunals Ontario / Tribunaux décisionnels Ontario

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

ISSUE DATE: June 09, 2022 FILE NO.: WR 178392

Assessed Person(s): Zhaohui Sun and Ping Huang Appellant(s): Zhaohui Sun and Ping Huang Respondent(s): Municipal Property Assessment Corporation Region 22 Respondent(s): City of Guelph

Property Location(s): 2 Sagewood Place Municipality(ies): City of Guelph Roll Number(s): 2308-060-009-40952-0000 Appeal Number(s): 3471123, 3464477, 3471124 and 3490019 Taxation Year(s): 2019, 2020, 2021 and 2022 Hearing Event No.: 763694

Legislative Authority: Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Representative
Zhaohui Sun and Ping Huang	Self-represented
Municipal Property Assessment Corporation	Tara Jones
City of Guelph	No one appeared

HEARD: April 29, 2022 by video conference

ADJUDICATOR(S): Dan Weagant, Member

DECISION

OVERVIEW

1Zhaohui Sun and Ping Huang (the “Appellants”) purchased the subject property in September 2015. Subsequent to the purchase, a building permit was issued for the construction of a secondary storage building on the subject property. This triggered an investigation by the Municipal Property Assessment Corporation (“MPAC”) and for the 2019 taxation year, an omitted assessment was applied to the subject property to reflect the value of the new building.

2Prior to the application of the omitted assessment, the assessment of the subject property was $362,000. The omitted assessment applied by MPAC was $17,000, for a 2019 total assessment of $379,000. The Appellants did not appeal the annual assessment of $362,000 for the 2019 taxation year, only the omitted assessment of $17,000.

3The Appellants appealed the 2019 taxation year omitted assessment and in accordance with s. 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), that appeal was deemed for the 2020, 2021 and 2022 taxation years.

Issues for the Hearing

4At issue in this proceeding is:

1. A determination of the current value of the subject property; and
2. Whether a reduction in the current value determined is necessary for it to reflect equitable assessment when reference is made to the assessments of similar lands in the vicinity.

Result

5The Assessment Review Board (“Board”) finds that the current value of the subject property is $362,000.

6The Board also finds that the current value determined must be reduced for it to represent equitable assessment when reference is made to the assessments of similar lands in the vicinity. The current value is reduced to $347,000.

7The Board finds that the omitted assessment value applied to the subject property for the 2019 and 2020 taxation years is $0, consistent with submissions made by MPAC and agreed to by the Appellant at the hearing.

8For the 2021 and 2022 taxation years the assessment is reduced from $379,000 to $347,000, in the Residential property class.

PRELIMINARY MATTERS

9At the outset of the hearing, in response to questions from the Board, the parties submitted that the $17,000 value attributed to a secondary structure being built on the subject property was erroneous. While a building permit had been issued for the work, the Parties agreed that during the years under appeal, the shed was not advanced to a point where it should be assessed.

ANALYSIS

Description of Subject Property

10The subject property is a single-family dwelling measuring 1,074 square feet (“sq. ft.”) of living area, on a single storey. The subject lot is 0.15 acres in size. The subject dwelling lies within a neighbourhood of mixed housing types and styles.

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

MPAC’s Case

11MPAC relied on the sale of the subject property that occurred in September 2015 to determine its current value. The value of that transaction was $350,500, with an effective date of September 4, 2015. MPAC pointed out that this date was less than four months from January 1, 2016; the valuation day stipulated in the Act for the years under appeal.

12MPAC submitted that the best indication of the current value of the subject property was the value of the subject transaction with an adjustment for the effects of time on that sale price. MPAC submitted that the sale price should be increased by approximately 3.3% to account for changes in values from the date of the sale and the valuation day. This adjustment percentage was based on a study conducted by MPAC, of 525 residential sales that occurred between January 2015 and December 2016. The overall change in values over that 24-month period was 23.64%, or approximately 1% per month. MPAC’s indicated adjustment of the sale price of the subject property is slightly below that 24-month average.

13When applied to the sale value of the subject property, the time adjustment factor of 3.3% results in a value of $362,000 (rounded). It was MPAC’s position that this is the best evidence of the current value of the subject property.

14MPAC also carried out a direct comparison approach study of five proposed comparable properties in Guelph, and within 600 metres of the subject property. Those five properties were all single-storey, single-family dwellings, ranging in living area from 979 to 1,325 sq. ft. on the main level. The time-adjusted sale values of these five properties ranged from $371,712 to $439,425.

15MPAC submitted that the sales comparison clearly showed that the assessment of the subject property, based on its time-adjusted sale value, was slightly below the range of value indicated in the market for comparable properties. For that reason, MPAC argued that the returned assessment should be confirmed.

Appellants’ Case

16The Appellants submitted that the purchase price on record for the subject property was not a good indication of its current value because that agreement to purchase was undertaken when the Appellants were under duress.

17The Appellants explained that their family was moving to Guelph from out of town, near the beginning of the upcoming school year. They were also dealing with other personal matters at the same time, including going through the process of obtaining a driver license.

18The Appellants testified that the asking price of the property was $345,000.

19Instead of the purchase price of the subject property, the Appellants submitted that its current value should be based on the assessments of nearby properties. In advancing this position, the Appellants reviewed the per sq. ft. assessment values of 23 properties in the immediate neighbourhood; 13 on Sagewood Place and 10 on Kortright Road.

20All 23 of these properties were two-storey dwellings that exceed the building area of the subject property by 260 sq. ft. to 1,041 sq. ft. To make the comparison with these nearby properties, the Appellant determined the average per sq. ft. current value assessment of those 23 properties at $266 per sq. ft. When applied to the subject property the Appellants submitted the result of $286,000 (rounded) is the correct current value of the subject property.

21In an alternative approach, the Appellants submitted that current value could also be determined, based on a percentage of the asking price of a property for sale in the marketplace. Citing a transaction that occurred in Meaford Ontario, the Appellants submitted that they purchased a property for 23% less than the asking price. From this they submitted an appropriate means of determining the current value of the subject property would be to reduce the asking price at the time of the subject sale ($345,000) by 23% for a current value of $266,000 (rounded).

Findings on Issue 1

22The Act defines current value as being “…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…”. The Act also stipulates that the valuation day for the taxation years under appeal is January 1, 2016.

23This section of the Act effectively sets out the kind of evidence that is best for the determination of current value. The Board has widely held that a sale of the subject property is the best evidence of its current value and that the closer the sale date is to the legislated valuation day, the more indicative that sale value is of its current value.

24MPAC’s position is based on a sale of the subject property, with a small increase to reflect the changes in the market from the date of the sale to the legislated valuation day. The increase applied was consistent with MPAC’s findings of the change in residential sale values during the period of time of 12 months before and 12 months after the valuation day.

25The Appellants view the sale of the subject property as being too high because the agreed-to price was based on the urgency on the Appellants’ part that the property be purchased in time for their children to register for school at the appropriate time. They testified that there were a number of things going on in their family’s life that added to this urgency, including the requirement for a property that could accommodate a storage container in their possession and that they were in the process of obtaining an Ontario Driver’s license.

26The Board views these submissions as an indication by the Appellants that they were not a “willing buyer” as referenced in the definition of current value in the Act. Given the testimony at the hearing, the Board notes the following with respect to the sale in 2015:

• the successful offer was 1.6% higher that the asking price;
• negotiations for residential properties regularly transact in the summer and into early September. The timing of the transaction does not in and of itself constitute duress in the negotiating process; and
• the necessity of finding a place for a storage container is a consideration of the process of the move and not the value of the property transacted.

27The Board cannot find anything in this set of circumstances that would support that the sale price was not between a willing seller and a willing buyer. The property was listed for sale by a licensed broker and there was nothing in evidence to suggest there was anything unusual in the conclusion of the transaction.

28In making their determination of the current value of the subject property, the Appellants ignored the concept indicated in the definition of current value that makes specific reference to sales. The Act stipulates that current value is the value determined between a willing buyer and a willing seller.

29The Appellants’ comparisons to 23 nearby properties fails in determining current value on two counts. Firstly, comparing the subject single-storey dwelling to a list of two-storey dwellings confounds the concept of “comparability”. While the 23 properties cited are demonstrably in the same local neighbourhood, they are simply not comparable enough to the subject property to use to determine its current value.

30Secondly, the Appellants’ comparison to these properties relies on assessment, not sale values. Comparing the subject property’s current value to the assessments of other properties is insufficient evidence to determine the current value, which by statute is a determination of value based on sales.

31The Appellants’ alternative approach, that current value can be determined by discounting the asking price by a certain percentage was simply not supported by the evidence. This assertion was based on a single, previous transaction in a market far from the subject property, for a property in a different property class.

32Accordingly, the Board finds that the best evidence of the current value of the subject property is that of MPAC. The resulting time adjustment to the sale of the subject property is based on an established valuation approach and most closely represents the definition of current value in the Act.

33The Board finds the current value of the subject property is $362,000.

Issue 2 – Does the current value determined need to be reduced for it to represent equitable assessment when reference is made to the assessments of similar lands in the vicinity?

Appellants’ Case

34By comparing the subject property to the assessments of properties in the vicinity, the Appellants were effectively attempting to have the current value of the subject property reduced for the purpose of equitable assessment. In doing so they submitted that the best indication of equitable assessment was the average per square foot assessment value of 23 properties in the immediate vicinity of the subject property. That value of $266 per sq. ft., when applied to the subject property, results in a value of $286,000.

MPAC’s Case

35MPAC prepared an equity study that compared the assessments of 30 residential properties in the vicinity of the subject property with their respective, time-adjusted sale prices. The relationship between assessments and sale prices is known as an assessment to sale ratio (“ASR”) and is a common method of determining if a specific set of properties is assessed at or near its current value.

36MPAC’s equity study indicated that the median ASR of its sample of 30 properties was 0.96. According to MPAC this means that properties are assessed at approximately 4% below what the time-adjusted sale values for those properties would indicate.

37MPAC submitted that a median ASR that falls between 0.95 and 1.05 indicates that equitable assessment is being achieved and submitted further that no reduction in the current value determined was necessary for it to represent equitable assessment.

Findings on Issue 2

38The Act requires the Board to reduce a current value determined if doing so would make the assessment of the subject property equitable when reference is made to the assessments of similar lands in the vicinity.

39The Appellants advanced a case for a reduction in the current value determined by comparing the subject property to properties in the immediate vicinity. Vicinity is an important part of determining if a reduction in the current value should be made for the purposes of equitable assessment. But it is only one component of that consideration.

40The second component of the test of equitable assessment is similarity. The properties used by the Appellants for the purpose were all two-storey dwellings. In its evidence, MPAC provided the details of five single-storey dwellings within 600 metres of the subject property.

41A determinative case in deciding what evidence to use in deciding whether a current value determined requires reduction for the purposes of equitable assessment is Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299 (“Loblaw”), where Justice Nordheimer wrote, in paragraph 25:

In my view, the proper approach to be taken to determining what are “similar lands in the vicinity” is that set out by Saunders J. in Trizec, that is, that all points of comparison must be considered.

42In this case, all points of comparison are best demonstrated by MPAC’s selection of the five most comparable properties in its current value evidence. The data for each of the five properties was detailed and demonstrated their similarity to the subject property. The ASRs of those five properties range from 0.89 to 1.02, with a median of 0.96. This is good evidence that, where all points of comparison are used, the assessments of similar properties in the vicinity are 4% below the current value determined.

43The Board finds that the current value determined, of $362,000 requires a downward adjustment of 4%, and that the equitable assessment of the subject property is $347,000 (rounded) as a result.

CONCLUSION

44The Board finds that the current value of the subject property is $362,000 for the 2019, 2020, 2021 and 2022 taxation years.

45The Board also finds that the current value determined must be reduced for it to represent equitable assessment when reference is made to the assessments of similar lands in the vicinity. The assessment is reduced to $347,000.

46The Board finds that the omitted assessment value applied to the subject property for the 2019 and 2020 taxation years is $0, consistent with submissions made by MPAC and the Appellants at the hearing.

ORDER

47The Board orders that the omitted assessment of $17,000 for the 2019 and 2020 taxation years is reduced to $0 and that the 2021 and 2022 taxation year assessments are reduced from $379,000 to $347,000, in the Residential property class.