Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
January 26, 2022
FILE NO.:
WR 172193
Assessed Person(s):
Yan Dong, Elgin Mills Homes Limited
Appellant(s):
Yan Dong
Respondent(s):
Municipal Property Assessment Corporation Region 14
Respondent(s):
Town of Richmond Hill
Property Location(s):
6 Caine Street
Municipality(ies):
Town of Richmond Hill
Roll Number(s):
1938-050 055-95232-0000
Appeal Number(s):
3424079, 3423596, 3424080 and 3443971
Taxation Year(s):
2019, 2020 and 2021
Hearing Event No.:
748175
Legislative Authority:
Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties
Representative
Yan Dong
John He
Municipal Property Assessment Corporation
Elva Yu
Town of Richmond Hill
No one appeared
HEARD:
July 12, 2021 by telephone conference call
ADJUDICATOR(S):
Joanne Laws, Member
DECISION
OVERVIEW
1This decision relates to two appeals of omitted assessments made pursuant to s. 33 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), for 6 Caine Street (the “Subject Property”) in the Town of Richmond Hill.
2For the 2019 and 2020 taxation years the Municipal Property Assessment Corporation (“MPAC”) assessed the Subject Property as a vacant lot. In 2019 a residence was built on the land, and the Appellant purchased the Subject Property and took possession on November 20, 2019.
3In May 2020 MPAC issued two notices of omitted assessments pursuant to s. 33 of the Act in the amount of $687,000 for the new residence: The first is effective November 20, 2019 and the second is effective January 1, 2020.
4The Assessment Review Board (“Board”) has deemed two further appeals under s. 40 of the Act. The first, effective January 1, 2020, in the amount of $624,000 reflecting the value of the land and a second, effective January 1, 2021, in the amount of $1,311,000 for the land and building.
Background
5As a result of a June 2021 exterior inspection of the Subject Property, MPAC adjusted building size measurements. The total building area for the first and second storeys was changed from 3,094 square feet (“sq. ft.”) to 3,074 sq. ft.; the first floor area was changed from 1,376 sq. ft. to 1,368 sq. ft. and the second floor area from 1,718 sq. ft. to 1706 sq. ft. In addition, the basement area was changed from 1,436 sq. ft. to 1,427 sq. ft and the garage area from 391 sq. ft. to 392 sq. ft.).
6These adjustments and a 2% reduction for the Subject Property’s location on a corner lot resulted in a $4,000 downward adjustment and MPAC recommended the assessed value should be reduced from $1,311,000 to $1,307,000. However, based on her analyses, MPAC’s representative, Elva Yu, concluded that the Subject Property’s current value is $1,504,000 and that no adjustment is required to make it equitable with that of similar lands in the vicinity (s. 44(3) of the Act).
7John He, representing the Appellant, took the position that MPAC’s recommended value of $1,307,000 is too high and that the correct current value should be $1,200,000.
Issues for the Hearing
8At issue in this proceeding is:
A determination of the current value of the subject property.
Whether an equity reduction in the current value should be made.
Result
9The Board estimated a current value for the Subject Property higher than assessed values. However, MPAC only sought a confirmation of the assessed values; it did not seek higher assessed values. As such, the Board confirms the Subject Property’s assessed values as follows:
a. $687,000 for the omitted assessment effective November 20, 2019 and January 1, 2020 for the building value,
b. $624,000 effective January 1, 2020 for the land value, and,
c. $1,311,000 effective January 1, 2021 for the land and building value
10The Board finds that when referencing the Subject Property to similar lands in the vicinity, no equitable reduction of the current value is necessary.
ANALYSIS
Description of Subject Property
11The Subject Property is located on a corner lot and is improved with a two-storey single family detached residence. The lot size is 0.12 acres and the building’s adjusted total area is 3,074 sq. ft. The basement is unfinished and measures 1,427 sq. ft. and there is an attached garage of 392 sq. ft. The Subject Property was purchased from the builder in November 2019 for $1,348,673.
Issue 1 – What is the Subject Property’s Current Value?
12Section 19(1) of the Act provides that the assessment of land shall be based on its current value. 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.” For the taxation years subject to these appeals, valuation date is January 1, 2016.
MPAC’s Case
13MPAC submitted a valuation report which included six property sales. Based on these sales, and using the direct comparison approach to value, MPAC took the position that the Subject Property’s’ correct current value is $1,504,000. The Board notes that MPAC’s data on these six sales was somewhat limited: the lot and building sizes, variables which may affect a property’s market value (corner lot, traffic patterns, etc.) the year built, number of storeys and MPAC’s allocation for the quality of construction.
14The Appellant provided additional information for MPAC’s six sales including: the number of bathrooms, bedrooms, and fireplaces and whether the basements are finished. The Appellant also submitted exterior photographs of the six sale properties. This additional information along with that provided by MPAC, has assisted the Board in making a meaningful comparison between the six sale properties and the Subject Property.
15A summary of the properties’ details is set out in Table 1:
Table 1
Subject Property: 6 Caine Street
232 Frank Endean Road
34 Gracedale Drive
38 Gracedale Drive
7 Ridgeston Drive
7 Elder Street
17 Harman Avenue
MPAC’s neighbourhood designation
A65
A63
A90
A90
A90
A65
A65
Year Built
2019
2008
2014
2014
2007
2018
2019
Assessed Value
$1,311,000
$1,229,000
$1,247,000
$1,204,000
$1,292,000
$1,292,000
$1,428,000
Sale Date
November 20, 2019
September 2016
May 2017
June 2016
June 2016
May 2020
October 2020
Sale Amount
$1,348,673
$1,735,000
$2,050,000
$2,218,000
$1,615,000
$1,950,000
$1,975,000
Time Adjusted Sale Value
N/A
$1,488,526
$1,551,355
$1,654,106
$1,458,711
$1,577,436
$1,535,954
Site Area
0.12
0.10
0.11
0.11
0.10
0.09
0.12
Variables
Corner lot
Abuts school, light traffic
Abuts utility box
none
None
None
none
Building area
3,074
3,075
3,032
3,164
3,248
3,164
3,029
Number of Storeys
2
2
2
2
2
2
2 (the photographic evidence is 3 storeys
Basement finished?
no
yes
yes
yes
yes, with walkout and kitchen
no
no
Number of bathrooms
3.5
4.5
4.5
5.5
4.5
3.5
4.5
Number of bedrooms
4
5
5
4
5
4
4
Fireplace
1
1
1
1
1
1
1
MPAC’s quality of construction
7
7
7
7
7
7
7
16The Subject Property’s subdivision is relatively new and most of the sales that have taken place were purchased directly from the builders. MPAC took the position that builder sales often include taxes and incentives that would otherwise not be included in resales and, therefore, are not reliable for determining a property’s current value as defined in s. 1 of the Act. As a result, MPAC expanded its search beyond the Subject Property’s subdivision to find four re-sale properties (sales 1 -4). MPAC argued that sales 1-4, although older than the Subject Property, are comparable in lot and building sizes, year built, quality of construction and number of storeys.
17MPAC included sales 5 and 6 for ‘reference’ purposes only. While they are located in the same subdivision they would not reflect the Subject Property’s current value because the sale dates are too far from the January 1, 2016 valuation date.
Appellant’s Case
18The Appellant argued that MPAC’s sales 1-4 do not reflect the Subject Property’s current value because they are not similar to the Subject Property: none are located on a corner lot, all have finished basements and more bathrooms, the buildings are older and none are located in the same subdivision.
19Regarding the time adjustments used by MPAC to estimate the sale values to the January 1, 2016 valuation date. The Appellant argued they are not reliable because none of the 342 properties used to develop the time adjustment factors are located in the Subject Property’s subdivision.
20The Appellant presented some 30 sales to support its argument that the Subject Property’s current value is $1,200,000. The evidence is real estate listings with sale prices.
21The Appellant argued that the Subject Property’s value has been impacted by a grading issues which resulted in flooding and water damage to the basement and because the developer/city’s sidewalk encroaches on the Subject Property’s boundary resulting in the Subject Property being trespassed upon.
22The Appellant stated he found it difficult to access the data required to support the appeals and questioned the validity of MPAC’s assessment model including MPAC’s time adjustment factors.
Findings on Issue 1
23The Board has carefully considered the parties evidence and arguments.
24The Appellant challenged the accuracy and correctness of MPAC’s assessment methodology. The Board’s task is to determine whether the assessment meets the test of s. 19 of the Act, that is, whether the assessment reflects the Subject Property’s current value. Current value is defined under s. 1 of the Act 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. In other words, the Board’s concern is deciding the correctness of the assessment in relation to sales, where available, rather than whether MPAC’s model makes sense. (Cogan v Municipal Property Assessment Corporation, Region No 3, [unreported] DM 32084).
25The Board must determine the current value of the Subject Property as of the January 1, 2016 valuation date. To do this, the best evidence is an arm’s length sale of the Subject Property close to the valuation date. If such a sale did not occur, the next best evidence are open market sales of similar properties that sold close to the valuation date.
26The Appellant’s sales are not helpful in determined the current value of the subject property because significant data, such as the sale dates, and the sizes of the lots and buildings were not included. Without such data the Board cannot make a meaningful comparison between them and the Subject Property for the purpose of determining the Subject Property’s current value.
27The Appellant purchased the Subject Property from the builder in November 2019. Neither the sale of the Subject Property nor MPAC’s sales 5 and 6 which are located in the same subdivision occurred close to the valuation date. The further away a sale occurs from a valuation date, the less likely it reflects the current value. As a result, the Board does not find them helpful in determining the current value of the Subject Property.
28Further, the Board prefers re-sales over builder sales, where available, due to the fact that builder sales often include incentives or other factors that alter a sale price (see Roitman v. Municipal Property Assessment Corp. Region No. 9, [2013] O.A.R.B.D. 138. Accordingly, the Board will focus on re-sale properties rather than builder sales.
29The Appellant argued that grading, water damage and encroachment on the Subject Property have affected its value. However, the Board received no evidence as to the quantum of the effect, if any, on the current value.
30The Appellant argued that sales 1-4, are not comparable to the Subject Property due to differences such as location, age and finished basements and should not be used to determine the Subject Property’s current value. On reviewing the data presented the Board finds these four sales are the best indicators of the Subject Property’s current value because the sales occurred closer to the valuation date, they are located near the Subject Property with two-storey residences, similar building and lot sizes and number of fireplaces. An analysis of these four sales are set out below.
31Sale 1, 232 Frank Endean Road, is, on balance, slightly superior to the Subject Property. Both properties are similar in that MPAC allocated a 2% downward adjustment for both, this property because it is located on a busier street, and the Subject Property because it is located on a corner lot. While this property is inferior because it is older it is, overall superior due to a finished basement and an extra bathroom.
32Sale 2, 34 Gracedale Drive, is slightly older than the Subject Property but, on balance, is superior because it has a finished basement, an extra bathroom and is not located on a corner lot.
33Sale 3, 38 Gracedale Drive is slightly older than but on balance, is superior because it has a finished basement, two additional bathrooms and it is not a corner lot.
34Sale 4, 7 Ridgeston Drive is, on balance, superior to the Subject Property because it has a finished basement with a kitchen and walk-out, one additional bathroom and is not located on a corner lot.
35Having found that all four sales are superior to the Subject Property, the Board concludes that the Subject Property would not sell for more than $1,458,711, the lowest time adjusted sale value of sale 4. The Board reduces this value by MPAC’s quantum of 2% to reflect that this property is not located on a corner lot. The resulting value is $1,429,537. This is the current value of the Subject Property.
Issue 2 – - Does the current value determined require a reduction for it to be an equitable assessment when reference is made to the assessments of similar properties in the vicinity?
36MPAC presented an Equity Report with an analysis of 30 single family detached residential properties located within 1.5 kilometres from the Subject Property with sales near the January 1, 2016 valuation date. The median Assessment to Sale Ratio of those 30 sales is 0.99. Based on this result MPAC concluded that similar properties in the vicinity have been assessed at or near their current values and therefore an equitable adjustment is not required.
37The Appellant presented no evidence on the issue of an equitable assessment but argued that the search criteria used by MPAC in its Equity Report should reflect sales occurring closest to the Subject Property’s sale date of November 20, 2019 and they should be identical to the Subject Property.
Findings on Issue 2
38Section 44(3)(b) of the Act requires the Board to have reference to the assessments of similar lands in the vicinity to determine whether a reduction in the current value as determined is necessary for an equitable assessment.
39The Board finds that the comparison factors of residential properties located within 1.5 kilometres of the Subject Property with sale dates occurring close to the legislated valuation date of January 1, 2016 are sufficient to meet the test for an equitable assessment. Based on the evidence presented, an adjustment to the current value is not required to achieve an equitable assessment.
CONCLUSION
40The Board determines that the current value of the Subject Property is $1,430,000 (rounded) in the residential property class and that an equitable adjustment is not required. This value reflects a 2% downward adjustment for the corner lot location.
41The current value estimate is higher than the assessed value of $1,311,000. No party sought a higher assessment than the returned value. Accordingly, the Board confirms the assessment as returned at $1,311,000.
42For the purpose of determining the omitted assessments pursuant to s. 33 of the Act, the Board finds that the value of the building is $687,000 effective November 20, 2019 and January 1, 2020.
ORDER
43The assessments as returned are confirmed as follows:
a. For omitted assessments effective November 20, 2019 and January 1, 2020, the correct current value for the building is $687,000.
b. For the land value the correct current value is $624,000 effective January 1, 2020.
c. For the property as a whole the correct current value is $1,311,000 for the January 1, 2021 taxation year.