Kai Yuan Qiu and Chun Ling Li v. Municipal Property Assessment Corporation Region 27 and Town of Lasalle, 2022 CanLII 69394

Tribunals Ontario / Tribunaux décisionnels Ontario

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

ISSUE DATE: July 27, 2022

FILE NO.: WR 180143

Assessed Person(s): Kai Yuan Qiu; Chun Ling Li

Appellant(s): Kai Yuan Qiu; Chun Ling Li

Respondent(s): Municipal Property Assessment Corporation Region 27

Respondent(s): Town of Lasalle

Property Location(s): 1400 Monck Avenue

Municipality(ies): Town of Lasalle

Roll Number(s): 3734-030-000-12102-0000

Appeal Number(s): 3479080 and 3490534

Taxation Year(s): 2021 and 2022

Hearing Event No.: 769270

Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Representative
Kai Yuan Qiu and Chun Ling Li	Self-represented
Municipal Property Assessment Corporation	Brad Di Pierdomenico
Town of Lasalle	No one appeared

HEARD: July 5, 2022 by telephone conference call

ADJUDICATOR(S): Subuola Awoleri, Member

DECISION

OVERVIEW

1Kai Yuan Qiu and Chun Ling Li (the “Appellants”), owners of 1400 Monck Avenue (the “Subject Property”), appealed the 2021 supplementary assessment of the Subject Property to the Assessment Review Board (the “Board”) under s. 34 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) on the ground that the assessment is too high. Pursuant to s. 40(26) of the Act, the Appellants are deemed to have brought a s. 40 appeal in respect of the 2022 taxation year.

2The Appellants argued that the current value of the Subject Property should be $527,525.

3The Municipal Property Assessment Corporation (“MPAC”) stated that the original 2016 current value assessment (“CVA”) was returned at $112,000, which was for the vacant lot only. The Appellants built a two-storey structure on the land. Consequently, in accordance with s. 34 of the Act, MPAC made a supplementary assessment on the Subject Property.

4For the 2021 taxation year, MPAC issued a property assessment change notice (“PACN”) for an assessed value of $614,000, effective January 18, 2021. The Appellants appealed this supplementary assessment. MPAC also issued another notice for a CVA of the Subject Property as of January 1, 2016 pursuant to s. 19.2(1)(4) of the Act at $726,000, for the 2022 taxation year.

5MPAC argued that based on market sales, the current value of the Subject Property should be $646,000 with no equitable reduction pursuant to s. 44(3)(b) of the Act. MPAC also added that the Appellants did not raise equity as an issue in the appeals.

6At the completion of the hearing, the Board reserved its decision.

Areas of Agreement

7The parties agreed that the effective date for the supplementary assessment should be March 18, 2021, which is the effective date the Appellants occupied the Subject Property and not January 18, 2021.

Issues for the Hearing

8The issues to be determined are:

1. What is the correct current value of the Subject Property, as of the valuation date of January 1, 2016, for the 2022 taxation year?

2. What is the correct value of the s. 34 supplementary assessment for the 2021 taxation year?

3. Is the current value as determined by the Board equitable in reference to the assessments of similar lands in the vicinity?

Result

9The Board finds that the correct current value of the Subject Property, as of the valuation date of January 1, 2016, is $621,000 (rounded). The Board reduces the current value assessment of the Subject Property from $726,000 to $621,000 for the 2022 taxation year.

10Accordingly, the Board determines that the correct value of the s. 34 supplementary assessment is $509,000 effective March 18, 2021 for the 2021 taxation year.

11The Board finds that there is no evidence to support a conclusion that the Subject Property requires a reduction in its determined current value in order to make it equitable with the assessment of similar properties in the vicinity.

ANALYSIS

Description of the Subject Property

12The Subject Property is a two-storey Single-Family Detached residential dwelling built in 2020, with an effective year built of 2020, located in the Town of Lasalle in Essex County. It has a lot with 87.49 feet (“ft.”) of effective frontage and 136.35 ft. of effective depth for an effective site area of 0.27 acres. It has a total building area of 3,354 square feet (“sq. ft.”), with construction quality of 7.5, with an unfinished basement area of 1,677 sq. ft. It has an attached garage of 539 sq. ft., built in 2020.

Issue 1 - What is the correct current value of the Subject Property as of January 1, 2016 for the 2022 taxation year?

13In accordance with s. 44(3)(a) of the Act, the first mandate of the Board is to determine “the current value of the land”. 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”. That is, for the 2022 taxation year, the Board must determine what the Subject Property would have sold for in an arm’s length transaction on the January 1, 2016 valuation date set by the Act.

14The Board finds the correct current value of the Subject Property as of January 1, 2016 for the 2022 taxation year to be $621,000 (rounded).

MPAC’s Proposed Comparable Properties

15MPAC presented the Board with five proposed comparable property sales. Brad Di Pierdomenico, MPAC’s representative, testified that these sales are comparable to the Subject Property. The details of these proposed property sales are provided in Table 1 below:

Table 1

Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Building/ Size (sq. ft.)	Lot Size (Acres)	Year Built	Quality of Construction
Subject Property 1400 Monck Avenue	726,000	N/A	N/A	3,354/ unfinished basement	0.27	2020	7.5
Sale 1 2570 Lovell Crescent	536,000	August 2015 (510,000)	527,883	3,106/ finished basement	0.17	2012	7.5
Sale 2 3046 Bridgeway Blvd.	584,000	August 2016 (624,800)	580,145	3,135/ Unfinished basement	0.18	2012	7.5
Sale 3 2975 Bridgeway Blvd.	627,000	July 2016 (705,000)	662,474	3,409/ Finished basement	0.26	2006	8.0
Sale 4 1270 Lyons Avenue	555,000	August 2015 (648,000)	670,722	3,085/ Finished basement	0.14/ 0.15	2011	7.5
Sale 5 2970 Brooklyn Avenue	601,000	Sept. 2016 (682,500)	625,330	3,471/ Unfinished basement	0.15	2011	7.5

16Mr. Di Pierdomenico testified that the Subject Property is a new property located in a neighbourhood with properties built between 1995 - 2005, with sizes ranging from 1,500 sq. ft. - 2,500 sq. ft., with predominant style of home being a ranch or raised ranch. The homogenous neighbourhood in which the Subject Property is located is designated by MPAC as “B83”.

17Mr. Di Pierdomenico further testified that properties located in the “B” neighbourhood are more comparable with the Subject Property than those located in the homogenous neighbourhood designated as “A”. He added that it will not be fair to compare the Subject Property with properties located in the “A” neighbourhood, since these properties are more valuable being in a superior neighbourhood than properties in the “B” neighbourhood.

18The Board questioned MPAC why it included proposed property sales 4 and 5 as part of its proposed comparable properties both located in the homogenous neighbourhood with an “A” designation. Mr. Di Pierdomenico testified that three sales (property sales 1, 2 and 3) are not sufficient for the Board to determine the current value of the Subject Property, therefore, MPAC included property sales 4 and 5 to increase the amount of property sales in MPAC’s evidence. For this reason, the Board will disregard comparable property sales 4 and 5. MPAC cannot arbitrarily include these proposed comparable property sales in its evidence especially when the burden of proof to demonstrate the correctness of current value of the Subject Property rests with MPAC.

19The Board finds that comparable property sale 3 is superior to the Subject Property. It has a finished basement of 1,223 sq. ft. a higher quality of construction of 8.0, a larger building total area (“BTA”) and an outdoor swimming pool. It sold for a time-adjusted sale price (“TASP”) of $662,474.

20The Board finds that proposed comparable property sales 1 and 2 are inferior to the Subject Property. Although property sale 1 has a finished basement of 1,164 sq. ft., it has a smaller BTA of 3,106 sq. ft. and a smaller lot size of 0.17 acres. The Subject Property is also eight years newer than comparable property sale 1 and has a larger BTA and lot size. Proposed comparable property sale 2 is also eight years older than the Subject Property with a smaller BTA and smaller lot size.

Appellants’ Proposed Comparable Properties

21The Appellants presented three proposed comparable properties. Only one of these properties sold in September 2018. The Board did not use this sale to determine the current value of the Subject property, since it sold outside the shoulder years, which is 12 months on either side of the valuation date of January 1, 2016. As the further a sale is from the valuation date, the less it reflects the market.

22The Appellants argued that downward adjustments should be made to the assessed value of the Subject Property, due to some issues, which the Board will now address:

Assessed value versus Current value

23The Board notes that the Appellants are more concerned about the assessed value of the Subject Property, which is a reasonable concern as this will be used to determine the tax levied on the Subject Property. Section 19 provides that the assessment of land shall be based on its current value.

24MPAC provides the assessed values of properties, using its model to make an estimation, since most properties would not have been sold on the valuation date of January 1, 2016. This is what is referred to as the assessed value of the Subject Property.

25Current value is the market value of the Subject Property as 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”.

26Part of the mandate of the Board is to determine the current value of the Subject Property. The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the Subject Property on the valuation date or close to it. If no such transaction took place, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

27The Board will disregard the Appellants’ other two proposed comparable properties since these two properties did not sell.

Easements

28The Appellants testified that there are easements on the Subject Property, which reduces the size of the Subject Property, since these portions are not buildable. The Appellants further testified that there is a big storm sewer, a cable box and a catch basin, and these reduces the value of the Subject Property. The Appellants did not present the Board with any market evidence to show that the easements on the Subject Property reduce its current value. Furthermore, evidence is required to quantify or measure the impact of any unique situation against the current value of the Subject Property. The Board cannot speculate or arbitrarily calculate an impact to the Appellants’ assessed current value.

Quality of Construction

29The Appellants argued that the quality of construction of the Subject Property should be 6.0. MPAC initially assessed the Subject Property with a quality of construction of 8.0. Mr. Di Pierdomenico testified that due to COVID-19 restrictions, he was unable to carry out an interior inspection of the Subject Property. However, he testified that based on the drawings provided by the Appellants, the Subject Property has a quality of construction of 7.5. He further added that MPAC reduced the quality of construction from 8.0 to 7.5, due to the exterior inspection that he carried out. He testified that the reason for the reduction in quality of construction is because the exterior of the Subject Property is only brick to the roof, no stone or architectural features and the roof does not have a quality 8.0 finish.

30Mr. Di Pierdomenico testified that a quality 6.0 home does not have a master bathroom, an en suite bathroom, kitchen island, walk-in closets and it’s basically a 1,000 sq. ft. - 1,500 sq. ft. home, with its exterior made from vinyl. He added that a home with quality of construction 6.5 is basically the same, but with a master bathroom. A home with quality of construction 7.5 has walk-in closets, an en suite bathroom, the master bedroom has an en suite bathroom, which basically fits the description of the Subject Property.

31The Subject Property has two bedrooms with en suite bathrooms and the other two bedrooms share a bathroom with dual sinks. Three bedrooms have walk-in closets. It has a kitchen island, a great room, a fireplace and a study. The Appellants did not disagree with MPAC’s description.

32The Appellants compared the Subject Property with their former home, which they testified had a better quality, than the Subject Property but had a quality of construction of 6.5. They testified that it was assessed at $317,000 and sold at $768,000 in June 2021. They further testified that price is a good determinant of quality since the Subject Property was built for $450,000, its quality of construction should be lower than 7.5.

33The Board finds that on a balance of probabilities the Subject Property has a quality of construction of 7.5 rather than 6.0, based on MPAC’s evidence; a description of the Subject Property, which the Appellants admitted as being accurate. Furthermore, it is not the Appellants old house that is on appeal but the Subject Property.

Direct Comparison Approach versus Cost Approach

34The Appellants testify that the best methodology to value the Subject Property is the cost approach. The cost approach is usually an estimation and it is used for properties that cannot reasonably be valued using the direct comparison or the income approach to value. This approach is used mostly to value unique properties, that do not regularly have comparable sales. The direct comparison approach is commonly used for properties that regularly have sales, such as residential properties. The value of a property is derived from what similar properties within the vicinity are selling for. MPAC used this approach to value the Subject Property.

35The Appellants testified that the assessed value of the land is $112,000 and the cost to build the house is $415,525. Therefore, the value of the Subject Property should be $527,525. The Appellants argued that the direct comparison approach is based on assumptions and MPAC’s opinion of value is more subjective than objective. Furthermore, they argued that MPAC’s five comparable properties are not similar to the Subject Property.

36The Board finds that the best approach to determine the value of the Subject Property is the direct comparison approach. The Subject Property is not a unique property and there are sales of similar residential properties within the vicinity to compare with the Subject Property. Moreover, the Appellants approach is more subjective, as the cost to build the Subject Property does not determine its market value, based on the definition of current value in the Act.

Finding on Current value

37On a balance of probabilities, the current value of the Subject Property should fall between the TASP of the inferior property sales 1 and 2 and the superior property sale 3. The current value of the Subject Property should be higher than inferior property sales 1 and 2, since the Subject Property is newer, with a larger lot and building size, but not higher than superior property sale 3. The TASP range of the inferior property sales 1 and 2 is $527,883 - $580,145, while the TASP of the superior property sale 3 is $662,474. The average TASP of Property sale 2 and Property sale 3 is $621,309. The Board finds that the correct current value of the Subject Property is $621,000 (rounded).

Section 34 Supplementary assessments - 2021 Taxation Year

38In accordance with s. 34 (1) (a) of the Act,

If, after notices of assessment have been given under section 31 and before the last day of the taxation year for which taxes are levied on the assessment referred to in the notices,

(a) an increase in value occurs which results from the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof that commences to be used for any purpose;

the assessor may make the further assessment that may be necessary to reflect the change…

39MPAC issued a supplementary assessment for the Subject Property due to the structure constructed on it. The Board determined that the correct current value of the Subject Property is $621,000 (rounded), therefore the Board finds that the correct s. 34 supplementary assessment for the 2021 taxation year is $509,000 (correct current value of $621,000 minus $112,000 the original s. 40 returned assessment for the valuation date of January 1, 2016) effective March 18, 2021.

Issue No. 2 - Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html#sec44subsec3_smooth)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be.

40Section 44(3)(b) of the Act directs that after determining current value,

the Board shall,

(b) 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.

41The goal of the Act is to determine the correct current value of properties. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted. In this regard, the burden of proof rests with the party that alleges that it would be inequitable to assess the Subject Property at its current value, and in this appeal that party is the Appellants. The Appellants have to establish, on a balance of probabilities, that an equitable reduction is required.

42The Appellants did not raise this issue and they did not present any evidence on the appropriate reduction based on equity.

43The Board finds that there is no evidence provided by the parties to support a reduction in the current value of the Subject Property, in order to make it equitable with the assessment of similar properties in the vicinity.

CONCLUSION

44The Board finds that the correct current value of the Subject Property as of the valuation date of January 1, 2016 is $621,000 for the 2022 taxation year and the correct value of the supplementary assessment for the 2021 taxation year is $509,000, effective March 18, 2021 with no adjustment for equity.

ORDER

45The Board orders that:

a) the current value of the Subject Property as of January 1, 2016, be reduced from $726,000 to $621,000 for the 2022 taxation year;

b) the supplementary assessment be reduced from $614,000 to $509,000 for the 2021 taxation year; and

c) the effective date of the 2021 supplementary assessment be changed, on consent of the parties, from January 18, 2021 to March 18, 2021.