Tribunals Ontario

Assessment Review Board

ISSUE DATE: March 21, 2023

FILE NO.: WR 183245

Assessed Person: National Capital Commission

Appellant: Abbott Point of Care Canada Limited

Respondent: Municipal Property Assessment Corporation Region 03

Respondent: City of Ottawa

Property Location: 185 Corkstown Road

Municipality: City of Ottawa

Roll Number: 0614-120-210-46400-0000

Appeal Numbers: 3464219 and 3486284

Taxation Years: 2021 and 2022

Hearing Event No.: 778269

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

APPEARANCES:

Parties	Counsel/Representative*
National Capital Commission	No one appeared
Abbott Point of Care Canada Limited	Ken West*
Municipal Property Assessment Corporation	Makael Nur
City of Ottawa	Shen Bai

HEARD: January 31, 2023 by telephone conference call

ADJUDICATOR: Jean-Paul Pilon, Member

DECISION

OVERVIEW

1Abbott Point of Care Canada Limited (the “Appellant”) appealed the assessment of its property at 185 Corkstown Road in the City of Ottawa (the “Subject Property”) for the 2021 taxation year taking the position that it was incorrect as in too high. A further appeal was deemed for the 2022 taxation year.

2The Appellant is the tenant of the Subject Property. Only it, the Municipal Property Assessment Corporation (“MPAC”) and the City of Ottawa (the “City”) participated in these appeals.

Background

3The Subject Property was originally a manufacturing plant built for Nortel which was then active in the telecommunications industry. Currently, the Subject Property contains manufacturing facilities, laboratories and offices.

4The current value assessment of the Subject Property was $44,881,000 for both taxation years.

5MPAC’s position in these appeals was that the assessment should be reduced to $43,829,000 with no adjustment in equity. The Appellant’s position was that the assessment of the Subject Property should be reduced to $27,658,000 after a considerable adjustment for equity. The Municipality’s position was that the assessment of the Subject Property should be increased to $47,705,000 with no adjustment in equity.

Areas of Agreement

6The parties agreed that the building area of the Subject Property is 509,910 square feet. The Appellant and MPAC further agreed that the Subject Property includes 66.55 acres of land.

7In addition, although the Appellant’s expert opined as to the current value of the Subject Property using the income approach in his expert report, the parties ultimately agreed that the correct method of determining the current value was to use the cost approach.

Issues for the Hearing

8There were essentially four issues to be decided in these appeals:

1. the means by which replacement cost new less depreciation (“RCNLD”) should be determined using the cost approach;
2. the value of the land;
3. whether an equity adjustment is needed and, if so, the quantum; and
4. apportionment.

ANALYSIS

Issue 1 – Determining RCNLD

9The first of two sub-issues determines which costing system provides the more accurate replacement cost new in these circumstances. MPAC used its proprietary Automated Costing System (“ACS”) to determine the replacement cost new of the building on the Subject Property. The Municipality used the Marshall and Swift Valuation Service (“M&S”) to do the same.

10MPAC’s position was that the use of ACS was preferable because it is more accurate in determining the value of assemblies, does not require the use of multipliers to account for local circumstances, and that its use would be equitable with every other property in Ontario where it is used by MPAC.

11The Municipality’s expert argued that there were inaccuracies in a number of the specific inputs used by MPAC and testified that he had no access to that software. He conceded, however, that it was the preferable system using the correct data.

12The Appellant’s expert attempted in his expert report to determine the equitable value of the building through the assessment of similar properties in the vicinity.

13The second sub-issue is whether there should be an adjustment of functional obsolescence of 15%. The Appellant argued that there should be such an adjustment to make it consistent with MPAC’s position set out in its publication “Market Valuation Report, Assessing Special Purpose Properties in Ontario: Pharmaceutical Manufacturing Plants.” The position of MPAC’s expert was simply that the report did not make that adjustment mandatory.

Findings on Issue 1

14On the first sub-issue, the Board prefers MPAC’s determination of RCNLD with yardwork (excluding functional obsolescence).

15First, the Board finds that there was no need to resort to the novel approach of the Appellant’s expert when two separate analyses using two established costing systems were available and taking into account the uniqueness of the Subject Property.

16It may well be, as argued by the Municipality, that there were inaccuracies as to specific inputs used by MPAC in its software. However, it also required line-by-line inputs as opposed to square foot values then subject to further multipliers to obtain a result. In addition, the testimony of the Municipality’s expert witness suggested the use of considerable discretion was required to generate a result using M&S, even as to fundamental issues such as the class of building.

17The RCNLD with yardwork (excluding functional obsolescence) is therefore determined to be $28,597,672 as submitted by MPAC.

18On the second sub-issue, there was simply no reason given for MPAC not to have followed its directive on functional obsolescence. Even if not mandatory, the Board finds that it would be unfair for it not to be applied when it would have been applied to similar properties where the Subject Property meets the definition of special purpose property in that document.

19Therefore, a deduction of 15%, or $4,289,651, is applied to bring the RCNLD to $24,308,021.

Issue 2 – Land Value

20The parties’ positions as to the value of the land at the Subject Property were as follows on a per acre basis: MPAC, $228,877; the Municipality, $110,000 and the Appellant, $101,724. For the reasons below, the Board finds the correct value of the land to be $167,391 per acre.

21Using the cost approach, land value is determined using the direct comparison approach and added to the RCNLD.

22MPAC relied on six properties that sold in its analysis. The first, Page Rd, is not included in the Board’s analysis because its sale occurred in 2021 when the valuation date is January 1, 2016. The second, Mer Bleue Rd, is geographically too distant from the Subject Property to be included in the Board’s analysis. The third, at 35 Bill Leathem Dr, is included as it has comparable zoning to the Subject Property. The fourth, Ottawa St, is also included as being relatively comparable to the Subject Property and because it was also relied upon by the Municipality. MPAC’s fifth property at 4400 Fallowfield Rd is excluded because it transacted in 2020, and MPAC’s sixth property at 5341 Boundary Rd is excluded as the use of the land is heavy industrial, quite unlike the use of the Subject Property. While it also may be the case that most if not all of these properties are qualitatively inferior to the Subject Property, they constitute the best evidence of land value in these appeals and there was no evidence supporting quantum for any potential adjustment.

23The Municipality relied on a further property sale at 2090 Mer Bleue Road, but that is excluded as it is substantially larger than the Subject Property.

24The Appellant’s approach to land value was subsumed in its approach using total assessments of similar properties to determine value. The Board does not agree that using assessments to determine current value can be correct in these circumstances, when better evidence is available in the case of land value through sales. The Appellant did, however, identify a further property sale of a research and laboratory facility at 552-562 Booth Street including buildings of little value. However, that transaction was clearly an outlier with a land value far exceeding those of the others. It was therefore also excluded from the analysis.

25As to time adjustment, the Board preferred MPAC’s approach to the Municipality’s paired sale time adjustment.

Findings on Issue 2

26Only two proposed comparable properties remain to determine the land value of the Subject Property in the Board’s analysis. The Board finds that these are sufficient for this purpose and do not require resort to the Appellant’s novel approach to the determination of land value.

27The Board therefore finds the following time adjusted sale prices to be the most salient for the determination of land value on a per acre basis:

a. 35 Bill Leathem Dr at $225,330; and b. Ottawa Street at $109,452.

28The Board therefore finds the land value of the Subject Property to be the mean of these two, or $167,391 per acre.

Issue 3 – Equity

29Only MPAC and the Appellant submitted evidence on the question of equity.

30The Appellant’s closing argument succinctly described its approach to equity: “the Appellant’s expert witness used the assessments of other similarly used and situated buildings to derive an equitable rate per square foot for improvement value…”

31The Board rejects this approach where adequate real market data exists determine equity.

32The Appellant also noted that “there were no sales within the Greenbelt with the same zoning or use…” Nevertheless, MPAC’s expert witness testified that the ten sales used in its equity analysis involved either industrial or research and development properties and were as close to the Subject Property as possible within 17 km. This evidence constituted the best evidence before the Board.

33MPAC determined through these ten sales an assessment-to-sale ratio of 0.99 indicating no inequity in the assessment of the Subject Property.

Finding on Issue 3

34No adjustment for equity is required.

Issue 4 – Apportionment

35There was no dispute that the two returned property classes should remain Large Industrial (Excess Land) and Large Industrial (Full), and the only party to make a comprehensive submission on classification and apportionment was the Appellant.

36This submission was essentially “that the land rate determined by the Board should be multiplied by the area of excess land to get the (Industrial (Excess Land)) value. That amount should then be subtracted from the total land value to the (Large Industrial (Full)) portion of the land value.” The amount of excess land in the Appellant’s submission was 23.36 acres.

Finding on Issue 4

37In the absence of any other submissions on point, the Board concurs with the Appellant’s approach. The land value was determined above to be $167,391 per acre and it was further determined that there are 66.55 acres of land at the Subject Property. Multiplied, the total land value is $11,139,871. Since the excess land portion of the Subject Property is 23.36 acres of 66.55 acres, 35.1% of the land value or $3,910,094 should be apportioned as Industrial Excess Land (Full). This is slightly more than as returned in that property class of $3,474,894.

CONCLUSION

38To summarize, the Board determines the current value of the Subject Property in these appeals as follows:

RCNLD (not including functional obsolescence): $28,597,672 Less functional obsolescence: $(4,289,651) RCNLD: $24,308,021 Land value: $11,139,871 TOTAL: $35,447,892

39The apportionment is as follows:

a. Large Industrial (Full): $31,537,798; and b. Industrial Excess Land (Full): $3,910,094.

ORDER

40The Board orders that the assessment of 185 Corkstown Road in the City of Ottawa shall be reduced to $35,447,892 with $31,537,798 in the Large Industrial (Full) property class and $3,910,094 in the Industrial Excess Land (Full) property class.