Man Ying Lam v. Municipal Property Assessment Corporation Region 14, 2023 CanLII 30799

Tribunals Ontario Tribunaux décisionnels Ontario Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: April 13, 2023

FILE NO.: WR 182194

Assessed Person(s): Man Ying Lam

Appellant(s): Man Ying Lam

Respondent(s): Municipal Property Assessment Corporation Region 14

Respondent(s): City of Markham

Property Location(s): 4300 Steeles Avenue East, Suite E78

Municipality(ies): City of Markham

Roll Number(s): 1936-020-121-10571-0000

Appeal Number(s): 3419255, 3444265, 3488310 and 3512595

Taxation Year(s): 2020, 2021, 2022 and 2023

Hearing Event No.: 777572

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

APPEARANCES:

Parties	Representative
Man Ying Lam	Self-represented
Municipal Property Assessment Corporation	Kristina de Andrade
City of Markham	No one appeared

HEARD: November 3, 2022 by telephone conference call

ADJUDICATOR(S): Pierre R. Lavigne, Member

DECISION

OVERVIEW

1Man Ying Lam is the owner of 4300 Steeles Avenue East, Suite E78 (York Region Condo Plan 890, Level 1, Unit 571, in a commercial condominium shopping mall located in the City of Markham. This unit was assessed at $346,000 for the taxation year 2020. The owner appeals this assessment as incorrect because the assessment is too high and submits that the correct value should be $132,000. The Municipal Property Assessment Corporation (“MPAC”) submits the correct value should be $415,000.

2This appeal is made under s. 40(1) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). Pursuant to s. 40(26) of the Act, further appeals were deemed to have been made for the 2021, 2022 and 2023 taxation years.

Issues for the Hearing

3At issue in this proceeding is:

1. A determination of the correct current value of the subject property; and,
2. Whether an equity reduction in the correct current value should be made?

Result

4The Assessment Review Board (“Board”) finds that the January 1, 2016 value of the subject property is $406,000.

5The Board finds that an equitable reduction of the correct current value is necessary pursuant to s. 443(b) of the Act in the amount of $60,000. This will result in an equitable assessment of $346,000 for the taxation years in question. Accordingly, the original assessment of $346,000 is confirmed.

PRELIMINARY MATTERS

6The Appellant is a real estate agent/broker. By virtue of experience, she has acquired knowledge in the valuation of properties. Because of this background the Respondent MPAC objected to the evidence of the Appellant being considered as expert evidence. Furthermore, as a long-time owner of properties in the Pacific Mall she has knowledge of prices at which properties have transacted in the Pacific Mall.

7The Appellant had not expressly sought to have her evidence treated as expert evidence, nor had she complied with the Board’s Rules of Practice and Procedure concerning expert evidence. As she is testifying on her own behalf, for her own financial interest, the Appellant’s evidence of value cannot be considered objective expert evidence to the Board. For this reason, the Board will not consider as expert evidence any opinion of final value given by the Appellant. This does not prevent the Board from considering her evidence of facts within her knowledge with respect to sales having occurred at the Pacific Mall nor does it prevent the Board from considering her submissions with respect to current value.

ANALYSIS

Description of the Subject Property

8The subject property is a commercial condominium unit identified as York Region Condo Plan 890, Level 1, Unit 571 (“subject property”). The unit is 145 square feet (“sq. ft.”) with dimensions of approximately 16 feet by 9 feet. This commercial condominium operates as a shopping mall under the name of Pacific Mall, located at 4300 Steeles Avenue in the City of Markham. It has been described as one of the largest Asian themed malls in North America and a such is considered a tourist attraction as well as a shopping venue.

9The subject property is located on the main floor of this two-storey structure. The main floor is laid out in a grid pattern with five “avenues” running north south and 17 narrower “streets” running east west. For purposes of identification, I shall label the Avenues “A” from the most eastward to “F” on the west side. The streets shall be labelled 1 to 17 starting from the south side where the front entrance to the mall is located. Between these avenues and streets, analogous to city blocks, are groupings of eight or ten commercial condominium units. Improvement have been made to divide each block of units into four commercial stores. These stores are comprised of two or three condominium units of undivided space.

10In the centre of the mall, between Avenue B and D and between Streets 8 and 10 is an open atrium where escalators come up from the underground parking and up to the second level.

11The Appellant owns three contiguous units, physically organised as one store, on the block of units at the very north west corner of the main floor. Her three-unit store faces Avenue “D” and is adjacent to Street 16. The store is approximately 16 feet wide by 27 feet deep. It consists of three commercial condominium units, each approximately 16 feet wide by 9 feet deep: Unit 573 (the “front unit”), Unit 572 (the “middle unit”) and Unit 571 (the “back unit”). Only the back unit, Unit 571, is under appeal.

Issue 1 – What was the January 1, 2016, current value of the subject property?

The Governing Statutory Scheme

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.”

13Section 19.2(1) paragraph 4 of the Act fixes the valuation day for the 2020 taxation year at January 1, 2016. Section 48.6 of Ontario Regulation 282/98 fixes the valuation day for the 2021, 2022 and 2023 taxation year at January 1, 2016, as well.

14Pursuant to s. 40(17) of the Act, the onus is on MPAC to prove the correct value of the subject property.

15Section 44(3)(b) of the Act provides for a reduction, if required, of an assessment based on current value to make the assessment equitable.

MPAC’s Position

16Inna Malinovska was called as a witness for MPAC. She has been an accredited member of the Institute of Municipal Assessors for six years and a property valuation analyst for seven years. She was qualified as an expert witness in the valuation of industrial and commercial condominiums.

17Ms. Malinovska’s expert opinion of value was that the subject property, the back unit 571, had a January 1, 2016, current value of $415,000. She arrived at this opinion by the direct comparison valuation method: deriving her opinion from on an examination of property sales at or near the valuation day.

18She limited her search to sales of assemblies of units that had occurred in the Pacific Mall within one year of the valuation day. She adjusted the sale prices for changes in value over time. The time adjustments were not contested. From these time adjusted values, she derived a value per square foot.

19The following Table summarizes the sales examined:

Sale	Suite	Date	Amount	Time Adj Amount	Sq. Ft.	Time Adj. $/Sq. Ft.
Subject	E78				435
1	B13	2015-01-15	$1,110,000	$1,113,780	435	$2,560
2	B52/C	2015-05-01	$710,000	$711,724	290	$2,454
3	B16	2015-08-05	$1,210,000	$1,211,762	435	$2,786
4	B20	2016-03-31	$1,300,000	$1,298,947	435	$2,986
5	D6	2016-04-08	$1,070.00	$1,068790	290	$3,685
6	D58	2016-05-18	$1,048,000	$1,046,477	290	$3,609
7	C26	2016-07-22	$1,005,000	$1,002,892	290	$3,458
8	D60	2016-08-31	$1,048,000	$1,045,464	290	$3,605
9	E73	2016-10-25	$1,250,000	$1,246,171	435	$2,865
10	E77	2016-10-31	$588,000	$586,199	290	$2,021

20Of the ten sales examined, five were for assemblies of three contiguous condominium units of 145 sq. ft., for a total of 435 sq. ft. Five sales were for assemblies of two contiguous condominium units with a total area of 290 sq. ft.

21She characterized Sale 2 as inferior. Sale 2 was for the sale of a middle and back unit which had been combined with a front unit to operate as one store.

22She also characterized Sale 10 as inferior. It was along Avenue “E” which abuts the western wall of the building. As there are stores only along one side of the avenue, there is less customer traffic.

23She characterized the remaining eight sales as similar to the subject in terms of location within the mall and exposure to customer traffic. Her evidence was that the sales do not show any difference in value arising out of their location in relation to the atrium, the front main entrance or the back entrance.

24The per sq. foot time adjusted value of the three-unit, 435 sq. ft. assemblies, Sale 1, Sale 3, Sale 4 and Sale 9, ranged from $2,560 to $2,986 with an average time adjusted value of $2,799 per sq. ft. and a median value of $2,825 per sq. ft. Using the average value of $2,799 per sq. ft. produces an indication of value for a three-unit assembly of 435 sq. ft. of $1,217,565 or $405,855 for a single 145 sq. ft. unit, when sold as part of a three-unit assembly.

25The per sq. foot time adjusted value of the two-unit, 290 sq. ft. assemblies Sale 5, Sale 6, Sale 7 and Sale 8 ranged from $3,458 to $3,685 with an average time adjusted value of $3,589 per sq. ft. and a median value of $3,607. Using the average value of $3,589 per sq. ft. produces an indication of value for a 2-unit assembly of 290 sq. ft. of $1,040,810 or $520,405 for a single 145 sq. ft. unit, when sold as part of a two-unit assembly.

26In her expert opinion, Sale 9 was the most comparable to the subject property. It was for a three-unit assembly, was on the same avenue and was just a few meters away from the Appellant’s three-unit store. She used the time adjusted sale price per sq. ft. of this three-unit Sale 9, $2,865, multiplied by the square footage of the subject unit of 145 sq. ft. to produce a value of $415,425. She rounded this amount to $415,000, which was her final opinion of value for the subject property.

Appellant’s Position

27The Appellant did not present any evidence of sales to establish value using either the direct comparison approach or the income approach. Her evidence was of her experience as a long-term owner in that condominium development. She testified that in times of economic downturn the first stores to suffer were those located away from the central atrium. It was also her experience that the stores at the north end, away from the main entrance and the west side were inferior, as there were units that had been vacant for two or three years.

28The Appellant submitted that there should be a differential in value of each group of units, assembled as a store, based on location within the development.

29The Appellant also submitted that there should be a differential in value among each unit, assembled as a store, with the front unit facing the foot traffic flow having the most value and the back unit having a lesser value. It was the Appellant’s evidence that each of the three condominium units constituting her store were assessed equally at $346,000.

30The Appellant also submitted that as each of the three units comprising the store was an independent assessment parcel, it was open to her to partition off the back unit and open an entrance onto a narrow side “street” within the development. Because of the significantly less visibility and foot traffic, this would mean the back unit would be of much less value than the two front units.

Findings on Issue 1:

31There was no sales evidence to support the Appellant’s submissions that location within the development influenced value. In addition, the Appellant’s evidence of lower value for stores away from the central atrium in difficult economic times did not have reference to the valuation date of January 1, 2016. The Appellant’s submission of a differential based on location is therefore unsupported by appropriate sales evidence. I accept MPAC’s opinion evidence that location within the development did not influence value.

32With respect to her submission of a differential in value among units assembled as a store, the only arguable sales evidence that the back unit is worth less is from MPAC’s sale evidence that assemblies comprising three units have a median indicated value of $1,217,565, whereas assemblies comprising two units have a median indicated value of $1,040,810, a difference of $176,755. This difference in indicated value between three-unit stores and two-unit stores cannot be taken as an indication of value of a back unit. The difference in indicated value reflects the additional cost of one unit added to a two-unit assembly, not the cost of a single unit. A third unit is not worth less than the first two, it is each unit that is worth less, when sold as a three-unit assembly, because of reduction in unit value caused by economies of scale. There is no sales evidence of the value of single units, let alone a back unit and therefore no evidence of what a back unit would sell for individually.

33There was some evidence that in multiple unit sales the parties, in the affidavit accompanying the sale transaction, may have allocated a difference in price of 4% between units. The Board rejects these allocations as indications of value because they are unilateral allocations of value that are not supported by evidence of sales of individual units in the market.

34MPAC’s indications of value were supported by sales evidence. All sales retained for analysis were of assemblies of two or three condominium units. As the Appellant’s back unit under appeal was in a three-unit store, the Board retains as an indication of value, the average time adjusted value per sq. ft. of a three-unit assembly. The average value was selected over the median as the sample size is small and there are no outliers. This value of $2,799 per sq. ft., applied to the 145 sq. ft. of the back unit under appeal, produces a value of $405,855, rounded to $406,000.

35The Board does not retain the indication of value from the single sale closest to the subject as it was the evidence of MPAC that location had no effect on value. Accordingly, the better indication of value is derived from the average per sq. ft. price of all three units store sales rather than the price of the physically closest sale.

36The Board finds that the correct current value of the subject property on the valuation day of January 1, 2016, is $406,000.

Issue 2 - Should an equity reduction in the correct current value be made, pursuant to s. 44(3)(b), to achieve an equitable assessment?

37MPAC indicated that equity was not an issue, and the Appellant made no submissions on the matter. The evidence the Appellant gave was that all three of her units were assessed equally at $346,000.

38Though equity was not expressly raised as an issue, the Board is nonetheless directed by s. 44(3)(b) to consider the issue and make an equitable adjustment if the evidence supports it.

39Here we have one physical store composed of three units. The front and middle units of the store have both been assessed at $346,000. Those units are not under appeal. They are however “similar properties in vicinity” for the purposes of s. 44(3)(b). In these circumstances it would be inequitable to assess the back unit based on a current value greater than the assessment of the two front units. An equity reduction of $60,000 in the correct current value is therefore required to produce an equitable assessment of $346,000.

40The Board finds that an equity reduction of $60,000 is required under s. 44 (3)(b) of the Act.

CONCLUSION

41The Board finds that the correct current value of the subject parcel is $406,000. The Board further finds that an equity reduction in the amount of $60,000 is required to return an equitable assessment of $346,000. The assessment of $346,000 is confirmed for the 2020, 2021, 2022 and 2023 taxation years.