Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 17, 2023

FILE NO.: WR 183792

Assessed Person(s): Highway 50 & 7 South Equities Inc., Greycan 9 Properties Inc., 9404635 Canada Inc.

Appellant(s): City of Brampton

Respondent(s): Municipal Property Assessment Corporation Region 15

Respondent(s): Highway 50 & 7 South Equities, Greycan 9 Properties Inc., 9404635 Canada Inc.

Property Location(s): 8386 Highway 50

Municipality(ies): City of Brampton

Roll Number(s): 2110-120-001-03100-0000

Appeal Number(s): 3486014 and 3513001

Taxation Year(s): 2022 and 2023

Hearing Event No.: 779174

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

APPEARANCES:

Parties

Representative

Highway 50 & 7 South Equities Inc., Greycan 9 Properties Inc., 9404635 Canada Inc.

Chantelle MacMillan

Municipal Property Assessment Corporation

Shannon Smale, William Cottingham

City of Brampton

Kumar Sapkota

HEARD: May 1, 2023 by video conference call

ADJUDICATOR(S): Christopher Voutsinas, Vice-Chair

DECISION

OVERVIEW

1Greycan 9 Properties Inc., Highway 50 & 7 South Equities Inc, and 9404635 Canada Inc. (“Assessed Person” or “Respondent”) are the owners of 8386 Highway 50 in the City of Brampton (“Subject Property”). The City of Brampton (“City” or “Appellant”) filed an appeal of the Subject Property’s assessed value for the 2022 and 2023 taxation years.

2The City takes the position that the assessed values of $6,014,000 for 2022 and $11,927,000 for 2023 are incorrect and too low. In addition, the City disputes the returned property class of the Subject Property for taxation purposes.

3The City takes issue with the assessment of the Subject Property, and in its opinion, the assessment should be $13,022,162. The City bases its opinion on the view that the highest and best use of the Subject Property is multi-residential and commercial development. The City did not provide sufficient evidence nor analysis to support its view.

Description of the Subject Property

4The Subject Property is a large-scale greenhouse and nursery operation situated on 17.64 acres of land in the City of Brampton. The property is improved with multiple greenhouses and garden-centre structures, as well as a residence, comprising a total improved area (as estimated by the Municipal Property Assessment Corporation (“MPAC”)) of 69,892 square feet. The Subject Property is triangular in shape. The improvements are variously constructed between 1962 and 2009. The Subject Property sold in late 2019, is no longer in use, and is currently vacant.

Issues for the Hearing

5At issue in this proceeding is:

1. What is the correct current value of the Subject Property for the 2022 and 2023 taxation years?

2. Is an equity reduction of the current value required, and if so, how much?

3. What is the correct property class of the Subject Property for taxation purposes?

6While property class may typically be determined prior to establishing current value, the order of issues reflects the order in which the issues were addressed by the parties given the particular facts and circumstances of these appeals.

Result

7The Assessment Review Board (“Board”) finds that the correct current value of the Subject Property for the 2022 and 2023 taxation years is $5,472,291.

8The Board finds with reference to similar lands in the vicinity that no equity reduction is required for the 2022 and 2023 taxation years.

9The Board finds that the correct property class of the Subject Property for taxation purposes is the Commercial property class in the Vacant land subclass.

ANALYSIS

10The Subject Property sold on December 4, 2019, for $9,842,250. Both the Assessed Person and MPAC agree that this sale reflects the best evidence of the current value of the Subject Property. The Subject Property ceased operating as a garden-centre and nursery about that time. The Assessed Person notes the existence of a hydro-electric corridor over a portion of the Subject Property. The Assessed Person asserts that the hydro-electric corridor is an impediment to development. MPAC concurred with this view.

Issue 1 - What is the correct current value of the Subject Property for the 2022 and 2023 taxation years?

11Section 19(1) of the Assessment Act, R.S.O. 1990, c. A.31 (“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 2022 and 2023 taxation years, the statutory valuation date is January 1, 2016.

12MPAC, and the Assessed Person represented by the Altus Group, both take the position that the current value of the Subject Property for the 2022 and 2023 taxation years is $5,472,291, reflecting the time-adjusted December 2019 sale price as of the statutory valuation date. This time-adjustment is necessary to reflect the generally upward market trend between the statutory valuation date and the actual sale transaction date. As the sale occurred approximately 48 months after the statutory valuation date, the value as of the statutory valuation date is lower.

13Time-adjustment factors used by the parties are not in dispute.

14The City takes the position that the correct current value of the Subject Property for the 2022 and 2023 taxation years is $13,022,162 based upon a commercial vacant land rate. The City indicates that the vacant land rate applied to the Subject Property is based on land rates used by MPAC. The land rate represents a $ value/acre of land used for valuation comparison purposes. The City could not produce evidence to support the applied vacant land rate.

15At the hearing, MPAC reviewed its Valuation Report, as amended November 22, 2022. The Valuation Report is entered in the record as Exhibit A.

16Upon reviewing the Assessed Person’s Statement of Response and confirming the City of Brampton’s zoning at the Subject Property as Commercial Agricultural, which allows only a narrow list of permitted uses, MPAC revised its Valuation Report and its opinion of current value to $5,472,291, reflecting the time-adjusted December 2019 sale price of the Subject Property.

17MPAC asserted that the 2019 sale of the Subject Property represented the best evidence of the current value of the Subject Property, primarily due to the lack of similar sale properties for valuation comparison purposes.

18At the hearing, the City accepted MPAC’s analysis and resulting opinion of value.

19In its Statement of Response dated August 16, 2022, the Assessed Person asserts that the current value of the Subject Property should be determined using the time-adjusted December 2019 sale price of $5,472,291. The Assessed Person confirmed its opinion of value at the hearing.

Findings on Current Value

20The Board considers the context (including location), characteristics, and physical attributes of the Subject Property and all available evidence to determine current value. In this case, the Board accepts that there is a lack of sufficiently similar property for value comparison purpose primarily due to the property’s Commercial - Agricultural zoning and the associated narrow permitted uses.

21By contrast, the actual sale of the Subject Property is a specific value in time related solely and directly to the Subject Property. For this reason, the Board agrees that the subject sale provides the best indication of current value.

22While the subject sale is approximately 48 months after the statutory valuation date, there is no dispute amongst the parties in connection with the time-adjustment factors.

23Both MPAC and the Assessed Person take the position that the subject sale is a market-based and arm’s length transaction. There is no evidence to the contrary. For these reasons, the Board accepts the subject sale as a valid transaction pursuant to s. 19.1 of the Act. The Board finds that the undisputed and correct current value of the Subject Property is $5,472,291 for the 2022 and 2023 taxation years.

Issue 2 - Is an equity reduction of the current value required, and if so, how much?

24Section 44(3)(b) of the Act directs that after determining current value, the Board shall 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.

25The Assessment to Sales Ratio (“ASR”) is a tool used to determine whether a reduction of the assessment is required to make it equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time-adjusted sale price. The level of appraisal (“LOA”) measures the overall ratio at which a sample set of properties is assessed. LOA is established by determining the median ASR of the property sales in the sample set.

26At the hearing, MPAC reviewed its Equity Analysis Report, as amended. The Equity Analysis Report is entered in the record as Exhibit B.

27MPAC searched its corporate database and identified 21 property sales for equity comparison purposes with the property code 105, vacant commercial land, and sale dates between January 1, 2015 and December 31, 2016 - representing one year on either side of the January 1, 2016 statutory valuation date.

28MPAC submits that due to a lack of comparable property sales, and the Subject Property’s zoning and narrow list of permitted uses, that it applied a 7% time-adjustment, as determined by the Assessed Person, to MPAC’s sale properties for equity analysis purposes resulting in a LOA of 0.96 and a Coefficient of Dispersion (“COD”) of 30.80.

29The COD is measured by determining the average percentage deviation from the median ASR or LOA. MPAC states that the International Association of Assessing Officers (IAAO) standard requires a COD of no more than 25 for vacant land, and that lower CODs imply good appraisal uniformity among individual properties.

30MPAC asserts that its ASR of 0.96 and COD of 30.80 indicates that similar properties in the vicinity are assessed at or near their current values and therefore, an equity adjustment is not required.

31At the hearing, MPAC submitted that it revised its sample set of 21 properties to exclude two properties assessed as farms and all properties located outside of Brampton. The resulting sample size of eight property sales for equity comparison purposes yields an ASR of 0.97. MPAC concluded that an equity adjustment is not required.

32The City did not submit an independent equity analysis. At the hearing, the City accepted MPAC’s equity analysis and conclusion.

33At the hearing, the Assessed Person reviewed its equity analysis. The Assessed Person calculated ASRs for 16 properties resulting in a median ASR of 0.86. The Assessed Person concluded that a 14% reduction in the current value of the Subject Property is necessary to achieve equity.

34At the hearing, MPAC challenged the validity of six of the property sales used by the Assessed Person in its equity analysis.

35The parties agreed to remove four of the six disputed property sales from the Assessed Person’s equity analysis resulting in a sample size of 12 and an ASR of 0.91. If all six disputed properties are removed the resulting ASR is 0.96.

36Both remaining sample sizes of 12 for the Assessed Person’s equity analysis, and eight for MPAC’s, are small for comparative purposes. A larger and sufficient sample set that adheres to the requirements of similarity and vicinity yields a more reliable result.

Findings on Equity

37Given that the Assessed Person and MPAC made satisfactory adjustments to their respective sample sets - in the case of MPAC removing the two farms and removing sale properties outside of Brampton - and in the case of the Assessed Person removing the four disputed sale properties, the Board is of the opinion that combining the parties’ sample sets yields the best evidence for equity comparison purposes. The combined sample set of property sales for equity comparison purposes yields a sample size of 20 sale properties and an ASR of 0.96.

38The Board finds that the combined sample set of both the Assessed Person’s and MPAC’s remaining property sales provides a sufficient and satisfactory sample set and the best evidence for equity comparison purposes. The ASR of this sample set is 0.96. The Board finds that no equity reduction to the current value of the Subject Property is required.

Issue 3 - What is the correct property class of the Subject Property for taxation purposes?

39The Subject Property is currently zoned by the City in the Commercial - Agricultural category.

40The returned property class of the Subject Property for taxation purposes for the 2023 taxation year was Commercial - Vacant land, and for the 2022 taxation year was Residential and Commercial.

41The City disputes the classification of the Subject Property for taxation purposes and is of the opinion that the correct property class of the Subject Property is Commercial - Vacant land for both the 2023 and 2022 taxation years.

42MPAC takes the position that notwithstanding the returned property class for the 2022 taxation year, that the correct class of the Subject Property for taxation purposes is Commercial - Vacant land for both the 2023 and 2022 taxation years.

43MPAC bases its opinion on the following:

a. farming has ceased and the property is no longer in use as a garden-centre or nursery;

b. per its Expert’s inspection, the structures are in an advanced state of decay and unused;

c. the Subject Property is no longer used for any residential purpose; and,

d. the Subject Property is no longer used for farming or farm purposes and does not satisfy s. 19(5) of the Act (i.e., farm lands used only for farm purposes).

44MPAC asserts that per Ontario Regulation 282/98 (“O. Reg. 282/98”) s. 5(1)1 that the commercial property class includes land and vacant land that is not included in any other property class.

45The Assessed Person takes the position that the property class of the Subject Property for taxation purposes is Residential and Commercial for both the 2023 and 2022 taxation years.

46The Assessed Person bases its opinion on the following:

a. the current zoning is unchanged and remains Commercial - Agricultural;

b. subsequent to the December 2019 sale of the property, there has been no physical change in the property;

c. farming and farm uses ceased on the Subject Property shortly after the December 2019 sale;

d. the returned property class for the 2022 taxation year is Residential and Commercial and there has been no change to the property from 2022 to 2023;

e. the property was purchased by the current owner for the purpose of redevelopment; and,

f. the property ceased to be used for farm purposes and that the default property class in this case is Residential.

47The Assessed Person asserts that absent any change in the property, it should remain in the Residential and Commercial property classes. Further, the Assessed Person submits that the apportionment of the Subject Property’s property class for taxation purposes should reflect the apportionment used in MPAC’s property profile. Specifically, 65% in the Residential property class and 35% in the Commercial property class.

48Property class for taxation purposes is addressed in Ontario Regulation 282/98 (“O. Reg. 282/98”), Part II, Classes of Real Property:

• Section 3(1)1 of O. Reg. 282/98 describes the types of Land used for residential purposes that are included in the Residential property class.

• Section 3(1)2 of O. Reg. 282/98 describes the types of Land not used for residential purposes that are included in the Residential property class.

• Section 3(1)1 and s. 3(1)2 are reproduced for reference purposes in the attached Appendix A.

49The Board reviewed s. 3(1)1 and s. 3(1)2 and there is no evidence to suggest that the Subject Property falls within any of the described uses. Therefore, the Board finds that the Subject Property is not in the Residential property class.

50Section 5(1) of O. Reg. 282/98 describes the types of property that are included in the Commercial property class. Section 5(1) is reproduced in the attached Appendix B. The Subject Property is currently unused for any purposes and is vacant. The structures on the land are in an advanced state of decay. There is no evidence to demonstrate any uses on the Subject Property. The Board reviewed s. 5(1) and finds that the Subject Property falls within s. 5(1)1, land and vacant land that is not included in any other property class.

51A detailed review of Part II of O. Reg. 282/98, Classes of Real Property, confirms that the Subject Property does not fall within any other property class including the Farm property class. A list of the classes of real property is included in Appendix C.

52The Board notes that O. Reg. 282/98, s. 20(1) describes a subclass for Vacant land in the Commercial property class and s. 20(2)1 states that the subclass for Vacant land for the Commercial property class consists of land in the Commercial property class that is vacant land.

53O. Reg. 282/98, Part I, Interpretation, Vacant Land, defines vacant land for the purposes of the Regulation. The Subject Property falls within s. 1(2) and as such, is vacant land for taxation purposes.

Findings on Property Class

54The Board finds that the correct property class and subclass of the Subject Property for taxation purposes is Commercial - Vacant land, for both the 2023 and 2022 taxation years.

CONCLUSION

55The Board finds that the correct current value of the Subject Property is $5,472,291 in the Commercial - Vacant property class/subclass for both the 2023 and 2022 taxation years.

ORDER

56The Board orders that the assessment of the Subject Property be reduced from $11,927,000 and $6,014,000, for the 2023 and 2022 taxation years, respectively, to $5,472,290 for both taxation years, in the Commercial property class and the Vacant land property subclass.

"Christopher Voutsinas"

CHRISTOPHER VOUTSINAS

VICE-CHAIR

Assessment Review Board

Website: www.tribunalsontario.ca/arb

APPENDIX A

O. Reg. 282/98: GENERAL under Assessment Act, R.S.O. 1990, c. A.31

Residential Property Class

3. (1) The residential property class consists of the following:

4. Land used for residential purposes that is,

i. land that does not have seven or more self-contained units,

ii. a unit or proposed unit, as defined in the Condominium Act, 1998,

iii. land owned by a co-operative, as defined in the Co-operative Corporations Act, the primary object of which is to provide housing to its members or land leased by such a co-operative if the term of the lease is at least 20 years,

iv. land with seven or more self-contained units owned by a corporation with or without share capital each shareholder or member of which has a right, by virtue of being a shareholder or member of the corporation, to occupy one of the units,

v. land with seven or more self-contained units owned by individuals only, each of whom has an undivided interest in the land and a right, arising from a contract with the other owners, to occupy one of the units,

vi. land with self-contained units, organized as what is commonly known as a timeshare, that,

A. is owned by persons, each of whom has an undivided interest in the land and a right to occupy a unit on a periodic basis for at least one week at a time, or

B. is leased by persons, for terms of at least 20 years, each of whom has a right to occupy a unit on a periodic basis for at least one week at a time,

vii. a group home as defined in subsection 163 (3) of the Municipal Act, 2001,

viii. a care home, as defined in the Residential Tenancies Act, 2006, that does not have seven or more self-contained units and that is not included in the commercial property class under paragraph 2 of subsection 5 (1),

ix. land used for residential purposes on a seasonal basis, including campgrounds,

x. land with self-contained units, organized as what is commonly known as a life lease project, in respect of which individuals (referred to in this subparagraph as “purchasers”) have each entered into an agreement to purchase a right (referred to in this subparagraph as the “life lease interest”) to occupy a unit for residential purposes within the project, if,

A. the term, not including renewals, of the life lease interest is equal to or greater than 20 years or is equal to the lifetime of the purchasers,

B. the purchasers have made one or more payments to the owner of the land on account of the purchase, and

C. the purchasers have a right to sell, transfer or otherwise dispose of the life lease interest in a manner determined under the terms of the agreement for the purchase,

xi. land that is a municipally-licensed rooming house,

xii. a recreational facility that is operated on a not-for-profit basis, if the use of the facility is restricted to residents of units in a residential subdivision, land-lease community or condominium or townhouse complex, as well as their guests, and if the facility is not open to the general public.

xiii. Revoked: O. Reg. 1/12, s. 1.

xiv. a retirement home as defined in subsection 2 (1) of the Retirement Homes Act, 2010.

2. Land not used for residential purposes that is,

i. farm land to which subsection 19 (5) of the Act applies for the taxation year for which the land is being classified, other than land in the farm property class or land prescribed under section 44,

ii. land used by a non-profit organization for child care purposes that is either,

A. land owned by the organization, or

B. land leased by the organization, other than land that would otherwise be in the commercial property class or the industrial property class,

iii. land owned by a religious organization other than land occupied by a tenant and used for a commercial activity,

iv. land owned and occupied by a non-profit service organization, a non-profit private club, a non-profit cultural organization or a non-profit recreational sports club, other than land used as a golf course or ski resort,

v. land owned by a conservation authority, other than land occupied by a tenant and used for a commercial activity or land used as a golf course or ski resort,

vi. land used as a golf course, including buildings or structures used for the purpose of maintaining the golf course, but not including any other buildings and structures and the land used in connection with those other buildings or structures,

vii. land used as a driving range for at least four consecutive months a year but not including any buildings and structures and the land used in connection with those buildings or structures,

viii. land used as a ski resort, including ski-lifts and buildings or structures used for the purpose of maintaining ski hills or trails, but not including any other buildings and structures and the land used in connection with those other buildings or structures,

ix. vacant land principally zoned for residential development but not principally zoned for multi-residential development,

x. buildings used exclusively for the purposes of storing private aircraft and land on which those buildings are located,

xi. land used to provide horse trail rides or horse riding lessons to the public.

APPENDIX B

O. Reg. 282/98: GENERAL under Assessment Act, R.S.O. 1990, c. A.31

Commercial Property Class

5. (1) The commercial property class consists of the following:

6. Land and vacant land that is not included in any other property class.

7. A care home, as defined in the Residential Tenancies Act, 2006, to which that Act does not apply, that is operated with the intention of generating a profit and that does not have seven or more self-contained units.

8. If a portion of land is in the office building property class, any other portion of the land that is not included in any other property class.

9. If a portion of land is in the shopping centre property class, any other portion of the land that is not included in any other property class. O. Reg. 282/98, s. 5; O. Reg. 68/14, s. 2.

(1.1) Revoked: O. Reg. 575/06, s. 2.

(2) For the 2000 and subsequent taxation years, a building that is used exclusively for storage purposes at the site where manufacturing, production or processing takes place is included in the commercial property class if the building is,

(a) not attached to a building or structure or portion of a building or structure that is included in the industrial property class; or

(b) linked to a building or structure or portion of a building or structure that is included in the industrial property class by means of a minimal connection or corridor constructed only for the purpose of moving material or goods between the buildings. O. Reg. 356/00, s. 2.

(3) For 2005 and subsequent years, the following land shall be included in the commercial property class but only if the land is owned by the University of Windsor and occupied by DaimlerChrysler Canada Inc.:

1. The University of Windsor/DaimlerChrysler Canada Automotive Research and Development Centre located at 3939 Rhodes Drive in the City of Windsor and having assessment roll number 37 39 070 301 06500 0000 and the legal description Concession 3, Parts of Lots 103-105 designated as Part 1 on Registered Plan 12R-8104, as set out on the assessment roll. O. Reg. 399/04, s. 1.

APPENDIX C

O. Reg. 282/98: GENERAL under Assessment Act, R.S.O. 1990, c. A.31