Tribunals Ontario Tribunaux décisionnels Ontario Assessment Review Board Commission de révision de l’évaluation foncière
ISSUE DATE: June 22, 2023 FILE NO.: WR 184343
Assessed Person(s): Elena Soldatova; Konstantin Soldatov Appellant(s): Elena Soldatova Respondent(s): Municipal Property Assessment Corporation Region 14 Respondent(s): Town of Whitchurch-Stouffville Property Location(s): 2 Lakeview Avenue Municipality(ies): Town of Whitchurch-Stouffville Roll Number(s): 1944-000-047-42300-0000 Appeal Number(s): 3499468, 3512618 Taxation Year(s): 2022 and 2023 Hearing Event No.: 778921
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
| Parties | Representative |
|---|---|
| Elena Soldatova | Andrew Attard |
| Municipal Property Assessment Corporation | Tania Papaikonomou |
| Town of Whitchurch-Stouffville | No one appeared |
HEARD: April 3, 2023 by telephone conference call
ADJUDICATOR(S): Paul Brennan, Member; Dirk VanderBent, Vice-Chair
DECISION
OVERVIEW
1Elena Soldatova (“the Appellant”), the owner of the property located at 2 Lakeview Avenue in the Town of Whitchurch-Stouffville, Ontario (the “Subject Property”), has filed an appeal pursuant to s. 40 of the Assessment Act, S.O. 1990, c. A.31 (the “Act”) for the 2022 taxation year. The ground of this appeal is that the current value of the Subject Property, which was determined by the Municipal Property Assessment Corporation (“MPAC”) in its general reassessment of the current value of the Subject Property (“General Reassessment Value”), is too high, and, therefore, is incorrect. Pursuant to the deeming provision under s. 40(26) of the Act, an appeal has been deemed for the 2023 taxation year.
2MPAC assessed the value of the Subject Property at $2,104,000 for the 2017 taxation year. During the Request for Reconsideration (“RFR”) process initiated by the Appellant for the 2020 taxation year, MPAC amended its opinion of value from $2,104,000, as returned, to $1,907,000 for the 2020 taxation year, and the parties executed Minutes of Settlement to reflect this change. MPAC also assessed the value of the Subject Property at $1,907,000 for the 2021 taxation year. However, for the 2022 taxation year, MPAC assessed the Subject Property at $2,670,000, reflecting a positive 40% adjustment for waterfront properties on Lakeview Avenue, which it had omitted in assessing the Subject Property from 2017 to 2021.
3The Appellant claims that MPAC’s adjusted assessment is too high and that it unfairly applied the 40% adjustment after the parties executed Minutes of Settlement for the 2020 taxation year. The Appellant claims that MPAC’s assessment should be confirmed at $1,907,000, representing MPAC’s 2022 returned value of $2,670,000 less the 40% adjustment.
4MPAC submits that the correct current value of the Subject Property is $2,904,000, but it should be reduced to $2,294,000 to make it equitable with the assessment of similar lands in the vicinity.
5Pursuant to s. 40(11) of the Act, the Municipality (the Town of Whitchurch-Stouffville) is a party to this proceeding. However, the Municipality did not advise the Board of its position on the issues raised in this appeal, and no one appeared at the hearing on the Municipality’s behalf.
Issues for the Hearing
6The issues to be determined on this appeal are:
- What is the correct current value of the Subject Property for the 2022 and 2023 taxation years; and
- Should the correct current value of the Subject Property be reduced to make it equitable with the assessment of similar lands in the vicinity, and, if so, by what amount?
Result
7At the completion of the hearing, the Board reserved its decision. For the following reasons, the Board finds that the correct current value of the Subject Property for the 2022 and 2023 taxation years is $2,904,000.
8The Board further finds that an equity reduction is required under s. 44(3) of the Act, resulting in an assessment of $2,279,000 for the 2022 and 2023 taxation years.
ANALYSIS
Description of Subject Property
9The Subject Property is a single-family, two-storey residential detached dwelling on water located in the Town of Whitchurch-Stouffville. It has indirect waterfront access to Preston Lake. The Subject Property is improved with a house that was built in 2010. The house has a total building area of 4,503 square feet (“sq. ft.”) and a finished basement area of 1,685 sq. ft., including a walkout. The house has four bedrooms, four full bathrooms, one-half bathroom and three fireplaces. The quality of construction is 8, and the condition is average. The Subject Property is also improved by an attached garage built in 2010 with a total of 610 sq. ft. and a quality of construction of 4, and an outdoor pool built in 2011 with a quality of construction of 2.
10The Subject Property has not been the subject of a market sale that occurred within reasonable proximity to the January 1, 2016 Valuation Day.
Issue 1: What is the correct current value of the Subject Property for the 2022 and 2023 taxation years?
Applicable Law
11In accordance with s. 44(3)(a) of the Act, the Board must first 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.”
12Accordingly, the Board must first determine what the Subject Property would have sold for in an arm’s length transaction on the statutory valuation day. Section 19.2(1) of the Act confirms that the valuation day for the 2022 and 2023 taxation years is January 1, 2016.
MPAC’s Evidence on Current Value
13The best evidence of current value would be the sale of the Subject Property on or close to the valuation day of January 1, 2016. If no such sale occurred, the Board will consider sales of comparable properties to establish the current value of the Subject Property.
14MPAC provided the Board with evidence regarding sales of proposed comparable waterfront properties within one year of January 1, 2016. MPAC indicated that it extended its search for comparable properties throughout York Region due to the unique nature of the Subject Property and the lack of sales of waterfront properties in the Town of Whitchurch-Stouffville. MPAC performed a time adjustment to reflect what the properties would have sold for on January 1, 2016.
MPAC’s Proposed Comparable Properties and Sales Information
| Property Address | 58 Lakeview Avenue | 510 Sunset Beach Road | 199 Lakeland Crescent | 442 Sunset Beach Road | 504 Sunset Beach Road | 630 Sunset Beach Road | 5670 Lakeshore Road |
|---|---|---|---|---|---|---|---|
| Sale Date | 02/19/16 | 08/05/16 | 06/29/16 | 08/15/16 | 03/30/16 | 08/10/16 | 03/29/16 |
| Time adjusted sale amount | $2,590,595 | $2,490,222 | $1,799,719 | $2,908,057 | $3,319,127 | $3,777,304 | $1,786,996 |
| Building area (sf) | 2,737 | 3,250 | 2,411 | 2,854 | 3,363 | 7,511 | 2,610 |
| Lot size (acres) | 0.42 | 0.91 | 0.2 | 1.36 | 1.31 | 0.69 | 3.34 |
| Year Built | 2005 | 1983 | 1959 | 1978 | 1988 | 1994 | 1987 |
| Quality of construction | 7.5 | 7.5 | 5.5 | 6.5 | 7 | 9 | 6.5 |
| Finished Basement area (sf) and Quality | 1,915 Average Quality | 1,322 Average Quality | N/A | N/A | 1,100 Average Quality | 2,778 Average Quality | 216 Rec. Room Average Quality |
| Comparability to Subject Property | Inferior | Similar | Inferior | Inferior | Similar | Superior | Inferior |
15MPAC determined that two of the comparable properties – 510 Sunset Beach Road and 504 Sunset Beach Road – were similar to the Subject Property (the other five properties were described as inferior or superior). 510 Sunset Beach Road sold on August 5, 2016 for a time adjusted sale price of $2,490,222, and 504 Sunset Beach Road sold on March 30, 2016 for a time adjusted sale price of $3,319,127. MPAC averaged the time adjusted sale prices of these two properties to arrive at a current value of $2,904,000 (rounded), which is higher than the returned value of $2,670,000.
16MPAC indicated that it arrived at the assessed value of $2,670,000 after applying a positive 40% adjustment to the $1,907,000 current value assessment reflected in the 2020 Minutes of Settlement. MPAC indicated that it had applied the positive 40% adjustment to all waterfront properties on Lakeview Avenue, but the Subject Property was missed due to an oversight for the 2017 to 2021 taxation years.
17MPAC indicated that the comparable properties’ square footage, lot size, quality class and finished basements were the primary factors used in determining similarity. MPAC’s valuation expert inspected the Subject Property with the owner, who agreed that the quality of construction of 8 is correct. MPAC acknowledged in cross-examination that it could not obtain permission from the owners of the similar properties to inspect their properties.
Appellant’s Evidence
18The Appellant did not dispute the accuracy of the information MPAC provided in its comparable sales analysis but challenged MPAC’s opinion of value based on this information. Specifically, the Appellant emphasized that the lot sizes for 510 Sunset Beach Road and 504 Sunset Beach Road (0.91 and 1.31 acres, respectively) were larger than the Subject Property’s lot size of 0.56 acres and therefore would be expected to sell for higher amounts. The Appellant further claimed that MPAC did not consider that the Subject Property has only a limited view of and access to Preston Lake.
19The Appellant adduced evidence that the property at 34 Lakeview Avenue was the most appropriate comparable property. He indicated that in September 2015, this 0.42-acre property sold for $1,370,000, or $3,261,905 per acre. The Appellant testified that this was a vacant land sale, and a new home was constructed on the lot in 2020. In applying this per acre rate to MPAC’s two similar properties at 510 Sunset Beach Road and 504 Sunset Beach Road, the Appellant claimed that the lot-size adjusted sale prices of MPAC’s similar properties were $1,341,000 and $885,000, respectively.
20However, on cross-examination, the Appellant acknowledged that the September 2015 sale of 34 Lakeview Avenue was not a vacant land sale, as at the time of sale, there was a single-family home on the land, and it was not demolished until 2020.
21The Appellant further indicated that MPAC’s evidence suggests that the Subject Property was the only one to which MPAC had applied a positive 40% adjustment. However, on cross-examination, Appellant admitted that on November 21, 2022 his office had received from MPAC a list of the other properties on Lakeview Avenue to which the positive 40% adjustment had been applied.
Findings on Issue 1
22The parties agreed that the valuation methodology to be applied in determining the correct current value is a comparable sales analysis. As discussed below, the Appellant argues that MPAC’s proposed similar properties are not comparable to the Subject Property and that the correct way to value the Subject Property is to adjust for lot size.
23The Board finds that the Appellant’s approach of adjusting MPAC’s comparable properties based only on lot size is inappropriate, as the Appellant acknowledged that the proposed comparable property of 34 Lakeview Avenue was not a vacant land sale. The Board notes that there is not always a direct correlation between sale value and lot size alone. In other words, in a competitive market for a residential property, a smaller site area does not necessarily mean that the sale value will be lower. All property profile factors must be considered when determining whether a property is comparable.
24The Board accepts MPAC’s submission that 510 and 504 Sunset Beach Road are similar to the Subject Property. The Appellant adduced no evidence to indicate that the residential real estate market for these properties differed from that of the Subject Property. The Board notes that these are waterfront properties within a reasonable proximity to the Subject Property. Both are two-storey residences with similar quality construction ratings as the Subject Property. While it is true that lot sizes of MPAC’s comparable properties are larger than the Subject Property’s 0.56 acres, both house sizes are smaller (3,250 and 3,363 sq. ft., respectively), than the Subject Property’s 4,509 sq. ft., and their quality of construction (7.5 and 7) is slightly inferior to the Subject Property’s construction quality of 8. Both properties are significantly older (build years of 1983 and 1988) than the Subject Property’s 2010 build year. For these reasons, the Board finds that the variances in lot size are not sufficiently significant to indicate that MPAC’s two properties are not similar to the Subject Property.
25The Appellant submits that, as she had negotiated a settlement with MPAC for a current value of $1,907,000 in 2020, MPAC’s redetermination of the current value for the 2022 taxation year, in which it applied a positive 40% positive adjustment, is unfair. The Appellant submits that the settlement should remain in place because no changes have been made to the Subject Property since the 2020 settlement. The Appellant further submits that the positive 40% adjustment should be removed, and the Board should find that the correct current value of the Subject Property is $1,907,000 in accordance with the 2020 Minutes of Settlement.
26The Board does not accept the Appellant’s submission. MPAC’s evidence is that the 40% adjustment was applied to all properties on Lakeview Avenue as of the Valuation Day, but the Subject Property was missed due to an oversight. The Board accepts this evidence as it was not disputed by the Appellant. In this regard, the Appellant’s representative acknowledged that his office received a list of the properties to which MPAC had applied the 40% adjustment.
27Pursuant to s. 32(1) of the Act, MPAC may “at any time before the time fixed for the return of the assessment roll may correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly.” It is not disputed that the failure to apply the 40% adjustment is an error. Therefore, the Board finds that MPAC had the authority to apply the positive 40% adjustment to the Subject Property for the 2022 taxation year.
28Based on the above findings and analysis, the Board finds that the correct current value of the Subject Property is $2,904,000 for the 2022 and 2023 taxation years in accordance with MPAC’s evidence.
29The Board notes that the Appellant did not plead issue estoppel regarding the 2020 settlement with MPAC. In terms of overall fairness, the Board observes that the Appellant has benefitted from paying taxes on an incorrect lower current value for the 2017 to 2021 taxation years, and the Board’s finding of a higher current value applies only to the 2022 and 2023 taxation years.
Issue 2: Should the correct current value of the Subject Property be reduced to make it equitable with the assessment of similar lands in the vicinity, and, if so, by what amount?
Applicable Law
30Section 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.”
Evidence and Parties’ Submissions on Equitable Adjustment
31The Assessment to Sales Ratio (“ASR”) of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed above or below its current value. If sold properties are assessed below their current value, a reduction in the subject assessment below current value is required to make the subject assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by comparing the assessment as returned to the time-adjusted sale price, expressed as a mathematical ratio.
32MPAC provided an equity analysis report detailing sales of 30 detached waterfront properties located within 25 kilometres of the Subject Property, occurring between January 1, 2015 and December 31, 2016. MPAC typically locates the 30 sales closest to the Subject Property when preparing an equity analysis report, but in this case because the Subject Property is a waterfront property, MPAC expanded its search to nearby municipalities to locate other waterfront properties. MPAC’s analysis reflected a median ASR of 0.79. Based on its analysis, MPAC submitted that current value of the Subject Property should be reduced to $2,294,000 to ensure equity under the Act.
33The Appellant did not specifically request an equity adjustment but, as noted above, argued that the current value for the Subject Property should be confirmed at $1,907,000 as reflected in the Minutes of Settlement executed in 2020. The Appellant submitted that this would be an equitable result. The Appellant took no issue with MPAC’s equity analysis, but provided his own Equity Study, which included 26 of the 30 properties in MPAC’s equity analysis and four additional properties not referenced in MPAC’s analysis, as set out in the following Table:
| Property Address | Sale Date | Assessment | Sale Price | Time Adjustment Factor (per MPAC) | Time Adjusted Sale Price | Time Adjusted ASR |
|---|---|---|---|---|---|---|
| 706 Lake Drive South | November 2016 | 481,000 | 745,000 | 0.908 | 676,460 | 0.71 |
| 191 Lakeland Crescent | August 2016 | 1,153,000 | 1,650,000 | 0.933 | 1,539,450 | 0.75 |
| 451 North Lake Road | August 2016 | 1,336,000 | 1,728,000 | 0.933 | 1,612,224 | 0.83 |
| 414 Sunset Beach Road | March 2015 | 2,332,000 | 1,325,000 | 1.101 | 1,458,825 | 1.6 |
Findings on Issue 2
34The Board finds that the best evidence on equity is MPAC’s Equity Analysis Report, which includes 30 waterfront properties, and the four properties in the Appellant’s Equity Report that were not included in MPAC’s Report. The Board has analyzed the evidence and is satisfied that these 34 properties are within the vicinity of the Subject Property are detached residences on waterfront property and therefore of a similar nature and character to the Subject Property, were sold within the shoulder years of the Valuation Day and the sale prices were appropriately time adjusted. The Board used MPAC’s Time Adjustment Factor to arrive at a Time Adjusted Sale Price for the Appellant’s four properties identified in the table above.
35The Board’s analysis results in a median ASR of 0.785. The Board is satisfied that the median ASR of 0.785 indicates that a downward adjustment should be made to correct the current value of the Subject Property to ensure it is equitable with the assessments of similar properties in the vicinity.
36The Board has found that the correct current value of the Subject Property is $2,904,000 for the 2022 and 2023 taxation years. Multiplying that figure by an ASR of 0.785 results in a current value assessment of $2,279,640, or $2,279,000 rounded.
CONCLUSION
37The correct current value of the Subject Property is $2,904,000. The Board has had reference to the value at which similar lands in the vicinity are assessed and determines that a reduction in this current value is required to make it equitable, resulting in a current value of $2,279,640, rounded to $2,279,000.
ORDER
38The Board orders that the returned assessment for the 2022 and 2023 taxation years be decreased to $2,279,000.
"Paul Brennan" PAUL BRENNAN MEMBER
"Dirk VanderBent" DIRK VANDERBENT VICE-CHAIR
Assessment Review Board Website: www.tribunalsontario.ca/arb