Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 04, 2023

FILE NO.: WR 184292

Assessed Person(s): Saeed Tabrizi; Shahnaz Tabrizi

Appellant(s): Saeed Tabrizi

Respondent(s): Municipal Property Assessment Corporation Region 14

Respondent(s): City of Markham

Property Location(s): 30 Abraham Avenue

Municipality(ies): City of Markham

Roll Number(s): 1936-020-112-25090-0000

Appeal Number(s): 3512597 and 3490857

Taxation Year(s): 2022 and 2023

Hearing Event No.: 780477

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

APPEARANCES:

Parties	Representative
Saeed Tabrizi	Andrew Attard
Municipal Property Assessment Corporation	Tong Li
City of Markham	No one appeared

HEARD: June 12, 2023 by telephone conference call

ADJUDICATOR(S): Christopher Voutsinas, Vice-Chair

DECISION

OVERVIEW

1Saeed Tabrizi (“Appellant”) is the owner of 30 Abraham Avenue in the City of Markham (“Subject Property”). The Appellant appealed the assessment for the 2022 taxation year, and a further appeal was deemed for the 2023 taxation year pursuant to s. 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). The Appellant takes the position that the assessed value of $1,100,000 is incorrect and too high.

2The Municipal Property Assessment Corporation (“MPAC”) responded to the appeals and takes the position that the correct current value of the Subject Property for the 2022 and 2023 taxation years is $1,034,000.

3At the hearing, the Assessment Review Board (“Board”) rendered an oral decision ordering that the assessment of the Subject Property be reduced from $1,100,000 to $927,390 for the 2022 and 2023 taxation years.

4The Appellant requested written reasons.

Description of the Subject Property

5The Subject Property is a two-storey, detached, single family residential property consisting of 2,312 square feet of built area on a lot size of 0.15 acres. The property was built in 1979 and has an effective year built of 1997 as a result of renovations and upgrades. MPAC assigns a quality of construction to the property of 6.5 out of 10.

6The Subject Property sold on May 1, 2018 for $1,270,000 in an open market transaction.

Issue for the Hearing

7At issue in this proceeding is:

1. What is the 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?

Result

8The Board finds that the correct current value of the Subject Property for the 2022 and 2023 taxation years is $927,390.

9The Board finds that with reference to similar lands in the vicinity, per s. 44(3)(b) of the Act, that no equity reduction is required for the 2022 and 2023 taxation years.

ANALYSIS

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

10Section 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.” For the 2022 - 2023 taxation years in question, the statutory valuation day is January 1, 2016.

11MPAC takes the position that the current value of the Subject Property for the 2022 - 2023 taxations years is $1,034,000 (no equity adjustment required). The Appellant takes the position that the current value of the Subject Property is $984,000 (or a correct current value of $905,000 after an 8% equity adjustment).

MPAC’s Analysis

12At the hearing, MPAC reviewed the valuation report prepared by its expert, Tong Li, dated March 14, 2023.

13MPAC derived a value of the Subject Property using the direct comparison approach. MPAC searched its database for property sales of similar to the Subject Property. MPAC found six property sales for valuation comparison purposes as shown in Appendix E of its expert report. MPAC time-adjusted the sale prices to the statutory valuation day of January 1, 2016, to reflect the general upward trend in the market from January 1, 2016, to the actual sale date of the respective property sale. MPAC calculated the median time-adjusted sale price per square foot for the group of six properties and applied that to the built area of the Subject Property, resulting in a current value of the Subject Property of $1,034,000.

14The Appellant noted that MPAC did not use two similar properties in its direct comparison approach that were much closer to the Subject Property than the others it used, and that these two properties are located on the same street as the Subject Property. MPAC indicated that it did not use these two properties because both had basement walk-outs and the Subject Property did not. The Appellant asked MPAC if a walk-out was considered a positive feature. MPAC indicated that it did not adjust values for a walk-out. The Appellant used both these properties in its group of properties in its direct comparison approach.

15MPAC did not consider the May 2018 sale of the Subject Property as it viewed it to be too far removed from the January 1, 2016, valuation day to be reliable.

The Appellant’s Analysis

16The Appellant takes the position that the May 2018, sale of the Subject Property at $1,270,000, time-adjusted to $984,000, represents the best evidence of the current value of the Subject Property as of the January 1, 2016, valuation day.

17Given that the referenced sale occurred 29 months after the statutory valuation day, the Appellant time-adjusted the actual sale price to reflect the overall trend in the market from January 1, 2016, to the sale date of March 2018. While the Appellant calculated a time-adjustment factor of 2.5% per month using two paired sales, the Appellant chose to use MPAC’s time-adjustment factor of 1% per month, recognizing that two paired sales were not sufficient to establish an accurate growth rate for the 29-month timeframe.

18The Appellant also used the direct comparison approach to support its position on current value. The Appellant used five property sales for value comparison purposes. Three of these properties are located on the same street as the Subject Property. The Appellant time-adjusted the sale prices to the statutory valuation day of January 1, 2016. The time-adjust sale price per square foot of this group of five properties ranged from $360 - $460. The Appellant calculated the median time-adjusted sale price per square foot at $418 and applied that to the built area of 2,312 square feet for the Subject Property, resulting in a current value of the Subject Property of $965,000 (rounded).

The Board’s Analysis

19The Board has reviewed the six time-adjusted property sales used by MPAC and the five time-adjusted property sales used by the Appellant for value comparison purpose using the direct comparison approach. Three of the property sales are common to both MPAC and the Appellant resulting in eight discrete property sales.

20The Board takes the view that the combined group of eight similar properties (three in common) reflects the best evidence for value comparison purposes.

21The range of time-adjusted sale prices per square foot for the group of eight properties is $360 - $549. Removing the outliers on each of the low and high ends yields a range of $404 - $460 (both ends of which are common sale properties to MPAC and the Appellant). The Board is satisfied that the resulting range is consistent and reasonable for value comparison purposes.

22The median time-adjusted sale price per square foot for the combined group of eight property sales equals $436 per square foot (same figure calculated with or without the outliers). Applying that figure to the built area of 2,312 square feet for the Subject Property results in a current value of $1,008,032.

23The Board did not consider the May 2018 sale of the Subject Property as it is far removed from the statutory valuation day – 27 months later – to be reliable. The Board has long accepted that the farther removed from the valuation day, the less reliable and useful the property sale for valuation comparison purposes.

Findings on Issue 1

24Based on the above analysis and evidence received, the Board finds that the Subject Property’s current value for the 2022 and 2023 taxation years is $1,008,032.

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

25Section 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.

26The 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.

MPAC’s Analysis

27At the hearing, MPAC reviewed its equity analysis report prepared by Ms. Li.

28MPAC applied the same time adjustment factors used in its valuation report to determine the time adjusted sale prices for the property sales in its equity analysis. These figures along with the 2016 assessment values used in its analysis are shown in Appendix B of MPAC’s equity analysis report.

29MPAC searched its corporate database for properties described as single-family detached (not on water) and with sale dates between January 1, 2015 and December 31, 2016 - representing one year on either side of the January 1, 2016 statutory valuation day. MPAC identified 30 such properties to use in its equity analysis.

30MPAC’s sale properties for equity analysis purposes result in a LOA of 0.97 and a Coefficient of Dispersion (“COD”) of 7.0.

31The 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 15 for residential properties, and that lower CODs imply good appraisal uniformity among individual properties.

32MPAC asserts that its ASR of 0.97 and COD of 7.0 indicate that similar properties in the vicinity are assessed at or near their current values and therefore, an equity adjustment is not required. As a result, MPAC takes the position that the correct current value of the Subject Property is $1,034,000 for the 2022 and 2023 taxation years.

33The Appellant asserts that MPAC’s equity analysis is inaccurate as MPAC used updated 2016 assessments rather than the 2016 assessments as initially returned on the roll. The Appellant testified that of the 30 properties used in MPAC’s analysis, 14 properties had an updated assessment. The Appellant takes the view that updated and increased assessments make the equity issue disappear, and those properties that had not sold after the return of the roll are not treated the same.

34MPAC confirmed its practice is to use updated assessments in its equity analysis.

The Appellant’s Analysis

35At the hearing, the Appellant reviewed its time adjusted equity study. The Appellant’s equity study identified properties with property code 301 (same as the Subject Property) in Markham (within 0.63 kilometres from the Subject Property) that sold in either the 2015 or 2016 shoulder years.

36The Appellant calculated ASRs for the 30 properties in its equity study resulting in a median ASR of 0.92 and a COD of 2.9%. The Appellant concludes that an 8% reduction in the current value of the Subject Property is necessary to achieve equity. As a result, the Appellant takes the position that the correct current value of the Subject Property is $905,000 (rounded).

The Board’s Analysis

37The Board reviewed both MPAC and the Appellant’s equity analysis. MPAC’s equity analysis yields a 3% reduction which is within MPAC’s acceptable zone. Hence, MPAC concludes that no adjustment is necessary. The Appellant’s equity analysis yields an 8% reduction which results in a required reduction. Both outcomes point to a reduction for equity purposes.

38Further, the Appellant asserts that If properties that sell are re-assessed based on their sale price and these properties are included in the equity analysis, uniformity inferences will not be accurate (i.e., assessments will appear more uniform than they were initially) and the resulting ASRs are impacted.

39The Board recognizes that there are different methodologies for calculating ASR and analysing equity. However, given the points raised by the Appellant regarding MPAC’s use of updated assessment values in its equity analysis and the associated impact on outcomes of the analysis, as well as the fact that both analyses trend toward a reduction, i.e., a 3% and an 8% reduction, respectively, the Board, under these circumstances, prefers the Appellant’s analysis.

Findings on Equity

40The Board finds that an 8% reduction in the current value of $$1,008,032 of the Subject Property is required to establish equity resulting in a correct current value of $927,390 for the 2022 and 2023 taxation years.

ORDER

41The Board orders the assessment of the Subject Property for the 2022 and 2023 taxation years reduced from $1,100,000 to $927,390.