Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: July 12, 2023
Assessed Person(s): Sergio Folino
Appellant(s): Sergio Folino
Respondent(s): Municipal Property Assessment Corporation Region 15
Respondent(s): Town of Oakville
Property Location(s): 241 Trafalgar Road
Municipality(ies): Town of Oakville
Roll Number(s): 2401-040-050-07100-0000
Appeal Number(s): 3496971 and 3513106
Taxation Year(s): 2022 and 2023
Hearing Event No.: 779776
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties
Representative
Sergio Folino
Self-represented
Municipal Property Assessment Corporation
Raj Rakhra
Town of Oakville
No one appeared
HEARD: June 5, 2023 by telephone conference call
ADJUDICATOR(S): Dan Weagant, Member
DECISION
OVERVIEW
1Sergio Folino (the “Appellant”) appealed the current value assessment of his property at 241 Trafalgar Road for the 2022 taxation year, because he believed the value returned by the Municipal Property Assessment Corporation (“MPAC”) of $1,990,000 was too high. This appeal was subsequently deemed for the 2023 taxation year, pursuant to s. 40(26) of the Assessment Act. (the “Act”).
2In preparation for this hearing and in response to the Appellant’s appeal, MPAC revised its opinion of value to $1,942,000. After an external inspection conducted earlier this year, MPAC further reduced its position of current value to $1,925,000, reflecting a correction on the lot size and pool size existing on the subject property.
3The Appellant believes the assessment of the subject property should be reduced to approximately $1,200,000 to $1,300,000 for it to be fair and equitable.
Areas of Agreement
4The Parties agree that the subject property was sold to the Appellant in August of 2017 for $2,695,000.
Issues for the Hearing
5At issue in this proceeding is:
- A determination of the current value of the subject property; and
- Whether a reduction in the current value should be made to achieve equitable assessment.
Result
6The Board finds that the current value of the subject property is $2,075,000.
7The Board also finds that, when reference is made to the assessments of similar lands in the vicinity, the current value requires a reduction for it to reflect equitable assessment.
8Therefore, for the 2022 and 2023 taxation years the assessment of 241 Trafalgar Road is reduced, from the value returned, to $1,882,000 in the Residential property class.
ANALYSIS
Description of Subject Property
9The subject property comprises 13,468 square feet of land on Trafalgar Road in Oakville. The existing dwelling was constructed in 1869. It was designed in the ‘Italianate’ style and has a total of 3,462 square feet of living area on two storeys and has a quality of construction rating of 7.5 as applied by MPAC.
10MPAC applied an ‘Effective Year Built’ to the subject property of 1997, reflecting normal maintenance and potential renovations over the course of the building’s life span. This effective year built was not confirmed by internal inspection.
Issue 1 – What is the current value of the subject property?
MPAC’s evidence and submissions
11To arrive at its opinion of current value, MPAC applied the ‘direct comparison approach’ to value, whereby a subject property is compared to other properties that have sold in proximity to the valuation day in the Act that applies to the years under appeal. For 2022 and 2023, the valuation day is January 1, 2016.
12MPAC selected three proposed comparable properties sold between December 29, 2015 and July 21, 2016. In order to compare these sale values as though they sold on the applicable valuation day, MPAC applied Time Adjustment Factors (“TAFs”) to each of the three sale values in its sales study. These TAFs were derived from a “price changes over time” study where the sale values of 260 single family dwellings in Oakville that sold between January 2015 and December 2017 were plotted on a linear graph. The resulting graph indicates the TAF to be applied to property sale values in each month of the study.
13MPAC submitted that, when the sale values of the three comparable properties, and the sale value of the subject property are considered, the range of value indicated for the subject property is between $1,805,000 and $2,419,000.
14By comparing the subject property, and its 2017 sale, to the three comparable properties included in its analysis, MPAC submits that the indicated value of the subject property is $2,323,000; a value lying within the range determined from the time-adjusted sale values of the proposed comparable properties.
15However, in its adjustments to the assessment returned, MPAC arrives at a value of $1,925,000 derived from the results of its exterior inspection, the review of the Appellant’s documents and an adjustment to the size of a swimming pool added to the property. These adjustments were made to the returned value of $1,990,000.
16MPAC recommended the $1,925,000 value as the correct current value of the subject property, despite the sales analysis and its conclusion of $2,323,000.
Appellant’s evidence and submissions
17The Appellant took the position that, since the subject property is so unique in the marketplace, owing to its age and design, comparisons with other properties cannot be used reliably to determine its current value assessment.
18The Appellant also submitted that there were several shortcomings with the property that were not suitably addressed in MPAC determination of the current value. In summary:
− Traffic – while a reduction in the assessment was applied by MPAC of 5% for ‘medium’ traffic impact, the reduction should be higher as Trafalgar Road is very busy.
− Views – MPAC referred to available scenic views from the subject property. The Appellant submitted view photographs to refute MPAC’s position.
− Condition – The subject dwelling has shortcomings on the exterior and interior due to its age. Photographs show deteriorating brick and exterior trim and the presence of older windows.
19The Appellant did not provide any quantitative adjustments for these perceived shortcomings as an adjustment to any current value determined otherwise.
20The Appellant also submitted that the subject sale could not be used as an indicator of current value because it was a ‘private sale’.
21In order to arrive at a current value for the subject property, the Appellant relied on the assessments of properties that he believed were the best indicators of current value:
− 289 Trafalgar, Oakville – bigger lot, bigger house, similar age; assessment of $1.5 million; current value of the subject should be lower.
− 180 Dunn, Oakville – bigger lot, bigger house, better street; assessment of $1.668 million; current value of the subject property should be lower.
− 334 Reynolds, Oakville – much bigger lot, better street, five bedrooms, similar house size; assessment of $1.491 million. Current value of the subject property should be lower.
− 311 Wilson, Ancaster – Italianate style, lot, and house much bigger; assessment of $888,000.
22Using these comparisons, the Appellant submitted that the current value of the subject property should be $1.2 million.
23In the alternative, the Appellant advanced another approach where he reviewed the assessments of the thirty properties used by MPAC to determine whether the current value determined should be reduced to achieve equitable assessment (see paragraph [40], below).
24The Appellant pointed out that the four highest assessment values were selected from that list to compare to the subject property. The Appellant suggested that if this list were to be used in its entirety, the average assessment of that sample of thirty is $1.3 million, and that could also be applied to the subject property as its current value.
Findings on Issue 1
25The Act defines current value as being “…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…”.
26MPAC’s position is based on a comparison of the subject property with three other properties that sold, while having regard for the subject property’s sale in 2017. The Appellant relied on the assessments of properties that were most similar in character to the subject property, in his view.
27Neither party relied on the subject sale in August of 2017. The Appellant was concerned that the value in exchange was not reliable because the transaction was a ‘private sale’. MPAC, on the other hand considered the sale as ‘valid’ in its report, but chose not to use it as an indicator of current value.
28The Act is explicit in its definition of current vale. That definition includes the following elements:
− The transaction is between a willing seller and a willing buyer.
− The subject property is unencumbered.
− The transaction is arm’s length.
29According to the Appellant, he was working with a real estate agent in Oakville who suggested the subject might be for sale, based on communication the agent had with the previous owners. A meeting was held between the agent, the Appellant, and the former owners, at the subject property, and a sale price was negotiated. The Appellant testified that neither he nor his spouse had any previous connection with the vendors before or during the negotiation.
30This description of the sale process indicates that the transaction was between two willing parties, in an arm’s length process facilitated by a third party. Further, there is no evidence that the subject property was encumbered in any way at the time of the sale. The Board finds the sale of the subject is a valid indicator of its current value and should be considered.
31The Board has widely held that a sale of the subject property is the best evidence of its current value and that the closer the sale date is to the legislated valuation day, the more indicative that sale value is of its current value.
32The subject property sold for $2,695,000 in August 2017. That date is 19 months from the January 1, 2016 valuation day applicable to these appeals. The Board notes that MPAC’s TAFs cover the period of January 2015 through December 2017. The TAF attributed to August 2017 in MPAC’s time adjustment study is 0.77. When applied to the undisputed sale price of the subject property in evidence, the result is $2,075,000, rounded.
33The Board disregards the Appellant’s approach to current value because it relies on the assessments of other properties, rather than sales. One critical element in determining current value in accordance with the definition in the Act is the aspect of sales.
34MPAC’s opinion is more difficult to deduce. It provides a range of potential values based on the sales of three other properties, but ultimately arrives at a current value that is far less than the indicted mid-range value of $2,323,000 in its valuation report. While the resulting recommended value from MPAC seems fair to the Appellant in the circumstances, it is impossible for the Board to follow the path taken by MPAC, from a value of over $2.3 million to one of $1,925,000.
35The Board finds therefore that the best evidence of the current value of the subject property is the 2017 sale value, reduced by the TAF drawn from MPAC’s time adjustment study. The Board notes that this TAF of 0.77 was not refuted by the Appellant.
36The Board finds that the correct current value of the subject property is $2,075,000.
Issue 2 – Does the current value determined require a reduction to achieve equitable assessment when reference is made to the assessments of similar lands in the vicinity?
Appellant’s evidence and submissions
37The Appellant’s approach to the question of current value was essentially an argument to reduce the assessment of the subject property based on it being inequitable with the assessments of similar properties. This is the essence of an argument for the reduction of assessment for fairness or equitable assessment as set out in the Act.
38The Appellant submitted that, when the same properties he used for his current value opinion are used for the purpose of equitable assessment, the value would be the same for the subject property at $1,200,000 to $1,300,000.
MPAC’s evidence and submissions
39MPAC prepared an equity study, where the assessments of thirty properties in the vicinity of the subject property are compared to their respective time-adjusted sale prices. The results of these comparisons are the respective Assessment to Sale Ratios (“ASRs”) for the thirty properties selected.
40MPAC’s search criteria for similar properties included single family dwellings that had sold in proximity to the valuation day, within three kilometres of the subject property.
41When MPAC analyzed this data set, the result was a median ASR of 0.99. According to MPAC this means that similar properties in the vicinity of the subject property are generally assessed at a value of one percent below their respective current values, as determined by their respective time-adjusted sale values.
Findings on Issue 2
42Section 44 (3) (b) of the Act states:
(3) For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,
(b) 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.
43There is no specific method established in law for the Board to adopt in determining whether a downward adjustment in a current value is necessary for it to be equitable. In this case, the parties applied two different methods. One method considers the assessments of other properties; the other considers assessments as they related to respective, time-adjusted sale values.
44The Appellant’s method focused on the assessments of four properties, without any specific accounting of their differences or the resulting difference in value.
45In making its decision on the best method of determining whether the current value determined represents equitable assessment, the Board relies on Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299 (“Loblaw”), where Justice Nordheimer wrote, in paragraph 25:
In my view, the proper approach to be taken to determining what are “similar lands in the vicinity” is that set out by Saunders J. in Trizec, that is, that all points of comparison must be considered.
46The points of comparison set out in the Appellant’s method are limited to a visual comparison between the subject property and other properties and a comparison of the assessments of those properties to the assessment of the subject property.
47MPAC’s equity study provided the assessments of thirty properties and compared them to their respective time-adjusted sale values, arriving at a range of thirty ASRs. In its search criteria, MPAC established its vicinity as 3 km from the subject property and established similarity by indicating the properties in the analysis were single family dwellings, not on water, like the subject property.
48In the context of the evidence in this case, neither party’s approach can be considered to address ‘all points of comparison’ as set out in Loblaw. The only evidence available to the Board that addresses all points of comparison is the sales analysis prepared by MPAC for its determination of current value. That analysis had specific points of comparison between the subject property and three other properties in Oakville. These are the most similar properties to the subject property in evidence. They are identified in MPAC’s market analysis as Properties #2, #3 and #4.
49The Board disregards MPAC’s Property #4, as it is an older property than the subject and has a quality of construction rating of 8.0. It is also a larger dwelling than the subject, with multiple, identified modifications. Property #4 does not have any finished basement area.
50The Board also disregards MPAC’s Property #3. It has a smaller dwelling, is much newer and has several identified modifications since it was originally constructed. It also has a smaller lot than the subject.
51MPAC’s remaining Property #2 is of similar size when compared to the subject. It also has the same quality of construction rating as the subject, at 7.5. Both the subject and MPAC Property #2 have finished basement areas.
52Owing to the similarities of MPAC’s Property #2 using all points of comparison, the Board finds that the best indication of the correct ASR to apply to the subject property is that of Property #2 at .907.
53When that ASR is applied to the subject property’s current value of $2,075,000, the result is $1,882,000 (rounded).
CONCLUSION
54The Board finds that the current value of the subject property is $2,075,000.
55The Board also finds that, when reference is made to the assessments of similar lands in the vicinity, the current value requires a reduction for it to reflect equitable assessment.
ORDER
56The Board orders that the assessment of 241 Trafalgar Road, for the 2022 and 2023 taxation years is reduced to $1,882,000, in the Residential property class.
"Dan Weagant"
DAN WEAGANT
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb