Toronto Standard Condominium Corporation 2279 v. Municipal Property Assessment Corporation Region 09, 2023 CanLII 66824

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

July 18, 2023

FILE NO.:

WR 183697

Assessed Person(s):

Toronto Standard Condominium Corporation 2267 and Toronto Standard Condominium Corporation 2279

Appellant(s):

Toronto Standard Condominium Corporation 2279

Respondent(s):

Municipal Property Assessment Corporation Region 09

Respondent(s):

City of Toronto

Property Location(s):

325 Bay Street

Municipality(ies):

City of Toronto

Roll Number(s):

See Schedule A

Appeal Number(s):

See Schedule A

Taxation Year(s):

2021, 2022 and 2023

Hearing Event No.:

778366

Legislative Authority:

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

APPEARANCES:

Parties

Counsel

Toronto Standard Condominium Corporation 2279

Raivo Uukkivi

Municipal Property Assessment Corporation

Francis X. Shea

City of Toronto

No one appeared

HEARD:

April 26, 2023 by video conference with written submissions on May 8, 2023

ADJUDICATOR(S):

Carly Stringer, Member

DECISION

OVERVIEW

Background

1The St. Regis Hotel and residential condominium building is a 65-storey building located at 325 Bay Street in the City of Toronto (the “St. Regis”). There are 211 guest hotel rooms and 118 residential units in the building, along with commercial, retail and amenity units.

2Toronto Standard Condominium Corporation 2279 (the “Appellant”) has brought appeals before the Assessment Review Board (the “Board”) relating to the assessments of 16 units within the St. Regis. These 16 units are described in Schedule A to this decision (the “Subject Properties”). None of the Subject Properties are hotel guest rooms or dwelling units – they are service units, including mechanical units, communications control units, loading docks and garbage rooms that service the St. Regis building as a whole including both hotel and residential condominium units.

3The Appellant is the condominium corporation for the residential units located in the St. Regis. The Appellant is a 30% owner of the Subject Properties. The other 70% ownership interest belongs to Toronto Standard Condominium Corporation 2267 (“TSCC 2267”), which is the condominium corporation for the hotel portion of the St. Regis. TSCC 2267 was not involved in the proceeding.

4The St. Regis is considered a “condominium hotel” in accordance with s. 45.3.1 of O. Reg. 282/98 (the “Regulation”). Section 45.3.1 prescribes a specific method to determine the value of “hotel units” contained in condominium hotels.

5The Appellant agrees with the Municipal Property Assessment Corporation (“MPAC”) on an assessment value of $75,899,000 for hotel units at the St. Regis. Where the Appellant and MPAC disagree is whether the Subject Properties are hotel units and, therefore, whether they should be included in the allocation of that $75,899,000 value.

6MPAC treats the Subject Properties as “hotel units” and allocates them a proportional share of the $75,899,000 value based on their gross floor areas. In taking this approach, MPAC relies on s. 45.3.1(2) and (3) of the Regulation that requires the value of hotel units be allocated proportionally based on their gross floor areas.

7The Appellant argues that the Subject Properties are not “hotel units” as described in the Regulation, and therefore s. 45.3.1 does not apply to them and they should not be allocated a share of the $75,899,000 value. The Appellant argues the Subject Properties are “common elements” to the residential condominiums in the St. Regis, and their value is included in the value of the residential condominium units. The Appellant devotes extensive submissions to issues of fairness and double taxation, arguing that assessing the Subject Properties in accordance with the Regulation will result in paying tax on the value of the Subject Properties as part of both the residential condominium units and the hotel units. The Appellant asks the Board to order that the assessments of the Subject Properties be reduced to a nominal current value of $1.00.

8The City of Toronto has not responded to these appeals.

Issues for the Hearing

9As noted above, the parties agree that the value of the hotel units is $75,899,000. The primary question to be decided is whether the Regulation applies to the Subject Properties such that they should be included in the allocation of that value, which turns on whether the Subject Properties are “hotel units.” Then, the Board must determine the current value assessment (“CVA”) of each Subject Property as of the statutory valuation date of January 1, 2016.

Are the Subject Properties “hotel unit[s]” within the meaning of s. 45.3.1(1) of the Regulation?
What is the CVA of each Subject Property as of January 1, 2016?

Result

10For the reasons that follow, the Board finds that the Subject Properties are hotel units within the meaning of s. 45.3.1(1) of the Regulation.

ANALYSIS

Issue 1 – Are the Subject Properties “hotel unit[s]” within the meaning of s. 45.3.1(1) of the Regulation?

Applicable Law

11The interpretation of s. 45.3.1 of the Regulation is engaged in these appeals. The relevant subsections of s. 45.3.1 provide as follows:

(1) In this section,

“condominium hotel” means a building complex,

(a) that contains at least 20 hotel units, and

(b) that is not located within the boundaries of a resort; (“condominium hôtelier”)

“hotel unit” means land,

(a) that is a unit or proposed unit as defined in the Condominium Act, 1998,

(b) that is furnished and operated or managed in a manner to provide transient accommodation for a fee or charge for a minimum period of less than 30 days, or that is used as part of the hotel operations, and

(c) in respect of which, for the 2008 and subsequent taxation years, the owner or his or her authorized agent has made a declaration under subsection (5) or clause (6) (a);

“resort” means a building complex that is occupied primarily for recreational purposes, including golfing, skiing, swimming and hiking.

(2) For the purposes of subsection 19(2.1) of the Act, the current value of a hotel unit that is contained in a condominium hotel for the purposes of assessment for 2006 and subsequent taxation years shall be determined by using the pro forma income capitalization approach to valuation to determine assessments that are comparable to the assessments of hotels of similar size and quality in the vicinity of the condominium hotel.

(3) For the purposes of subsection (2), all hotel units shall be deemed to be a single parcel of land for valuation purposes and the value determined shall be apportioned among the hotel units in the proportion that the square footage of each unit is of the total square footage of all hotel units contained in the condominium hotel.

(6) For the purposes of assessment for 2009 and subsequent taxation years, the owner of a hotel unit that is part of a condominium hotel or his or her authorized agent shall make a declaration on or before June 30 of the previous taxation year to the assessment corporation stating that,

(a) the unit will be a hotel unit for the following and subsequent years; or

(b) the unit will cease to be a hotel unit for the following and subsequent years.

(7) Despite subsection (6), no declaration is required where,

(a) a declaration was previously made under subsection (5) or (6); and

(b) there has been no change in the status of the unit since the declaration was made.

(8) The assessment corporation may determine the manner in which a declaration under subsection (5) or (6) is made.

12The Condominium Act, 1998 defines a “unit” as “part of the property designated as a unit by the description and includes the space enclosed by its boundaries and all of the land, structures and fixtures within this space in accordance with the declaration and description.”

13When it comes to interpreting the Regulation, the ordinary rule of statutory interpretation requires that “the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2006] 1 SCR 715 at paragraph 26. Further, the Supreme Court of Canada has stated that where a provision is precise, clear, and “admits of no ambiguity in its meaning or in its application to the facts, it must simply be applied”: Placer Dome Canada v. Ontario (Minister of Finance), 2006 SCC 20, [2006] 1 SCR 715 (“Placer Dome”) at paragraph 23. To clarify, “legislative purpose may not be used to supplant clear statutory language, but to arrive at the most plausible interpretation of an ambiguous statutory provision”: Placer Dome at paragraph 24.

Submissions of the Parties

14MPAC submits that the Subject Properties satisfy the three requirements of being hotel units as defined in the Regulation and therefore the method of allocating value described in s. 45.3.1(3) applies.

15The Appellant submits that s. 45.3.1(1)(b) and (c) of the definition of hotel unit are not satisfied, as follows:

a. With respect to s. 45.3.1(1)(b), the Appellant submits that the Subject Properties are not used as part of the hotel operations, but they are used for base building functions that are required by the building as a whole. The Appellant submits the Subject Properties are not unique or necessary to operate a hotel, but rather they are shared amenities between the hotel and residential condominiums. The Appellant submits that, for a unit to be a hotel unit, it must be an “exclusive use area”, otherwise double tax will always be the result and this cannot be the intention of a taxing statute.

b. With respect to s. 45.3.1(1)(c), the Appellant submits that the current owner of the Subject Properties has not filed a declaration in accordance with s. 45.3.1(6)(a), which is required by (c).

Findings on Issue 1

16The Board will consider all three requirements of a hotel unit prescribed in s. 45.3.1(1).

A Unit as Defined in the Condominium Act

17At the hearing, the Appellant confirmed its agreement with MPAC that part 45.3.1(1)(a) of the definition of “hotel unit” is satisfied.

18The Board finds that the Subject Properties are units as defined in the Condominium Act, 1998, S.O. 1998, c. 19 (“Condominium Act”) and therefore (a) of the definition of hotel unit is satisfied. MPAC’s evidence included a copy of the “Condominium Act Declaration” dated October 22, 2012 (the “Condo Act Declaration”). The Board finds that the Subject Properties are designated as “units” in this Condo Act Declaration. More specifically, Article 1, subsection 1.1(kk) defines some of the Subject Properties as “Service Units”. The remaining three Subject Properties are defined as “Communications Control Units” in accordance with Article 1, subsection 1.1(h). The Condo Act Declaration then designates at Article 1(qq) that “Units” includes the “Communications Control Units” and the “Service Units.” It is clear from this evidence that the Subject Properties are units as defined in the Condominium Act.

Used as Part of Hotel Operations

19The Parties are in agreement that the Subject Properties are not “furnished and operated or managed in a manner to provide transient accommodation for a fee or charge for a minimum period of less than 30 days,” per 45.3.1(1)(b) of the definition of a “hotel unit”. Therefore, the Board must determine whether the Subject Properties are “used as part of the hotel operations” in accordance with the latter half of 45.3.1(1)(b) of the definition of “hotel unit.”

20The Board notes that “hotel operations” is not defined in the Act or Regulation.

21Based on the factual evidence of both MPAC and Appellant experts, as well as the descriptions of the Subject Properties in the Condo Act Declaration, the Board finds that the Subject Properties are used “for the maintenance and operation of all mechanical, electrical, utility, site servicing and/or ancillary systems(s) serving all or various parts” of the St. Regis, including hotel and residential units.

22The Board also finds that the words of the Regulation are clear and unambiguous. Giving the words of the Regulation their plain and ordinary meaning, and considering the use of the Subject Properties, the Board finds that the Subject Properties are clearly “used as part of the hotel operations” because they maintain and operate the mechanical and ancillary systems, without which the St. Regis - in which the hotel exists and runs its business - would not be operational.

23The Board does not accept the Appellant’s submission that the Subject Properties are not “used as part of the hotel operations” because they are shared amenities and that a unit must be an “exclusive use area” to be a hotel unit, for the following reasons:

a. First, the Appellant has not provided the Board with any case law supporting its proposed interpretation that a “hotel unit” must be an “exclusive use area.”

b. Second, the Appellant’s interpretation is inconsistent with the precise wording of the Regulation. “Exclusive use” does not form part of the criteria in the definition. The words of the Regulation are clear and unambiguous and must be applied. The Board must give the words of the Regulation their plain and ordinary meaning and will not read-in an “exclusive use” requirement into the definition of “hotel unit.”

24For these reasons, the Board finds that 45.3.1(1)(b) is satisfied.

A Declaration by the Owner

25Finally, the Board must determine whether “the owner or his or her authorized agent has made a declaration under subsection (5) or clause (6)(a)” of the Regulation, in accordance with 45.3.1(1)(c) and the definition of “hotel unit.”

26Section 45.3.1(5) applies to assessment for the 2008 taxation year, while clause 45.3.1(6)(a) applies to assessment for 2009 and subsequent taxation years. Therefore, it is (6)(a) that is relevant to the Board’s analysis of this question.

27For ease of reference, the Board restates s. 45.3.1(6):

(a) the unit will be a hotel unit for the following and subsequent years; or

(b) the unit will cease to be a hotel unit for the following and subsequent years.

28The Board heard the following evidence that is relevant to whether a declaration was made in accordance with 45.3.1(1)(c):

a. The St. Regis building was originally constructed to operate as the “Trump Hotel”. MPAC received a “Statutory Declaration” signed by the President of “Talon International Inc. o/a Trump International Hotel & Tower” on June 29, 2010 (the “Statutory Declaration”). This Statutory Declaration stated that “[d]uring the 2011 tax year and subsequent years the condominium unit(a) listed on the attached Schedule A will be a hotel unit as defined in section 45.3.1 of Ontario Regulation 282/98 as amended”. Schedule A lists the Subject Properties and identifies Talon International Inc. as the “Owner” of the Subject Properties at that time. Schedule A also states that the condominium is in the process of being registered and the Schedule is “subject to any final adjustments to be set forth in the final condominium documents”.

b. Talon International Inc. did not provide MPAC with any further or additional schedules, adjustments, or statutory declarations relating to the Subject Properties pursuant to s. 45.3.1 of the Regulation. However, by letter dated June 24, 2011 to MPAC’s legal counsel, Talon International Inc.’s legal counsel confirmed that: i) both lawyers had a discussion that the “Trump Hotel will be a condominium hotel within the meaning of Section 45.3.1 of Ontario Regulation 282/98, as amended”; and ii) “there are no material changes to the [Statutory] Declaration as filed [on June 29, 2010] that identified the various level and unit numbers of the condominium that will be ultimately registered and operated as the Trump Hotel”.

c. In December 2013, Talon International Inc. transferred its ownership of the Subject Properties to the Appellant and TSCC 2267 as tenants in common with a 30% and 70% ownership interest, respectively.

d. Neither the Appellant nor TSCC 2267 provided any amendments, further schedules, or additional statutory declarations to MPAC pursuant to s. 45.3.1 of the Regulation.

29Based on the evidence above, the Board finds that the owner has made a statutory declaration under clause 45.3.1(6)(a) in satisfaction of 45.3.1(1)(c) of the definition of “hotel unit”. The uncontroverted evidence is that a declaration was made by Talon International Inc., who owned the Subject Properties, on or before June 30 of 2010, that the Subject Properties will be hotel units for the 2011 and subsequent years.

30The Appellant argues that 45.3.1(1)(c) is not satisfied because there was a change in ownership in 2013. Therefore, says the Appellant, it cannot be said that “the owner” made a declaration since neither the Appellant nor TSCC 2267 provided a statutory declaration. The Appellant further submits, in reference to (7)(b) of s. 45.3.1, that the change in ownership constitutes a “change in status” such that the units automatically ceased to be “hotel units” when the change in ownership occurred in 2013.

31The Board does not accept the Appellant’s proposed interpretation for the following reasons:

a. First, the Appellant has not provided case law supporting its proposed interpretation.

b. Second, the Appellant’s proposed interpretation, which would automatically cause a property to cease to be a hotel unit following a change in ownership whether or not MPAC is aware of that change, is inconsistent with the clear wording of the Regulation read in its entire context, particularly (6)(b) which creates a requirement to actively “opt-out” of the s. 45.3.1 valuation regime once the owner has told MPAC that its units are hotel units for the applicable and subsequent taxation years. Taken in context, the reference to “change in status of the unit since the declaration was made” in (7)(b) refers to any change in the status of the unit as a hotel unit since the declaration was made pursuant to 6(a) that the unit will be a hotel unit for the following and subsequent years, not a change in ownership. This is the most reasonable interpretation in light of the plain and ordinary meaning of the words, taken in the entire context.

32Accordingly, the Board finds that 45.3.1(1)(c) of the definition of “hotel unit” is satisfied.

Conclusion on Issue 1

33For the reasons outlined above, the Board finds that all three parts of the definition of “hotel unit” are satisfied and the Subject Properties are therefore “hotel units” for the purposes of s. 45.3.1 of the Regulation.

Issue 2: What is the CVA of each Subject Property as of January 1, 2016?

Applicable Law

34The Board has determined that the Subject Properties are hotel units such that s. 45.3.1 of the Regulation applies to their valuation.

35The relevant subsection of s. 45.3.1 is as follows:

(2) For the purposes of subsection 19 (2.1) of the Act, the current value of a hotel unit that is contained in a condominium hotel for the purposes of assessment for 2006 and subsequent taxation years shall be determined by using the pro forma income capitalization approach to valuation to determine assessments that are comparable to the assessments of hotels of similar size and quality in the vicinity of the condominium hotel.

Submissions of the Parties

36MPAC submits that the methodology of s. 45.3.1 is straightforward and should be mechanically applied to determine the value of the Subject Properties. MPAC submits that the Board should accept the valuation evidence provided by its expert, who applied the relevant provisions in the Regulation. Namely, MPAC’s expert took the agreed value of $75,899,000 and divided it by the total gross floor area of all hotel units to determine a rate of $289 per square foot. Then, they multiplied the gross leasable area of each unit by $289 to determine the value for each hotel unit, including the Subject Properties.

37The Appellant submits that the Subject Properties should be ascribed a nominal value of $1.00 on the basis they are common elements of the building, not hotel units. The Appellant’s submissions focused almost entirely on whether s. 45.3.1 even applies to the Subject Properties.

Findings on Issue 2

38The Board accepts MPAC’s expert evidence regarding the application of s. 45.3.1 and the value of each Subject Property.

39The Appellant did not provide evidence challenging the manner in which MPAC’s expert determined value – its evidence focused on whether s. 45.3.1 applies at all. The Board has already found that it does, and that the Subject Properties must be valued as hotel units. Therefore, the Board does not accept the Appellant’s evidence that the Subject Properties are common elements such that they should be ascribed a nominal value of $1.00.

40Accordingly, the Board finds that the value of the Subject Properties is as described by MPAC’s expert, based on $289 per square foot applied to the leasable area of each hotel unit. These values are consistent with the value on the assessments returned by MPAC for each Subject Property for the taxation years under appeal.

CONCLUSION

41The Board finds that the Subject Properties are hotel units and, therefore, they must be valued in accordance with s. 45.3.1 of the Regulation. The Board finds that MPAC’s returned value for each Subject Property is the current value.

ORDER

42The Board orders that the returned assessments be confirmed.

"Carly Stringer"

CARLY STRINGER

MEMBER

Assessment Review Board

Website: www.tribunalsontario.ca/arb

Schedule A

Appeal No.

Roll Number

Property Address

Assessed Person

Year

3467267

1904 063 010 00340 0000

325 to 0 BAY ST