Tribunals Ontario Tribunaux décisionnels Ontario
Assessment Review Board Commission de révision de l’évaluation foncière
ISSUE DATE: July 21, 2023 FILE NO.: WR 184605
Assessed Person(s): Peter Brueckner, Fredelina Brueckner Appellant(s): Peter Brueckner Respondent(s): Municipal Property Assessment Corporation Region 15 Respondent(s): City of Mississauga Property Location(s): 1436 Carmen Drive Municipality(ies): City of Mississauga Roll Number(s): 2105-010-008-16400-0000 Appeal Number(s): 3504974 and 3512808 Taxation Year(s): 2022 and 2023 Hearing Event No.: 780164 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
| Parties | Representative |
|---|---|
| Peter Brueckner | Self-represented |
| Municipal Property Assessment Corporation | Tanya Janeczek |
| City of Mississauga | No one appeared |
HEARD: June 1, 2023 by video conference ADJUDICATOR(S): Carly Stringer, Member
DECISION
OVERVIEW
1Peter Brueckner (the “Appellant”) brought an appeal before the Assessment Review Board (the “Board”) pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) relating to the assessment of 1436 Carmen Drive (the “Subject Property”) in the City of Mississauga for the 2022 taxation year. An appeal was subsequently deemed for the 2023 taxation year pursuant to s. 40(26) of the Act.
2The Subject Property was assessed at $2,973,000 for 2022 and $2,950,000 for 2023. It is the Appellant’s position that the assessment is too high, and the Board should reduce it to $1,273,000.
3The Municipal Property Assessment Corporation (“MPAC”) is responding to these appeals. MPAC takes the position that the assessed value should be $2,391,000.
4The City of Mississauga has not responded to these appeals.
Areas of Agreement
5The parties agree that the direct comparison approach is the appropriate valuation methodology.
Issues for the Hearing
6At issue in this proceeding is:
a. What is the current value of the Subject Property as of the statutory valuation date of January 1, 2016?; and
b. Is the current value equitable with the assessments of similar lands in the vicinity?
Result
7For the reasons that follow, the Board finds that the current value is $1,194,990 (rounded).
8The Board finds that no reduction is required to make the assessment of the Subject Property equitable with the assessments of similar lands in the vicinity, resulting in a current value assessment of $1,194,990 (rounded).
ANALYSIS
Description of Subject Property
9The Subject Property is 1.79 acres of land improved by a single family detached residence. The residence has two storeys, is 2,259 square feet (“sq. ft.”) in size, and has an effective year built of 1969.
Issue 1 – What is the current value of the Subject Property as of the statutory valuation date of January 1, 2016?
Applicable Law
10In 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.”
11Accordingly, the Board must first determine what the Subject Property would have sold for in an arm’s length transaction on the statutory valuation day. The valuation day for the 2022 and 2023 taxation years is January 1, 2016.
Evidence on Current Value
12The 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.
MPAC’s Evidence
13MPAC stated in its valuation report that the highest and best use of the Subject Property is its current use as improved residential land.
14MPAC provided evidence that the Subject Property sold in March 2015 for roughly $300,000. MPAC testified that the sale was not an arm’s length transaction, and therefore should not be relied upon as evidence of value.
15MPAC provided evidence regarding the sale of four proposed comparable properties on the same street as the Subject Property. MPAC performed a time adjustment to reflect what these properties would have sold for on January 1, 2016.
MPAC’s Proposed Comparable Properties and Sales Information
| Property Address | Subject Property | 1430 Carmen Drive | 1541 Carmen Drive | 1561 Carmen Drive | 1561 Carmen Drive |
|---|---|---|---|---|---|
| Sale Date | November 2020 | November 2015 | March 2015 | June 2015 | |
| Time Adjusted Sale Amount | $1,821,601 | $1,240,721 | $1,160,347 | $1,229,632 | |
| Effective Site Area (acres) | 1.79 | 1.94 | 0.66 | 0.66 | 0.66 |
| Building Information | 2 storey single family detached residence with effective year built of 1969 and 2,259 sq. ft. | Structure on the property at time of sale, demolished after sale | 1.5 storey single family detached residence with effective year built of 1976 and 2,106 sq. ft. | None - Vacant land | None - Vacant land |
| Rate per acre | $938,970 | Not provided by MPAC | $1,863,079 | $1,758,102 | |
| (Rate per acre) x (Subject property 1.79 Acre Lot Size) | $1,680,756 | Not provided by MPAC | $3,334,911 | $3,147,002 |
16MPAC took two approaches to determining value based on the above-noted sales.
a. Land Value Plus Improvements
17MPAC testified that the sales of 1430 Carmen Drive and 1561 Carmen Drive represent the land value only, as 1430 Carmen Drive was purchased with the intent to demolish the improvements and 1561 Carmen Drive was vacant land.
18At page 11, paragraph 40 of its valuation report, MPAC used 1430 Carmen Drive and both 1561 Carmen Drive sales to determine a land value for the Subject Property. MPAC took the time-adjusted sale price of each property and divided that by each property’s acreage, determining a “rate per acre”: see page 11, paragraph 40 of MPAC’s valuation report, also outlined in the chart above. MPAC then applied the lot size of the Subject Property to each of those “rates per acre”, multiplying each one by 1.79 to determine an amount of $1,680,756 for 1430 Carmen Drive, and $3,334,911 and $3,147,002 for the two 1561 Carmen Drive sales. MPAC determined that the average of these 3 values is $2,720,889.67, as follows:
Rates per acre of $1,680,756 + $3,334,911 + $3,147,002 = $8,162,669
$8,162,669 / 3 = $2,720,889.67
19MPAC then took this average of $2,720,889 (rounded) and added $302,592 to arrive at an “opinion of value” of $3,023,000 (rounded): see page 12, paragraph 40 of MPAC’s valuation report. MPAC testified that this $302,592 amount represents the cost of improvements on the Subject Property, determined using MPAC’s computerized system which automatically costs all components of a structure.
20MPAC then considered the sale of 1430 Carmen Drive, being the proposed comparable property with the most similar lot size to the Subject Property: page 12, paragraph 40 of MPAC’s valuation report. MPAC took the $1,680,756 “land value” of 1430 Carmen and added the Subject Property’s structure value of $302,592 to reach a value of $1,983,000 (rounded): see page 12, paragraph 40 of MPAC’s valuation report.
21Using these figures, MPAC estimated the current value range from $1,983,000 to $3,023,000 for the Subject Property: see page 13, paragraph 41 of MPAC’s valuation report.
b. Rate Per Sq. Ft. Based on 1541 Carmen Drive
22MPAC provided an alternative method of determining current value at page 13, paragraph 40 of its valuation report.
23MPAC considered the sale of 1541 Carmen Drive, a property that has a home with a similar effective year built and similar square footage to the Subject Property. MPAC determined a $589 rate per sq. ft. on the sale of 1541 Carmen Drive, based on its time-adjusted sale price of $1,240,721 divided by 2,106 sq. ft.
24MPAC applied this $589 rate per sq. ft. to the square footage of the Subject Property’s improvements of 2,259 sq. ft to derive a value of $1,330,000 (rounded)
25MPAC noted that the “glaring issue” is that the Subject Property is 1.79 acres in size while 1541 Carmen Drive is 0.66 acres in size. To address this issue, MPAC used the sale of 1430 Carmen Drive to “establish a land rate/foot that made up for that differential in land size”: see page 13, paragraph 40 of MPAC’s valuation report. MPAC testified that it subtracted the acreage of 1541 Carmen (0.66) from the acreage of the Subject Property (1.79) to arrive at a 1.13 acre “land differential”. MPAC multiplied this 1.13 land differential by the rate per acre of 1430 Carmen Drive ($938,970) to arrive at a land differential of $1,061,036.
26MPAC added the land differential of $1,061,036 to $1,330,859 resulting in a value of $2,391,894: see page 13, paragraph 40 of MPAC’s valuation report.
c. Final Estimate of Current Value
27At page 13, paragraph 41 of its expert report, and in oral testimony at the hearing, MPAC estimated the current value of the Subject Property to range from $1,983,000 to $3,023,000, specifically at $2,391,000.
Appellant’s Evidence
28The Appellant testified that the house on the Subject Property has not been occupied since 2013 and is not habitable due to deterioration such that it should be valued based on land value only.
29The Appellant proposed several alternative methods for calculating the current value of the Subject Property.
a. Four Proposed Comparable Properties
30The Appellant provided four comparable properties for analysis.
| Property Address | Subject Property | 1430 Carmen Drive | 1537 Credition | 1416 Carmen Drive | 1488 Elaine |
|---|---|---|---|---|---|
| Sale Date | November 2020 | April 2018 | 2016 Current Value Assessment | ||
| $2,950,000 | $2,261,000 | $2,576,000 | $4,580,000 | $2,094,000 | |
| Sale amount normalized to January 2016 | $1,676,408 | $2,119,870 | |||
| Effective Site Area (acres) | 1.79 | 1.94 | Not provided | Not provided | Not provided |
| Building Information | 2 storey single family detached residence with year built of 1966 and 2,259 sq. ft. | 3,567 sq. ft. structure built in 1947 on the property at time of sale, demolished after sale | 2,875 sq. ft. structure built in 1959 | 5,595 sq. ft. structure built in 1948 | 2,735 sq. ft. structure built in 1956 |
| Estimated Value of Buildings | $0 | $0 | $450,000 | $900,000 | $500,000 |
| Land Value | $1,243,442 | $1,676,408 | $2,126,000 | $1,219,870 | $1,594,000 |
31The Appellant adjusted the sale prices to January 1, 2016 using a time adjustment factor of 0.6574. The Appellant derived this factor by taking Toronto Real Estate Board data, dividing the average sale price for single family detached residential properties in Mississauga for December 2015 to February 2016 ($870,264) and for October 2020 to December 2020 ($1,323,766). He applied the resulting 0.6574 to the sale prices for both 1430 and 1416 Carmen Drive.
32The Appellant estimated a value for the buildings on 1537 Credition, 1416 Carmen Drive, and 1488 Elaine at $450,000, $900,000 and $500,000 respectively. He derived this estimated value himself based on the size, external appearance and apparent condition of the properties. The Appellant treated 1430 Carmen Drive as land only.
33The Appellant then took the time-adjusted sale prices of 1430 and 1416 Carmen Drive, the assessed values of 1537 Credition and 1488 Elaine (since there were no sales to determine a sale price) and reduced these amounts by his estimated building cost. He determined the following land values for these proposed comparable properties:
a. 1430 Carmen Drive $1,676,408
b. 1537 Credition $2,126,000
c. 1416 Carmen Drive $1,219,870
d. 1488 Elaine $1,594,000
34He then established a dollar value per square foot land value for each comparable ($16.26, $22.80, $10.53 and $12.90 respectively). He determined the average of those land values to be $15.62, and applied this rate per square foot to the square footage of lot area of the Subject Property, resulting in a land value of $1,243,442.
b. Comparison with 1430 Carmen Drive
35Next, the Appellant testified that 1430 Carmen Drive shares many characteristics with the Subject Property, including flood plain, tree cover, soil drainage, and structures in decline with no value.
36The Appellant determined a time-adjusted sale price of $1,676,408 for 1430 Carmen Drive, as discussed at paragraph 31 above. He testified that since the buildings on 1430 Carmen Drive and the Subject Property were uninhabitable, a land value could be determined by adjusting for the difference in lot area between the two properties. To adjust for this difference, he divided the lot area of the Subject Property (79,593 sq. ft.) by the lot area of 1430 Carmen Drive (103,118 sq. ft.) and multiplied this by the time-adjusted sale price of 1430 Carmen Drive ($1,676,408), yielding a land value of $1,299,811 for the Subject Property.
c. Previous Assessment
37The Appellant also testified that the Subject Property was previously assessed at $650,000 as of January 1, 2005. The Appellant time-adjusted this value by comparing the assessments of 1430 Carmen Drive for January 1, 2005 ($931,000) and January 1, 2016 ($1,821,601), a 95.7% increase. Applying that same increase to the January 1, 2015 assessment for the Subject Property would result in a current value assessment of $1,271,477.
d. Sale of the Subject Property
38The Appellant relied on the sale of the Subject Property on March 25, 2015. He testified this was a non-arm’s length transaction for 25% ownership in the Subject Property for $300,000. Time adjusting this to January 1, 2016 and multiplying by 4 to reflect 100% of the value, the Appellant testified the sale demonstrates a $1,274,836 value.
e. Appellant’s Conclusion of Value
39The Appellant averaged the values from his four alternative approaches to value ($1,243,442 + $1,299,811 + $1,271,477 + $1,274,836 / 4), resulting in an average current value of $1,272,392 (rounded).
Findings on Issue 1
40The Board accepts the Appellant’s largely uncontested evidence that the residence on the Subject Property became unoccupied in 2013 and is not habitable due to deterioration. On this basis, the Board finds that the Subject Property should be valued as vacant residential land using the direct comparison approach.
41The Board does not accept the $2,391,000 current value proposed by MPAC for the following reasons:
a. The Board does not accept the “Land Value Plus Improvement” value proffered by MPAC because:
i. MPAC stated that the Subject Property should be valued using the direct comparison approach based on its highest and best use as an improved residential property. However, the “Land Value Plus Improvement” approach is not the direct comparison approach. MPAC first relied on sales of 1430 Carmen Drive and 1561 Carmen Drive to derive a land value only for the Subject Property, and separately determined a cost for the residence using a cost manual. This is not consistent with the direct comparison approach to valuing property, which MPAC described in Appendix G of its valuation report. The “Land Value Plus Improvements” method appears closer to the cost approach valuation methodology, where the contributory value of land and improvements are calculated separately.
ii. The Board does not accept 1430 Carmen Drive as an appropriate comparable. This property sold in 2020 - more than four years past the statutory valuation date of January 1, 2016. In general, the Board prefers sales of comparable properties within 12 months on either side of the valuation day, and from time to time has accepted sales as far as 18 months from the valuation day: see for instance Allen v Municipal Property Assessment Corporation Region 15, 2021 CanLII 44157 (ON ARB) at paragraph 26; see also Pittens v Municipal Property Assessment Corporation, Region 07, 2016 CanLII 53151 (ON ARB) at paragraph 8. In this case, a sale four years from the valuation date is simply too far for the Board to be confident it is a reliable indicator of value.
iii. MPAC stated that the structure on the Subject Property should be costed at a value of $302,592, however did not provide data to support that costing. There is no evidence to support or explain what inputs or components MPAC used to derive that cost.
b. The Board does not accept the “Rate Per Sq. Ft. Based on 1541 Carmen Drive” value proffered by MPAC because:
i. The method used by MPAC is not the direct comparison approach to value real property. MPAC applied the sale value of one proposed comparable (1541 Carmen Drive) to 0.66 of the Subject Property’s acreage, then added a land value from an entirely different property (1430 Carmen Drive) to the remaining 1.13 acres. This is not consistent with the direct comparison approach to valuing property, which MPAC described in Appendix G of its valuation report.
ii. The property at 1541 Carmen Drive is not an appropriate comparable in any event, as it is an improved residential property and the Board has determined this land should be valued as vacant residential land.
42Further, the Board does not accept the ultimate determination of current value proposed by the Appellant ($1,272,392) for the following reasons:
a. The Board does not accept the “Four Proposed Comparable Properties” method because two of the proposed comparable properties (1537 Credition and 1488 Elaine) did not sell on or close to the valuation date, and accordingly there is no sale price for these properties on which the Board may rely. The direct comparison approach requires using arm’s length, market-tested sales. The Appellant used the assessed values of these two proposed comparable properties - an assessment is not an arm’s length, market-tested sale. Further, 1416 Carmen Drive is an improved residential property, and the Board finds it is not comparable for the purposes of determining a value for the Subject Property as vacant land.
b. The Board does not accept the “Previous Assessment” method. As noted above, the direct comparison approach requires using arm’s length, market-tested sales. The “Previous Assessment” method is simply not a valid way to derive a market value of real property.
c. The Board does not accept the sale of the Subject Property in March 2015 as a reliable indicator of value. The Board accepts the evidence of both parties that this is a non-arm’s length transaction, which is not a reliable indicator of market value. Moreover, the sale only related to 25% ownership.
43This leaves the two sales of 1561 Carmen Drive in 2015, proposed by MPAC as a comparable property. The Appellant has not challenged this property as an appropriate comparable. It is vacant residential land on the opposite side of the street to the Subject Property, and both sales occurred within 12 months of the valuation date of January 1, 2016. Although 1561 Carmen Drive is smaller in lot size than the Subject Property at 0.66 acres, the Board accepts it is sufficiently comparable for the purpose of determining current value. The Board finds the two sales of 1561 Carmen Drive are the best evidence of current value of the Subject Property.
441561 Carmen Drive sold for a time-adjusted sale price of $1,160,347 in March 2015 and $1,229,632 in June 2015. The Board finds the mid-point between these sales is $1,194,989.50, which the Board finds reflects the current value of the Subject Property.
45Accordingly, the Board finds that the correct current value of the Subject Property is $1,194,990 (rounded).
Issue 2 - Is the current value equitable with the assessments of similar lands in the vicinity?
Applicable Law
46Section 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 on Equitable Adjustment
Appellant’s Evidence
47The Appellant did not provide evidence or make submissions relating to whether the Board should make an equitable adjustment.
MPAC’s Evidence
48MPAC provided an equity analysis report reflecting an Assessment to Sale Ratio analysis (“ASR”). The ASR of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If sold properties are assessed below their current value, a reduction in the subject assessment below the correct 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.
49MPAC relied on the sales of 30 properties that sold from January 1, 2015 to November 26, 2020 within 0.727 kilometres of the Subject Property. MPAC used sales of single family detached homes and vacant residential land. MPAC testified that its analysis demonstrates an ASR of 0.99, which reflects that similar properties in the vicinity are being assessed at or near their current values such that an adjustment is not required.
Findings on Issue 2
50While the Appellant did not raise the issue of an equitable adjustment, this Board has held that it has a statutory duty to consider whether an equitable adjustment is required pursuant to s. 44(3)(b) regardless of whether the parties have raised it as an issue in dispute. In this instance, the Board must determine whether it has sufficient evidence before it to determine whether an equitable adjustment is required and, if there is sufficient evidence, decide whether or not it supports a reduction in the current value.
51The Board does not accept MPAC’s equity report for the following reasons:
a. MPAC relied on sales of single family detached homes. The Board finds that these properties are not sufficiently similar to the Subject Property, which the Board has determined should be valued as vacant residential land.
b. MPAC stated that it searched for sales from January 1, 2015 to November 26, 2020. However, a review of the 30 properties used in MPAC’s report shows that every property was sold in 2015 and 2016 save and except a single property (1430 Carmen Drive) which was sold in 2020. This Board has found that 1430 Carmen Drive sold too far from the valuation date to be reflective of value on January 1, 2016. Moreover, the inexplicable absence of sales from 2017, 2018 and 2019 in MPAC’s analysis suggests that this is not a comprehensive list of the sales derived from the search and accordingly the Board does not have confidence in this analysis.
52The Board has accepted the sales of 1561 Carmen Drive as evidence of current value. The Board finds that 1561 Carmen Drive is a similar property in the vicinity of the Subject Property for the purposes of this analysis. It was assessed at $1,223,000 as of January 1, 2016. It sold for $1,160,347 and $1,229,632 (time-adjusted to January 1, 2016), resulting in the following ASRs:
a. 1,223,000 / 1,160,347 = 1.05
b. 1,223,000 / 1,229,632 = 0.99
53These ASRs reflect that 1561 Carmen Drive was assessed very close to, or higher than, what it sold for. The Board finds that an equitable adjustment is not required.
CONCLUSION
54The Board finds that the correct current value of the Subject Property is $1,194,990 (rounded).
55The Board finds that no reduction is required to make the assessment of the Subject Property equitable with the assessments of similar lands in the vicinity, resulting in a current value assessment of $1,194,990 (rounded).
ORDER
56The Board orders that the assessment of the Subject Property is reduced to $1,194,990 (rounded).
"Carly Stringer"
CARLY STRINGER MEMBER Assessment Review Board Website: www.tribunalsontario.ca/arb