Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 06, 2024

FILE NO.: WR 187094

Assessed Person(s): 1485900 Ontario Limited

Appellant(s): 1485900 Ontario Limited

Respondent(s): Municipal Property Assessment Corporation Region 16

Respondent(s): City of Barrie

Property Location(s): 521 Bayfield Street

Municipality(ies): City of Barrie

Roll Number(s): 4342-021-030-00700-0000

Appeal Number(s): 3522356

Taxation Year(s): 2022

Hearing Event No.: 784364

Legislative Authority: Section 357(7) of the Municipal Act, 2001, S.O. 2001, c. 25

APPEARANCES:

Parties	Counsel/Representative
1485900 Ontario Limited	Dean Petrovic
City of Barrie	Kelan Jylha

HEARD: September 11, 2024 by video conference

ADJUDICATOR(S): Anita Lovrich, Member; Dirk VanderBent, Vice-Chair

DECISION

OVERVIEW

Background

11485900 Ontario Limited (the “Appellant”) has brought an appeal to the Assessment Review Board (the “Board”) pursuant to s. 357 of the Municipal Act 2001, S.O. 2001, c. 25 (the “Municipal Act”) relating to 521 Bayfield Street in the City of Barrie (the “Subject Property”).

2The Subject Property is a regional shopping centre. The Appellant commenced removal of interior finishes of the Subject Property in August of 2022.

3Because of the renovations to the Subject Property that took place in 2022, the Appellant filed applications with the City of Barrie (the “City”) seeking tax relief pursuant to s. 357(1)(d)(ii) and (g) of the Municipal Act, which provides as follows:

Cancellation, reduction, refund of taxes

357 (1) Upon application to the treasurer of a local municipality made in accordance with this section, the local municipality may cancel, reduce or refund all or part of taxes levied on land in the year in respect of which the application is made if,

(d) during the year or during the preceding year after the return of the assessment roll, a building on the land,

(ii) was damaged by fire, demolition or otherwise so as to render it substantially unusable for the purposes for which it was used immediately prior to the damage;

(…); or

(g) repairs or renovations to the land prevented the normal use of the land for a period of at least three months during the year.

4However, at the hearing, the Appellant confirmed that it was proceeding with the appeal only pursuant to s. 357(1)(g).

5For the 2019 taxation year, the Municipal Property Assessment Corporation (“MPAC”) reassessed the current value of the Subject Property on the basis that, due to the bankruptcy of Sears, an anchor store tenant, there was a vacancy which required that the Appellant retrofit this space for re-rental to other tenants.

6The City denied the Appellant’s application on October 23, 2023, on the basis that MPAC advised the City that MPAC's assessment of the current value of the Subject Property for the 2019 and subsequent taxation years already included reductions to account for the vacant area under renovations. Therefore, the City decided that no tax adjustment was required for the 2022 taxation year.

7The Appellant appealed the City’s decision to this Board pursuant to s. 357(7) of the Municipal Act, arguing that MPAC's assessment did not take into account the vacancy which occurred due to renovations that commenced in the 2022 taxation year.

Result

8The Appellant is not entitled to a refund pursuant to s. 357(1)(g) of the Municipal Act. The appeal for the 2022 taxation year is dismissed.

Issues for the Hearing

9The Board must determine the following issues:

1. Did MPAC's assessment for the 2019 and subsequent taxation years include a reduction in current value due to the Sear’s tenancy vacancy?

2. If so, is the reduction in current value due to a vacancy to effect repairs or renovations to the land that prevented the normal use of the land?

3. If the answers to questions 1 and 2 are both yes, is the Appellant entitled to a refund pursuant to s. 357(1)(g) of the Municipal Act?

ANALYSIS

Evidence Adduced at the Hearing

10The Appellant called no witnesses and presented no documents into evidence.

11The City provided evidence from an MPAC assessor who testified that he was familiar with the property in both 2019 and 2022.

12The City’s witness testified that the current value of the Subject Property was reduced from $10,365,400 to $5,606,000 in 2019 following a Request for Reconsideration process (“RfR”) when the anchor tenant of the Subject Property (Sears) vacated the Subject Property. The adjustment in the current value was comprised of a 20% reduction of the fair market rent (“FMR”) to account for Sears vacating the Subject Property as well as an adjustment to account for known contamination on the site.

13The MPAC assessor testified that the Subject Property was assessed as though it was a vacant shell since 2019 to allow for renovations for new tenants to occupy the Subject Property.

Issue 1 - Did MPAC's assessment for the 2019 and subsequent taxation years include a reduction in current value due to the Sears tenancy vacancy?

Appellant’s Submissions

14The Appellant submits that it “does not indicate anywhere that MPAC values properties as vacant and without interior finishes” and argues that no evidence was adduced to demonstrate that this was the case. The Appellant argues that the Subject Property was not valued as vacant and under renovation since 2019.

15In its submissions, the Appellant argues that the $4 per square foot FMR, which was the adjusted FMR applied by MPAC following the RfR process, was within the lower end of the range of rents that were not valued as shells, as indicated by MPAC’s pleadings in a 2020 assessment appeal of the Subject Property. The Appellant argues that, as the FMR was within the range of rents of comparable properties that are not vacant, the valuation of the Subject Property does not reflect an adjustment for it being a vacant shell.

City’s Submissions

16The City argues that it was advised by MPAC that the Subject Property was valued as though it were a vacant shell since the RfR process in 2019 following the closure of the Subject Property’s anchor tenant, Sears. On this basis, it argues that MPAC's assessment for the 2019 and subsequent taxation years already includes a reduction in current value.

Findings on Issue 1

17The City’s witness testified that he was familiar with the property in both 2019 and 2022. He stated that in 2019 following an RfR process, MPAC made a 20% reduction to the FMR to account for the Subject Property’s anchor tenant, Sears, vacating the Subject Property and that the Subject Property has been valued as though it were a vacant shell since 2019. The evidence before the Board indicates that the change to the valuation in 2019 was due to the loss of the anchor tenant.

18The Board finds that MPAC's assessment for the 2019 and subsequent taxation years include a reduction in current value due to the Sears tenancy vacancy.

Issue 2 - If so, is the reduction in current value due to a vacancy to effect repairs or renovations to the land that prevented the normal use of the land?

Appellant’s Submissions

19The Appellant’s submissions are that MPAC did not apply a reduction in value due to a vacancy at the Subject Property.

City’s Submissions

20The City submits that, based on its witness’s testimony, the Subject Property has been valued as though it were a vacant shell since 2019 when the anchor tenant vacated, to reflect an anticipated renovation to allow for new tenants.

Findings on Issue 2

21The Board accepts the evidence of the City’s witness’s testimony that the change to the valuation in 2019 was due to the loss of the Subject Property’s anchor tenant and the requirement to retrofit the Subject Property to allow for new tenants to occupy the space. Accordingly, the Board finds that the reduction in current value is due to a vacancy to effect repairs or renovations to the land that prevented the normal use of the land.

Issue 3 - If the answers to questions 1 and 2 are both yes, is the Appellant entitled to a refund pursuant to s. 357(1)(g) of the Municipal Act?

Appellant’s Submissions

22The Appellant maintains that there is no indication that MPAC assesses properties as vacant and without interior finishes. The Appellant argues that the renovations that began in August 2022 were mid-year changes, citing a decision of the Board in Canadian Property Holdings (Ontario) Inc. v Municipal Property Assessment Corporation, Region 15, 2017 CanLII 78332 (ON ARB) (“Canadian Property Holdings”).

City’s Submissions

23The City’s position is that MPAC's assessment of the value for the 2019 and subsequent taxation years already included reductions in the valuation to account for the vacant area under renovations and allow for a new tenant retrofit. It argues that since the valuation already included that adjustment, a tax adjustment for the 2022 taxation year would be unfair and inequitable.

Findings on Issue 3

The legal test to be applied

24Canadian Property Holdings is a decision of the Board respecting s.357(1)(d)(ii) of the Municipal Act. The Hearing Panel ruled that this section only applies to mid-year changes that the property owner is unable to address in appeal of the assessed value under the Assessment Act. The Hearing Panel stated its reasons at paragraph 17:

The assessing and taxing acts together are a complete statutory code for property assessment and taxation. Pursuant to s. 341(1) and (2) of the Municipal Act, a taxpayer is not entitled to relief until any appeals or other adjustments are made under the Assessment Act… have been finalized and the tax roll has been adjusted. Section 357(1)(d)(ii) is intended to provide the taxpayer with relief to deal with a midyear change that he is unable to address in an appeal of the assessed value. This is evident from the language of s. 357.(1)(d), “during the year or during the preceding year after the return of the roll.” [Emphasis added.]

25The Board adopts this analysis. However, as noted above, this was a decision respecting s. 357(1)(d)(ii) of the Municipal Act, whereas the applicable section before the Board in this case, is s. 357(1)(g).

26Although s. 357(1)(g) of the Municipal Act does not use the same language as s. 357(1)(d)(ii), of “during the year or during the preceding year after the return of the roll,” it allows for relief where repairs or renovations to the land “prevent the normal use of the land for a period of at least three months during the year” (emphasis added). Therefore, the Board finds that the above-cited rationale in Canadian Property Holdings also applies to s. 357(1)(g) of the Municipal Act.

27In further support of this conclusion, from a purposive perspective, there is no apparent reason why a “cancellation, reduction, or refund of taxes” would be restricted to only mid-year changes under s. 357(1)(d), but not under s. 357(1)(g), because the circumstances applicable to both of these subsections may be addressed in a re-determination of current value in an appeal of assessed value.

28For these reasons, the Board concludes that s. 357(1)(g) of the Municipal Act is intended to address only mid-year changes that a taxpayer is unable to address in an appeal of the assessed value.

Application of the legal test in the circumstances of this case

29The Board has already found that the renovations that took place in 2022 and are the basis of the s. 357(1)(g) application, were not mid-year changes as they had been anticipated and accounted for in an adjustment to the Subject Property’s current value in 2019. Therefore, the Board finds that there is no basis for allowing further relief under s. 357(1)(g) of the Municipal Act.

CONCLUSION

30The Appellant is not entitled to a refund pursuant to s. 357(7) of the Municipal Act. The appeal for the 2022 taxation year is dismissed.

31As this is the only issue in this appeal, the Board denies the appeal.

ORDER

32The Board orders that the appeal be dismissed.