Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
December 20, 2024
FILE NO.:
WR 187193
Assessed Person(s):
Avondale Stores Limited
Appellant(s):
Avondale Stores Limited
Respondent(s):
Municipal Property Assessment Corporation Region 18
Respondent(s):
City of St. Catharines
Property Location(s):
84 Pelham Road
Municipality(ies):
City of St. Catharines
Roll Number(s):
2629-020-030-00300-0000
Appeal Number(s):
3473356, 3489408, 3513266 and 3525862
Taxation Year(s):
2021, 2022, 2023 and 2024
Hearing Event No.:
781973
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties
Counsel/Representative
Avondale Stores Limited
Jonas Perov, Jill Bender
Municipal Property Assessment Corporation
Kashifa Aslam
City of St. Catharines
No one appeared
HEARD:
October 24, 2023 by telephone conference call
ADJUDICATOR(S):
Pierre R. Lavigne, Member
DECISION
OVERVIEW
1Avondale Stores Limited (“Avondale”) appeals to the Assessment Review Board (the “Board”) the 2021 property assessment of 84 Pelham Road in the City of St Catharines in the Regional Municipality of Niagara (the “subject property”). The principal issues are the 2016 current value of the subject property and whether any equity adjustment to this value should be made.
Background
284 Pelham Road is a 0.34-acre lot improved with a 2,487 square foot (“sq. ft.”) one-storey commercial building, constructed in 1945. The Municipal Property Assessment Corporation (“MPAC”) assessed its 2016 value at $313,000. MPAC’s expert opinion of value at the hearing is $291,000 with no equity adjustment required. Avondale’s expert final opinion of value is $109,000, with a further 10% equity adjustment required for an equitable assessment of $98,100.
3Avondale appeals pursuant to s. 40(1)(a)(i) of the Act on the basis that the current value of the land is incorrect. Pursuant to s. 40(26) further appeals are deemed for each subsequent year.
Areas of Agreement
4The parties agree that the subject property’s classification in the Commercial Property Class is correct.
Issues for the Hearing
5At issue in this proceeding is:
- What is the current value of the subject property as of January 1, 2016.
a. Current Value Legislative Provisions
b. Methodology
c. Sales of Comparable Properties
d. Application of Time Adjustment Factors
e. Findings on Current Value
- Should a reduction in the correct current value be made for equity?
a. Equity Legislative Provisions
b. Onus
c. Procedural Objection
d. Findings on Equity
Result
6The Board finds that the 2016 current value of the subject property is $285,000 with no equity adjustment.
ANALYSIS
Description of Subject Property
7The subject property is a 0.34 acre lot with a frontage of 105 feet and a depth of 140 feet. Upon this lot is a one-storey building of 2,487 sq. ft. The construction dates from 1945. MPAC states that with improvements over time the building has an effective age of 1965. This is not disputed by Avondale. The interior finishes of the building are minimal. Interior partitions and drywall have been removed. The building is used for commercial / industrial overflow storage of steel and yard space by a tenant.
Issue 1 – What is the current value of the subject property as of January 1, 2016
a. Current Value Legislative Provisions
8Section 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.”
9Section 19.2(1) paragraph 4 of the Act requires that the valuation day for the 2017 to 2020 taxation years be as of January 1, 2016. Section 48.6 of Ontario Regulation 282/98 requires that the valuation day for the 2021, 2022, 2023 and 2024 taxation years be as of January 1, 2016, as well.
10Pursuant to s. 40(17) of the Act, the onus is on MPAC to prove the correct value of the subject property.
b. Methodology
11Avondale made submission which relied on both the direct approach and the income approach at the hearing. MPAC relied upon the direct comparison approach, but also provided evidence for the cost approach for verification, though neither party relied on the cost approach as providing an indication of value. Avondale also relied upon a decision of this Board in Hockenhull Land Cattle Co. v Municipal Property Assessment Corporation Region 32, 2020 CanLII 1387 (ON ARB) for the proposition that the cost approach is normally the approach of last resort and was therefore inapplicable. The Board finds that the cost approach does not provide the most reliable indication of value.
12The Board finds that Avondale’s income approach is not appropriate for the valuation of this property. Avondale based its calculations on the tenant’s actual rent, with no evidence of or comparison to fair market rents of other income properties. Avondale relied upon the decision of this Board in 703787 Ontario Ltd v Municipal Property Assessment Corporation Region 16, 2015 CanLII 51214 (ON ARB). However in that decision there was evidence of market rents of other properties (paras. 16-17) together with an explanation as to how the rent of that subject property situated itself in relation to the market of rents for other properties. Similarly in 703787 Ontario Ltd v Municipal Property Assessment Corporation Region 16, 2015 CanLII 51214 (ON ARB), Avondale’s relied upon decision, there was evidence of rents from comparable income producing properties.
13Avondale’s expert witness also stated in its expert report, para. 5.2.3, that “the Income approach is not the correct appraisal method” for the subject property. This unaddressed contradiction also supports the conclusion that the income approach is not appropriate in this valuation.
14The Board finds that the direct comparison approach is the appropriate approach to value the subject property.
c. Sales of Comparable Properties
15Using the direct comparison approach, MPAC’s expert submitted proposed comparable property sales (see Attachment 1 - DCA Approach No Adjustments Analysis). Its unadjusted conclusion of value was $366,225.
16At the start of evidence-in-chief, MPAC’s expert witness corrected this grid by indicating that “Total Source Structure Value” of the subject property reducing the $77,508.60 to $59,707.00. This reduction occurred as a result of a site visit with Avondale’s expert when it was observed that the original Structure Value required correction as a result of missing ceiling, stud frame partitions, some plumbing, ceiling and floor coverings.
17MPAC’s expert was of the opinion that adjustments were required to be made to its comparable sales to render them most similar to the subject property. After these adjustments (see Attachment 2 - DCA With Adjustments) the opinion of indicated value was $291,000
18Avondale objected to the adjusted sales conclusion of value because there was no evidence to explain how the adjustments were arrived at. No evidence explaining how the adjustments were arrived at was advanced in the expert report or at the hearing. The Board finds itself unable to transparently and justifiably explain how the adjusted values were derived. The Board finds that MPAC’s adjustments were not supported by evidence, accordingly the adjusted conclusion of value of $291,000 cannot be relied upon.
d. Application of Market Time Adjustment Factors
19MPAC’s adjustments for changes in the market prices over time are retained. MPAC’s expert produced a Sales Ratio Trend Analysis to determine the rate of change in prices over time. The Analysis was based on 188 sales from the subject property’s neighbourhood and adjacent areas from January 2014 to December 2017. The overall change in the market was 24.58%. The trend line was used to derive adjustment factors to adjust sales to the valuation day of January 1, 2016. Avondale objected to the Market Time Adjustment Factors used by MPAC stating that the methodology was incorrect, that factors should have been derived from paired sales analysis and that some of the sales were beyond one year from the valuation date.
20Avondale provided no evidence to demonstrate that paired sales analysis would have produced a different result. The Board finds that MPAC has provided the best evidentiary support for its market time adjustments. With respect to the sales being beyond one year from the valuation date the extension to two years from the valuation date this was reasonable in light of the difficulty in finding sufficient sales similar to this unique property.
21For the Direct Comparison Approach, Avondale relied upon the sales submitted by MPAC and submitted no other sales. Avondale objected to the comparability of MPAC’s sales on the basis of dissimilarity to the subject property.
22Avondale’s expert (para. 5.3.2.8.4) was of the opinion that Property 5, 197 Louth St., provided the best indication on value. Avondale’s expert then applied a negative 25% adjustment for interior finishes and a negative 15% for condition, a total adjustment of negative 40% to arrive at an adjustment selling price of $44 per sq. ft. of structure. This was a correction at the hearing of area calculation which originally produced a value of $65 per sq. ft. of structure. Applying the $44 per sq. ft. to the subject property’s 2,487 sq. ft. would produce an opinion of value of $109, 428.
23The Board is not persuaded that this negative 40% reduction in the sale price is justified by the lack of interior finishes and condition of the structure on the subject property. The corrected Structure Value of the subject property ($59,707.00) is substantially identical to the uncontested Structure Value of 197 Louth at $59,775. This is evidence that in both properties, the structure contributes relatively little to the overall value of the property. In these circumstances the Board finds the quantum of adjustment, applied to the whole value of the property, to be excessive. In the end the adjustments are not supported by the evidence and Avondale’s valuation of $44 per sq. ft. of structure is not retained by the Board.
24Notwithstanding this state of the evidence, both parties failing to substantiate their adjustments, the Board is nevertheless obligated to find a correct value: see Municipal Property Assessment Corporation v. Claireville Holdings Limited, 2024 ONCA 598, at para. 36 citing with approval the Divisional Court’s decision in Municipal Property Assessment Corporation v. Zarichansky, 2020 ONSC 1124.
The Board’s Analysis Using the Direct Comparison Approach
25A particularly defining feature of the subject property is the relatively little value contributed by the structure on the land. After a site visit MPAC reduced the Structure Value from $77,508.60 to $59,707.00. As previously indicated, MPAC made this verbal correction to its report at the opening of its evidence-in-chief. Avondale took no issue with MPAC’s use of the Automated Cost System used by MPAC to calculate Structure Values other than obtaining a correction for missing inputs. The Structure Value will be an important component of the Board’s analysis.
Property 1, 69 Pelham Rd.
26The Board finds this property is comparable to the subject property because it has a similar low Structure Value similar to the corrected Structure Value of the subject property, similar land characteristics and is the closest to the subject property at 0.21 kilometers. In the opinion of Avondale’s expert, Sale 1, 69 Pelham Rd. was not comparable as the building was used as a garage. The Board finds that use of the property is not a reason to disqualify the structure from being considered comparable. Similarity of the physical characteristics of the property is what is important so that a potential purchaser could view the property as a reasonable substitute for the subject property.
27Avondale also submitted that for this sale, as well as the three sales following no location adjustment had been made to account for the fact that the subject property was outside the GO Transit Secondary Plan. All suggested comparables were within the Secondary Plan. While this is true, Avondale presented no evidence to indicate what effect this would have on value. Accordingly no effect could be given to this difference.
Property 2, 179 St Paul Cres.
28The Board finds that the cumulative difference in three elements of comparison are too great for this sale to be comparable. The Structure Value of this property was $118,375. Firstly, the site area at 0.13 acres is too small compared to the subject property’s 0.34 acres. Secondly, the total floor area at 1,799 sq. ft. is considerably smaller than the subject property’s 2,487 sq. ft. Thirdly, the Structure Value is too great compared to the subject property’s. In Avondale’s expert evidence, this sale could not be comparable because it was a fully functioning restaurant and no location adjustment had been made. In its view a 50% location adjustment was required, but no support was provided for the quantum of this adjustment.
Property 4, 197 Louth St.
29The Board finds this sale to be comparable because of the similarity of Structure Value, the similarity of total floor area and the relative similarity of actual site area. MPAC was of the opinion that this sale was relatively comparable to the subject property. Avondale was of the opinion that this sale was comparable and provided the best indication of value. It required however, in the opinion of Avondale’s expert, a subjective negative 25% adjustment for interior finishes and a negative 15% adjustment for condition. No evidence was adduced to support the quantum of these adjustments.
Property 5, 58 St. Paul St. W.
30The Board finds this sale not to be comparable because of too great a dissimilarity in Structure Value. MPAC attributed to this sale a Structure Value of $161,558 whereas the Structure Value of the subject property is $59,707.00.
31The Board has retained Property 1, 69 Pelham Rd. and Property 4, 197 Louth St., as comparable. The Board has identified the Structure Value as a defining feature of the subject property. In this circumstance, 69 Pelham Rd. requires a $38,500 negative adjustment to render its Structure Value roughly equal ($98,395 - $38,500 = $59,895) to the corrected Structure Value of the subject property ($59,707). The structure adjusted and time adjusted sale price of 69 Pelham Rd. is therefore, $273,557 ($312,057 -$38,500). The end result is an adjusted price per sq. ft. of $127.23 ($273,557/2,150) for 69 Pelham Rd.
e. Findings on Current Value
32As the adjusted price per sq. ft. of 197 Louth St. is $102, the average of the prices per sq. ft. of the two retained sales is $114.61 (($127.23 + $102) / 2). Applied to the 2,487 sq. ft. of the subject property produce $285,035. The Board finds $285,000 (rounded) to be the correct 2016 current value of the subject property.
Issue 2 - Should a reduction in the correct current value be made for equity?
Equity Legislative Provisions
33Section 44(3)(b) of the Act provides for a reduction in current value where required to make the current value equitable with similar properties in the vicinity.
Onus
34Though MPAC has the statutory onus of proving current value, no such reversal of onus applies to proof that an equity adjustment to current value is required. Avondale has the burden of proof with respect to the requirement of an equity adjustment.
Procedural Objection
35MPAC objected in its Statement of Response that the Appellant had not complied with Rule 43(b) of the Board’s Rules of Practice and Procedure. MPAC maintained this objection in its submissions. Avondale made no response to this objection.
36The relevant parts of Rule 43(b) are as follows:
Statements of Issues and Responses
- Statements of Issues and Responses must contain:
(a) …
(b) If the issue is the equity of the assessment pursuant to section 44(3) of the Assessment Act:
i. the assessment requested;
ii. identification of the vicinity claimed by the party;
iii. identification of similar lands in the vicinity to be relied on by the party;
iv. how the party proposes to calculate the adjustment for equity; and
v. a list of all facts, legal grounds and documents that the party relies on in support of its position.
37Avondale’s Statement of Issues and Amended Statement of Issues on its face comply with Rule 43(b).
38Avondale did not introduce into evidence by way of its expert the properties that had been relied upon in Appendix A in its Amended Statement of Response as the method it proposed to use to calculate the adjustment for equity. MPAC produced no equity study. Avondale advanced a new theory of inequity founded on a comparison of the assessments of the four properties relied upon by MPAC in its direct comparison approach. Avondale asserted that it was not required to establish inequity by way of an Assessment to Sales Ratio (“ASR”) analysis. Avondale relied upon a decision of this Board in Cindymac Ltd. v. Municipal Property Assessment Corp., Region No. 7 [2001] O.A.R.B.D No. 1373, at para. 29 to establish that a taxpayer is not required to use the same methodology as the assessor to demonstrate inequality of assessment.
39While the Board agrees that the Appellant is not required to establish inequity by means of an ASR study, the Appellant is required to abide by the Board’s Rules with respect to the content of its Statement of Issues.
40The Board finds that how Avondale proposed to calculate the adjustment for equity at the hearing was not disclosed in its Statement of Issues or the Amended Statement of Issues or expert report. This was in breach of clause iv of Rule 43 and unfair to the Respondent. No exceptional circumstances were advanced by Avondale to justify this fundamental departure from its pleaded method to calculate the adjustment for equity. The Board maintains the Respondent’s objection and accordingly will not consider the Appellant’s equity evidence and submissions.
Findings on Issue 2- Equity
41As Avondale failed to establish inequity in compliance with the Board’s Rules therefore, the Board makes no adjustment for equity.
CONCLUSION
42The Board finds that the correct current value of the subject property is $285,000. No requirement for an equity adjustment has been established.
ORDER
43The Board orders that the assessment for the taxation years 2021, 2022 and 2023 is reduced from $313,000 to $285,000 and the assessment for the 2024 taxation year is reduced from $291,000 to $285,000.
"Pierre R. Lavigne"
PIERRE R. LAVIGNE
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb
Attachment 1 - DCA Approach No Adjustments Analysis
Property #1
Property #2
Property #5
Property #6
Roll Number
2629-020-030-00300
2629-020-023-00200
2629-020-020-13100
2629-020-027-04800
2629-020-021-10700
Address
84 Pelham Rd
69 Pelham Rd
179 St Paul Cres
197 Louth St
58 St Paul St W
Neighbourhood
A07 – 4011
A07 – 4011
A08 – 4011
A08 – 4011
A08 – 4011
Property Description
Retail Under 10,000 sf
Specialty automotive shop/Auto Repair/Collision Service
Restaurant
Small commercial building Under 7,500 sf
Small Commercial Building Under 7,500 sf
Distance in KM
0.21
0.64
0.76
0.81
Valuation
Current Value Assessment
$231,000
$324,000
$235,000
$222,000
$337,000
Sale
Sale Date
20170719
20141117
20140704
20160826
Sale Amount
$340,000
$250,000
$200,000
$410,000
Time Adjusted Sale Amount
$312,057
$268,714
$219,669
$395,569
Time Adjusted per sq ft
$145
$149
$102
$155
Site
Actual Site Area (acres)
0.34
0.33
0.13
0.22
0.23
Frontage
105
158.2
120.6
96
66
Official Plan
Low Density Residential
Low Density Residential
Mixed Use 1
Mixed Use 1
Mixed Use 1
Included in Go Transit Station Secondary Plan? Y/N & Density
N
Yes, 11 metres, 3 storey
Yes, 22 metres, 6 storey
Yes, 22 metres, 6 storey
Yes, 22 metres, 6 storey
Zoning
C1, Local Convenience Commercial
C1, Local Convenience Commercial
M1, Medium Density Mixed Use
M1, Medium Density Mixed Use
M1, Medium Density Mixed Use
Lot Details
Corner Lot
Corner Lot
Corner Lot
Regular Lot
Corner Lot
Source Improvements
Total Floor Area (SF)
2487
2,150
1,799
2,153
2,558
Total Interior Office Area (SF)
2487
560
1799
1141
2,339
Weighted Average Year Buil
1945
1969
1966
1954
1964
Weighted Average Effective Year End
1965
1975
1984
1964
1967
Weighted Average Height
12
14
14
12
15.51
Total Source Structure Value
$77,508.6
$98,395
$118,375.4
$59,774.99
$161,557.66
Total Source Improvement Value
$77,508.6
$98,395
$118,375.4
$59,774.99
$161,557.66
Compatibility
Relatively Comparable
Inferior
Relatively Comparable
Relatively Comparable
Time Adjustment per sq ft range
$102 - 155
median
$147
$366,225
Attachment 2 - DCA With Adjustments
Sales Analysis
Subject Property Roll#
Property Address
Property Code
E-NHBD
Lot size (ac)
Building Size Above Grade
Number of Storeys
Interior Retail Area
Average Height
BSMT Area
Actual Year Built
Effective Year Built
RCNLD
Land Value
2016 CVA
2629-020-030-00300
84 Pelham Road
410
A07-4011
0.34
2,487
1
0
12
0
1945
1965
$77,508
$231,307
$313,000
Comparable Properties Roll#
Property Address
Property Code
E-NHBD
Lot size (ac)
Building Size Above Grade
Number of Storeys
Interior Office Area
Average Height
BSMT Area
Actual Year Built
Effective Year Built
RCNLD
Land Value
Building Value Adjustments
Land Value Adjustment
Absolute Value Adjustments
Date of Sale
Sale Price
Time Adjusted Sale Price (TAS)
Adjusted TAS
2629-020-023-00200
69 Pelham Road
421
A07-4011
0.33
2,150
1
560
14
0
1969
1975
$98,395
$226,401
-$20,887
$4,906
$25,793
20170719
$340,000
$312,057
$296,076
2629-020-020-13100
179 St Paul Cres
411
A08-4011
0.13
1,799
1
1799
14
0
1966
1984
$118,375
$117,726
-$40,867
$113,581
$154,448
20141117
$250,000
$268,714
$341,428
2629-020-027-04800
197 Louth St
400
A08-4011
0.22
2,153
1
1141.00
12.00
0
1954
1964
59,775
173,436
$17,733
$57,871
$75,604
20140704
$200,000
$219,669
$295,273
2629-020-021-10700
58 St Paul St W
400
A08-4011
0.23
2,558
1
2,339
15.51
1510
1964
1967
161558
176347
-$84,050
$54,960
$139,010
20160826
$410,000
$395,569
$366,479
Mean
0.23
2,165
1,167
14
378
1973
$109,526
$173,478
$300,000
$299,002
$324,814
Median
0.23
2,152
1,141
14
0
1971
$108,385
$174,892
$295,000
$290,386
$318,752
With Structure Data Adjustments: $291,000