Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: March 22, 2024
Assessed Person(s): 1324782 Ontario Limited; 5053714 Ontario Limited
Appellant(s): 1324782 Ontario Limited
Respondent(s): Municipal Property Assessment Corporation Region 05
Respondent(s): City of Kingston
Property Location(s): 1264 - 1270 McAdoo’s Lane
Municipality(ies): City of Kingston
Roll Number(s): 1011-080-260-20000-0000
Appeal Number(s): 3419277, 3440083, 3486715, 3519655, 3519656 and 3511857
Taxation Year(s): 2020, 2021, 2022, and 2023
Hearing Event No.: 782710
Legislative Authority: Sections 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
| Parties | Representative |
|---|---|
| 1324782 Ontario Limited; 5053714 Ontario Limited | Jonas Perov |
| Municipal Property Assessment Corporation | Rox-Anne Poulain |
| City of Kingston | No one appeared |
HEARD: January 15, 2024 by telephone conference call
ADJUDICATOR(S): Carly Stringer, Member
DECISION
OVERVIEW
Background
11324782 Ontario Limited (the “Appellant”) has appealed the property assessments of the property municipally known as 1264-1270 McAdoo’s Lane in the City of Kingston (the “Subject Property”) for the 2020 to 2023 taxation years to the Assessment Review Board (the “Board”) pursuant to s. 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”).
2The Subject Property was assessed at a current value of $723,000 for the 2020 to 2023 taxation years, apportioned with $74,100 in the Residential property class and $648,900 in the Commercial property class, pursuant to s. 40 of the Act. Further assessments were issued pursuant to s. 33 of the Act, reflecting a value of $118,000 for building improvements on the Subject Property, classified in the Commercial property class.
3The Appellant argues that the assessed value of $723,000 is too high, and the Subject Property should reflect a current value assessment (“CVA”) of $384,000 for all taxation years under appeal.
4The Municipal Property Assessment Corporation (“MPAC”) is responding to these appeals. MPAC’s position is that the Board should confirm the values returned on the assessments. MPAC also takes the view that the Subject Property should be classified entirely in the Commercial property class.
5The City of Kingston is a statutory party to these appeals but did not participate or otherwise make submissions to the Board.
Description of the Subject Property
6The Subject Property is an industrial property operating as an automotive recycling business. It is 43.89 acres in size, improved by a building that is 8,977 square feet (“sq. ft.”). The Subject Property is surrounded by various industrial properties with varying uses, including trucking businesses, recyclers and aggregate businesses.
7A hydro corridor intersects the northwest portion of the Subject Property.
Issues for the Hearing
8At issue in this proceeding is:
- What is the current value of the Subject Property as of January 1, 2016?
- Should an equitable adjustment be applied to that current value and, if so, how much?
- What is the applicable property classification?
Result
9In relation to the s. 40 appeals, the Board finds that the correct current value is $1,126,000 (rounded) and that no equitable adjustment is required.
10In relation to the s. 33 appeals, the Board finds that the returned value of $118,000 should be confirmed.
11The Board finds that the Subject Property should be classified entirely in the Commercial property class.
ANALYSIS
Issue 1 – What is the current value of the Subject Property as of January 1, 2016?
Applicable Law
12In 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”.
13Accordingly, the Board must first determine what each Subject Property would have sold for in an arm’s length transaction on the statutory valuation day. Section 19.2(1) of the Act and 48.6 of O. Reg. 282/98 confirm that the valuation day for the taxation years under appeal is January 1, 2016.
Evidence and Submissions of the Parties
a. MPAC
14MPAC’s expert testified that the cost approach - where a value is ascribed to the building by determining its replacement cost new less depreciation, which is then added to the land value - is the appropriate way to value the Subject Property. He testified that the Appellant did not challenge the returned value of the building, which was $248,967.00 on the assessments made pursuant to s. 40 of the Act. Therefore, MPAC’s expert focused his analysis on determining a land value to add to that uncontested building value.
15MPAC’s expert provided evidence regarding sales of seven industrial vacant land properties. In his ultimate opinion of value, he relied on only three of those sales.
MPAC’s Proposed Comparable Properties Information
| Property | Sale Date | Time Adjusted Sale Amount | Site Area (Acres) | Time Adjusted Rate per Acre |
|---|---|---|---|---|
| 1533 McAdoo’s Lane | October 2019 | $1,296,000 | 16.53 | $78,403 |
| 1145 McAdoo’s Lane | October 2015 | $543,500 | 18.84 | $28,851 |
| 1619 Westbrook | October 2020 | $308,400 | 17.5 | $17,623 |
16He determined the median time adjusted rate per acre is $28,851 and opined that, considering the larger acreage of the Subject Property and the need for some measure of “economies of scale”, a lower rate per acre of $20,000 is reasonable. He applied this $20,000 per acre to the Subject Property’s site area of 43.89 acres to determine a land value of $877,800.
17He added this land value of $877,800 to the uncontested improvement value of $248,967 to arrive at a total opinion of value of $1,126,000 (rounded).
18MPAC’s expert also analyzed the sales of improved industrial properties that he deemed comparable, but he did not rely on those sales for his final opinion of value.
19With respect to the hydro corridor, MPAC’s expert testified that both parts of the Subject Property (on either side of the hydro corridor) are functioning as a single property and would transact together such that they should be valued as a single parcel. He testified that he is not aware of any comparable sales of land that are bisected by a hydro corridor. In his opinion, the hydro corridor has no impact on the Subject Property’s land value, for the following reasons:
a. two roads service the northwest portion of the Subject Property by crossing the hydro corridor;
b. the Subject Property is being used on either side of the hydro corridor;
c. property owners can apply to Ontario Hydro for access across corridors;
d. a provincial secondary land use program permits landowners to make proposals to use hydro corridors; and
e. there is no market evidence supporting an adjustment for the corridor.
20MPAC submits that its expert’s opinion of value is $1,126,000 and therefore a value of at least $723,000, being the value returned on the assessments made pursuant to s. 40 of the Act, and $841,000 including the s. 33 assessments, should be confirmed.
b. Appellant
21The Appellant submits that the hydro corridor has a significant impact on value, and the rear of the Subject Property has no value because it is “not saleable”. According to the Appellant, MPAC’s expert has selected properties that are unaffected by the hydro corridor and are significantly smaller than the Subject Property, without adjusting for either factor. The Appellant submits that the Subject Property should be valued at a lower rate per acre due to economies of scale and the restrictions imposed by the hydro corridor.
22The Appellant’s witness provided a mix of opinion and fact evidence. The Appellant’s witness was not qualified as an expert, and the Board found at the hearing that any opinion evidence provided by the Appellant’s witness was not admissible. With respect to fact evidence provided, the Appellant’s witness testified that the rear 7.33 acres of the Subject Property is landlocked and is accessible only by trespassing over the hydro corridor.
23The Appellant submits that the rear 7.33-acre portion of the Subject Property has a market value of $0.
Findings on Issue 1
24The Appellant has not challenged the s. 33 assessment value of $118,000, which is based on the value of building improvements on the Subject Property effective in October 2022. Accordingly, the Board will confirm the value of $118,000 reflected on the s. 33 assessments.
25With respect to the improvement value reflected in the s. 40 assessments, the Board accepts the uncontested evidence of MPAC’s expert and finds an improvement value of $248,967.
26With respect to land value reflected in the s. 40 assessments, the Board does not accept the Appellant’s submissions that the hydro corridor negatively impacts value and prefers MPAC’s expert’s evidence that the hydro corridor has no impact on land value, for the following reasons:
a. The Appellant has stated there are restrictions imposed by the hydro corridor that negatively impact value, but has not provided evidence supporting these alleged restrictions. In contrast, MPAC’s expert provided uncontested evidence that there are roads that cross the corridor to connect both portions of the Subject Property; that the entirety of the Subject Property is being used; and that there are provincial programs in place to permit use of hydro corridors.
b. The Appellant has not provided any market or admissible expert evidence to substantiate its position that the rear portion of the Subject Property is “not saleable” or has a $0 value.
27Accordingly, the Board finds that the hydro corridor has no impact on the Subject Property’s land value.
28With respect to the proposed comparable property sales used by MPAC’s expert in his final opinion of land value, the Board does not accept 1533 McAdoo’s Lane and 1619 Westbrook as appropriate comparable properties. These sales occurred in October 2019 and October 2020 respectively. The Board finds these sales are too far removed from the January 1, 2016 valuation date to be reliable indicators of value at that time.
29This leaves 1145 McAdoo’s Lane. The Board finds that the sale of 1145 McAdoo’s Lane is sufficiently comparable to the Subject Property. This property is on the same road as the Subject Property and the sale occurred very close to the valuation day. The Board accepts and relies on MPAC’s expert’s opinion of value of $20,000 per acre, using the time adjusted rate per acre of 1145 McAdoo’s Lane ($28,851) adjusted downwards to address the difference in site area. The Board finds that $20,000 per acre for land is reasonably correct.
30Applying the rate of $20,000 per acre to the 43.89 acre site area of the Subject Property results in a land value of $877,800. Adding the uncontested improvement value of $248,967 results in a correct current value of $1,126,000 (rounded), which the Board finds is reasonably correct in relation to the s. 40 assessments.
Issue 2 - Should an equitable adjustment be applied to that current value and, if so, how much?
Applicable Law
31Section 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”.
32With respect to the evidence required to satisfy the Board that an equitable adjustment is required, “the Board must have convincing evidence on equitable assessment to reduce an otherwise correct current value”: see Vale Canada Limited v Municipal Property Assessment Corporation, Region 30, 2022 CanLII 48461 (ON ARB) at paragraph 84.
Evidence and Submissions of the Parties
a. Appellant
33The Appellant submits that the Board consistently applies adjustments to properties that are affected by hydro corridors to account for their negative impact on resale value, and that downward adjustments are typically between -5% to -10%, citing Secor v Municipal Property Assessment Corporation, Region 07, 2016 CanLII 5575 (ON ARB) (“Secor”), Pang v Municipal Property Assessment Corporation, Region 09, 2017 CanLII 2292 (ON ARB) (“Pang”), and Jagosky v Municipal Property Assessment Corporation, Region 17, 2019 CanLII 39627 (ON ARB) (“Jagosky”). The Appellant submits it would be inequitable to treat the Subject Property differently. The Appellant submits that the hydro corridor divides the Subject Property into two parcels and, as such, each of these parcels should have a -10% adjustment resulting in a total adjustment of -20% to the overall assessment.
34The Appellant further submits that Appendix B of MPAC’s Statement of Response reflects four properties that are assessed at a median rate of $4,372 per acre. The Appellant states that 1575 Westbrook Road is the most comparable and has a land assessment rate of $3,077 per acre. The Appellant submits that applying this rate to the Subject Property would yield a fair and equitable land value of $135,050.
35The Appellant submits that, adding a land value of $135,050 to the building value of $248,967 would result in a current value assessment of $384,000.
36Finally, the Appellant submits that the Board cannot rely on MPAC’s equity analysis because it includes sales from 2012, 2013, 2014, 2019 and 2021 without any time adjustment.
b. MPAC
37MPAC submits that the Subject Property does not require an equitable adjustment, relying on its expert’s evidence. MPAC’s expert provided an Assessment to Sales Ratio (“ASR”) analysis to compare the current value assessments to sale prices of industrial properties in the City of Kingston valued using the Cost Approach. MPAC’s expert determined an ASR of 0.98, and he opined that this ASR reflects that similar properties in the vicinity have been assessed at or near their current values such that an equity adjustment is not required.
Findings on Issue 2
38The Board finds that the Appellant has not provided it with sufficiently convincing evidence that an equitable adjustment is required. Specifically, the Board finds as follows:
a. The Board does not accept the Appellant’s approach of analyzing only a portion of the current value assessment for equity purposes. Here, the Appellant only references the land value component of the Subject Property’s current value. The Appellant does not consider the improvement value. Section 44(3)(b) directs that the Board must “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”. The Act does not direct the Board to have reference to a portion of the value and adjust only a portion of the assessment based on whether that portion of the assessment (i.e. the land value) is equitable.
b. The Board does not accept the Appellant’s submission that an equitable adjustment is required because the Board has applied adjustments for hydro corridors in other cases. In particular, the Board rejects the Appellant’s reliance on Secor (where the property at issue was a vacant residential/recreational parcel of land on water located in Minden Hills), Pang (where the property at issue was a single-family detached two-storey residential building in the City of Toronto) and Jagosky (where the property at issue was a single-storey detached residential dwelling on water in Huntsville) because the Board finds that the properties in those cases are not “similar lands in the vicinity” of the Subject Property. Further, in those three cases, there was evidence supporting an adjustment to the current value. In this case, the Board has found that there is no market or expert evidence that the hydro corridor impacts the value of the Subject Property.
c. Regarding the Appellant’s submission that the Board should rely on the properties referenced in Appendix B of MPAC’s Statement of Response, the Board notes that information in a pleading is not evidence in a proceeding unless and until a witness testifies to that evidence or incorporates the document by reference into its evidence. In this instance, the Appellant’s witness referenced the properties in Appendix B of MPAC’s Statement of Response as evidence that the Subject Property is over assessed, but the Appellant did not seek to tender Appendix B as an exhibit to his testimony, nor did the Appellant’s witness provide sufficient information regarding these properties for the Board to determine whether they are “similar lands in the vicinity” for the purpose of the s. 44(3)(b) analysis. The Board notes that one of the four properties is a recreational sport club and the other is exhibition/fairgrounds, which are not similar to the Subject Property. The Appellant did not provide evidence regarding the location of 1575 Westbrook Road for the Board to make a determination regarding vicinity. For these reasons, the Board does not accept the Appellant’s submission and places no weight on the information contained in Appendix B to MPAC’s Statement of Response.
39For these reasons, the Board finds that no equitable adjustment is required.
Issue Three – What is the applicable property classification?
Applicable Law
40Section 5.(1)1 of O. Reg. 282/98 provides that “[t]he commercial property class consists of the following: land and vacant land that is not included in any other property class”.
Evidence and Submissions of the Parties
a. MPAC
41MPAC’s expert testified that tractor trailers, haulers and aggregate materials are currently stored on the portion of the Subject Property classified in the Residential property class. He further testified that a mechanical sifter is processing and screening aggregate on that portion of the Subject Property.
42MPAC submits that, given this use, this portion of the Subject Property cannot be classified in the Residential property class. MPAC’s expert opined that the entirety of the Subject Property should be assessed in the Commercial property class.
b. Appellant
43The Appellant did not provide submissions on this issue.
Findings on Issue 3
44The Board accepts and relies on the expert’s evidence regarding the use of the Subject Property. The expert’s evidence was largely uncontested in this regard, and the Board finds that the photographs included in the expert report substantiate that there is a non-residential use occurring on the northern portion of the property that was otherwise classified in the Residential property class. The Appellant has not provided evidence or submissions substantiating that this portion of the property should remain classified in the Residential property class, or in any other property class.
45For these reasons, the Board finds that the entirety of the Subject Property should be classified in the Commercial property class as land that is not included in any other property class.
CONCLUSION
46The Board finds that the correct current value of the Subject Property is $1,126,000 (rounded) for the s. 40 appeals, and that no equitable adjustment is required. The Board confirms the current value of $118,000 for the s. 33 appeals. The Board finds that the entire Subject Property should be classified in the Commercial property class.
ORDER
47The Board orders that the assessed value be increased from $723,000 to $1,126,000 for all taxation years under appeal pursuant to s. 40 of the Act.
48The Board orders that the assessed value of $118,000 for the s. 33 assessments for the 2022 and 2023 taxation years is confirmed.
49The Board orders that the property classification be changed to Commercial.