Albert/O’Connor Properties v. City of Ottawa, 2024 CanLII 29982

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 02, 2024

FILE NO.: WR 185742

Assessed Person(s): Albert/O’Connor Properties

Appellant(s): Albert/O’Connor Properties

Respondent(s): City of Ottawa

Property Location(s): 377 381 O’Connor Street

Municipality(ies): City of Ottawa

Roll Number(s): 0614-042-201-01900-0000

Appeal Number(s): 3506858

Taxation Year(s): 2021

Hearing Event No.: 783164

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

APPEARANCES:

Parties Representative

Albert/O’Connor Properties Glenn Lucas

City of Ottawa Shen Bai

HEARD: February 5, 2024 by telephone conference call

ADJUDICATOR(S): Carly Stringer, Member Leo Demarce, Member

DECISION

OVERVIEW

Background

1Albert/O’Connor Properties GP Inc. (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 377-381 O’Connor Street in the City of Ottawa (the “Subject Property”). The Appellant owns the Subject Property.

2The Appellant is asking the Board to cancel, reduce or refund municipal taxes levied on the Subject Property for the 2021 taxation year. The Appellant argues that the Subject Property was fully closed to the public and under demolition and renovation throughout 2021, such that it could not be used.

3The City of Ottawa (the “City”) opposes the Appellant’s request. The City submits that the Appellant has not provided enough evidence for the Board to grant tax relief.

Result

4For the reasons that follow, the Board denies the appeal.

Description of the Subject Property

5The Subject Property is a hotel with over 130 units in the building. The Appellant acquired the Subject Property in mid-October 2020 and currently leases it to a hotelier.

6The Appellant’s witness testified that it began renovating the Subject Property commencing with demolition on October 14, 2020. The Appellant’s witness also testified that renovations continued for all of 2021; that the Subject Property was fully closed to the public and could not be used throughout the 2021 calendar year; and that the hotel re-opened its doors in late March 2022.

Procedural History

7The Appellant filed applications with the City seeking tax relief pursuant to s. 357(1)(a), (b), (d) 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,

(a) as a result of a change event, as defined in clause (a) of the definition of “change event” in subsection 34 (2.2) of the Assessment Act, during the taxation year, the property or portion of the property is eligible to be reclassified in a different class of real property, as defined in regulations made under that Act, and that class has a lower tax ratio for the taxation year than the class the property or portion of the property is in before the change event, and no supplementary assessment is made in respect of the change event under subsection 34 (2) of the Assessment Act;

(b) the land has become vacant land or excess land during the year or during the preceding year after the return of the assessment roll for the preceding year;

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

(i) was razed by fire, demolition or otherwise, or

(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.

8The City denied the Appellant’s application on October 27, 2022, stating that it did not receive enough information to substantiate the request.

9The Appellant appealed the City’s decision to this Board pursuant to s. 357(7) of the Municipal Act on the basis that repairs or renovations to the land prevented the normal use of the land for a period of at least three months during the year: see “Municipal Act Application/Appeal – Cancel, Reduce, Refund” received from the Appellant on November 1, 2022, citing s. 357(1)(g) of the Municipal Act.

10The appeal was heard on February 5, 2024, and these reasons reflect the Board’s Decision.

Issues for the Hearing

11The Board must determine whether the Appellant is entitled to tax relief pursuant to s. 357(1)(g) of the Municipal Act for the 2021 taxation year. Specifically, the following issues must be addressed:

Issue 1: Did repairs or renovations of the Subject Property prevent its normal use for at least three months of the 2021 taxation year, per s. 357(1)(g) of the Municipal Act?

Issue 2: If the answer to Issue 1 is yes, should taxes be cancelled, reduced or refunded and, if so, how much?

PRELIMINARY MATTERS

Request to Dismiss

Background

12The City filed a Request to Dismiss in advance of the hearing. The City’s Request to Dismiss was denied at the outset of the hearing on February 5, 2024, and the Board indicated it would provide its reasons in writing.

13The City argued that the appeal should be dismissed without a hearing. The City argued that the Appellant breached the Board’s Rules of Practice and Procedure (the “Rules”) when it failed to disclose relevant documents, including invoices, quotes, or paperwork of any kind to support both the nature of the repairs/renovations that were being performed at the Subject Property, and the costs associated with those repairs/renovations.

14The Appellant opposed the City’s Request to Dismiss, arguing that there were hundreds and hundreds of invoices spanning multiple years, and that complying with the City’s disclosure request would be burdensome, too costly, and time-consuming. The Appellant also argued that the City had all of the documents it needed to make a decision.

Findings on the City’s Request to Dismiss

15The Board denied the City’s Request to Dismiss the appeal without a hearing event.

16The Board applied Rule 24(e), which gives the Board discretion to dismiss a proceeding without holding a hearing, or after a hearing, if the appellant has not complied with the statutory requirements or the Rules. The Board found that the Appellant admitted that it had many invoices relating to the renovations and repairs performed at the Subject Property, but did not provide them to the City. The Board found this was a breach of Rule 45, which requires that “[a]ll parties must serve an electronic copy of all relevant documents in their possession, control, or power to all other parties in the proceeding, except for privileged documents, or documents that cannot be disclosed by law.” The Board then applied Rule 7, which states that “[t]he Board will determine the appropriate consequences of non-compliance with these Rules.” In determining the appropriate consequence for the Appellant’s non-compliance, the Board found that although the Appellant failed to provide relevant documents, it disputed the proportionality of the City’s request for disclosure and the City failed to take steps pursuant to the Rules to obtain disclosure in advance of the hearing. In these circumstances, the Board found that dismissal without a hearing was not the appropriate remedy. The Board found that a more appropriate consequence pursuant to Rule 7 was to continue with the hearing, but draw a negative inference from the Appellant’s failure to produce primary documents.

ANALYSIS

Issue 1: Did repairs or renovations of the Subject Property prevent its normal use for at least three months of the 2021 taxation year, per s. 357(1)(g) of the Municipal Act?

Evidence and Submissions of the Parties

17The Appellant’s witness provided the following testimony relevant to Issue 1:

a. A document entitled “Construction Budget” dated October 10, 2023 reflects the total cost of the construction work performed at the Subject Property, being $4,992,237.09.

b. A document entitled “377 O’Connor 2021 Construction Timeline” outlined the construction work that was performed, and when this work occurred, at the Subject Property. This document was not prepared by the Appellant’s witness.

c. Demolition commenced on October 14, 2020 and the hotel opened its doors and commenced stays in late March 2022. Renovations were performed throughout all of 2021.

d. Demolition costs were roughly $240,000.

18The Appellant submits that this case is similar to 123 Metcalfe Properties GP Inc. v Municipal Property Assessment Corporation Region 03, 2023 CanLII 121503 (ON ARB) (“123 Metcalfe Properties”), where the parties did not provide receipts or invoices and only had a witness testifying to the timing and cost of construction work. The Appellant submits that its witness’ testimony is sufficient to confirm the timing and cost of the renovation work performed at the Subject Property.

19The City’s witness provided the following testimony relevant to Issue 1:

a. The City was unable to locate building permits for the Subject Property and none were provided by the Appellant.

b. The City’s witness saw undated photographs of what appeared to be renovations in a kitchen and bathrooms that were included in the Appellant’s Statement of Issues, but there were no photographs of lobbies or elevators or hallways of the hotel, nor was there evidence of work in multiple units.

Findings on Issue 1

20With respect to the application of 123 Metcalfe Properties, that Decision only addresses the quantum of the applicable tax refund. The Board did not provide reasons in support of its determination that s. 357 applies. For this reason, the Board is not persuaded that 123 Metcalfe Properties is applicable to its analysis.

21That said, the Board does find that renovations and/or repairs prevented normal use of the Subject Property for at least three months of the 2021 taxation year. In making this finding, the Board relies on the evidence of the Appellant’s witness confirming that renovations prevented the Subject Property being used as a hotel for the entire 2021 taxation year. While the Appellant did not provide primary evidence to show the extent of the work performed, the Board is satisfied based on the sworn evidence of the Appellant’s witness that renovations and repair were indeed performed at the Subject Property for at least three months of the 2021 taxation year. The Board finds that the City did not substantially challenge the Appellant’s evidence in this regard – the City focused its cross-examination on the Appellant’s failure to provide documentation rather than challenging the fact that renovations and repairs were actually performed on-site for at least three months of 2021. The Board finds that the Appellant’s evidence-in-chief is supported by the Construction Timeline that explains the nature of the renovations performed throughout the 2021 taxation year.

22For these reasons, the Board finds that the answer to Issue 1 is that yes, repairs or renovations prevented normal use of the Subject Property for at least three months of the 2021 taxation year.

Issue 2 - If the answer to Issue 1 is yes, should taxes be cancelled, reduced or refunded and, if so, how much?

Evidence and Submissions of the Parties

23The Appellant’s Statement of Issues states at paragraph 10 that “the assessed value should be reduced by the cost of repairs”. Under “Relief Sought” at paragraphs 12 and 13 of the Appellant’s Statement of Issues, the Appellant states that it paid $242,376 in taxes for the 2021 taxation year, and that it is seeking a refund of approximately $242,376.

24At the hearing, the Appellant changed its position and argued that the City should refund it $132,176. The Appellant did not explain to the Board why it changed its position, or how it arrived at the amount of $132,176.

25The City argued that if the basis of any reduction in taxes is the total construction cost, then the Appellant did not provide enough information to make that determination.

Findings on Issue 2

26The Board finds that the Appellant did not provide sufficient evidence for the Board to calculate a quantum of tax relief for the 2021 taxation year. Specifically:

a. With respect to the Appellant’s statement that the assessed value should be reduced by the cost of repairs, the Board finds that it cannot apply that approach for several reasons.

i. First, neither party provided evidence of the assessed value of the Subject Property, or the municipal tax levy applied to the Subject Property. The Appellant did not provide evidence regarding the current value assessment of the Subject Property, or the rate of the municipal tax levy as against the Subject Property by providing, for instance, a copy of its tax bill. Therefore, the Board does not have evidence supporting a starting assessed value against which cost of construction can be applied, nor does the Board have evidence of the rate to apply to a revised assessed value.

ii. Second, the Board finds that the Appellant did not provide sufficient evidence to substantiate the cost of renovations and repairs at the Subject Property. The Board draws a negative inference from the Appellant’s failure to provide even a single primary document in support of its costs. Further, the Board places little to no weight on the “Construction Budget”. The Appellant’s witness confirmed in cross-examination that the “Construction Budget” includes items such as security guards, management fees and traffic control, which do not necessarily have a corresponding impact on the Subject Property’s value. In this regard, the Board finds that it is not confident that the “Construction Budget” reflects the actual impact that renovations had on the value of the Subject Property. Finally, the Board places little to no weight on financial statements provided by the Appellant. The Appellant’s witness had not seen them in advance of the hearing, and could not comment on them.

b. Further, the Appellant did not provide evidence that it paid municipal taxes for the Subject Property, nor did it provide evidence regarding the quantum of any taxes paid. Namely, the Appellant’s witness did not testify that municipal taxes were paid, nor did any party provide documentary evidence to substantiate that property taxes were levied and paid, such as a tax bill or cheque paid to the City. The parties did not provide the Board with an agreed Statement of Facts in relation to whether and how much property taxes were paid in 2021 for the Subject Property. The only reference to taxes paid is a statement in the Appellant’s Statement of Issues that it paid $242,376 in taxes for the 2021 taxation year. A statement in a pleading is not evidence before the Board. Accordingly, the Board finds there is no evidence on which it can rely to determine whether and how much taxes were paid for the Subject Property.

c. Finally, the Board finds that there is no evidence to substantiate the Appellant’s requested refund of $132,176. The Appellant provided no explanation as to how that figure was calculated, nor any other evidence supporting relief in the amount of $132,176.

27For these reasons, the Board finds that the Appellant has not met its burden to prove that taxes should be cancelled, refunded or reduced.

CONCLUSION

28The Board finds that the Appellant has not provided sufficient evidence to satisfy the Board that it should order that taxes be cancelled, reduced or refunded pursuant to s. 357(1) of the Municipal Act.

ORDER

29The Board orders that the appeal is dismissed.