Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: January 03, 2024
Assessed Person(s): 1584720 Ontario Ltd.
Appellant(s): Jewish Russian Community Centre
Respondent(s): Municipal Property Assessment Corporation Region 09
Respondent(s): City of Toronto
Property Location(s): 0 Church Avenue; 17 Church Avenue
Municipality(ies): City of Toronto
Roll Number(s): 1908-093-150-00800-0000; 1908-093-150-00900-0000
Appeal Number(s): 3485917, 3512319, 3485918, and 3512244
Taxation Year(s): 2022 and 2023
Hearing Event No.: 782673
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties Representative
Jewish Russian Community Centre Rabbi Yisroel Zaltzman
1584720 Ontario Ltd. No one appeared
Municipal Property Assessment Corporation Felicia Nacini and Zoe Moraitis
City of Toronto No one appeared
HEARD: November 1, 2023 by telephone conference call
ADJUDICATOR(S): Subuola Awoleri, Member
INTERIM DECISION
OVERVIEW
1The Jewish Russian Community Centre (“JRCC” - the “Appellant”) leased 17 Church Avenue (“Subject Property A” – a detached bungalow) and 0 Church Avenue (“Subject Property B” – a surface parking lot used in conjunction with another property) from the Sub-Landlord, Hanahreum Mart Inc. (“H-Mart”), who leased it from the owner, 1584720 Ontario Ltd. (the “Assessed Person”).
2The Appellant appealed the 2022 classification of the Subject Properties to the Assessment Review Board (the “Board”) under s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) on the ground that the classification is incorrect. The Appellant argued that Subject Property “A” and portions of Subject Property “B”, used by the Appellant should be classified in the residential property class, and not in the commercial property class, since they are both being used for residential purposes. The Appellant is deemed to have brought the same appeals in respect of the 2023 taxation year, pursuant to s. 40(26) of the Act.
3The Municipal Property Assessment Corporation (“MPAC”) argued that the current use of Subject Property “A” is as a place of worship (Synagogue) and Subject Property “B”, being used by the Synagogue and another commercial entity, H-Mart, qualifies both properties to be in the commercial property class. MPAC requests the Board confirm the returned classification of the Subject Properties in the commercial property class for the 2022 and 2023 taxation years.
4Classification of properties in the residential property class attracts a lower tax rate than in the commercial property class.
5For the 2022 to the 2023 taxation years, the current value assessment (“CVA”) for Subject Property “A” is $2,213,000. The CVA for Subject Property “B” for the 2022 taxation year is $2,806,000 and for the 2023 taxation year, it is $2,173,000.
BACKGROUND
6The Appellant is a not-for-profit organization that serves the local Jewish Russian community. The Appellant has only one employee, Rabbi Yisroel Zaltzman, who is representing the Appellant in these appeals.
7Subject Properties “A” and “B” are both owned by 1584720 Ontario Ltd., the Assessed Person. They are both identified by separate roll numbers and are assessed separately by MPAC.
8The Assessed Person leased the Subject Properties to H-Mart, the Sub-Landlord, who sub-leased Subject Property “A” and “B” to the Appellant.
9The Appellant and H-Mart entered an Agreement to Sub-Lease-Commercial (“Agreement to Sub-Lease”) dated August 24, 2021.
10The Appellant’s tenancy commenced on October 1, 2021.
11Prior to the commencement of the Appellant’s tenancy, and thereafter, the Subject Properties have been classified by MPAC in the commercial property class.
12The Appellant is now seeking to change the classification of Subject Property “A” and portions of Subject Property “B” used by the Appellant to the residential property class.
Areas of Agreement
13The parties agree that the current value of Subject Property “A” for the 2022 and 2023 taxation year is $2,102,000 and the current value of Subject Property “B” for the 2022 and 2023 taxation year is $2,173,000.
14The current values for the Subject Properties as agreed upon by the parties are confirmed in this Decision on consent.
15The parties further agree that equity is not an issue in these appeals.
Issues
16The only issue in these appeals is: what is the correct classification of the Subject Properties for the 2022 and 2023 taxation years?
Result
17The Board makes the following determination for Subject Property “A”:
a. the basement level is incorrectly classified in the commercial property class; the correct classification is in the residential property class; and,
b. the main floor and the remainder of the property is correctly classified in the commercial property class.
18The Board finds that Subject Property “B” is correctly classified in the commercial property class.
Preliminary Matter
19MPAC objected to the admissibility of part of the Appellant’s evidence which was served on MPAC a day prior to the hearing and received by the Board on the day of the hearing. This new evidence reveals the terms of settlement between MPAC and another appellant regarding the classification of another property, not relevant to these appeals.
20MPAC submitted that the Appellant’s new evidence is not relevant to the appeals, since it relates to another property, which is not the subject of these appeals. Furthermore, MPAC argued that since the only issue in the appeals is the correct classification of the Subject Properties, which is determined based on facts, the Appellant’s new evidence is not relevant. MPAC further argued that it did not have the opportunity to review the new evidence, and it may have to request additional time to do this, which may require a response and further delay the hearing of the appeals.
21In addition, MPAC submitted that pursuant to Rule 40 of the Board’s Rules of Practice and Procedure, the Appellant has not presented any exceptional circumstance for the Board to alter the due date in the schedule of events.
22The Appellant’s representative submitted that although the new evidence is not relevant or important to the appeal, it is just an example of the terms of settlement between MPAC and another appellant relating to the classification of properties. He added that he became aware of the new evidence a day prior to the hearing.
23The Board finds that the documents are inadmissible since they are not relevant to the appeals.
ANALYSIS
Description of Subject Properties “A” and “B”
24Subject Property “A” is a detached bungalow, built in 1953. The lot size is approximately 5,750 square feet (“sq. ft.”). The main floor is 1,060 sq. ft. with a finished basement of 1,060 sq. ft. It also has an attached garage. A storage facility is located at the rear of Subject Property “A”, specifically on the south-east side of its lot.
25Subject Property “B” is a surface parking lot used in conjunction with another property. There are no structures on it, and it is approximately 7,288.94 sq. ft.
Issue: What is the correct classification of Subject Properties “A” and “B” for the 2022 and 2023 taxation years?
26In accordance with s. 40 of the Act, the Appellant can appeal the incorrect classification of another person’s land.
27Pursuant to s. 40(17) of the Act, where current value is an issue in any appeal, the burden of proof is on MPAC to show correctness of that current value. MPAC submitted that the onus is on the Appellant to prove that the Subject Properties are incorrectly classified and should be changed to the residential property class.
28The legislative requirement for classification of real property is set out in the Ontario Regulation 282/98 (the “Regulation”). Section 3(1) provides in part that the residential property class “consists of land used for residential purposes that is land that does not have seven or more self-contained units”. Section 5(1) provides that the commercial property class consists of “land… that is not included in any other property class”. Section 5(1) is therefore termed the default provision to classify properties that do not fit into any of the classes.
29Section 14(5) of the Act provides that portions of a property can be classified in different classes.
30The Subject Properties were assessed separately by MPAC and have different roll numbers. The Board will determine their correct classifications separately.
Classification of Subject Property “A” (a detached bungalow)
31Section 19.3 of the Act provides that “the day as of which land shall be classified for a taxation year is June 30 of the previous year”. The classification days for the taxation years under appeal are June 30, 2021 and June 30, 2022. MPAC submitted that on June 30, 2021, the Appellant had not leased Subject Property “A” and “B” and upon commencement of its tenancy on October 1, 2021, to date, there is no change in the use, therefore it is correctly classified in the commercial property class.
32The Appellant submitted that during the taxation years under appeal, to date, Subject Property “A” is used for residential purposes and should be correctly classified in the residential property class.
33The Board’s task is to determine whether Subject Property “A” was used for residential purposes during the taxation years under appeal.
Subject Property “A” - storage facility and some parking spots for H-Mart
34A determination on the remainder of Subject Property “A” will be made first, as the Board finds that there are some undisputed facts regarding this portion of the Subject Property.
35Dean Kolovos, MPAC’s witness, testified that he inspected Subject Property “A” on September 15, 2022 and at the rear of Subject Property “A”’s lot, specifically, the south-east end, there is a building used as storage by H-Mart (the Sub-Landlord) with some designated parking spots for H-Mart. Mr. Kolovos added that access to this storage facility is from Subject Property “B” (a surface parking lot used in conjunction with another property).
36MPAC submitted that since the storage facility is located on Subject Property “A”, and it is being used by a commercial entity, therefore, in addition to the evidence it presented that the Subject Property is being used for a place of worship, it is also being used by a commercial entity, consequently, it is correctly classified in the commercial property class.
37The Appellant agrees that the storage facility is used by H-Mart. However, Rabbi Zaltzman testified that this portion of the Subject Property including the parking spots reserved for H-Mart was not leased to the Appellant and that the Appellant does not occupy it, even though it is located on the Subject Property. Rabbi Zaltzman directed the Board to Schedule “D” of the Agreement to Sub-Lease, which delineates with yellow lines the portion of Subject Property “A” where the Appellant is not allowed to park. This includes the storage facility and portions of Subject Property “B”. The portion that the Appellant is allowed to use is delineated with red lines, which includes portions of Subject Property “B”.
Findings - Storage facility and some parking spots for H-Mart
38The parties agree that the storage facility is used by H-Mart. H-Mart also has some reserved parking spots on Subject Property “A”, and also includes portions of Subject Property “B”. H-Mart is a commercial entity; therefore, the Board finds that this portion of the Subject Property “A” which consists of the storage facility and the parking spots reserved for H-Mart are correctly classified in the commercial property class.
Subject Property “A” – detached bungalow
39In determining whether the remaining portions of Subject Property “A” were used for residential purposes, the parties presented their evidence and made submissions to the Board based on the factors summarized in the decision of Chandhoke v. Municipal Property Assessment Corporation, Region 09, 2021 CanLII 19608 (ON ARB) at para. 20 (“Chandhoke”).
40In Chandhoke, the Board referred to the decision in British Columbia (Assessor of Area No 10 - Burnaby/New Westminster) v. Intracorp Developments Ltd., [2000] B.C.J No. 368, (“Intracorp”) to assist it in determining whether the property was used for residential purposes. In Intracorp, the British Columbia Court of Appeal, considered some factors which it used to determine this question: “at what stage during the construction of a residential project can it be said that the land is used for residential purposes…”. The Court referred to these factors as the “degree of commitment” factors. These factors include:
A. the various legal instruments attached to or applicable to the land;
B. relevant features of actual construction; and,
C. substantial indication that the owner is using the land for another purpose.
41The Board will also adopt these factors to determine whether the remaining portions of Subject Property “A” were used for residential purposes.
Factor A: Legal instruments attached to or applicable to the land
42Mr. Kolovos, MPAC’s witness, testified that the zoning of Subject Property “A” permits several uses including residential and institutional (place of worship).
43Rabbi Zaltzman argued that even if the zoning permitted a place of worship, it cannot be used as a place of worship as it would require additional structural changes to comply with the building code criteria. He testified that to carry out renovations on the Subject Property, a building permit was filed with the City of Toronto and a city staff made him understand that several additional improvements would have to be included to use it as a place of worship to comply with the building code criteria to reflect this use. Consequently, the Appellant argued that technically and legally Subject Property “A” cannot be used as a place of worship or as a Hebrew school, as communicated on its website.
44Apart from Rabbi Zaltzman’s viva voce evidence, he did not present any documentary evidence or expert opinion regarding Subject Property “A”’s non-compliance with the building code. Therefore, the Board will accord little weight to his testimony. Besides, in Ontario Property Assessment Corp. v. Praxair Canada Inc., [2002] OJ No 121 at para. 20, the Divisional Court held that “Classification must be determined with due regard to the function of the portion under consideration. It cannot be based solely on the zoning of the portion except where prescribed specifically.” [emphasis added].
45The Appellant presented into evidence the Agreement to Sub-Lease dated August 24, 2021. Paragraph 2 of this Agreement provides:
USE: The premises shall be used only for Religious, community and social activities and programs for the local jewish russian community (sic)
46MPAC argued that this Agreement, the zoning, the Appellant’s pleadings, its website, and the use of the Subject Property, all indicate that Subject Property “A” is correctly classified in the commercial property class.
47Rabbi Zaltzman admitted during cross-examination that a residential use was not permitted in the Agreement to Sub-Lease; however, he testified that H-Mart, wanted to lease Subject Property “B” (a surface parking lot used in conjunction with another property) together with Subject Property “A”, and insisted on it being a commercial agreement for the Appellant to be responsible for paying the taxes. Rabbi Zaltzman further testified that H-Mart is aware of the appeal and does not oppose it. He submitted that a technical lease agreement does not have any bearing on the actual use of the Subject Property.
Findings - Factor A
48The Board finds that although the Agreement to Sub-Lease provides a good indication of the permitted uses on the Subject Property, the actual use may differ. Therefore, the permitted uses, which are applicable to the land are not expected to be used as the sole criteria for determining the classification of Subject Property “A”.
Factor B: Relevant features of actual construction
49Mr. Kolovos testified that his observations during the inspection of Subject Property “A” on September 15, 2022, confirmed that it is used as a place of worship.
50Rabbi Zaltzman testified that prior to the Appellant’s occupancy, Subject Property “A” was used as an office, and the Appellant had to carry out extensive renovations to change the layout into a residential space. He presented into evidence two invoices which showed the extent of the renovations.
51In determining the correct classification of Subject Property “A”, the Board will consider the physical features of each level. In Amelia Properties Inc. v. Municipal Property Assessment Corp., Region No. 18, [2003] O.J. No. 4605, the Divisional Court denied the Applicant leave to appeal the Board’s decision that Amelia’s facility had self-contained units. The Board determined that the governing consideration was the use of the property and in assessing use, the physical properties of the building should be considered. The Divisional Court held at para. 3, that “The Board correctly determined that the governing consideration is the use to which the property is being put. In assessing use, the physical aspects of the property must be considered…”.
Basement Floor
52Rabbi Zaltzman testified that there are four rooms in the basement, three bedrooms and one family room. There are also two washrooms. The Appellant added a shower to one of the washrooms. There is a furnace room but no kitchen. Prior to the Appellant’s tenancy, two rooms were accessible to each other, the Appellant made it inaccessible. The three bedrooms have beds, clothing and they are typical bedrooms; only one bedroom does not have a closet. The family room has children’s toys, a couch and carpet. The Board notes that the Appellant’s description of the physical layout of the basement level is confirmed by Mr. Kolovos’ testimony of his observation during the inspection of the Subject Property except that Mr. Kolovos could not recall during cross-examination if gender specific signs were on both washrooms. Rabbi Zaltzman testified that there was only one sign on one washroom.
Main Floor
53Rabbi Zaltzman testified that prior to the Appellant’s tenancy, there were seven offices on the main floor without a kitchen. The Appellant demolished these offices and created an open space on the main floor, without any dividing walls. He added that the prior tenants made an opening from the main floor into the garage and since the Appellant discovered that there was plumbing in the garage, the Appellant decided to install a kitchen with a few counter tops in the attached garage.
54He also testified that from the main floor there are steps that go down to the basement level and there are no washrooms on the main floor. During cross-examination, Rabbi Zaltzman corrected MPAC by stating that the open space was not to make the main floor accessible for religious services, but to make it livable and host guests.
55MPAC submitted that the spaces in Subject Property “A” are not delineated, unobstructed, have no self-contained units and each of the spaces are used in conjunction with each other, therefore there is only one use, which is as a place of worship.
56The wording of s. 3(1) of the Regulation indicates that there need not be one self-contained unit in the property for it to be classified as residential. The key factor being that it must be devoted to residential purposes. See Municipal Property Assessment Corp v. R.M.L. Parking Ltd., [2006] O.J. No. 2049 at para. 21 and 25 (“R.M.L. Parking”).
57The basement floor has all the necessary features required for residential purpose excluding a kitchen, which is in the attached garage. The fact that the basement does not have a separate entrance or kitchen does not exclude it from being used for a residential purpose. In S/A/L Falsetto and Falsetto Salvatore v Municipal Property Assessment Corporation, Region 03, 2015 CanLII 26384 (ON ARB) at para. 20, the property on appeal had three floors, the kitchen was not located on the same floor as the bedrooms, the Board still determined it was used for a residential purpose. The Board focused on the use of the property at the relevant time.
Findings - Factor B
58The Board finds that the basement floor layout was set up for residential use and not the main floor, which is an open space.
Factor C: Substantial indication that the owner is using the land for another purpose
59MPAC submitted that Subject Property “A” should be classified commercial since it is being used as a place of worship. The Appellant argued that it is a clergy’s residence and further defined it as religious people living in a facility leased by a religious organization.
Basement Floor
60Rabbi Zaltzman testified that he and his family were living in the Subject Property from mid-December 2021 to mid-July 2022 and due to his expanding family, he moved to a nearby basement not far from the Subject Property. He added that during the day, he and his family spend time at the Subject Property, and they cook and eat there. He submits that MPAC cannot define how a proper living space should look like as determined in Bradley v. Municipal Property Assessment Corporation, Region 03, 2022 CanLII 5443 (ON ARB) (“Bradley”).
61In Bradley, the appellant purchased a church building, with the intention of residing in it. He resided in it for approximately seven months until he discovered it was contaminated with mold. He moved out and used it for storage of his personal belongings. At the time of the hearing, he had not yet moved back into the property. MPAC argued that this property was used as storage and did not fit into any property class, therefore it should be classified in the commercial property class. MPAC’s witness testified that “in his opinion, the kitchen and washroom looked like those of a typical church, not residence” (para. 20). In determining that the basement floor, which had a kitchen, washroom, bedroom, cloakroom, and storage room was in the residential property class, the Board stated at para. 28 that “the appearance of a residential space is subjective and not restricted to the opinion of another person”.
62The Appellant presented into evidence, letters from different families that have lived in the Subject Property from 2022 to 2023. Rabbi Zaltzman testified that there was another family that lived there from mid-October 2022 – January 2023, but he was unable to obtain letters from them. He further testified that there were times he and his family moved back to the Subject Property since it was more convenient and that presently there are two students residing at the Subject Property.
63MPAC argued that there was no tenancy agreement between the Appellant and these families and that these families were more like volunteers, not tenants, and some of the telephone numbers provided in their letters reveal that they are outside Canada. MPAC submitted that the living arrangement is intermittent and not regular as determined in Bank of China (Canada) v. Municipal Property Assessment Corp., Region No. 9, [2002] O.A.R.B.D. No. 180 (“Bank of China”). The Board in Bank of China found that the Bank was providing rooms as part of its services to its client at no cost, and that this further supports the argument that the use of the third and fourth floor is one of its usual although intermittent business practices.
64In Bank of China, the property had a basement and four floors. The banking areas were on the main floor and basement. The fourth floor had 8 bedrooms, with each having its own bathroom and shared kitchen facilities. The bedrooms were used a few times in a month by visiting delegates from the Bank of China and VIP clients of the bank. No fee was charged for the use of these bedrooms and the bedrooms were not available for rent to the public. The complainant requested that the fourth floor should be in the residential property class and some portions of the third floor used by the occupants of the fourth floor. MPAC’s counsel submitted that the third and fourth floors do not qualify as residential since no real person lives on the fourth floor, that there is a real person requirement under s. 3 of the Regulation. The Board determined that the third and fourth floors were in the commercial property class, since the bedrooms were used on few occasions in a month, and only made available to visiting delegates and VIP clients.
Main Floor
65Rabbi Zaltzman testified that as a Rabbi, in accordance with Jewish tradition, he usually has many guests for Shabbat1 dinner on Fridays, and prayers and light lunch on Saturdays, and this open space is used to accommodate the guests on these days and Jewish holidays. He added that he could have 10 - 20 guests in the space.
66MPAC submits that the Appellant’s pleadings, website, and the observations made during its inspection of Subject Property “A”, confirm that the Subject Property is used as a place of worship.
67In R.M.L. Parking, at para. 32, the Divisional Court referred to the dictionary definition of the word “use” to include:
... "employ (something) for a particular purpose", and "employ or avail oneself of (something) regularly" (Canadian Oxford Dictionary, 2d ed.)
68Rabbi Zaltzman testified that he lived in the Subject Property from mid-December 2021 to mid-July 2022, after which there were other people residing in the Subject Property from July 2022 – April 2023. This period covered the classification day for the taxation years except from June 30, 2021, when the Appellant had not leased the Subject Property, to October 1, 2021, when the Appellant’s tenancy commenced. As seen in the invoices provided by the Appellant, it commenced extensive renovation of the Subject Property during the months of October and November 2021 to make it livable, as testified by Rabbi Zaltzman. Consequently, there were people living in the basement level.
69MPAC argued that the people residing in the Subject Property lived in it intermittently, did not pay rent, and were volunteers for the Appellant. Rabbi Zaltzman further testified that the people that resided in the Subject Property did not have the intention of residing in it for short intervals. For example, he testified that a couple that stayed in the basement had to leave due to immigration issues. The Board finds his testimony credible since he also resided in Subject Property “A” and had to move due to his expanding family.
70In Bradley, the appellant only resided in the property for seven months and during the hearing of the appeals, he had not moved back into the property, the Board determined that the appellant used the basement floor as his residence. The Board did not refer to the continuity of his occupancy in the property in determining that the basement level should be classified in the residential property class.
71The Board finds that the facts in Bank of China are distinguishable from this appeal. The occupants in Bank of China, did not have the intention to reside in the property, the bedrooms were used on few occasions per month and only made available for VIP clients and visiting delegates from the Bank of China in Beijing. The Board determined that this was more like an extension of its services to its clients.
72The Appellant in this appeal is a not-for-profit organization and did not receive rental income. The tenants in the Subject Property did not have the intention to reside in it intermittently. Rabbi Zaltzman and his family lived in the Subject Property for half of the year and moved due to his expanding family. He further testified that they lived in the basement, and prepared meals in the kitchen upstairs in the garage. The other tenants that lived in the Subject Property also had to leave for one reason or the other, such as immigration issues as testified by Rabbi Zaltzman.
Findings - Factor C
73The Board finds that there is no substantial evidence that shows that the basement level was extensively used for any other purpose other than residential and should be classified in the residential property class.
74However, with respect to the main floor, the Board finds that it was substantially used as a place of worship. The Board reached its conclusion based on the following facts:
a. a group of 10 – 20 people regularly meeting every Saturday on Shabbat for prayers and lunch;
b. meals were sometimes prepared for this group in the kitchen, located in the attached garage;
c. the photograph of the entrance of the Subject Property presented into evidence by MPAC, which shows a big signage on the front entrance with inscriptions in Hebrew stating Rabbi Zaltzman’s name and contact information, which he testified was used for the Jewish Russian community to contact him; and,
d. the Appellant’s pleadings and website that indicate that it is a place of worship. Rabbi Zaltzman’s testimony stating the pleadings were filed due to his lack of legal expertise on the definition of a place of worship, does not seem plausible. He also testified that the website has not been updated for two years. However, during cross-examination he admitted that the website states that the fund raising for 2022 is $250,000, which is an obvious update.
75The Board determines that these facts indicate that the main floor was substantially used as a place of worship, and it is therefore correctly classified in the commercial property class.
Findings - Subject Property “A”
76The Board finds that the basement is incorrectly classified in the commercial property class and should be classified in the residential property class. The Board further determines that the main floor and the remainder of Subject Property “A” are correctly classified in the commercial property class.
77The parties did not make submissions on the apportionment for Subject Property “A”.
Classification of Subject Property “B” – Surface Parking Used in Conjunction with Another Property
78As determined in R.M.L. Parking at para. 25, a property does not need to have a dwelling for it to be classified in the residential property class. The only requirement is that the purpose to which it is used must be residential.
79Mr. Kolovos testified that Subject Property “B” is divided into two sections using physical concrete barriers, which divided the Subject Property into a west and east side. The west side has signs that indicate the spots are for the exclusive use of H-Mart and the east side has signs that directly identify that the parking spots are for the “JRCC and visitors”. He concluded that this reveals that the Subject Property is shared by the Appellant and H-Mart.
80Rabbi Zaltzman testified that the parking is not used by the guests, since Jewish people do not drive on Shabbat, only the visitors of the people residing in Subject Property “A” use the parking lot. Mr. Kolovos testified that the parking lot signage looks professional, and that it is obvious that it is reserved only for the Appellant and its visitors. Rabbi Zaltzman further testified that since there is a Metro grocery store located close to it, the Appellant used the parking signs to prevent customers from parking on the Subject Property.
81MPAC presented into evidence a photograph which showed a truck, specifically a recreational vehicle (RV) with the words “JRCC on wheels” written on it, which was parked on the Subject Property at the time of MPAC’s inspection. Rabbi Zaltzman testified that this is his personal vehicle, which he also uses for Hebrew school. He added that JRCC on wheels goes to Jewish neighbourhoods offering Hebrew classes. MPAC submitted that since it is used for both personal and business, and it is parked on the Subject Property, then the Subject Property’s use is not residential. Rabbi Zaltzman disagreed with MPAC, submitting that if a work vehicle is parked on a residential driveway, it does not make the driveway commercial.
82MPAC’s evidence reveals that for H-Mart to access the storage facility located on Subject Property “A”, it must use Subject Property “B”, which is also leased to the Appellant. Furthermore, H-Mart also has designated parking spots on Subject Property “B”, which the Agreement to Sub-Lease indicates that the Appellant is not allowed to park in those spots, however it is still on the Subject Property. Therefore, the Board finds that both H-Mart, a commercial entity and the Appellant share the use of Subject Property “B”.
83In R.M.L. Parking, the Divisional Court distinguished the decision in Two Sac Self-Storage v. Ontario Property Assessment Corp., Region No. 21, [2000] O.A.R.B.D. No. 406, (“Two Sac Self-Storage”) from the facts in R.M.L. Parking. In Two Sac Self-Storage, leave to appeal the Board’s decision was denied by the Divisional Court. The issue before the Board in Two Sac Self-Storage was whether a portion of the property used as storage units should be classified in the commercial or residential property class. The Board determined that it should be in the commercial property class.
84The Divisional Court stated that in Two Sac Self-Storage, there was evidence that some of the storage units were rented by individuals “in conjunction with a business operated by the lessee”, and the rental agreement explicitly stated that “the space shall not be used for residential purposes.” Although there was evidence that showed that majority of the storage units were rented by individuals for storage of items not related to the business, the Board determined that its classification is in the commercial class. The Divisional Court held that the facts in Two Sac Self-Storage differ from R.M.L. Parking, that in the latter, “… the property was being used exclusively for residential parking spots.” (para 36).
Findings - Subject Property “B”
85In this appeal, the Appellant and H-Mart, a commercial entity, share the use of Subject Property “B”. Furthermore, the Board has determined that Subject Property “A” is not exclusively used for residential purposes, therefore the Board finds that Subject Property “B” is correctly classified in the commercial property class.
CONCLUSION
86The Appellant has met its burden of proof to demonstrate that the basement floor of Subject Property “A” is incorrectly classified in the commercial property class and should be changed to the residential property class.
87The Appellant has not been able to prove that the main floor and the remainder of Subject Property “A” and Subject Property “B” are incorrectly classified in the commercial property class.
ORDER
88The Board orders the following for Subject Property “A”:
a. on consent, the current value of Subject Property “A” is changed from $2,213,000 to $2,102,000 for the 2022 and 2023 taxation years;
b. the basement level classification shall be changed from commercial property class to the residential property class;
c. the main floor and the remainder of the property shall remain in the commercial property class;
d. within 30 days of the release of this Interim Decision the parties shall provide the Board with classification apportionment of Subject Property “A”, as determined in this Interim Decision; and,
e. in the event that the parties are not able to agree on apportionment of the current value, they shall jointly give notice to the Board within 45 days of the issue date of this Interim Decision, via an Expedited Board Direction Form emailed to arb.registrar@ontario.ca requesting that the Board reconvene the hearing for the purpose of determining the apportionment of the agreed current value of Subject Property “A”, within the property classes as determined by this Interim Decision.
89The Board orders the following for Subject Property “B”:
a. on consent, the current value of Subject Property “B” is changed from $2,806,000 to $2,173,000 for the 2022 taxation year and confirmed at $2,173,000 for the 2023 taxation year; and,
b. Subject Property “B”’s classification shall remain in the commercial property class.
"Subuola Awoleri"
SUBUOLA AWOLERI
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb