Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: June 25, 2024 FILE NO.: WR 186442

Assessed Person(s): 1097416 Ontario Inc. Appellant(s): 1097416 Ontario Inc.; Michael Wong Respondent(s): Municipal Property Assessment Corporation Region 19 Respondent(s): City of Hamilton Property Location(s): 68 Trinity Church Road Municipality(ies): City of Hamilton Roll Number(s): 2518-060-761-03320-0000 Appeal Number(s): 3519535 and 3525903 Taxation Year(s): 2023 and 2024 Hearing Event No.: 783684 Legislative Authority: Sections 32 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Counsel/Representative
1097416 Ontario Inc.	Michael Wong
Municipal Property Assessment Corporation	Stephen Slowikowski
City of Hamilton	No one appeared

HEARD: May 13, 2024 by video conference

ADJUDICATOR(S): Carly Stringer, Member

DECISION

OVERVIEW

The Subject Appeals

11097416 Ontario Inc. (the “Appellant”) is appealing the assessments of 68 Trinity Church Road in the City of Hamilton (the “Subject Property”) for the 2023 and 2024 taxation years. The assessments were made pursuant to s. 32 and s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), reflecting a current value of $708,000. The Appellant argues that this value is too high, and it should be adjusted downward by 90%.

2The Municipal Property Assessment Corporation (“MPAC”) is responding to these appeals. MPAC argues that the current value reflected on the assessments should be reduced to $668,000.

3The City of Hamilton did not participate in these appeals.

Description of the Subject Property

4The Subject Property is 2.51 acres of vacant industrial land.

Issues for the Hearing

5At issue in this proceeding is:

1. What is the current value of the Subject Property as of January 1, 2016?
2. Should an equity reduction in the current value be made and, if so, how much?

Result

6For the following reasons, the Board finds that the correct current value is $66,800 and that there is insufficient evidence to support a reduction in the current value for the purposes of equitable adjustment.

ANALYSIS

Issue 1 – What is the current value of the Subject Property as of January 1, 2016?

Applicable Law

7In 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.”

8Accordingly, the Board must first determine what the Subject Property would have sold for in an arm’s length transaction on the statutory valuation day. The valuation day for the 2023 and 2024 taxation years is January 1, 2016.

Evidence and Submissions of the Parties

9MPAC’s witness testified that:

a. The Subject Property was purchased by the Appellant on April 28, 2016 for $850,000.

b. At the time of purchase, the Subject Property was 3 acres in size.

c. On March 11, 2020, the Appellant sold 0.49 acres of the Subject Property to the City of Hamilton, such that the Subject Property decreased to 2.51 acres in size.

10MPAC submits that the Subject Property’s sale price, adjusted for time and the decrease in acreage, is the best evidence of current value. MPAC’s witness testified that this adjusted sale price is $668,808, or $668,000 (rounded).

11The Appellant’s witness testified that:

a. 1097416 Ontario Inc. is a family company.

b. The Subject Property was purchased through this family company by the witness’ parents. They were not experienced in purchasing real property for development and their English is not very good.

c. The Subject Property is vacant land that is landlocked on three sides. On the fourth side is Trinity Church Road. Trinity Church Road is the only point of road access to the Subject Property.

d. Roughly one or two years ago, the Appellant was advised by the City of Hamilton that City of Hamilton By‐Law 10‐128 Section 9.3.3 (n) prohibits all new development from access to Trinity Church Road.

e. Therefore, if the Appellant wanted to develop its vacant land, there would be no way to access it since the bylaw would not allow the Appellant to build a driveway to Trinity Church Road for its new development. The Appellant’s witness testified that the Subject Property is essentially undevelopable land due to this prohibition on access to Trinity Church Road.

f. The Appellant’s witness asked the City of Hamilton for permission to build a driveway, even a temporary one, from the Subject Property onto Trinity Church Road. The City of Hamilton denied the request.

g. The City of Hamilton intends to build a highway extension on the other side of the Subject Property, but the timeline for this construction is uncertain. It has been eight years since the Appellant purchased the Subject Property, and the City has not provided a timeline relating to construction of this new road throughout that time.

h. The Appellant was unaware of the bylaw restricting access to Trinity Church Road until it was so advised by the City of Hamilton a few years ago. The curb to the Subject Property from Trinity Church Road is cut, and therefore, at the time of purchase, the Appellant believed they could put in a driveway to access Trinity Church Road. The Appellant’s witness, and his parents, were entirely unaware of the bylaw restriction when the Subject Property was purchased for $850,000.

12The Appellant submits that the Subject Property is, for all intents and purposes, undevelopable because there is no road access. The Appellant submits that there should be a 90% reduction to the current value to reflect the lack of road access. This 90% reduction was derived from evidence from MPAC’s witness, in cross-examination, that MPAC performs a 90% reduction in current value when land is unusable due to permanent barriers to development, such as waterways.

13The Appellant’s witness also provided evidence regarding other “undevelopable” properties in the City of Hamilton. The Appellant submits that the Subject Property’s value should be consistent and comparable with these properties.

Property Address	Subject Property	Osler Drive	Bertram Drive
Current Value Assessed	$708,000	$36,000	$60,000
Zoning	Prestige Business Park	Open Space Conservation	Open Space Conservation
Site Area (Acres)	2.51	2.19	2.91

14In response to the Appellant’s evidence, MPAC testified that the City of Hamilton is building a road on the other side of the Subject Property. MPAC testified that the bylaw restriction has been in place since 2011, and that it is a temporary measure that will be lifted once the new road is complete. MPAC submits that since the Subject Property was purchased with the bylaw restriction in place, and the Appellant’s witness confirmed in cross-examination that a realtor and a lawyer provided advice on the sale, it is reasonable to conclude that the Appellant would have known whether there were any restrictions to development when it bought the Subject Property for $850,000. MPAC submits that it is reasonable to conclude that the Appellant knew both about the bylaw restriction at the time of sale, and that a new road would be constructed to access the Subject Property, such that the purchase price captured these factors. For these reasons, MPAC submits, the sale price is the best indicator of value as of January 1, 2016.

15MPAC also testified that the Appellant’s proposed comparable properties differ significantly from the Subject Property, based on their zoning as Open Space Conservation compared to the Subject Property which is zoned Prestige Business Park. The Appellant’s properties are owned by McMaster University and there is no record of these properties transacting since 2006, and therefore it is difficult to know their market value.

Findings on Issue 1

16The Board has widely held that the best evidence of current value is the open market, arm’s length sale of the Subject Property on or close to the valuation day: see McWilliams Brothers Holdings Inc. v. Municipal Property Assessment Corp., Region No. 7, 2006, [2006] O.A.R.B.D. No. 566 at paragraph 10.

17However, a sale is not always automatically accepted as the best evidence of current value. As noted in City of Toronto (Revenue Services) v. Municipal Property Assessment Corporation, Region 09, 2017 CanLII 80039 (ON ARB) (“City of Toronto”) at paragraph 42:

Ordinarily a recent free sale of the subject property so close to the valuation day would be the best evidence for its current value. The circumstances behind such a sale needs to be examined to ensure that it represents the market...

18The Board finds that, in this instance, there are circumstances to suggest that the sale price of the Subject Property might not represent the actual market value as of the valuation day. In this regard, the Board accepts and relies on the Appellant’s witness’ evidence that neither he, nor his parents, knew about the bylaw restriction when they bought the Subject Property for $850,000 in April 2016. The Board finds the Appellant’s witness was credible, candid, forthright and consistent in providing his evidence. Moreover, this version of events is consistent with the fact that the curb was cut to Trinity Church Road, from which the Appellant reasonably believed the Subject Property could have road access to Trinity Church Road. Importantly, the Board finds that MPAC did not impugn the witness’ evidence in cross-examination or with other evidence. Therefore, the Board does not accept MPAC’s submission that it would be reasonable to infer that the Appellant was aware of the bylaw restriction at the time of sale.

19Ordinarily, the Board has two options when it suspects a subject sale may not reflect market value – it may reject the sale outright, or consider sales of comparable properties to test whether the sale price is reflective of market value: see Iberkona Holdings Ltd. v Municipal Property Assessment Corporation, Region 03, 2021 CanLII 22019 (ON ARB), 2021 at paragraph 30; City of Toronto, supra at paragraph 42.

20In this instance, MPAC did not provide evidence of sales of comparable properties. The only other evidence using comparable properties was provided by the Appellant. However, the Board does not accept the Appellant’s evidence because the Appellant did not provide comparable property sales - neither property presented by the Appellant sold on or close to the statutory valuation day. Instead, the Appellant has asked the Board to rely on the assessment value of Osler Drive and Bertram Drive to determine current value. The Board does not accept this approach – the Board requires market-tested sales evidence to determine current value, not assessment values.

21For these reasons, the only evidence of current value on which the Board can rely is the subject sale. Since the Board has accepted the Appellant’s evidence that it did not know of the restriction on development at the time of sale, the Board finds that the purchase price did not reflect a discount for the bylaw restriction. The Board finds that since the purchase price did not reflect a discount for the restriction, a downward adjustment is appropriate.

22MPAC testified in cross-examination that it performs a -90% adjustment when a property is “permanently unusable”. This is the only evidence on adjustment before the Board. Although MPAC argued that the -90% adjustment would not apply because the Subject Property is not “permanently unusable” as the bylaw restriction is “temporary”, there was no other evidence to support MPAC’s assertion that the bylaw restriction is temporary. The bylaw restriction has been in place since 2011 – 13 years - and was clearly in place on the valuation day. There was no evidence to support precisely when, or if, the City will construct the road on the other side of the Appellant’s property. There was no evidence from the municipality attesting that it would be amending or lifting the bylaw when the road is constructed. Accordingly, the Board finds that the Subject Property was effectively landlocked as of January 1, 2016, which rendered it “undevelopable” at the relevant time. For these reasons, the Board finds that MPAC’s evidence is the best evidence of the appropriate adjustment to reflect the lack of road access to the property that effectively precludes development. The Board finds that a 90% downward adjustment to the sale price is appropriate in the circumstances.

23Therefore, the Board finds that the correct current value of the Subject Property is $66,800, which is the Subject Sale price, time and size adjusted to $668,000, less 90% to account for the restrictions on road access.

Issue 2 - Should an equity reduction in the current value be made and, if so, how much?

Applicable Law

24Section 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.”

Evidence and Submissions of the Parties

25The Appellant did not raise equitable adjustment as an issue in its Statement of Issues. The Appellant did not differentiate in its evidence regarding current value and equitable adjustment, and therefore the Board references the Appellant’s evidence regarding proposed similar properties as outlined in paragraph 13 above.

26MPAC did not provide submissions or evidence relating to equitable adjustment.

Findings on Issue 2

27The Board finds that there is insufficient evidence to support a reduction in the current value for the purposes of equitable adjustment. The Board finds that the two properties relied on by the Appellant, Osler Drive and Bertram Drive, are insufficiently similar. They have much different zoning than the Subject Property. There is insufficient evidence for the Board to consider all points of comparison. For these reasons, the Board finds there is insufficient evidence to support a reduction in the current value for the purposes of equitable adjustment.

CONCLUSION

28The Board finds that the correct current value is $66,800.

29The Board finds there is insufficient evidence to support a reduction in the current value for the purposes of equitable adjustment.

ORDER

30The Board orders that the value reflected on the assessments is reduced to $66,800 in the Industrial property class.