Tribunals Ontario / Tribunaux décisionnels Ontario

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: July 10, 2024 FILE NO.: WR 186500

Assessed Person(s): 1693876 Ontario Inc. Appellant(s): 1693876 Ontario Inc; Greg Capello Respondent(s): Municipal Property Assessment Corporation Region 03 Respondent(s): City of Ottawa

Property Location(s): 283 and 285 Kirchoffer Avenue Municipality(ies): City of Ottawa Roll Number(s): 0614-084-302-15100-0000 and 0614-084-302-15103-0000 Appeal Number(s): 3518659 and 3527260 Taxation Year(s): 2022 Hearing Event No.: 784123

Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Representative
1693876 Ontario Inc. and Greg Capello	Greg Capello
Municipal Property Assessment Corporation	Stuart Battrick
City of Ottawa	No one appeared

HEARD: June 17, 2024 by video conference ADJUDICATOR(S): Subuola Awoleri, Member

DECISION

OVERVIEW

11693876 Ontario Inc. and Greg Capello, (the “Appellants”), owners of 283 and 285 Kirchoffer Avenue (the “Subject Properties”), appealed the 2022 assessments 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 assessment is too high.

2The Appellants argued that the current value of the Subject Properties should be $891,446.

3The Subject Properties were assessed by the Municipal Property Assessment Corporation (“MPAC”) at $1,121,000 each for the 2022 taxation year. MPAC submitted that although it is not seeking an increase in the current value of the Subject Properties, based on market sales the current value of the Subject Properties should be $1,319,000 without a further reduction to make the current value equitable with the assessments of similar properties in the vicinity. Therefore, MPAC requests the Board confirm the assessed value as returned at $1,121,000.

4At the completion of the hearing, the Board reserved its decision.

Issues for the Hearing

5The issues to be determined are:

1. What is the correct current value of the Subject Properties for the 2022 taxation year?

2. Whether there should be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be?

Result

6The Board determines the correct current value of the Subject Properties for the 2022 taxation year is $1,121,000 each.

7The Board also finds that there is no evidence to support a reduction in the current value for the purposes of equitable assessment when reference is made to the assessments of similar properties in the vicinity.

8The Board confirms the Subject Properties’ assessments for the 2022 taxation year at $1,121,000 each.

PRELIMINARY MATTERS

9MPAC objected to the admissibility of part of the Appellants’ evidence, which was filed and served on the day of the hearing. MPAC submitted that it was not provided in the Appellants’ original evidence and besides, the date for exchange of disclosure had passed.

10The Appellants argued that the document is a condensed synopsis of the original email exchange filed by the Appellants in accordance with the timeline in the Schedule of Events and there was nothing new in the document. The Appellants submitted that a condensed synopsis was provided for ease of reference for the Board. MPAC admitted it had discussed some of the properties referenced in the new document with the Appellants and they were part of the Appellants’ summaries in its original evidence filed with the Board.

11The Board admitted the document into evidence. The purpose of the Board’s Rule regarding disclosure of documents prior to the hearing is to ensure procedural fairness to all parties, which eliminates the element of surprise at the hearing. MPAC admitted that the properties in the new document were discussed with the Appellants prior to the hearing, therefore MPAC had ample time to investigate these properties. Therefore, the element of surprise has been eliminated and there is no prejudice to MPAC if the document is admitted into evidence.

ANALYSIS

Description of the Subject Properties

12The Subject Properties are identical, owned by the Appellants. These properties are three-storey residential dwellings built in 2019 located in the City of Ottawa. They have lots with 25.02 feet (“ft.”) of effective frontage and 100 ft. of effective depth for effective site areas of 2,501.53 square feet (“sq. ft.”) (0.057 acres). The total building area (“TBA”) of the Subject Properties remains at issue, which includes the finished basement. The Subject Properties have a quality of construction of 7.5.

Issue 1 - What is the correct current value of the Subject Properties for the 2022 taxation year?

13In accordance with s. 44(3)(a) of the Act, the first mandate of the Board is to 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.” That is, for the 2022 taxation year, the Board must determine what the Subject Properties would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by the Act.

14The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the Subject Properties on the valuation day or close to it. If no such transaction took place, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation day of January 1, 2016.

MPAC’s Proposed Comparable Properties

15MPAC presented the Board with seven proposed comparable property sales. These seven proposed comparable property sales were built between 2007 and 2016. Their effective site areas range from 1,742.4 to 2,613.6 sq. ft. (0.04 – 0.06 acres) with TBAs from 1,112 to 2,278 sq. ft. The quality of construction of these properties is 7.5. These properties transacted within the shoulder years of the valuation day of January 1, 2016, which are 2015 and 2016. The details of MPAC’s proposed comparable property sales are in Table 1 below:

Table 1

Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time Adjusted Sale ($)	Building/ Size (sq. ft.)	Lot Size (Acres)	Year Built	Quality of Construction
Subject Properties: 283 & 285 Kirchoffer Ave.	1,121,000	N/A	N/A	3,309	0.057	2019	7.5
Sale 1: 245 Atlantis Ave	916,000	June 2016 (935,000)	915,891	2,278	0.06	2016	7.5
Sale 2: 237 Royal Ave.	869,000	December 2015 (889,000)	891,119	2,149	0.06	2014	7.5
Sale 3: 345 Berkley Ave	786,000	June 2016 (885,000)	866,450	1,894	0.06	2007	7.5
Sale 4: 360 Berkley Ave	784,000	June 2016 (885,840)	867,272	1,720	0.05	2016	7.5
Sale 5: 366 Roosevelt Ave	793,000	December 2016 (870,100)	840,123	1,964	0.06	2007	7.5
Sale 6: 365 Winston Ave	575,000	August 2015 (552,212)	561,562	1,112	0.04	2015	7.5
Sale 7: 355 Dominion Ave	842,000	June 2016 (908,000)	888,968	2,104	0.04	2014	7.5

16MPAC submitted that Property Sales 1, 2, 3, 4, and 7 are similar to the Subject Properties while Property Sales 5 and 6 are inferior to the Subject Properties. MPAC further submitted that the average rate per square foot (“psf.”) of the seven properties is $447.67. MPAC multiplied this rate by the TBA of the Subject Properties, which it submitted to be 3,309 sq. ft. each, providing a value of $1,481,340.03. MPAC submitted that this value is within the range of $1,319,159 - $1,656,910, which is the range of values it presented in its valuation report. MPAC further submitted that since it is not seeking an increase in the assessment of the Subject Properties, it requested that the Board confirm the assessments of the Subject Properties as returned at $1,121,000.

17The Appellants disagreed with MPAC and argued that MPAC’s measurements of the building sizes of its comparable property sales are incorrect. The Appellants submitted that due to these incorrect measurements, the Subject Properties current value as proposed by MPAC is inflated and incorrect, since MPAC is applying an average rate psf. of the seven comparable property sales to the Subject Properties’ TBAs which is not accurate based on MPAC’s incorrect measurements.

Appellants’ Proposed Comparable Properties

18The Appellants referred the Board to their choice of four comparable properties, 290 - 296 Kirchoffer Avenue which the Appellants testified are located across the street from the Subject Properties.

19The Appellants used the sale price of one of the four properties, 292 Kirchoffer Avenue, a builder sale, which sold at $1,055,000, to present the Board with the current value of the Subject Properties. The Appellants divided this sale price against its TBA of 3,350 sq. ft, which provided a rate of $314 psf., and further multiplied this rate against the TBA of the Subject Properties, which was provided by the Appellants as 2,829 sq. ft. This provides a value of $891,446. The Appellants submitted that the correct current value of the Subject Properties is $891,446.

Findings on Issue 1 - Current Value

20The Appellants did not present any evidence to prove that MPAC’s measurements of the TBAs of its comparable property sales is incorrect. The Appellants further admitted during cross-examination that they did not measure MPAC’s comparable property sales to determine the accurate measurements. However, Greg Capello, one of the Appellants, testified that he has walked around these properties and insisted that, based on his 37 years’ experience as a builder, he believes the measurements are not accurate. MPAC testified that its comparable property sales were all measured by an MPAC employee and imputed into MPAC’s internal database.

21The Board finds that without any evidence to the contrary, MPAC’s measurements of the TBAs of its comparable property sales are deemed accurate, since it was measured by an MPAC employee. Therefore, the Board will use MPAC’s measurements in determining the correct current value of the Subject Properties.

22The details of the Appellants’ four comparable properties where not provided to the Board to assist the Board in determining their comparability with the Subject Properties. Moreover, these properties are builder sales. Builder sales may not reflect the definition of current value in the Act, as the sale price may be influenced by other factors and incentives. See Lobo v Municipal Property Assessment Corporation, Region 09, 2022 CanLII 5446 (ON ARB) at para. 16.

23In Roitman v. Municipal Property Assessment Corp. Region No. 9 [2013] O.A.R.B.D. No.138 at para. 29 – 30 (“Roitman”) the Board was reluctant to use builder sales to determine the current value of the property, when there were non-builder sales available to make this determination. The Board specifically determined that:

Arguments against the use of builder's sales are plentiful: those sales are often distorted by builder's incentives such as low rate financing, upgrades, appliance packages and other inducements… This results in too many uncertainties about the total consideration paid; and the inability to accurately identify exactly how much money was paid to complete the purchase. Another concern with builder's sales is that there is often a significant time lapse between the entering into of the original agreement of purchase and sale and closing...

The Board is of the view that current value is best evaluated by reference to assessments of similar properties based on transactions that occur between parties after the initial builder's sales since these sales are more likely to be negotiated within a narrower time frame and to be at consistent and predictable values.

24Similarly, as determined in Roitman, MPAC has presented non-builder sales, therefore the Board will use only MPAC’s non-builder sales to determine the correct current value of the Subject Properties.

25At issue in determining the correct current value of the Subject Properties is the correct TBA of the Subject Properties.

26MPAC testified that it inspected the Subject Properties twice and has also reviewed the professional drawings of the Subject Properties presented into evidence by the Appellants. MPAC argued that the TBA of the Subject Properties is 3,309 sq. ft. and the Appellants argued that it is 2,829 sq. ft. MPAC submitted that the discrepancy in the two figures is because, for assessment purposes, MPAC’s measurement of building size is based on exterior measurements, while the Appellants’ measurement is interior.

27The jurisprudence of the Board has always been reiterated that the best tool to resolve these factual issues is through an inspection, which MPAC had carried out twice on the Subject Properties, yet this issue remains unresolved. See Municipal Property Assessment Corp., Region No. 16 v. Melnikova, [2017] O.A.R.B.D. No.153 at para. 4.

28During cross-examination, MPAC’s assessor and witness, Stuart Battrick, admitted that MPAC has to re-visit the Subject Properties to verify the measurements of the garage and a u-shaped cut out at the rear of the Subject Properties. This admission by MPAC indicates that its TBA measurement of 3,309 sq. ft. for the Subject Properties is questionable. The Appellants submitted that both the garage and the u-shaped structure, based on the professional drawings presented into evidence, account for 338 sq. ft., which when deducted from MPAC’s TBA of 3,309 sq ft. provides a measurement of 2,971 sq. ft., which the Appellants submitted is close to its professional measurement of 2,839 sq. ft.

29The Board finds that on the balance of probabilities it is more probable than not that the correct TBA measurements of the Subject Properties should range from 2,839 to 2,971 sq. ft.

30The Board finds that MPAC’s Property Sales 1 and 2 are relatively comparable with the Subject Properties, in terms of age, building and lot size, year built and quality of construction. The Board further determines that Property Sales 3, 4, 5, 6, and 7 are inferior to the Subject Properties.

31MPAC’s inferior Property Sales 3, 4, 5, 6, and 7 have effective site areas ranging from 0.04 to 0.06 acres, years built from 2007 to 2016 and TBAs from 1,112 to 2,104 sq. ft., Property Sales 3, 4 and 6 have finished basements, while Property Sale 5 has an un-finished basement and Property Sale 7 does not have a basement but an attached garage compared to the Subject Properties with a year built of 2019, site area of 0.057 acres, TBA range of 2,839 to 2,971 sq. ft., with a finished basement and a basement garage. The time-adjusted sale prices (“TASP”) of these inferior Property Sales range from $561,562 to $888,968. The Subject Properties’ current values should be higher than $888,968 since it is superior to these inferior properties.

32Property Sales 1 and 2 have the following averages: year built 2015, lot size 2,613.6 sq. ft., quality of construction 7.5, and TBA 2,213.5sq. ft., compared with the Subject Properties which have a TBA range of 2,839 to 2971 sq. ft., lot size of 2,501.53 sq. ft., year built 2019 and quality of construction 7.5.

33Although Property Sales 1 and 2 are similar to the Subject Properties, the evidence reveals that the current value of the Subject Properties should be higher than both comparable properties, for the following reasons: the Subject Properties are 3 years newer than Property Sale 1, and 5 years newer than Property Sale 2. The Subject Properties have four bedrooms while Property Sales 1 and 2 have three bedrooms. Furthermore, the TBA range of the Subject Properties is 2,839 to 2,971 sq. ft. which is much larger than the TBAs of Property Sale 1 and 2, which have TBAs of 2,278 and 2,149 sq. ft. respectively.

34The TASP range of Property Sales 1 and 2 is $891,119 to $915,891. The Subject Properties have more superior features than these two properties. The current value of the Subject Properties should be higher than these properties. Consequently, the Board finds that the correct current value of the Subject Properties for the 2022 taxation year is $1,121,000 each.

Issue 2 - Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)(b)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be?

35Section 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.

36MPAC used the Assessment to Sales Ratio (“ASR”), which is a tool often used to determine if a reduction in the assessment below current value is required to make that assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the TASP of a sold property.

37MPAC presented an ASR analysis of 23 semi-detached residential properties with sales that occurred from January 1, 2015 to December 31, 2016. MPAC searched for properties within 5.0 kilometers of the Subject Properties. MPAC further used the following additional physical attributes as its search criteria: within 5 years built, similar lot sizes, same structure type, within 1.5 kilometers of the Subject Properties. MPAC submitted that the median ASR of the 23 properties is 0.98. MPAC added that the International Association of Assessing Officers standards states that the level of appraisal for all properties should fall between 0.90 and 1.10. MPAC takes the position that equity is achieved if the median ASR falls between 0.95 and 1.05.

38MPAC further submitted that with a median ASR of 0.98, similar properties in the vicinity have been assessed at or near their current value, therefore an equity adjustment is not required.

39The Appellants did not present any evidence to show that there should be any adjustment to the determined current value.

Findings on Issue 2 – Equitable Adjustment

40The Ontario Divisional Court in Municipal Property Assessment Corporation. v Loblaw Properties Limited, 2017 ONSC 1299, (“Loblaw”) determined at para. 23:

The reference to "many points of comparison" is of interest because it mirrors wording used in a later judgment of this court, namely, Trizec Equities Ltd. v. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182 (Div. Ct.). In that decision, Saunders J. was faced with the same issue, that is, what constitutes similar properties. He referred to the decision in Downtown Oshawa and found that, based on that decision, the Board was required to "consider all points of comparison". Saunders J. then concluded on the issue by saying:

All points of comparison must be considered. The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.

41Therefore, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted. In this regard, the burden of proof rests with the party that alleges that it would be inequitable to assess the Subject Properties at their correct current value and, in this appeal, that is the Appellants. The Appellants must establish, on a balance of probabilities, that an equitable reduction is required. In choosing which properties are “similar properties”, the Board must consider all points of comparison.

42Applying, the Loblaw edict that "... [a]ll points of comparison must be considered“ MPAC has provided evidence of property sales of 23 residential properties within 1.5 kilometers of the Subject Properties which sold between January 2015 and December 2016. This selection provides similar properties as the Subject Properties, in terms of the location, nature, lot size and use of these properties.

43The Appellants did not present any evidence to show that there should be any adjustment to the determined current value. However, the Appellants argued that the 2016 assessments of the properties MPAC used in its equity analysis range from $575,000 to $1,019,000, with an average of $797,000 on similar lot size with the Subject Properties, shows inequity.

44The Appellants’ method of using the average assessments of MPAC’s 23 properties, as an equitable value, does not cure inequity. See Smith v. Municipal Property Assessment Corp., Region No. 23 [2018] O.A.R.B.D. No. 57 at para. 60. The seven properties MPAC used to present the Board with the current value of the Subject Properties are all included in its equity analysis. The median ASR of these seven properties is 0.95. This reveals than when compared with the sale prices, MPAC is assessing these properties at or near their sales price.

45MPAC’s equity study reveals that similar lands within 1.5 kilometers of the Subject Properties are assessed at or very close to their sale value (current value). In Re Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et at., 1968 CanLII 183 (ON CA) ("Empire Realty") the Ontario Court of Appeal provides the main objective of municipal taxation as:

... the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the application of a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

46The Court further addressed equity in assessment by stating that:

... an assessment made at the actual value of lands and buildings in compliance with the provisions of s. 35(1) would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred ... (Emphasis added.)

47MPAC’s median ASR of 0.98, is not substantially below 1.00. Consequently, the evidence does not lead the Board to make an adjustment for equity to the determined correct current value of $1,121,000.

48For these reasons, the Board finds that MPAC’s equity analysis is reliable and reveals that MPAC is assessing similar properties within the vicinity at or near their sale price.

CONCLUSION

49The Board finds the correct current value of the Subject Properties for the 2022 taxation year is $1,121,000 each with no adjustment for equity.

ORDER

50The Board orders that the assessment of the Subject Properties is confirmed at $1,121,000 each for the 2022 taxation year.