Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: July 26, 2024
Assessed Person(s): 1826997 Ontario Inc.
Appellant(s): 1826997 Ontario Inc.
Respondent(s): Municipal Property Assessment Corporation Region 14
Respondent(s): City of Markham
Property Location(s): 3985-3993 Highway 7 East
Municipality(ies): City of Markham
Roll Number(s): 1936-020-140-00348-0000
Appeal Number(s): 3519258
Taxation Year(s): 2022
Hearing Event No.: 784280
Legislative Authority: Section 357(7) of the Municipal Act, 2001, S.O. 2001, c. 25
APPEARANCES:
Parties
Representative
1826997 Ontario Inc.
Peter Tam
City of Markham
Matthew Vetere
HEARD: July 02, 2024 by video conference
ADJUDICATOR(S): Subuola Awoleri, Member
DECISION
OVERVIEW
11826997 Ontario Inc. (the “Appellant”) is the owner of 3985-3993 Highway 7 East (the “Subject Property”). The Subject Property is a small box shopping centre with offices on the upper floor.
2The Appellant filed an application with the City of Markham (the “City”) for tax relief under s. 357(1)(g) of the Municipal Act, 2001, S.O. 2001, c. 25, (the “Act”) for the 2022 taxation year, citing that the repairs and renovations of an office rentable area of 6,330 square feet (“sq. ft.”) located on the second floor of the Subject Property prevented its normal use for a period of at least three months during the year.
3The City denied the Appellant’s application for tax relief. Subsequently, the Appellant appealed the City’s decision under s. 357(7) of the Act to the Assessment Review Board (the “Board”).
Issues for the Hearing
4The issues to be determined are:
- For the 2022 taxation year:
(a) Is the Subject Property eligible for tax relief under s. 357(1)(g) of the Act?
(b) If yes, what is the quantum of relief?
Result
5For the 2022 taxation year:
(a) The Subject Property is eligible for tax relief under s. 357(1)(g) of the Act.
(b) Taxes are to be refunded in the amount of $8,227.16.
ANALYSIS
Issue 1(a) - Is the Subject Property eligible for tax relief under [s. 357(1)](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html#sec357subsec1_smooth)(g) of the [Act](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)?
6Section 357(1)(g) of the Act provides:
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,
(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.
7Under s. 357(10) of the Act, the Board may make any decision the council could have made. The Board has to determine if there were any repairs or renovations on the Subject Property in 2022 for at least three months, which prevented its use as an office, in order to determine its eligibility for tax relief under s. 357(1)(g) of the Act.
The Evidence
8The City acknowledged it received the Appellant’s application for tax relief on February 23, 2023 for the 2022 taxation year, for the effective period of September 1, 2022 to December 31, 2022.
9Matthew Vetere, representing the City of Markham, testified that there was no record of any demolition permit issued by the City but rather, only an alteration permit for interior renovation, which was issued on November 4, 2022. He submitted that the issue date on the alteration permit was less than three months, therefore, the requirement under s. 357(1)(g) of the Act was not met and the City’s decision denying the application should be affirmed.
10Peter Tam, representing the Appellant submitted that a pre-application was made by the Appellant to the City, which included a request for a permit for interior renovation of the office space, mechanical alteration and plumbing which was acknowledged by the City on August 31, 2022.
11The Appellant presented a letter dated September 9, 2022, from the City acknowledging the receipt of the Applicant’s permit application, which the City stated was received on September 9, 2022. The Appellant also presented evidence of the acknowledgement by the City of the Appellant’s pre-application fee, paid on August 31, 2022. In the September 9, 2022 letter, the City further directed the Appellant to pay the requisite fees associated with the issuance of the permit, which the Appellant paid on the same day, the receipt of which was presented into evidence by the Appellant.
12The Appellant directed the Board to photographs of the Subject Property taken August 19, 24 and 30, 2022, which showed that it was in disrepair and unusable as an office. The City also acknowledged receipt of these photographs.
13The Appellant further presented an executed addendum between the Appellant and the tenant occupying the Subject Property, to corroborate its testimony of the repairs and renovations in the Subject Property during the effective period. In the addendum, the tenant agreed to surrender its lease so that the rentable space could be reduced, demolished, and renovated. The surrender date was September 1, 2022, and was to be completed on or before March 1, 2023.
Findings - Issue 1(a) - Is the Subject Property eligible for tax relief under [s. 357(1)](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html#sec357subsec1_smooth)(g) of the [Act](https://www.canlii.org/en/on/laws/stat/so-2001-c-25/latest/so-2001-c-25.html)?
14The Courts have determined that s. 357 of the Act is a remedial section which provides “essential justice to taxpayers” who come within any of the enumerated exceptions. See Wilkes v. Interlake Tissue Mills Co. Ltd., 1968 CanLII 40 (ON CA).
15Although these sections of the Act are remedial sections, the Board still must ensure that the Appellants are qualified for tax relief under these sections. The Board carries out this legislative mandate, in order that essential justice is done not only for the Appellants, but also for other taxpayers.
16Based on the evidence presented, the Board finds that the Subject Property is eligible for tax relief under s. 357(1)(g) of the Act.
17The City submitted that there was no record of a demolition permit issued by the City. There could not have been a demolition permit issued as was correctly submitted by the Appellant, the Application for relief was made under s. 357(1)(g) of the Act for repairs and renovation and not 357(1)(d)(ii) for damages due to demolition.
18Michael Marciniak, witness for the Appellant, testified that the major work carried out on the Subject Property in 2022 was for repairs and renovations which prevented the use of the Subject Property as an office for a period of at least three months in 2022. In the Appellant’s tax relief application to the City, the Appellant explicitly stated that the reason for the application was: “Renovation work of the Second Floor- 6,330 SF”. Therefore, the City could not have issued a demolition permit, where an application was not made for it.
19The Board notes that the building permit number, 22 257782 000 00 AL quoted on the building permit issued by the City on November 4, 2022, is the same permit number quoted in the City’s letter dated September 9, 2022, which acknowledged receipt of the Appellant’s permit application. The City further acknowledged it received the photographs filed by the Appellants and it did not dispute the dates they were taken. However, the City only considered the permit issue date (November 4, 2022) regardless of the fact that the Appellant had made an application for the renovation permit before that date and the evidence shows that repairs and renovations were ongoing prior to that date from sometime in August. This shows that the City was aware of the repairs and renovations which preceded the permit issue date of November 4, 2022.
20The date the permit was issued does not negate the factual evidence that repairs and renovations commenced prior to the issue date of November 4, 2022. Although the repairs and renovations commenced in August the Appellant conservatively requested for relief for a later period from September 1, 2022 – December 31, 2022.
21The Abstract of the addendum between the Appellant and the tenant of the Subject Property further corroborates the fact that repairs and renovations were carried out during the effective period.
22The City denied the tax relief application based only on the permit issue date. The repairs and renovations commenced in the same taxation year in which the application for relief was claimed, which prevented the normal use of the Subject Property as an office for three months.
23The Board finds that the requirements of the s. 357(1)(g) of the Act are met by the Appellant and the Subject Property is eligible for tax relief.
Issue 1(b) – What is the quantum of relief?
24The Act does not stipulate the method to calculate the quantum of relief. This determination is made on a case-by-case basis. See Michalakos v. Mississauga (City), 2020 CanLII 28973 (ON ARB) at para. 18
25The City did not present any method in calculating any tax refund as it submitted that the decision of the council denying tax relief should be upheld.
26Mr. Marciniak testified that the Subject Property was assessed by MPAC using the Income Approach.
27In the Income Approach, the property is purchased for its income generating capacity. The expected income is calculated, and an appropriate capitalization rate is also utilized to reflect the investor’s rate of return on the investment. The valuation parameters used, such as fair market rent, vacancy allowance, expense allowance and capitalization rates, are market derived components, which analysis will determine the current value of the Subject Property.
28Mr. Marciniak testified that the Subject Property had a fair market rent of $18.00 per square foot, vacancy and expense allowance of 5% and capitalization rate of 6%. These parameters were used in calculating the refund amount. He further testified that the assessed value of the renovated space for the 2022 taxation year is $1,713,848, using the effective period of September 1 to December 31, 2022, which is 112 days, and applying the commercial tax rate of 1.5644170%, he submitted that the tax refund owing is $8,227.16. The details of the Appellant’s tax calculation is provided in Attachment 1 of this decision.
29The City initially disputed the commercial tax rate applied by the Appellant to its calculations. The City submitted that it is 1.535417%, while the Appellant submitted it is 1.5644170%. However, the City later admitted that it would result to the same refund calculated by the Appellant.
30The City did not dispute the Appellant’s method of calculating its tax refund.
Findings - Issue 1(b) – What is the quantum of relief?
31For the 2022 taxation year, the Board grants relief under s. 357(1)(g) of the Act in the amount of $8,227.16.
CONCLUSION
32For the 2022 taxation year, there were repairs and renovations which prevented the normal use of the Subject Property as an office for a period of at least three months.
ORDER
33The Board orders that for the 2022 taxation year, the amount of tax to be refunded is $8,227.16 for the effective period of September 1, 2022 to December 31, 2022.
"Subuola Awoleri"
SUBUOLA AWOLERI
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb
10 WR 186558
Attachment 1
1826997 ONTARIO INC
3985-3993 Hwy 7 Rd, Markham
2022 Section 357 Tax Rebate Amount Determination
Roll No.
Address
Building Space
Area (SF)
Tax Class
2022 Value (2016 CVA)
Start Date
End Date
Number of Days
Tax Rate (2022 effective)
Tax Rebate
1936 020 140 00348 0000
3985-3993 Hwy 7 Rd
2nd Floor
6,330
CT/ST
$1,713,848
9/1/2022
12/21/2022
112
1.5644170%
$8,227.16
Total Building Area (Office)
29,616
Total Days
365
Rebate %
100%
Total Assessed Value 2022 Taxation (2016 CVA)
$8,018,516 (For Office as per Jan. 20, 2022, Property Profile)
Calculated Tax Rebate
$8,227.16```