Tribunals Ontario / Tribunaux décisionnels Ontario

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

ISSUE DATE: August 28, 2024 FILE NO.: WR 185646

Assessed Person(s): Marko Majic, Lori Ann Majic Appellant(s): Marko Majic, Lori Ann Majic Respondent(s): Municipal Property Assessment Corporation Region 15 Property Location(s): 1596 Otterby Road. Municipality(ies): City of Mississauga Roll Number(s): 2105-030-074-21800-0000 Appeal Number(s): 3510206, 3510207, 3516756, 3512907 and 3525583 Taxation Year(s): 2021, 2022, 2023 and 2024 Hearing Event No.: 782299

Legislative Authority: Sections 32, 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Counsel/Representative
Marko Majic Lori Majic	Self-represented
Municipal Property Assessment Corporation	Laurie DeWinter
City of Mississauga	No one appeared

HEARD: November 10, 2023 by telephone conference call

ADJUDICATOR(S): Leo Demarce, Member

DECISION

OVERVIEW

1Marko and Lori Majic (“Appellants”) are the owners of 1596 Otterby Road in the City of Mississauga (“Subject Property”). The Appellants appealed the assessment of the Subject Property for the taxation years 2021, 2022 and 2023 pursuant to s. 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). The Appellants take the position that the assessed value of $841,000 is incorrect and too high. Pursuant to s. 40(26) of the Act, the Appellants are deemed to have brought the same appeal in respect of the 2024 taxation year.

Background

2In 2020 the January 1, 2016 assessed value of the Subject Property was $643,000 (“pre-addition value”). In 2021 the Municipal Property Assessment Corporation (“MPAC”) issued a Property Assessment Change Notice (“PACN”) of $198,000 which updated the assessed value to $841,000 (“PACN adjusted value”). This updated assessed value came into effect for the 2021 and 2022 taxation years. The change was due to an addition and updates that were performed on the Subject Property.

3In 2023 the PACN adjusted value was reduced via a Post Roll Assessment Notice (“PRAN”) from $841,000 to $838,000 (“PRAN adjusted value”) as MPAC acknowledged that the number of bathrooms in the Subject Property should be 2 and not 2.5. The Pran adjusted value is reflected in the s. 32 2023 appeal number 3516756 which replaces the s. 40 2023 appeal number 3512907 of $841,000.

4The Appellants appealed the taxation years 2021, 2022 and 2023 stating that the valuation should be between $730,000 and $767,000 based on two cost approaches to value. The first being the pre-addition value of $643,000 plus the cost of the addition. The second being based on the cost to build.

Issues for the Hearing

5At issue in this proceeding is:

1. What is the correct current value of the Subject Property for the 2021 to 2024 taxation years?
2. Is an equity reduction of the current value required, and if so, how much?

Result

6The Assessment Review Board (“Board”) finds that the current value of the Subject Property is $838,000 for the 2021, 2022, 2023 and 2024 taxation years. The s. 33 assessments for the 2021 and 2022 taxation years are reduced from $198,000 to $195,000. The s. 32 2023 PRAN adjusted value is confirmed at $838,000. The s. 40 2023 assessment (replaced by the s. 32 assessment) will be administratively closed. The s. 40 2024 assessment is confirmed at $838,000.

7The Board finds that no equity reduction of the current value is required.

ANALYSIS

Description of Subject Property

8The Subject Property is a residential, single-family, two-storey, detached (not on water) residence in the City of Mississauga.

Issue 1 - What is the correct current value of the Subject Property for the 2017 to 2023 taxation years.

MPAC’s Position

9MPAC’s position on current value is outlined in its Valuation Report (“Report”) dated October 10, 2023.

10Section 19(1) of the Act states that land shall be assessed based on its current value. Current value is defined within the Act, as “in relation to land, 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”.

11MPAC asserts that in any case, the best approach in the valuation of a residential property such as the Subject Property is the sales comparison approach. MPAC contends that project cost does not dictate market value and disagrees with the use of the cost approach as the best approach in the determination of the correct valuation of the Subject Property, a single-family dwelling.

12MPAC’s representative performed an assessment of the market value of the property adjusted to January 1, 2016 (“assessed value”) which was derived at $871,000. The Report details that the Subject Property was inspected and then compared to three other properties with similar features and market conditions. The analysis then used the direct comparison approach to establish the assessed value.

Appellants’ Position

13The addition to the property was completed in 2021 and the Appellants assert that, in their opinion, the PACN was overstated. They argue that the valuation should be based on either the pre-addition value of $643,000 plus the actual cost of construction, or the cost of land plus the cost to build by square foot.

1. In the first instance, the actual construction cost was $167,000, of which a portion was towards repairs leaving between $130,000 and $140,000 towards the addition. This would place the value of the property at $730,000 after time adjustments to January 1, 2016.
2. In the second instance, the value of the land plus the cost to build per square foot would bring the value in at $767,000. The Appellants derived this value based on their own analysis.

14The Appellants state that part of their due diligence prior to building the addition was to review the impact on their property tax bill. After consulting different resources such as contractors, architects, real estate brokers, and others the Appellants anticipated an increase of approximately 10% to the value of their property.

15The Appellants identified that a significant portion of the cost of the work was due to items that would not add value to the Subject Property such as repairs and maintenance. The Appellants discount the valuation method used by MPAC stating that a comparative approach is too broad and doesn’t take specific issues into account. They also state that the base of $643,000 was already grossly inflated and unfair. They further state that the “added value” component of the renovation, as reflected by the re-assessment, is arbitrary, oppressive, and not based in the reality of the actual costs.

Findings on Issue 1

16The Act is clear that “current value” means, in relation to land, 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.

17The Board is not persuaded that the Appellants’ approach to valuation is the correct application for this situation. The onus is on the Appellants to provide proof of value that is less than the PRAN adjusted value of $838,000 which they have not provided sufficient evidence nor analysis to support.

18In this situation (determining the value of a residential dwelling where there is a ready market) the cost approach, whether it is being applied to the “addition” or to the “cost to build” does not prove value in the market; although it can be useful. What it does prove is that there “is” value, just not how much. To determine value in this situation we consider what the market will bear based on demand and supply within that market. The cost to build comes into play when that information is limited, which is not the case in this situation.

19MPAC uses the sales comparison approach in deriving the current value of the Subject Property. In doing so, MPAC uses market-based sales to determine current value. In MPAC’s Report the assessed value of the Subject Property was found to be $871,000 where the PRAN adjusted value is $838,000. MPAC recommended that the PRAN adjusted value of $838,000 remain as the assessed value. This Report value of $871,000 reflects MPAC’s determination of the value of the Subject Property. However, the current PRAN adjusted value of $838,000, which is $33,000 less than the Report value, provides some room to demonstrate any possible variations on value between the Subject Property and other properties used in the comparison analysis.

20The Board finds that the current valuation of the Subject Property is $838,000 for the 2021, 2022, 2023 and 2024 taxation years.

Issue 2 - Is an equity reduction of the current value required, and if so, how much?

21The Board finds that an equity reduction is not required. The Appellants did not provide an equity analysis. MPAC did perform an equity analysis and concluded that an equity reduction is not required. The Board accepts MPAC’s equity analysis.

CONCLUSION

22The Assessment Review Board (“Board”) finds that the current value of the Subject Property is $838,000 for the 2021, 2022, 2023 and 2024 taxation years and that an equity adjustment is not required.

ORDER

23The Board orders that:

1. The section 33 assessments for the 2021 and 2022 taxation years be reduced from $198,000 to $195,000.
2. The section 32 assessment for the 2023 taxation year be confirmed at $838,000.
3. The section 40 assessment for the 2023 taxation year be administratively closed by the Board.
4. The section 40 assessment for the 2024 taxation year be confirmed at $838,000.