Tribunals Ontario

Assessment Review Board

ISSUE DATE: September 03, 2024 FILE NO.: WR 185600

Assessed Person(s): Olivier Souza, Danielle Abbott Appellant(s): Olivier Souza, Danielle Abbott Respondent(s): Municipal Property Assessment Corporation Region 15 Respondent(s): City of Mississauga

Property Location(s): 1156 Kos Boulevard Municipality(ies): City of Mississauga Roll Number(s): 2105-020-032-24215-0000 Appeal Number(s): 3511514 and 3525519 Taxation Year(s): 2023 and 2024 Hearing Event No.: 782297

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

APPEARANCES:

Parties	Counsel/Representative
Olivier Souza Danielle Abbott	Self-represented
Municipal Property Assessment Corporation	Evan Mendel
City of Mississauga	No one appeared

HEARD: November 1, 2023 by telephone conference call

ADJUDICATOR(S): Leo Demarce, Member

DECISION

OVERVIEW

1Olivier Souza and Danielle Abbott ("Appellants") are the owners of 1156 Kos Boulevard in the City of Mississauga ("Subject Property"). The Appellants appealed the assessment for the 2023 taxation year, 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 $454,000 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.

2As such, the Appellants filed an appeal to have the current assessed value of the Subject Property lowered by $40,000, from $454,000 to $414,000.

Background

3In 2022, the Appellants purchased the Subject Property and upon possession discovered that there were structural and other deficiencies that required repair to make the property safe and to comply with building code requirements such as:

1. new electrical panel
2. plumbing
3. cracked basement floor
4. mold and mildew
5. drafty windows
6. other repairs and improvements

4Repairs were undertaken by the Appellants after acquiring the Subject Property. The Appellants then appealed to have the assessment valuation of the Subject Property reduced. They argue that the valuation should be more specific to their situation and should reflect the deficiencies in their property. The Appellants are asking to have the assessed value reduced by $40,000 which is the approximate cost to correct the deficiencies. The Appellants testified that they have performed approximately $20,000 in repairs and that to complete the repairs will cost another $20,000.

Issues for the Hearing

5At issue in this proceeding is:

1. What is the current value of the Subject Property for the 2023 and 2024 taxation years?
2. Is an equity reduction in the current value required, and if so, how much?

Result

6The Assessment Review Board ("Board") finds that the current value of the Subject Property for the 2023 and 2024 taxation years is $437,000.

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

ANALYSIS

Description of Subject Property

8The Subject Property is a two-storey Freehold Townhouse/Rowhouse that abuts a railway. It consists of 1,711 square feet of building total area, built in 1979, with a quality of construction rating, as assigned by MPAC, of 6. There is a basement and a garage with a total building area of 240 square feet. A major renovation was completed in 2017.

Issue 1 – What is the current value of the Subject Property for the 2023 and 2024 taxation years?

9Section 19(1) of the Act provides that the assessment of land shall be based on its current value. 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." For the 2023 and 2024 taxation years in question, the statutory valuation day is January 1, 2016.

10MPAC takes the position that the current value of the Subject Property for the 2023 taxation year should be adjusted down from $454,000 to $437,000 after a comprehensive valuation had been completed (no equity adjustment required). The Appellants take the position that the current value of the Subject Property is $414,000.

MPAC's Analysis

11While the Appellants stated that various deficiencies in the Subject Property impact it's value negatively, they did not provide evidence to substantiate the reduced value they are seeking in relation to each.

12MPAC's position on current value is outlined in its Valuation Report dated July 13, 2023:

1. Concerning the issues raised by the Appellants, MPAC has chosen two comparable properties that share the same features; abutting the same railway, are built in the same year by the same builder with the same building materials, which MPAC asserts makes it likely to share similarities in their depreciation, such as leaks and airflow issues.
2. Additionally, upon inspection of the Subject Property, the Appellants clarified with MPAC that various deficiencies such as the Subject Property's electrical wiring as well as the cracks in the basement flooring/foundation have already been repaired. As such, these already repaired deficiencies contribute to an increase in current value, not a decrease. For example, a buyer is likely to spend more on a property with a new electrical system, compared to an identical property with electrical deficiencies.
3. Further, the Subject Property sold in January 2015 for $383,000. Based on MPAC's time adjustment factors, the adjusted sale price (adjusted to the valuation day: January 1, 2016) is $435,088. MPAC's time adjustment analysis was not challenged by the Appellant. i. This sale value represents the Subject Property in its originally built state. ii. Following this sale, the Subject Property was updated (2017 renovation: new kitchen, bathrooms, flooring, roof). iii. Therefore, the Subject Property's current value cannot be lower than $435,088. A renovated property will always sell for a higher amount than an identical unrenovated property. iv. The assumption is that the Subject Property would sell for $435,088 plus the market value of the new roof, new kitchen, bathrooms, and flooring.

13MPAC concludes:

• The best evidence of a property's value is the sale of that property. While the Subject Property did sell in 2015, it underwent substantial interior and exterior improvements after that time. The 2015 sale of the Subject Property, therefore, cannot be used on its own to establish the property's current value. The Subject Property's 2015 sale can, however, be used as a floor value. MPAC concludes that because a renovated house will sell for more than an identical unrenovated house. The Subject Property's value after renovations would have to exceed its 2015 adjusted sale value. Additionally, without the presence of various identical properties to the Subject Property, an assessment to square foot ratio analysis cannot be utilized to establish equity in assessment.

14Appendix E – Market Analysis Grid below shows the direct comparison valuation process that was conducted on the Subject Property.

Appendix E – Market Analysis Grid

	Subject Property	Property 1	Property 2
Roll Number	2105 020 032 24215	2105 020 032 24211	2105 020 032 24228
Address	1156 KOS BLVD	1172 KOS BLVD	1110 KOS BLVD
Property Code & Desc.	(309) Freehold Townhouse/Rowhouse	(309) Freehold Townhouse/Rowhouse	(309) Freehold Townhouse/Rowhouse
Distance in km		0-0487	0-1587
Valuation
Current Value Assessment	$454,000	$449,000	$461,000
Sale
Sale Date	20150515	20151113
sale Amount	$394,000	$440,000
Time Adjusted Sale Amount Site	$427,390	$446,984
Effective Site Area (Acres)	0.06	0.06	0.07
Abuts Variable(s)	(R) Abuts Railway	(R) Abuts Railway	(R) Abuts Railway
Residential Structure
Year Built	1979	1979	1979
Effective Year Built	2003	1996	2000
Quality of Construction	6	6	6
Full Storeys	2 Storeys	2 Storeys	2 Storeys
Building Total Area (SF)	1,771	1,771	1,771
Modifications	C, (Year) 2017	B, (Year) 2013	A, (Year) 2010 B, (Year) 2014
Secondary Structure
Structure Description	(121) Basement Garage	(121) Basement Garage	(121) Basement Garage
Year Built	1979	1979	1979
Building Total Area (Sf)	240	240	240
Quality of Construction	3	3	3

15MPAC's closing statement identified the following points:

1. The $40,000 valuation reduction request from the Appellants is arbitrary and there is no evidence provided to substantiate it.
2. The Appellants criticized the mass comparison approach to appraise properties, which is why MPAC performed a more detailed analysis of the Subject Property.
3. MPAC challenged the Appellants' logic that the valuation should be reduced by $40,000, the amount that it cost to address the deficiencies after they purchased the Subject Property. The flaw in this logic is that the Subject Property should be valued higher, not lower, after the deficiencies were addressed.
4. The Subject Property was sold in 2015 for $435,000, approximately one year prior to the January 1, 2016 valuation day. The property was then renovated in 2017 so the Subject Property must be worth more than $435,000, that value is to be set as the floor as it cannot be worth less that what it was sold for in 2015.
5. Based on the evidence gathered in Appendix E shown above, MPAC concludes that the current value is $437,000. MPAC recommends adjusting the valuation of the Subject Property down from $454,000 to $437,000.

Appellants' Analysis

16The Appellants assert that each property has its own issues and MPAC should consider deficiencies that are particular to a property. Deficiencies that are affecting the value of this Subject Property include:

1. Cracks in the foundation and walls
2. Electrical issues
3. Uneven flooring
4. Mold and mildew
5. Renovations done in 2017 were not done properly, including poor workmanship and materials
6. Plumbing issues
7. Windows required repairs

17The Appellants argue that the cost to correct the deficiencies was not readily apparent to them prior to purchasing the home. These deficiencies are estimated to cost $40,000 to correct/repair, which is why the Appellants feel that the current valuation of $454,000 should be reduced by $40,000 to $414,000.

18The Appellants discount the valuation method used by MPAC stating that a comparative approach is too broad and does not take specific issues into account.

Findings on Issue 1

19The Board accepts MPAC's analysis and conclusions over the Appellants' as MPAC provides several comparable properties based on market sales as required by the Act to determine value. While the Appellants assert the value should be tied to the cost to repair deficiencies without addressing the costs made to improve the Subject Property (when it was renovated). Further, the Appellants do not provide evidence to support the nexus between cost and value.

20Based on the above analysis and evidence received, the Board finds that the current value of the Subject Property for the 2023 and 2024 taxation years is $437,000.

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

21Section 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.

22The Assessment to Sales Ratio ("ASR") is a tool used to determine whether a reduction of the assessment is required to make it equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time-adjusted sale price. The level of appraisal ("LOA") measures the overall ratio at which a sample set of properties is assessed. LOA is established by determining the median ASR of the property sales in the sample set.

MPAC's Analysis

23MPAC's representative provides the following Equity Analysis in his Valuation Report.

24To test whether the assessment of the Subject Property at its current value is equitable, they conducted an ASR study as follows:

1. They defined the parameters or characteristics they would use to determine similarity;
2. They defined the vicinity and sales period to identify a sufficient number of properties to conduct their analysis;
3. They applied a Time Adjustment Factor ("TAF") to ensure all sale prices reflect market conditions as of the legislated valuation date;
4. For each sale, they calculated the ratio of the assessed value to its current (sale) value;
5. They established the median ASR and the Coefficient of Dispersion ("COD"); and
6. They used the results of their analysis to determine whether an equity adjustment is warranted or if equity among similar properties has been achieved.

25The International Association of Assessing Officers ("IAAO") standards state the LOA for all property types should fall between 0.90 – 1.10. For purposes of the equity test, MPAC takes the position that equity is achieved if the median ASR falls between 0.95 – 1.05.

26The following table details the sale count, LOA, the target level of appraisal, and whether the level of appraisal is within the target level of appraisal.

27They applied the same time adjustment factors as set out in their valuation report to determine time adjusted sale prices for all sales in their equity study.

Sales Count	LoA/ASR	Target LoA	LoA within Target LoA	CoD
30	0.95	0.95 – 1.05	Yes	6.5

28Their opinion of value is $437,000. Based on their analysis, similar properties in the vicinity have been assessed at or near their current values. Therefore, an equity adjustment is not required.

Appellants' Analysis

29The Appellants did not provide an equity analysis.

Finding on Issue 2

30The Board accepts MPAC's analysis and conclusion that an equity adjustment is not required.

CONCLUSION

31The Board finds that the current value of the Subject Property is $437,000 for the 2023 and 2024 taxation years and that an equity reduction is not required.

ORDER

32The Board orders that the assessment of the Subject Property be reduced from $454,000 to $437,000 for the 2023 taxation year and from $449,000 to $437,000 for the 2024 taxation year.