Tribunals Ontario

Assessment Review Board

ISSUE DATE: March 25, 2025 FILE NO.: WR 187542A AMENDED DECISION ISSUED: April 17, 2025

Assessed Person(s): 2116915 Ontario Inc Appellant(s): 2116915 Ontario Inc; Kim Moonkeun Respondent(s): Municipal Property Assessment Corporation Region 18 Respondent(s): City of Thorold Property Location(s): 1815 Merrittville Highway Municipality(ies): City of Thorold Roll Number(s): 2731-000-027-10600-0000 Appeal Number(s): 3511444 and 3525868 Taxation Year(s): 2023 and 2024 Hearing Event No.: 785067

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

APPEARANCES:

Parties	Counsel/Representative
2116915 Ontario Inc; Kim Moonkeun	Jonas Perov Jill Bender
Municipal Property Assessment Corporation	Lee Tomkins Nakita Ramjeawan
City of Thorold	No one appeared

HEARD: October 9, 2024 by video conference, with further submissions received post hearing. Last submissions received January 20, 2025

ADJUDICATOR(S): Anita Lovrich, Member

AMENDED DECISION

In accordance with Rule 99 of the Assessment Review Board’s Rules of Practice and Procedure, effective April 1, 2021, related to the correction of minor errors and in accordance with section 21.1 of the Statutory Powers and Procedure Act regarding the correction of errors, this Amended Decision is issued to correct error(s) in the Decision regarding paragraphs 12, 68, 105, 106, 110, 111. The amendments have been underlined for ease of reference. There are no other changes in this Amended Decision.

OVERVIEW

Background

12116915 Ontario Inc, Kim Moonkeun (the “Appellant”) is the owner of 1815 Merrittville Highway in the City of Thorold (the “Subject Property”). The Appellant appeals the assessment of the Subject Property for the 2023 taxation year, and a further appeal was deemed for the 2024 taxation year pursuant to section 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”).

2The current value assessment for the 2023 and 2024 taxation years was returned at $1,858,000.

3The Appellant’s ground of appeal is that the current assessed value of the Subject Property for the taxation years in question is incorrect and too high.

4The Appellant’s opinion as to the correct current value of the Subject Property is $969,446.

5The Municipal Property Assessment Corporation (“MPAC”) takes the position that the current assessed value of the Subject Property for the 2023 and 2024 taxation years is 2,513,000 (rounded) with $2,345,000 in the Commercial Class and $168,000 as Excess Land.

6The City of Thorold is a statutory party to the appeals but did not attend the hearing or provide submissions to the Assessment Review Board (the “Board”).

Description of the Subject Property

7The Subject Property is a multi-tenanted retail plaza with office, variety, and retail tenants, as well as a gas station.

Areas of Agreement

8The parties agreed that the current use represented the highest and best use of the Subject Property.

9There was no dispute that the correct operating expenses of the Subject Property should be 6%.

10There was no dispute that the capitalization rate should be 7%.

Issues for the Hearing

11At issue in this proceeding is:

1. What is the current value of the tenanted retail, office and variety retail portion of the Subject Property, including: a) The Gross Leasable Area (“GLA”) of each of the foregoing components of the Subject Property; b) the Fair Market Rent (“FMR”) to be applied in conducting the income approach; and c) whether vacancy rate was properly raised as an issue.
2. What is the value of the elements of the Subject Property valued on the basis of the cost approach, including: a) mixing the income and cost valuation methodologies; b) the canopy and billboard situated on the land; c) the land attributed to the gas bar component of the land; and d) the value of the yardwork.
3. What is the size and value of the excess land?
4. What is the current value of the Subject Property?
5. Is an equitable adjustment required pursuant to s. 44(3)(b) of the Act?

Result

12For the reasons that follow, the Board finds:

a. The current value of the Subject Property is $2,385,939.12.

b. An equitable adjustment is not required, resulting in a final determination of value of $2,385,000 (rounded) with $2,220,000 in the Commercial Class and $165,000 classified as Excess Land for the 2023 and 2024 taxation years.

Description of Subject Property

13The Subject Property is a multi-tenanted retail plaza with retail and office tenants as well as a variety store. The Subject Property is also improved by a gas station.

PRELIMINARY MATTERS

Preliminary Matter 1: Request by MPAC for a confidentiality order

Introduction

14MPAC brought a motion for an order that certain documents be treated as confidential pursuant to Rule 89.

15The Board approved a request from the Appellant for disclosure under s. 53(5) in the form of an Expedited Board Directions Form directing disclosure of certain information that was not disclosed in MPAC’s expert report including the square footage of each tenant in each unit, actual rent for each tenant in each unit, lease commencement dates, and rent per square foot. The Board determined that the Appellant complied with the Board's directions regarding s. 53(5) disclosure including confirming that none of the other property owners or tenants have opposed the request and, as a result, approved the request.

Applicable Law

16Rule 89 of the Assessment Review Board’s Rules of Practice and Procedure (“Rules”) states:

Confidential Documents

89. The Board, on its own motion, or on the application of:

(a) a party to a proceeding to which the adjudicative record relates; or

(b) a person who would be affected by the disclosure of information contained in the adjudicative record or a portion of the adjudicative record, may order that the information be treated as confidential and that it not be disclosed to the public, if the Board determines that:

i. matters involving public security may be disclosed; or

ii. intimate financial or personal matters contained in the record are of such a nature that the public interest or the interest of a person served by avoiding disclosure outweighs the desirability of adhering to the principle that the record be available to the public.

Submissions of the Parties

MPAC

17MPAC submits that it would be prejudicial to not treat the documents in the adjudicative record as confidential as it concerns intimate financial matters.

Appellant

18The Appellant made no submissions with respect to MPAC’s request.

Findings on Preliminary Issue 1

19At the hearing the Board declined to grant MPAC’s request. The Board finds it unnecessary to grant the request as the expert report that MPAC filed with the Board redacted intimate third-party financial information. The Board therefore finds that there is no basis for making a confidentiality order.

Preliminary Issue 2: Should the Board restrict the Proposed Experts from providing expert evidence in these appeals?

20MPAC sought to tender its expert witness as an expert in property appraisal and valuation in Ontario. The Appellant sought to tender its expert witness as an expert in property appraisal and valuation in Ontario.

21Each party challenged the qualifications of the other party’s proposed expert witnesses.

22In the Board decision, 1324782 Ontario Limited v. Kingston (City), 2023 CanLII 56782 (ON ARB), the Board summarized the law relating to evidence from expert witnesses and the admissibility of expert opinion evidence:

[14] To be considered “properly qualified”, an expert witness must i) be aware of their duty to provide the court with “fair, objective and non-partisan” evidence, and ii) be able and willing to carry out that duty: see White Burgess at paragraph 46. In the event a proposed expert witness is not able, or is unwilling, to fulfil that obligation, they do not meet the qualifications of an expert for the purpose of providing opinion evidence in a proceeding and their evidence should be excluded: White Burgess at paragraphs 23 and 46.

[16] The process for challenging a proposed expert’s qualifications on the basis that the expert is unable or unwilling to provide fair, objective and non-partisan evidence was outlined in White Burgess as follows:

a) Once an expert attests or testifies an oath that they are able and willing to perform their duty to be fair, objective and non-partisan – for instance, signing an AED – there is a burden on the party that opposes admitting the expert evidence to show that there is a “realistic concern that the expert’s evidence should not be received because the expert is unable and/or unwilling to comply with that duty”: see White Burgess at paragraph 48.

b) The burden to establish that the expert is qualified remains on the party proposing to call the evidence: see White Burgess at paragraph 48.

c) The trier of fact must then consider both the circumstances of the proposed expert, and the substance of their proposed evidence to ascertain whether they are able and willing to provide evidence that is fair, objective and non-partisan. When considering the relationship between a proposed expert and a party, “the question is not whether a reasonable observer would think that the expert is not independent. The question is whether the relationship or interest results in the expert being unable or unwilling to carry out his or her primary duty to the court to provide fair, non-partisan and objective assistance”: White Burgess at paragraph 50.

a. Qualification of MPAC’s Expert Witness

Evidence and Submissions from the Parties

MPAC

23MPAC pointed to MPAC’s expert witness’s executed Acknowledgement of Expert’s Duty (“AED”) Form and asked him questions regarding his education and experience as highlighted in his curriculum vitae. MPAC’s expert witness testified that he has property valuation analyst experience and experience with appraising properties, including specialized expertise in income-producing properties. He testified that he has experience with conducting valuations in Thorold for almost two years. He stated that he has five years of experience as a valuator for commercial properties and that he had two courses to complete until he receives his Associate Member Institute of Municipal Assessors (“AIMA”) designations. MPAC’s expert witness testified that although he is employed by MPAC, he does not have vested interest in the appeals, his duty is to the Board, and he is independent from MPAC.

Appellant

24The Appellant argued that MPAC’s expert witness’s employment at MPAC means that he is not an independent expert witness. It submits that MPAC’s expert witness did not state that he is an expert in rural land valuation or zoning or direct comparison approach or real estate planning and development. The Appellant argues that MPAC’s expert witness’s employment with MPAC means that he is a biased witness and that his lack of AIMA designation means that he lacks expertise. The Appellant submits that MPAC’s expert witness’s expert report contained critical errors (for example, that his expert report includes the incorrect zoning for the property) and that he lacks competence, which undermines his credibility.

b. Qualification of the Appellant’s Expert Witness

Appellant

25The Appellant highlighted the Appellant’s expert witness’s executed AED and asked him questions regarding his education and experience as highlighted in his curriculum vitae. The Appellant’s expert witness provided details regarding his training, experience, including significant experience with the valuation of income-producing properties, the cost approach, and the direct comparison approach. He stated that he is now working as a consultant who frequently provides his services as a consultant with the Appellant, as well as his familiarity with the Thorold area.

MPAC

26MPAC asked the Appellant’s expert witness if he believes that his expert report abides by the Canadian Uniform Standards of Professional Appraisal Practice standards and he responded that he did.

Findings of the Board on Preliminary Issue 2

27MPAC’s expert witness and the Appellant’s expert witness each executed an AED in which they attested to i) a duty to provide opinion evidence that is fair, objective, non-partisan, and related only to matters within his area of expertise; and ii) that this duty prevails over any obligation to any party by whom or on whose behalf they are engaged.

28The Board considered whether there is a “realistic concern that the expert’s evidence should not be received because the expert is unable and/or unwilling to comply with that duty” to be fair, objective and non-partisan for either proposed witness and found that there is no indication of such a concern. The Board considered both proposed expert witness’s combination of education, experience, training, and qualifications and determined that both proposed expert witnesses were able and willing to provide evidence that is fair, objective, and non-partisan. The fact that MPAC’s expert witness does not consider himself an expert in rural land valuation specifically would go to weight that the Board may attribute to some of his evidence rather than his qualifications.

29The Board qualified both proposed expert witnesses to give expert evidence on property valuations for income-producing properties in Ontario.

ANALYSIS

Issue 1 – What is the current value of the tenanted retail, office, and variety retail portion of the Subject Property

Introduction

30The parties agreed that the retail portion of the Subject Property should be valued on the income approach.

31The income approach involves applying an appropriate capitalization rate reflecting an investor’s long-term return expectation to the net operating income that a property generates. Several steps are involved in the determination of value using the income approach.

32The first step of the income approach requires a determination of the potential gross income (“PGI”) that the Subject Property can generate at full occupancy. The second step involves determining an allowance for vacancy loss and collection loss to derive the property’s effective gross income. The third step involves estimating the total annual operating expenses necessary to operate the property. Then, the estimated total annual expenses are deducted from effective gross income to obtain the property’s net operating income (“NOI”). Finally, a market-based capitalization rate applicable to the property is applied to the NOI to calculate current value.

a. The Gross Leasable Area (“GLA”)

Evidence on GLA

MPAC

33MPAC’s expert witness testified that the tenant list was taken upon an exterior inspection and that he reviewed those leases and rent rolls that were provided by the Appellant and determined the total GLA of 13,672 square feet and the GLA of each tenant as follows:

Tenant	Tenant Type	Gross Leasable Area (square feet)
Royale LePage	Office	3,390
Brown Sugar Decors	Retail	1,100
HardT Womens Fashion	Retail	2,250
ETFO Niagara Teachers Local	Office	1,600
On Point Landscaping	Retail	1,425
Spruceside Electrical & Construction	Retail	1,425
Grand Cannabis	Retail	1,300
Canco, Variety & Gas	Gas and Variety Retailer	1,182

Appellant

34The Appellant’s expert witness testified that the GLA of the Subject Property totalled 12,692 square feet based on the leases at the Subject Property, some of which were provided to MPAC and none of which were filed with the Board. The square footage of each tenant was as follows:

Tenant	Tenant Type	Gross Leasable Area (square feet)
Royale LePage	Office	2,140
GE/Boreal	Retail	1,100
HardT Womens Fashion	Retail	200
ETFO Niagara Teachers Local	Office	1,600
On Point Landscaping	Retail	450
Spruceside Electrical & Construction	Retail	2,250
Grand Cannabis	Retail	1,300
Canco, Variety & Gas	Gas and Variety Retailer	1,140
Maxima	Office	700

35The Appellant’s expert witness testified that the total GLA is 12,692 square feet. He testified that there is a vacant area of 2,000 square feet and a common area of 790 square feet, which he said accounts for the difference in square footage between the parties.

b. Fair Market Rent (“FMR”)

Evidence and Submissions on FMR

MPAC - Evidence

36MPAC’s expert witness presented proposed comparable properties in the vicinity of the Subject Property with net leases between 2014-2018 that had similar GLAs, uses, and years built.

37MPAC conducted two office rental analyses using both local comparables (5 proposed comparable market rents) and broad market area results in the Niagara Region (using 25 proposed market rents) to determine if location played a role in fair market rent results within the greater Niagara region. MPAC’s expert witness testified that the findings prove that office rents in the Niagara Region (Pelham, Welland, Niagara Falls City) tend to be fairly standard across the board and that the FMR on office buildings have a median FMR of 12.75.

38With respect to variety store FMR, MPAC analysed five variety store rents with commencement years between 2006 - 2018 with net leases in the local market and determined that they have a median FMR of $12.

39MPAC states that the Subject Property variety store is part of a gas bar operation which draws more attention than the comparable properties above that operate as stand-alone variety stores and therefore the median FMR of $12.00 is more than justified for the Subject Property.

40For retail FMRs, MPAC’s expert witness testified that he drew comparables both in the same city and outside to neighbouring boundaries and determined that the FMR of between $12 and $14 is the appropriate rent. He testified that the Subject Property has the advantage of a superior location, and prime tenants such as the gas station, being at corner of a major intersection, being close to Hwy 406. Using 26 Allied Standard local market rents, he determined a median FMR of $12.

41MPAC’s expert witness testified that, based on his analysis, the FMR for office tenants was $12.75 while the FMR for variety and retail stores was $12.

MPAC - Submissions

42MPAC argues that the Appellant uses actual rents to determine FMR. It submits that in paragraph 23 and 25 of Queen’s Court Developments Ltd. v. Municipal Property Assessment Corp., Region No. 15, [2007] O.A.R.B.D. No. 128 the Board held:

The Board must take into account that accepted valuation practice recognizes that actual contract rents do not always reflect the typical market rent which the landlord could expect to earn, and that it may be necessary to adjust the contract rents, particularly in the case of long-term leases and leases negotiated long before the valuation date […]

This means that the Board has to determine the current value of a property, as if it were unencumbered. If a property is encumbered by an old lease for less than market rent, the Board must ignore the encumbrance and value the property as if it did not exist.

43MPAC also cited a decision of the Board that cites the Court of Appeal for Ontario decision of Cardinal Plaza Ltd. et al. and Regional Assessment Commissioner, Region No. 19 et al., 1984 CanLII 1841 (ON CA), 49 O.R. (2d) 161 (“Cardinal Plaza”) where the Court held:

We are all of the view that the Divisional Court and the Ontario Municipal Board did not err in law in holding that the proper determinant of market value pursuant to s. 18 of the Assessment Act, R.S.O. 1980, c.31, using the income approach was "economic rent" rather than the actual rent received by the appellants.

On this basis, MPAC argued that market rents, not actual rents, must be used to determine FMR.

Appellant - Evidence

44The Appellant’s expert witness stated that some of MPAC’s proposed comparable properties used by MPAC were in more developed areas whereas the Subject Property is farmland.

45The Appellant’s expert witness states that the actual rents obtained by the tenants of the Subject Property should be used by the Board to determine the fair market rent. He reviewed the actual rental information for the Subject Property’s tenants with contract periods that include October 2019-Setember 2024, February 2016 – January 2021, June 2017 – May 2022, March 2021 – February 2022, June 2018 – May 2023, October 2020 – September 2025 and from June 2021.

46He testified that for the tenancy with the contract period of October 2019-Setember 2024, with a net rent of $8 a square foot, this is too high because the applicable valuation day of the subject appeals is January 1, 2016. As a result, he testified that the correct rent as of the valuation day “could be $7 or could be $6 but it’s about $6.”

47For the tenancy with the contract period March 2022 – February 2027 and a gross lease of $14.25 per square foot, the Appellant’s expert witness said that since net rent is approximately 50% of the gross, that amounts to $7 but since that refers to 2022 rent, his opinion of the net rent as of the valuation day is “about $6.” For the contract period of June 2017 - May 2022 of $13 per square foot, half of this would be “somewhere around $6 a square foot” as of the valuation day.

48For the tenant with the lease from March 2021 to February 2028, the net rent in the lease is $6.50 and so said “probably a fair rent is $5 but if we want to go to $6 that’s fine.” For another tenant that had a with a gross rent of $12 according to its lease, he testified that 50% of that is $6 but since that is as of 2021 it “seems $6 is about the right answer” as of the valuation day.

49For the tenant with a lease from October 2020 – September 2025 – the rate is $8 a square foot. The Appellant’s expert witness testified that $6 as of the valuation day “seems pretty reasonable.”

50For the lease from October 2022 to 2032 with a rent of $7.90 a square foot, he testified that the fair market rent as of the valuation day may be $5.50 or $6.50 but “around $6 a square foot.”

51For the lease signed Nov 2021 with a gross rent of $14.50, he testified that half of that is $7.25 and $6 is about reasonable as of the valuation day.

52The Appellant’s expert witness stated that there is “quite a bit of evidence” that the FMR of the Subject Property is $6 a square foot based on the rent rolls when he “feathered them down” to reflect the FMR as of the valuation day. He stated that the Subject Property’s actual rent rolls reflect the rent between a willing lessor and lessee and the actual rental appeal of the Subject Property.

Appellant - Submissions

53The Appellant argued that a potential buyer for the Subject Property would need to review the actual income and expenses of the Subject Property to determine its value, rather than estimating FMR from the rents of comparable properties. The Appellant further argued that comparables that are municipally-serviced and that have different zoning to the Subject Property are not comparable to the Subject Property.

54The Appellant submitted that the Subject Property’s rents from the actual rent roll should be used, citing paragraph 8 of Mignardi v. Municipal Property Assessment Corp. Region No. 9, [2015] O.A.R.B.D. No. 44 where the Board held:

8 Based upon the subject property's actual rent roll, and applying a GIM of 9.73, the assessment is reduced from $1,218,000 to $1,166,000 for the 2013 and 2014 taxation years. The resultant reduction of less than 5% is merited in this particular circumstance. The $1,166,000 current value is equitable with the assessments of similar lands in the vicinity.

c. Whether vacancy rate was properly raised as an issue

Evidence and Submissions

MPAC

55In its expert report, MPAC determined a market allowance of 6% for vacancy and collection loss for the Subject Property.

56The vacancy rate was not raised as an issue in the pleadings, was not listed as an issue in dispute in the Case Management Report and Order (“CMRO”) DM 186560, and at the outset of the hearing when the parties were asked to list the issues in dispute, it was not raised as an issue. However, the Appellant raised the issue of the correct vacancy rate at the hearing after MPAC had presented its evidence.

57MPAC submitted that it would be prejudicial to raise the issue of the vacancy rate for the first time at the hearing with no notice to MPAC, submitting that to allow the Appellant to raise this issue would go against the principles of procedural fairness and the Rules of the Board.

Appellant

58The Appellant argues that it reserved its rights to raise any issue related to the income approach and that the Board has an obligation to determine the correct current value.

59The Appellant’s expert witness stated that MPAC’s methodology guide states that market data should be used to determine the vacancy rate unless there are extenuating circumstances, and argued that those circumstances exist here. He testified that according to MPAC’s Property Profile Report for the Subject Property from 2022, there is 3,382 square feet of vacant space which is a 27% vacancy. He stated that according to the Subject Property’s 2024 rent roll, there is 2,000 square feet of vacancy which is a vacancy rate of 16%. He also noted that, according to the 2021 rent roll, 2,400 square feet were vacant. He submits that the Subject Property has historically had a high vacancy and submits that the correct vacancy rate is 15%.

Findings on Issue 1

a. GLA

60MPAC testified that their evidence was based on an incomplete list of leases and an exterior inspection only whereas the Appellant’s expert witness testified as to the GLA on the basis of the square footage as listed on the leases of the Subject Property’s tenancies. The Board finds that the Appellant’s evidence is based on more complete information and therefore relies on the Appellant’s evidence regarding GLA. The Board finds that this is the best evidence before the Board and finds that the correct GLA is 12,880 square feet (with 4,440 square feet being office space and 8,440 square feet being variety and retail) which includes the square footage of the tenant properties as provided in the itemized list provided by the Appellant, in addition to the space that is currently vacant and to be leased.

b. FMR

61The decision of the Court of Appeal for Ontario in Cardinal Plaza is clear that when the income approach is being used to calculate current value, economic or market rents are to be applied, rather than actual rents (which may or may not align with market rents).

62The Board agrees that a consideration of the Subject Property’s actual rent rolls as of the valuation day of January 1, 2016 may have been helpful in forming part of the FMR analysis. However, the Board notes that the Appellant did not adduce evidence as to the Subject Property’s tenants’ actual rents as of the valuation day. Rather, the Appellant’s expert witness considered various Subject Property leases, many of which commenced years after the valuation day, and used his judgment to make an estimate as to what the actual rent as of the valuation day could have been.

63Accordingly, the Board finds that the market rents adduced by MPAC are the best evidence before the Board as to the correct rents to be used in the calculation of current value of the Subject Property and finds that the FMR for office tenants is $12.75 per square foot while the FMR for variety and retail stores is $12 per square foot.

c. Vacancy rate

64The Appellant’s pleadings and evidence do not raise vacancy rate as an issue in these appeals. The issue was also not raised as an issue at the settlement conference and was not included as an issue to be determined in the CMRO. Allowing the Appellant to raise the issue of the vacancy rate at the hearing would violate the principles of procedural fairness and Rule 49 of the Rules of the Board, which provides:

No New Issues

49. An issue can only be raised at a hearing event if it has been set out in the Statements of Issues and Response which have been served on all other parties and filed with the Board in accordance with these Rules, unless the Board determines that there are exceptional circumstances.

65If a party wished to deviate from its evidence in an expert report, it should file a supplementary or amended report in accordance with the Board’s Rules and the Schedule of Events as the Board does not allow new evidence to be adduced at the hearing.

66As a result, the Board finds that hearing the issue of vacancy rate would be prejudicial to MPAC and violate the principles of procedural fairness and the Board’s Rules. MPAC did not have notice of this issue or the allegations and case to be met with respect to the issue of vacancy rate. The Board finds that the issue of vacancy rate is not properly before the Board and is not an issue for the Board to determine in this appeal proceeding. The Board accepts the evidence that was uncontested in the parties’ expert reports that the correct vacancy and collection allowance is 6%.

Current value

67Applying the FMRs to the GLA of the property, the PGI of the Subject Property is $157,890.

68Applying the vacancy and collection allowance of 6% and the operating expense rate of 6% yields a NOI of $139,510. In this case the Board accepts MPAC’s position that the operating expense allowance is a percentage of effective gross income rather than potential gross income. The Board notes that the Appellant’s income analysis also used a percentage of effective gross income to determine the operating expense allowance. Applying the agreed-upon capitalization rate of 7% to the NOI results in a current value of $1,993,000 for the retail and office portion of the Subject Property, utilizing the income valuation methodology.

Issue 2 - What is the value of the elements of the Subject Property valued on the basis of the cost approach, including the canopy and billboard situated on the land, land attributed to the gas bar component of the land, and the value of the yardwork

a. Mixing the income and cost valuation methodologies

Parties’ Positions on Mixing the Income and Cost Approaches

MPAC

69MPAC submits that all gas bars in Ontario are valued on the cost approach as there is almost no income data to base the income approach as most gas bars are owned or have long-term land leases where a lease exists but does not capture the improvements to the land (emphasis added). It submits that over 600 gas bars are valued on the cost approach that form part of income properties across the province. MPAC states that the cost value of the gas bar includes: the land associated with the gas bar (building coverage, parking, entrances, tank storage, require landscaping, and drive through around improvements), yardworks such as grading, paving, curbs gutters and lighting, and improvement values for the canopy, car wash, freestanding gas bar kiosk or gas bar convenience store. MPAC says that only land required to support the gas bar is valued independently.

Appellant

70The Appellant submits that the methodology that MPAC has applied to other gas bars is not, in and of itself, determinative of what constitutes a correct approach to valuing the Subject Property. It submits that, while the Appellant agrees to a cost value for the canopy and billboard, the gas bar itself should not have a costed land value over and above the income valuation for the plaza.

Findings of the Board - Mixing the Income and Cost Approaches

71Despite the Appellant’s submissions as to the correct valuation methodology, the Appellant did not dispute adding the value of the canopy and billboard to the valuation as structures valued on the cost valuation methodology. Accordingly, the Board finds that the parties are in agreement that the correct valuation methodology for the Subject Property is the income valuation methodology for the retail and office units of the Subject Property, with the gas bar valued on the cost approach.

72The Board accepts MPAC’s submission that gas bar leases, where they exist, do not capture the improvements to the land and that, for this reason, they are valued on the cost approach. The Board accepts that the actual value of the improvements associated with the gas bar are not captured by the income approach for the retail units on the Subject Property and that it is appropriate to value the Subject Property on both the income valuation methodology as well as valuing certain elements on the cost valuation methodology where they are not captured by the income methodology.

b. What is the value of the canopy and the billboard situated on the land?

73Although the parties stated that the value of the canopy and the billboard situated on the land were in dispute, at the hearing the Appellant did not dispute that the billboard on the Subject Property should be valued at $9,440 nor MPAC’s valuation of the canopy at $88,417.

74The Board accepts the parties’ agreed-upon current value for the billboard at $9,440 and the canopy at $88,417.

c. What is the value of the land attributed to the gas bar component of the land?

MPAC Evidence and Submissions

75At the hearing, MPAC testified that the current value for the land associated with the gas bar was $34,017.

76MPAC submits that the land associated with the gas bar includes building coverage, parking, entrances, tank storage, landscaping, and drive through around improvements. It submits that only land required to support the gas bar is valued independently. The parking and land required for improvements that are captured on the income approach is not included. Further, it states that “the land required for the gas bar operation has been assessed as a value-added amenity to the primary income approach. Therefore, there has been no double assessment of any element of this property.”

Appellant Evidence and Submissions

77The Appellant’s expert witness states that the land area for the gas bar is part of the land that is required to meet the maximum coverage required by the zoning by-law. He states that the zoning by-law requires a maximum 15% coverage of 85,000 square feet of land for the plaza, and the canopy requires 12,197 square feet, for a total of 85,313 square feet that is required by the bylaw. He states that the Subject Property’s total land area is 147,616 square feet. Therefore, the maximum area for any excess land is the difference between the two; namely 147,616 - 85,313, amounting to 49,886 square feet. His expert report states that a review of the property’s site plan shows that this excess land must be located behind the septic bed. Therefore, the land used for the gas bar is captured in the income valuation for the plaza.

78The Appellant submits that the land area required for the covered portion of the Subject Property is fixed by zoning; thus, adding a costed land value for land that is already captured in the income valuation for the plaza would double count the value of that land.

Findings of the Board - value of the land attributed to the gas bar component of the land

79As determined above, the Board accepts MPAC’s submission that gas bar leases, where they exist, do not capture the improvements to the land and that, for this reason, they are valued on the cost approach and the cost approach includes the value of land associated with the costed improvement, which must be valued in accordance with the cost approach.

80The Appellant argues that adding a costed land value for land would “double count the value of that land.” The Board does not accept this argument. The Board observes that the issue of the amount of land required that can be covered by lawfully-existing buildings and structures as per the municipal zoning bylaw, pertains to the determination of the amount of excess land on the Subject Property. It is not relevant to the issue of the valuation of the land associated with the gas bar.

81The best evidence before the Board is MPAC’s testimony as to the value of the land associated with the gas bar. The Board finds that the value of the land associated with the gas bar is $34,017.

d. What is the value of the yardwork?

82MPAC testified that the current value of the yardwork of the gas bar, including grading, curbs, gutters lighting, and paving is $95,734 based on the cost approach.

83The Appellant disputed the size of the paved area. The Appellant’s expert witness stated that there is a total unpaved area of 96,860 square feet. Based on the online tool Geowarehouse, there is 147,616 square feet and, based on his measurements, a total unpaved area of 96,860 square feet, which leaves a balance of 50,756 square feet and the gross building area is 15,500 square feet. The Appellant’s expert witness took his calculation of the paved area (50,756 square feet) less his calculation of the gross building area (15,500 square feet) which amounted to 35, 256 square feet, which he testified is how many square feet is paved.

84Further, the Appellant argues that the yardwork should not be included as a separate valuation on the basis of the cost approach as paving should not be included in the valuation of a neighbourhood shopping centre, as it is included in the rent and thereby captured by the income approach.

Finding of the Board - value of the yardwork

85The Appellant adduced no evidence to counter MPAC’s testimony as to the value of the yardwork. It did not adduce leases to prove that the value of the yardwork is included in rent paid by the tenants.

86The Board finds that the best evidence before the Board is MPAC’s testimony as to the value of the yardwork. The Board finds that the value of the yardwork is $95,734.

Findings on Issue 2

87For the reasons stated above, the Board finds that:

a. The current value of the billboard is $9,440 and the current value of the canopy is $88,417.

b. The current value of the land associated with the gas bar is $34,017.

c. The current value of the yardwork is $95,734.

Issue 3 - What is the size and value of the excess land?

88The parties are in agreement that the excess land has some value but there are disputes as to its size and current value.

Evidence and Submissions

MPAC

89MPAC states that the Subject Property has a total site area of 3.73 acres, confirmed using online digital imagery and Teranet, and stated that the site plans were not provided by the Appellant.

90MPAC testified that the Subject Property’s zoning is Highway Commercial/Industrial (“HCI”) zoning which has a maximum coverage of 15% in accordance with the zoning bylaw. This refers to the percentage of a lot that can be covered by lawfully existing buildings and structures. MPAC’s expert witness testified that the Subject Property is located on unprotected greenbelt land.

91Although MPAC’s expert report states that the Subject Property carries 1.92 acres of excess land that has not been assessed on the roll, MPAC’s expert witness changed his opinion to there being 1.36 acres of excess land in testimony at the hearing. MPAC testified that due to the 15% maximum coverage allowed by the zoning bylaw, when the GLA of 13,672 square feet is divided by 0.15 to account for the 15% coverage allowed, this amounts to 91,146 square feet of land that is required by the municipal bylaw, and is therefore not included in the calculation of excess land. MPAC then added the gas bar land of 12,196 square feet, which amounts to 103,342 square feet of total required area. MPAC testified that when this is subtracted from the total lot size of 3.73 acres (162,478 square feet), this amounts to an assessable excess land area of 1.36 acres, or 59,241 square feet.

92MPAC’s expert witness testified that an analysis of the value of excess land is done by comparing local vacant land parcels (or improved lands less the structure value) dividing by the total acreage of the land parcel and determining a rate per acre.

93MPAC’s proposed comparables are:

Roll	Address	Land Size	Assessed Value	Rate per A
2731 000 031 00600	2541 HWY 20	2.99A	$380,610	$127,294/A
2731 000 031 00110	2467 HWY 20	2.38A	$317,906	$133,573/A
2731 000 031 00400	2493 HWY 20	2.74A	$355,268	$129,659/A
2731 000 027 10400	1837 MERRITTVILLE HWY	3.48A	$367,204	$105,518/A

94MPAC’s expert testified that the total excess land value for the Subject Property is calculated by taking the average of the assessed values of these comparable properties, which amounts to $124,011 per acre, which is then multiplied by the Subject Property’s excess land area of 1.36 acres, resulting in a total land value of $168,000 (rounded). MPAC explains that the reason these comparables were utilized is because they are directly neighbouring properties who also carry excess land. However, the proposed comparables did not have sales near the valuation day.

95MPAC’s expert witness testified that a similar vacant land also on Merrittville Highway did have a sale in 2015 in the open market:

	Subject Property	Comparable Property
Roll Number	2731 000 027 10600	2731 000 027 10001
Address	1815 Merrittville Highway	Merrittville Highway
Neighbourhood	Q03 – 4528	Q03 - 4528
Property Code & Desc.	(430) Neighbourhood Shopping Centre - With More Than 2 Stores Attached, Under One Ownership, Without Anchor – Generally Less Than 150,000 S.F.	(105) Vacant Commercial Land
Distance in km	0.3214
Valuation
Current Value Assessment	$1,858,000	$337,000
Total Land Value	$34,017.59	$328,398.43
Sale
Sale Date		2015 12 15
Sale Amount		$300,000
Time Adjusted Sale Amount		$301,485
Site
Effective Site Area (Acres)	3.73	2.48
Actual Site Area (Acres)	3.73	2.48
Time Adjusted Rate/Acre		$121,567

96MPAC determined that the time-adjusted sale amount for that sale was $301,485 which leads to a time-adjusted rate per acre of $121,567. MPAC testified that an open-market sale near the statutory valuation day is a strong indicator of market value. Applying MPAC’s rate of $121,567 per acre to the Subject Property’s 1.36 acres amounts to $165,331.12.

97MPAC states that the Appellant’s expert report states “lot measurements accuracy: low” where the total lot size is indicated.

Appellant

98The Appellant’s expert witness stated that the single sale proposed by MPAC was part of a portfolio sale and submits that portfolio sales are not accepted by MPAC as open market sales and should not be considered an open-market sale.

99The Appellant’s expert witness testified that, according to Geowarehouse, the lot area is 147,616 square feet for the Subject Property. He stated that MPAC is incorrect to use GLA when determining excess land as total coverage should be used instead. He testified that according to his calculation, the building of the Subject Property has a coverage area of 17,290 square feet (including the building and canopy he measured). He stated that dividing this number by 0.15 (as the bylaw provides for a maximum lot coverage is 15%) results in a land area of 115,266 square feet that is required for the Subject Property according to the bylaw. Subtracting the required area, as per the bylaw, of 115,266 square feet from the total lot area of 147,616 results in a residual area of 0.74 acres (32,350 square feet).

100Although the Appellant’s expert report states that the zoning of the Subject Property is HCI, at the hearing he testified that the zoning changed from HCI to agriculture in December 2004 and it is situated on protected greenbelt. As a result, the improvements on the Subject Property are legally non-conforming and will be “phased out” according to the “Thorold official plan.” The Appellant’s expert witness testified that the vacant land’s only permissible use is agricultural purposes and thus cannot be developed commercially or severed. He testified that since the City’s zoning bylaw map has the Subject Property zoned as “specialty crop”, such that agricultural land rates should be used.

101He presented into evidence the assessed value of 2325 Highway 20, which he testified is nearby farmland and which has an assessed value per acre of $17,019 and multiplying this by the Subject Property’s 0.74 acres amounts to $12,594 which he said is the correct excess land value.

102This testimony varied from his expert report in which he stated that the zoning is HCI, that there is 1.14 acres of surplus land, and that an excess land rate per acre of $27,000 is considered reasonable, such that the additional value for the excess land is $30,000.

Findings on Issue 3

103The Appellant’s expert report only included the opinion as to the excess land in its supplementary report, the Appellant’s evidence in the expert report varied significantly from the evidence given in testimony, including his testimony respecting the correct zoning of the Subject Property. Further, the Appellant adduced no market-based evidence, namely sales of similarly zoned properties that occurred on or near the valuation day. For these reasons, the Board ascribes less weight to this evidence, as compared to MPAC’s evidence regarding the size at 1.36 acres and its market tested evidence of current value, namely the sale of Merritville Highway, which sold near the valuation day at a time-adjusted rate of $121,567 per acre, notwithstanding that this was a portfolio sale. Consequently, the Board finds this is best evidence before the Board of the size and value of the excess land.

104Applying MPAC’s market-based rate of $121,567 per acre to the Subject Property’s 1.36 acres amounts to $165,331.12.

Issue 4: What is the current value of the Subject Property

105As determined above:

a. The current value of for the retail and office portion of the Subject Property is $1,993,000 utilizing the income valuation methodology.

b. The current value of the billboard is $9,440 and the canopy is $88,417.

c. The current value of the land associated with the gas bar is $34,017.

d. The current value of the yardwork is $95,734.

e. The current value of the excess land is $165,331.12.

106Based on the findings above, the current value of the Subject Property is $2,385,939.

Issue 5: Is an equitable adjustment required pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html#sec44subsec3_smooth)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html)?

Evidence and Submissions of the Parties

Appellant

107The Appellant did not make submissions, or present evidence, in relation to equitable adjustment except to say that the ASR is 1.00 and that an equitable adjustment is not necessary.

MPAC

108MPAC submits that the Appellant did not raise equity as an issue and the assessment is presumed to be equitable with the assessments of similar properties in the vicinity.

Findings on Issue 5

109The Board finds there is insufficient evidence supporting an equitable adjustment and, for this reason, declines to make one.

CONCLUSION

110For the reasons that follow, the Board finds:

a. The current value of the Subject Property is $2,385,939.12.

b. An equitable adjustment is not required, resulting in a final determination of value of $2,385,000 (rounded) with $2,220,000 in the Commercial Class and $165,000 classified as Excess Land for the 2023 and 2024 taxation years.

ORDER

111The Board orders that current assessed value of the Subject Property be increased to $2,385,000 (rounded) with $2,220,000 in the Commercial Class and $165,000 classified as Excess Land for the 2023 and 2024 taxation years.