1000134493 Ontario Inc. v. Municipal Property Assessment Corporation Region 03, 2025 CanLII 34498

Assessment Review Board

Tribunals Ontario Tribunaux décisionnels Ontario Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: April 17, 2025 FILE NO.: WR 187943

Assessed Person(s): 1000134493 Ontario Inc Appellant(s): 1000134493 Ontario Inc.; Nancy Zhang Respondent(s): Municipal Property Assessment Corporation Region 03 Respondent(s): City of Ottawa Property Location(s): 181 Richmond Road Municipality(ies): City of Ottawa Roll Number(s): 0614-084-301-31300-0000 Appeal Number(s): 3519278, 3524684 and 3534471 Taxation Year(s): 2023, 2024 and 2025 Hearing Event No.: 786490

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

APPEARANCES:

Parties	Counsel/Representative
1000134493 Ontario Inc.; Nancy Zhang	Shen Bai
Municipal Property Assessment Corporation	Mohammad El Dali
City of Ottawa	No one appeared

HEARD: March 18 2025 by video conference

ADJUDICATOR(S): Dan Weagant, Member

DECISION

OVERVIEW

11000134493 Ontario Inc. (the “Appellant”) believes the assessment returned on a property known as 181 Richmond Road (the “Subject Property”) in the City of Ottawa (the “City”) is too high for the 2023 taxation year. The returned assessment was $852,000. The Appellant filed an appeal of that assessment. Pursuant to s. 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), the Appellant is deemed to have brought the same appeals in respect of the 2024 and 2025 taxation years.

2The Appellant believes the correct current value of the Subject Property is $451,000. The Appellant also believes that a reduction in that current value is necessary to reflect equitable assessment and submits that the assessment should be reduced to $369,000.

3The Municipal Property Assessment Corporation (“MPAC”) is a respondent in this case and believes that the correct assessment of the Subject Property is higher than the value returned on the roll. In response to the appeal, MPAC arrived at a current value assessment of $1,014,000, noting that it did not believe a reduction in that value was necessary for it to be considered equitable.

Areas of Agreement

4The parties agree that the Subject Property is correctly classified in the Commercial Property Class.

Issues for the Hearing

5At issue in this proceeding is:

1. A determination of the current value of the Subject Property and in particular: a. The correct method of determining current value; and
2. Whether a reduction in the current value should be made for the purposes of equitable assessment.

Result

6The Assessment Review Board (“Board”) finds that the correct current value of the Subject Property is $877,000. The Board also finds that the current value determined requires a reduction for the purposes of equitable assessment, when reference is made to the assessments of similar lands in the vicinity. The assessment is reduced to $811,000.

ANALYSIS

Description of Subject Property

7The Subject Property is comprised of four specific elements. First is the primary structure; a former residential property that has been converted to commercial use. This structure comprises 1,069 square feet (“sq. ft.”) of building area on two storeys, with an additional 666 sq. ft. of floor area in the basement. The primary structure is occupied by a commercial tenant. It was constructed in 1944.

8The second element of the property is a trailer that is connected to the primary structure and houses a second commercial tenant. The third element and last improvement to the property is a separate garage / storage building of undetermined size.

9Lastly, the improvements lie on a lot of approximately 0.1 acres (4,422 sq. ft.). The Subject Property currently has two tenants. One tenant occupies what the Appellant describes as a trailer, the other occupies the primary structure.

Issue 1 – What is the Correct Current Value of the Subject Property?

10The parties differ in their approaches to determining the current value of the Subject Property. MPAC adopted the cost approach to value, whereby the Subject Property is valued based on the current value of the land portion, added to the depreciated value of the improvements. The Appellant adopted the direct comparison approach whereby the Subject Property is valued based on the current value of other one property it deemed to be comparable to the Subject Property, as reflected by its sale value, per square foot of building area.

MPAC’s Evidence

11MPAC adopted the cost approach in its valuation. This approach determines the land value of properties that have sold in proximity to the valuation day for the years under appeal. For these appeals the valuation day is January 1, 2016. Once a land value is determined, the depreciated value of the improvements are added to the land value to arrive at a total value.

12MPAC reviewed four sales in its analysis:

Property	Land Area (square feet)	Building Area (square feet)	Sale price / Time adjusted sale price	TAS per Sq. ft. of land area	TAS per sq. ft. of building area
1391 Wellington Street	2,209	1,500	$655,000/ $621,170	$281.20	$414.11
1276 Wellington Street	5,393	1,804	$1,000,000/ $1,074,000	$199.15	$595.34
89 Holland Avenue	2,600	1,612	$659,000/ $637,253	$245.10	$395.32
91 Holland Avenue	2,600	1,825	$770,000/ $730,730	$281.05	$400.40
Subject Property 181 Richmond Road	4,422	1,069	Returned Value: $852,000	$192.67 (returned)	$797.01 (returned)

13From this data, MPAC determined a land value, based on the median time adjusted sale (“TAS”) price of the residual land portion of the four TAS prices. The total land area values of each comparable property sale was calculated by MPAC and was based on the land area ratio reflected in each property profile. MPAC’s median value of $216.00 per square foot was then applied to the Subject Property’s 4,422 sq. ft. of land area, for a total of $955,152.

14To this land value, MPAC then added the depreciated value of the existing improvements on the Subject Property, based on its property profile. That total of $59,194 was added to the land value determined above for a total of $1,014,346.

Appellant’s Evidence

15The Appellant took issue with MPAC’s approach to determining the current value of the Subject Property. In summary, the Appellant submitted that:

1. MPAC’s comparable properties were not suitably comparable to the Subject Property;
2. The correct approach to determine the current value of the Subject Property is to apply the TAS value of the building area of the most comparable properties in evidence and not the land area; and
3. The trailer component of the Subject Property should not be assessed as it is a vehicle with a motor vehicle registration.

16The Appellant relies on the sale of a nearby property at 160 Richmond Road. That property sold for $900,000 in December of 2017 (23 months after the valuation day), with a TAS price of $803,700.

17The Appellant prefers this comparable owing to its proximity to the Subject Property. The Appellant cites the TAS price of 160 Richmond Road, per square foot of building area of $416.90 as being the best indicator of the current value per square foot of the Subject Property. Multiplied by the square footage of the Subject Property of 1,069 sq. ft. this rate per square foot results in a current value calculation of $445,666.10. The Appellant rounded this value to $451,000 to represent its opinion of current value.

Findings on Issue 1

18The dispute over the best means of determining current value requires a determination prior to any specific findings on value. MPAC submits that the Appellant’s approach is flawed because it results in a current value that is less that an open market sale price of the Subject Property that took place in 2012 for $750,000 and that commercial property in the City increased in value from 2012 to the statutory valuation day of January 1, 2016.

19MPAC derived a value based on the sale value per square foot of land, of other properties it deemed to be suitably comparable to the Subject Property. However, that analysis used only improved properties. In the cost approach it is necessary to derive a value for the land only. The Board recognizes that vacant land isn’t always available for comparison, but in this case, MPAC adopted an approach where the land value was extracted from each of four sales by subtracting their improvement values from the total value.

20This might be considered appropriate, but MPAC failed in its analysis to explain where the improvement values of these four properties came from. That is a costing exercise that is normally carried out to complete a cost approach valuation. None of the data relating to improvement values or depreciation was in evidence. This is important data because MPAC’s valuation relies on it. Without an opportunity for cross-examination of the details by the Appellant, MPAC’s value assertions cannot be tested at the hearing. Without this important data, the Board disregards MPAC’s approach to current value.

21The Appellant applied a cost per square foot of building value, based on comparable properties. MPAC submitted that this approach is flawed as ‘the real value of these converted properties is the land value’ and for that reason MPAC’s should be the preferred approach. The Board does not agree.

22Using either a per square foot of building or square foot of land approach ignores the disparity in size between the Subject Property and the properties it is being compared with. Neither party adjusted its values to account for these differences.

23The Subject Property has a total of 1,069 sq. ft. of building area. The comparable property sales cited by the parties have building areas between 1,500 sq. ft. and 2,230 sq. ft. The Subject Property has a total of 4,422 sq. ft. of land area, while the comparable properties in evidence have land areas between 2,209 sq. ft. and 5,393 sq. ft. These area ranges are large when expressed as a percentage of the Subject Property and as a result are not a reliable means of determining what the Subject Property would sell for in an open market sale on the valuation day.

Bracketing

24The Board has frequently adopted an approach to determine current value that relies less on the quantitative data of comparable properties in evidence, and more on their qualitative characteristics. By reasonably deciding what comparable properties are superior and inferior to the Subject Property in value, a range of value can be determined within which the Subject Property would reasonably lie.

25In this case the Board has five properties in evidence. By comparing their characteristics with the Subject Property, the Board finds as follows:

• MPAC comparable property 1 – 1391 Wellington Street; lot area of 2,209 sq. ft., building area of 1,500 sq. ft.; property code 406; TAS value of $621,170;

• MPAC comparable property 2 – 1276 Wellington Street; lot area of 5,393 sq. ft., building area of 1,804 sq. ft.; property code 405; TAS value of $1,074,000;

• MPAC comparable property 3 – 89 Holland Avenue; lot area of 2,600 sq. ft., building area of 1,612 sq. ft.; property code 410; TAS value of 637,253;

• MPAC comparable property 4 – 91 Holland Avenue; lot area of 2,600 sq. ft., building area of 1,825 sq. ft.; property code 411; TAS value of $730,730;

• Appellant’s comparable property 1 – 160 Richmond Road; lot area of 5,485 sq. ft., building area of 2,230 sq. ft.; property code 410; TAS value of $803,700; and

• Subject Property – 181 Richmond Road; lot area of 4,422 sq. ft., building area of 1,069 sq. ft.; property code 406; TAS value of $852,000. The Subject Property also includes an income producing trailer, attached to the primary structure and a separate garage / storage building.

26The Board disregards the evidence related to MPAC’s comparable properties 3 and 4 and the Appellant’s comparable property 1. Those properties are in different property codes and do not reflect the Subject Property’s character as a converted dwelling for commercial use. This condition sets it apart from purpose built, single tenant or owner-occupied commercial properties that are represented by the comparable properties in property codes 410 and 411.

27In reviewing the two remaining comparable properties the Board finds that on a balance of probabilities, the Subject Property’s value is inferior to MPAC’s comparable property 2. That property has a larger lot area and a larger building area than the Subject Property. The Board also finds that the Subject Property is superior to MPAC’s comparable property 1. That property has a smaller lot area and a similar building area as compared to the Subject Property.

28The current value of the Subject Property, therefore, lies between the TAS values of MPAC comparable properties 1 and 2, at $679,235 and $1,074,000 respectively. The midpoint of those two values is $876,617. Accordingly, the Board finds that the correct current value of the Subject Property is $877,000, rounded.

Issue 2 – Does the current value determined require a reduction for it to represent equitable assessment when reference is made to the assessments of similar lands in the vicinity?

Appellant’s Evidence

29The Appellant produced an equity study that compared the assessments of 35 properties with their respective sale prices. The result of that comparison is the assessment to sales ratio. (“ASR”). ASRs are a common means of determining how a property’s assessment compares with the assessments of other properties. The Appellant’s list of properties included commercial properties in the City with property codes 405, 406 and 410.

30The Appellant’s calculations resulted in a range of ASRs, from 0.29 to 1.27, with a median on 0.84. The Appellant submitted that this result indicates that similar properties in the vicinity of the Subject Property are generally assessed below their respective current values by approximately 16%. The Appellant views similar properties to be in property codes 405, 406, 410 and 411. The Appellant also views the vicinity of the Subject Property to be the entire City of Ottawa.

MPAC’s Evidence

31MPAC also prepared an ASR study that compared the assessments of nine sales with their respective sale values. MPAC’s study resulted in a range of ASRs from 0.49 to 1.57, with a median of 0.97. As this median ASR falls within a range of 0.95 to 1.05, MPAC believes that is an indication that properties similar to the Subject Property in its vicinity are generally assessed at or near their respective current value and that no adjustment is necessary for the current value to be considered equitable assessment.

32MPAC’s sample included properties in the central part of the City, lying between the Queensway and the Rideau River. MPAC’s sample of nine properties are all in either the 405 or 406 property codes.

Findings on Issue 2

33The Act requires the Board to decide if the current value of the Subject Property requires a reduction for it to be considered equitable, when reference is made to the assessments of similar lands in the vicinity. This requires the Board to consider two aspects of any similar property used for reference to determine an equitable reduction: similarity and vicinity.

34Both parties elected to advance an ASR study in support of their respective cases. An ASR study is a common approach applied by parties before the Board as a means of determining the amount by which a given current value should be reduced for it to be considered equitable assessment. The Appellant considered 35 properties in its ASR study and MPAC considered nine.

35The Appellant’s list of properties included properties in the central core of the City and in the suburban areas of the greater City. Its sample included properties in the 405, 406 and 410 property codes. MPAC’s list of properties included only properties in the core area of the City with 405 and 406 property codes applied.

36The Board views the consideration of vicinity to be important here. The City is a vast municipality with a range of disparate characteristics in its neighbourhoods and environs. The Subject Property lies within the core of the City. The Board has widely held that the consideration of vicinity in making decisions on equitable reductions in assessment is a malleable concept and depends on the circumstances of the specific case at hand. Vicinity needs to include an area that contains the necessary number of properties to indicate the level of assessment in that area for properties that are similar. In this case the Board finds that the vicinity necessary to determine a reasonable sample of similar properties is the City core, where the Subject Property lies. The Board finds that outlying communities in the greater City area share fewer characteristics with the Subject Property in terms of other local amenities, local market conditions, foot traffic, access and supply and services.

37The concept of similarity has also been addressed by the Board on multiple occasions. In making its decision on the best method of determining whether the current value determined represents equitable assessment, the Board relies on Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299 (“Loblaw”), where Justice Nordheimer wrote in paragraph 25:

In my view, the proper approach to be taken to determining what are “similar lands in the vicinity” is that set out by Saunders J. in Trizec, that is, that all points of comparison must be considered.

38The direction indicated in Loblaw is helpful here. There are approximately 44 properties in evidence that have been adduced by the parties with respect to the question of equitable assessment. Some of these are in the same property code as the Subject Property and some are not. The Subject Property is property code 406, Commercial converted dwelling – retail. The sample of properties adduced by the Appellant includes property code 406, as well as property code 405, Commercial converted dwelling – office. The Appellant’s sample also includes property code 410, Commercial stand-alone restaurant less than 10,000 square feet.

39The Board finds that the most similar properties in evidence are those with the 405 and 406 property codes. These two property codes relate to properties that contain previous dwellings that have been converted to commercial use. That is the condition applicable to the Subject Property. Comparing the ASR of these types of properties to the exclusion of other property codes provides the best sample to determine the equitable assessment among the most similar properties in evidence, using all points of comparison.

40The parties adduced a total of 14 properties that are coded either 405 or 406 and that lie within the core of the City. The Appellant’s sample did not adjust sale prices to the valuation day to determine the respective ASRs. In order to develop a sample that is consistent in this regard, the Board has applied the same time adjustment factors to those sales as were applied by MPAC in its sample. The resulting 14 properties are listed below:

Property	2016 Current Value Assessment	Sale Month	Sale price	TAF MPAC	TAS	ASR
1122 Wellington	$986,000	January 2014	$1,875,000	1.073	$2,011,875	0.49
1272 Wellington	$1,123,000	October 2015	$1,668,458	1.009	$1,683,500	0.67
344 Frank	$889,000	September 2016	$1,200,000	0.976	$1,171,200	0.76
538 Rochester	$554,000	August 2017	$703,000	0.943	$662,929	0.84
176 Bronson	$1,219,000	August 2014	$1,350,000	1.051	$1,418,850	0.86
551 Somerset	$558,000	January 2015	$627,500	1.036	$650,100	0.86
336 McLaren	$1,081,000	March 2016	$1,200,000	0.994	$1,192,800	0.91
362 Rideau	$516,000	August 2015	$540,000	1.015	$548,100	0.94
1883 Baseline	$1,028,000	August 2016	$1,100,000	0.979	$1,076,900	0.95
151 Holland	$1,114,000	June 2015	$1,130,000	1.021	$1,153,730	0.97
1276 Wellington	$1,015,000	September 2014	$1,000,000	1.048	$1,048,000	0.97
83 Hinton	$703,000	July 2014	$650,000	1.054	$685,100	1.03
140 Holland	$600,000	February 2017	$600,000	0.961	$576,600	1.04
223 Echo	$602,000	February 2016	$475,000	0.997	$473,600	1.27
Median 0.925

41The resulting median ASR of these 14 properties selected for their similarity and vicinity when compared to the Subject Property is 0.925. The Board also notes that of the 14 properties in the sample, 11 have an ASR below 1.00. This is good evidence that similar properties in the vicinity are assessed below their respective current values, expressed as their TAS values.

42The Board finds therefore that the current value determined for the Subject Property requires a downward adjustment of 7.5% for it to be considered equitable when reference is made to the assessments of similar lands in the vicinity.

CONCLUSION

43The Board finds that the correct current value of the Subject Property is $877,000. The Board also finds that the current value determined requires a reduction for it to reflect equitable assessment when reference is made to the assessments of similar lands in the vicinity. The assessment is therefore reduced to $811,000.

ORDER

44The Board orders that the assessment of the Subject Property is reduced to $811,000 in the Commercial Property Class, for the 2023, 2024 and 2025 taxation years.