Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
May 08, 2025
FILE NO.:
WR 187992
Assessed Person(s):
Avondale Stores Limited
Appellant(s):
Avondale Stores Limited
Respondent(s):
Municipal Property Assessment Corporation Region 18
Respondent(s):
City of St. Catharines
Property Location(s):
431 Welland Avenue
Municipality(ies):
City of St. Catharines
Roll Number(s):
2629-030-027-00300-0000
Appeal Number(s):
3525814, 3511279 and 3535628
Taxation Year(s):
2023, 2024 and 2025
Hearing Event No.:
785964
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties
Counsel/Representative
Avondale Stores Limited
Jonas Perov; Jill Bender
Municipal Property Assessment Corporation
Nakita Ramjeawan
City of St. Catharines
No one appeared
HEARD:
February 11, 2025, with further submissions received February 25, 2025
ADJUDICATOR(S):
Anita Lovrich, Member
DECISION
OVERVIEW
Background
1Avondale Stores Limited (the “Appellant”) is the owner of 431 Welland Avenue in the City of St. Catharines (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 and 2025 taxation years 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, 2024 and 2025 taxation years was returned at $728,000 in the Commercial property class.
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, with an equitable adjustment, is $560,000 in the Commercial property class.
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 909,000 rounded in the Commercial property class.
6The City of St. Catharines 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 neighbourhood shopping centre with a variety store and restaurant, as well as a gas station.
Areas of Agreement
8The areas of agreement in this proceeding are:
The gas kiosk should be removed from the assessment.
The square footage of the total Subject Property is 23,142 square feet.
The gross leasable area (“GLA”) is 1,500 square feet for the diner and 2,590 square feet for the variety store.
The correct vacancy allowance is 6%.
The correct expense allowance is 6%.
The correct capitalization rate is 7%.
The value of the gas bar canopy is $46,129.
The value of the yard work is $19,407.
The correct classification is commercial.
Issues for the Hearing
9At issue in this proceeding is:
- What is the current value of the Subject Property, specifically:
a. What is the Fair Market Rent (“FMR”) of the diner and variety store?
b. What is the size and value of the land attributable to the gas bar?
Result
10For the reasons that follow, the Board finds that the correct current value of the Subject Property is $840,299.14, and that an equitable adjustment is not required, resulting in a final determination of current value of $840,000 (rounded).
ANALYSIS
Issue 1a – What is the FMR of the diner and variety store?
Introduction
11The parties agree that the retail portion of the Subject Property should be valued on the income approach.
12The 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: the first step requires a determination of the potential gross income (“PGI”) that the Subject Property can generate at full occupancy. Next, one must determine the appropriate allowance for vacancy loss and collection loss to derive a 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 is applied to the NOI to calculate current value. The only issue in dispute between the parties related to the income approach is the correct FMR to be applied.
Evidence and Submissions on FMR
MPAC - Evidence
13MPAC’s expert witness presented proposed comparable properties in the vicinity of the Subject Property that had similar tenancy and design type to the Subject Property.
14MPAC conducted an FMR analysis of the base rents of five proposed comparable variety stores and determined a median FMR of $15. MPAC conducted an FMR analysis of the base rents of six proposed comparable restaurants and determined a median FMR of $12.75.
15MPAC’s expert witness testified that, based on his analysis, the FMR for the variety store is $15 and the FMR for the diner is $12.75.
MPAC - Submissions
16MPAC 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.
In our view, it is not the function of the assessor to determine the competence of management, but to determine "what the typical tenant would be willing to pay for the occupancy of a particular property
for a specified period of time".
17MPAC also cited Queen's Court Developments Ltd. v. Municipal Property Assessment Corp., Region No. 15 [2007] O.A.R.B.D. No. 128, which held at para. 23 and 25:
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.
18On this basis, MPAC argued that market rents, not actual rents, must be used to determine FMR.
Appellant - Evidence
19The 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 FMR. He submits that the FMR for the diner was $10.16 per square foot and the FMR for the variety store, Avondale, is $9.16.
20In his expert report, the Appellant’s expert witness states that the diner paid $8.46 per square foot net rent in 2016 but paid $10.16 square foot net rent in 2015. At the hearing Appellant’s expert witness could not recall where he obtained the 2015 information.
21When asked by MPAC why his expert report states that the actual rent for the variety store, Avondale, was $11.23 but he instead used the value of $9.16 per square foot, he responded that he did not use the actual Avondale rent as Avondale is a corporate owner and he did not consider it an arms’ length lease, whereas the diner was. He testified that he discounted the Avondale actual rent but considered the diner rent is $10.16 for 1,500 square feet and so he “tapered it a bit for size” and considered 448 Welland Street across the street from the Subject Property which had an FMR of $11 per square foot and $7 per square foot for another tenant on that property. He stated that he felt it is being reasonable to use these rents (given that the property across the street has a higher number of tenants and is a dynamic property) and considered that the variety store should not have a greater FMR. This analysis was not included in his expert report but was provided in his oral testimony.
22The Appellant stated that some of MPAC’s proposed comparable properties were superior as they were in plazas with higher GLAs or themselves had higher GLAs, had no gas bars, were located in larger plazas and in “different locations” and that MPAC made no adjustments to account for this. The Appellant therefore argues that they are not appropriate comparators.
Appellant - Submissions
23The Appellant cited British Columbia (Assessor of area #09 - Vancouver) v. Bramalea, 1997 CanLII 3884 (BC CA) at paragraph 15 where the British Columbia Court of Appeal held that the Board did not err in using figures derived from the actual rents of the subject property, which was a hotel, stating:
The more one strays from actual experience, the more one introduces unreality that is not based on the uniqueness of the property being valued. The purpose of the income approach to valuation is to capture the unique value of the subject property, that is actual value. The income approach is designed to reflect many elements, including location, age, hotel rating and restaurant quality.”
Findings on Issue 1a
24In BCE Place Limited v. Municipal Property Assessment Corporation, 2010 ONCA 672, (“BCE Place”) the Court of Appeal for Ontario considered an appeal concerning the correct interpretation of "current value" in the Act, as applied to several large bank towers. The Court of Appeal compared the definition of “market value” in the Assessment Act, R.S.O. 1980, c. 31 to the new definition of “current value” in section 1 of the current Act, which is also the relevant statute in the current appeals, and held:
[22]…
section 18(2) of the old Act
18(2) … the market value of the land assessed is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.
section 1(1) of the new Act:
1(1) "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. [page528]
23As is apparent, the two definitions are almost identical, but for the inclusion of the phrase "fee simple, if unencumbered" in the new Act. I agree with the Divisional Court’s intent of the 1997 amendments was to clarify that the approach as taken by Robins J.A. in Nesse Holdings and Lacourcière J.A. in Cardinal Plaza Ltd. and Regional Assessment Commissioner, Region No. 19 (Re) was correct. The simple amendment instructs the assessor to ignore encumbrances, such as leases that are not at market rents. Where the income approach is taken, the assessor is, as held by Lacourcière J.A., to use market rents rather than actual rents. (emphasis added)
25In light of the Court of Appeal of Ontario’s decision, BCE Place, the Board must determine the market rent for a Subject Property and must ignore leases that are not at market rent.
26The Board notes that the Appellant in these appeals did not adduce evidence as to both of the Subject Property’s tenants’ actual rents. Rather, the Appellant’s expert witness used the actual rents for the diner but estimated the market rent of the variety store based on “tapering down” the diner rent and based on the leases of stores across the street from the Subject Property which were not included in the expert report.
27The Appellant submits that the FMRs presented by MPAC are superior and not indicative of market rents for the Subject Property as they have higher GLAs, no gas stations, or different locations, but the Appellant did not adduce its own market rent analysis to demonstrate that this is the case nor present market-based evidence to support its opinion of what the market rents are in its expert report.
28The 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 the variety store is $15 and the FMR for the restaurant is $12.75.
Current value
29Applying MPAC’s FMRs to the 1,500 square feet for the diner and 2,590 square feet for the variety store amounts to:
i. Diner: 1,500 x $12.75 = $19,125
ii. Variety store: 2,590 x $15.00 = $38,850
30The Board finds that the PGI of the Subject Property is $57,975.
31Applying the vacancy and collection allowance of 6% and the operating expense rate of 6% to the PGI results in an NOI of $51,226.71. Applying the agreed-upon capitalization rate of 7% to the NOI results in a current value of $731,810.14 for the diner and variety store portion of the Subject Property, utilizing the income valuation methodology.
Issue 1b - What is the size and value of the land attributable to the gas bar?
32There was no dispute between the parties that the total square footage of the Subject Property is 23,142 square feet and the parties are in agreement that the gas bar and land associated with it should be valued on the basis of the cost approach. The cost approach includes the value of land associated with the costed improvement, which must be valued in accordance with the cost approach. However, the parties did have a dispute as to both the size and value of the land attributable to the gas bar.
MPAC - Evidence and Submissions
33With respect to size, MPAC’s expert witness states that the total land attributable to the gas bar should be increased from 8,240 square feet currently associated with the gas bar to 10,000 square feet to account for the ingress and egress associated with the gas bar. It states that there is extra space around the gas canopy to allow access to underground tanks which need to be accessed by a tractor trailer with a liquid fuel tanker. MPAC states that the land is purpose-built to accommodate the gas bar as the additional space is required for a fuel tanker to ingress, egress, and maneuver for liquid fuel replenishment.
34MPAC’s expert witness testified that the three uses on the Subject Property require different amounts of land to operate their respective businesses but the gas bar use requires a larger proportion of the land to function compared to the diner and variety store uses. He testified that the areas around gas bar are in excess of the minimum amount required by the municipal zoning bylaw, so although customers for the income property can park there, it was purpose built for the gas bar and should therefore be attributed to the gas bar as land value on the cost approach. MPAC submits that having that area of asphalt area surrounding the gas bar be associated to the retail area with no added parking would be considered super adequate.
35MPAC states that the diner, gas station, and retail store, all have the same parking requirements as per “City of St. Catharines Comprehensive Zoning Bylaw 2013-283” and that vehicles attending the location would share the 19 parking spots (which are not marked). However, the area associated with the gas pumping stations at 810 square feet and the storage tanks are solely used for the sale of fuel. MPAC’s expert witness stated that in his opinion 10,000 square feet portion of land is required for maneuvering tractor trailers with liquid fuel tankers as well as their ingress and egress.
36With respect to the value of the land associated with the gas bar, MPAC reviewed the following six vacant land sales in the vicinity of the Subject Property:
Property 1
Property 2
Property 3
Property 4
Property 5
Property 6
Roll Number
262901000217700
262901002702300
262906003000600
262905001100100
262906003000600
262906003713001
Address
354 Glendale Ave
97 Hartzel Rd
502 Ontario St
446 Niagara St
502 Ontario St
104 Lakeport Rd
Neighbourhood
A51 - 4016
Q04 - 4016
A15 - 4012
A15 - 4012
A15 - 4012
A60 - 4011
Property Code and Description
(105) Vacant Commercial Land
(105) Vacant Commercial Land
(105) Vacant Commercial Land
(105) Vacant Commercial Land
(105) Vacant Commercial Land
(105) Vacant Commercial Land
Distance in km
4.1601
2.3631
3.8945
1.9581
3.8945
4.2377
Valuation
Current Value Assessment
$261,000
$241,000
$837,000
$201,000
$837,000
$693,000
Property 1
Property 2
Property 3
Property 4
Property 5
Property 6
Sale
Sale Date
2015-08-28
2016-12-07
2017-04-13
2015-12-02
2014-02-28
2016-10-04
Sale Amount
$300,000
$242,000
$317,500
$225,000
$290,000
$625,000
Time Adjusted Sale Amount
$311,319
$215,834
$270,894
$226,174
$322,155
$569,100
Site
Effective Site Area (Acres)
0.54
0.54
0.29
0.23
0.29
0.74
Actual Site Area (Acres)
0.54
0.54
0.29
0.23
0.29
0.74
Rate per acre
$576,516.67
$399,692.59
$934,117.24
$983,365.22
$1,110,879.31
$769,054.05
37MPAC’s expert witness testified that the two most comparable properties are properties 1 and 2 as they are a very similar size to the Subject Property and all vacant land:
Subject Property
Property 1
Property 2
Roll Number
2629-030-027-00300-0000
2629-010-002-17700-0000
2629-010-027-02300-0000
Address
431 Welland Avenue
354 Glendale Avenue
97 Hartzel Road
Property Code and Description
(430) Neighbourhood Shopping Centre -with more than two stores attached, under one ownership, without anchor – generally less than 150,000 sq. ft.)
(105) Vacant Commercial Land
(105) Vacant Commercial Land
Distance in KM
4.1601
2.3631
Valuation
Current Value Assessment
$728,000
$261,000
$241,000
Sale
Sale Date
2015-08-28
2016-12-07
Sale Amount
$330,000
$242,000
Time Adjusted Sale Amount
$311,319
$215,834
Site
Effective Site Acre (Acres)
0.53
0.54
0.54
Actual Site Acre (Acres)
0.53
0.54
0.54
Rate per Acre
$576,516.67
$399,692.59
Sq. Ft. in 1 Acre
43,560
Best Comparable Median
$488,104.63
Median Rate per Sq. Ft.
$11.21
Commercial Land Valued
$8,240
Subject Land Valuation
$92,332.01
38MPAC submits that using 10,000 square feet associated with the gas bar business, the updated land valuation is $112,053.40.
Appellant - Evidence and Submissions
39With respect to the size of the land associated with the gas bar, the Appellant’s expert stated that MPAC valued the entire lot of 23,142.33 square feet at $8.42 a square foot for a total $194,752. He calculated the land value for the gas bar as 810 square feet (accounting for the covered area of the canopy) divided by 4,900 (the total covered area of the canopy and variety store and diner) which amounts to 0.165 (meaning that the canopy makes up 16.5% of the covered area). Multiplying this by the total square footage of the Subject Property of 23,142.33 square feet amounts to 3,818 square feet, which the Appellant states is the land attributable to the gas bar.
40With respect to the value of the land associated with the gas bar, the Appellant’s expert presented six property sales but relied only on one as being sufficiently comparable, that being 97 Hartzel Road, whose time adjusted sale price (using MPAC’s time adjustment factors) is $350,000 per acre or $8.03 a square foot. The land value per square foot returned was $8.42 per square foot and he stated that he deferred to that value due to the “subjective nature” of his adjustment. The Appellant’s expert multiplied 0.165 by $194,752 (the land value as returned by MPAC) which amounts to $32,134, which the Appellant says is the value of the land associated with the gas bar.
41The Appellant’s expert stated that MPAC’s proposed land size attributable to the gas bar, as per the diagram presented by MPAC, leaves no allowance for access for cars to drive to and from the variety store or restaurant, and is thus too large. He also stated that the area around the canopy is rarely used by trucks and trailers to access the underground tanks whereas the same area is used more often by the customers of the retail and diner to drive in and out of the plaza as well as to the parking spots near it.
Findings on Issue 1b
42There was no dispute between the parties that the correct valuation methodology for the Subject Property is the income valuation methodology for the variety store and diner, with the gas bar valued on the cost approach. The dispute between the parties is the amount of land attributable to the gas bar, which is required to support the gas bar and should therefore be valued independently as it is not captured by the income approach. The parking and land required for improvements that are captured on the income approach cannot be included.
43MPAC’s proposed land area attributable to the gas bar, in the diagram illustrating the area that was adduced by MPAC, includes the gas station canopy, six of the parking spaces, as well as maneuvering space for a large refueling vehicles and cuts off the area of the income-producing property away from approximately three parking spots located near the gas station. The Board finds that MPAC’s proposed land area attributable to the gas bar does not allow sufficient space for retail and diner customers to drive in or out of the plaza or for driving to and from the parking spaces at the plaza which are utilized by the variety store and diner customers as well as by gas station customers. MPAC’s proposed land area therefore includes some space that is required for the income-producing portion of the Subject Property, and which is therefore already captured by the income methodology. Utilizing MPAC’s proposed area would risk double-assessing some land that is already valued by the income approach. For these reasons, the Board finds that the best evidence before the Board of the land attributable to the gas bar is the Appellant’s proposed size of 3,818 square feet.
44Regarding the value of the land attributable to the gas bar, the Board finds that proposed sales 1 and 2 from MPAC are most comparable to the Subject Property as they are a very similar size to the Subject Property and are both vacant land. The median time adjusted rate per acre is 488,104.63. Applying this to the 3,818 square feet (0.088 acres) attributable to the gas bar amounts to $42,953, which the Board finds is the value of the land attributable to the gas bar.
Findings on Current Value
45As determined above:
the current value of the diner and the variety store is $731,810.14.
the current value of the land associated with the gas bar is $42,953.
the current value of the gas bar canopy is $46,129 (as agreed by the parties).
the current value of the yardwork is $19,407 (as agreed by the parties).
46Based on the findings above, the current value of the Subject Property is $840,299.14.
Issue 2 - Is the current value equitable with the assessments of similar lands in the vicinity?
Applicable Law
47Section 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.”
Evidence and Submissions of the Parties
Appellant
48The Appellant provided an equity analysis report reflecting an Assessment to Sales Ratio (“ASR”) analysis. The ASR of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If sold properties are being assessed below their current value, as demonstrated in an ASR less than 1.0, a reduction in the Subject Property’s assessment below the correct current value may be required to make the Subject Property assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by comparing the assessment as returned to the time adjusted sale price, expressed as a mathematical ratio.
49The Appellant relies on the sales of eight properties with the property code 430 Neighbourhood Shopping Centre - With More Than 2 Stores Attached, Under One Ownership, Without Anchor - Generally Less Than 150,000 square feet that sold between between January 1, 2015 and December 31, 2016. The Appellant testified that the analysis reveals an ASR of 0.95, which means that similar properties in the vicinity have been assessed below their current values and an equity adjustment not required. However, when asked where he obtained the data for his equity analysis, the Appellant’s expert witness could not answer where he obtained that data.
50The Appellant’s expert argued that one of the properties in MPAC’s equity analysis which is the one property with a high time adjusted sales ratio, 161 Church Street, is an outlier and should not be considered, since there are no other 430 properties in the Appellant or MPAC’s equity study with a time adjusted sales ratio higher than 1.0. It submits that this is not typical and should be discarded. The Appellant argued that the assessment of the property was increased as a result of a renovation in 2016 following the sale of the property, so it is not appropriate to have that property included in an assessment to sale ratio study as the renovation occurred post-purchase and resulted in an increase in the property’s assessment whereas the sale price reflects the pre-renovation state of the property.
51The Appellant’s expert states that removing sale number 8 from the MPAC equity study results in a time adjusted sales ratio of 0.95.
MPAC
52MPAC provided an equity analysis report reflecting an Assessment to Sales Ratio (“ASR”) analysis. MPAC takes the position that equity is achieved if the median ASR falls between 0.95 and 1.05.
53MPAC relies on the sales of eight properties with the property code 430 Neighbourhood Shopping Centre - With More Than 2 Stores Attached, Under One Ownership, Without Anchor - Generally Less Than 150,000 square feet that sold between January 1, 2015 and December 31, 2016 within the vicinity of St. Catharines. MPAC testified that the analysis reveals an ASR of 0.96, which means that similar properties in the vicinity have been assessed at or near their current values and an equity adjustment is not required.
54For the sale disputed by the Appellant, MPAC states that the 2016 assessment does not reflect the renovation and the sale price does not reflect the renovation either, so it is an appropriate sale to include in the analysis.
Findings on Issue 2
55The Board does not rely on the Appellant’s proposed comparable properties to determine whether an equitable adjustment should be applied as the Appellant’s expert witness could not answer, when questioned by MPAC, where he obtained the information in his equity analysis.
56The Board accepts MPAC’s testimony that, for the sale disputed by the Appellant, the 2016 assessment does not reflect the renovation and the sale price does not reflect the renovation either, so it is an appropriate sale to include in the analysis. The Board accepts and relies on MPAC’s ASR analysis that demonstrates an ASR of 0.96. The Board finds that the ASR is a tool routinely relied on to ascertain whether a property requires an equitable adjustment.
57The Board finds that, when reference is made to the assessments of the most similar properties in the vicinity of the Subject Property, no equitable adjustment to reduce the current value determined is required.
CONCLUSION
58The Board finds that the correct current value is $840,299.14, and that an equitable adjustment is not required, resulting in a final determination of current value of $840,000 (rounded).
ORDER
59The Board orders that current assessed value of the Subject Property is $840,000 (rounded) in the Commercial property class for the 2023, 2024, and 2025 taxation years.