T Valeri Construction Limited v. Municipal Property Assessment Corporation Region 19, 2025 CanLII 74177

Tribunals Ontario / Tribunaux décisionnels Ontario

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

ISSUE DATE: May 27, 2025

FILE NO.: WR 188143A

AMENDED DECISION ISSUED: July 21, 2025

Assessed Person(s): T Valeri Construction Limited

Appellant(s): T Valeri Construction Limited

Respondent(s): Municipal Property Assessment Corporation Region 19

Respondent(s): City of Hamilton

Property Location(s): 1670 Garth Street

Municipality(ies): City of Hamilton

Roll Number(s): 2518-081-101-08175-0000

Appeal Number(s): 3505087, 3513370, 3525928 and 3535698

Taxation Year(s): 2022, 2023, 2024 and 2025

Hearing Event No.: 785813

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

APPEARANCES:

Parties	Representative
T Valeri Construction Limited	Paul Grosman
Municipal Property Assessment Corporation	Michael Radan
City of Hamilton	John O’Kane

HEARD: February 18 and 19, 2025 by video conference

ADJUDICATOR(S): Dan Weagant, Member

AMENDED DECISION

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 updated values at various paragraphs. The amendments have been underlined for ease of reference. There are no other changes in this Amended Decision.

OVERVIEW

1T Valeri Construction Limited (the “Appellant”) believed that the assessment returned on the roll for 1670 Garth Street (the “Subject Property”) for the 2022 taxation year of $36,759,000 was too high. In accordance with s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), the Appellant filed an appeal with the Assessment Review Board (the “Board”). Pursuant to s. 40(26) of the Act, that appeal is deemed to apply to the subsequent 2023, 2024 and 2025 taxation years.

2The Appellant believed that the correct assessment of the Subject Property should be reduced to reflect a current value of $30,215,000 and that the current value should be reduced further to reflect equitable assessment. The Appellant submits that the correct equitable assessment of the Subject Property is $22,963,400.

3In response to the appeal, the Municipal Property Assessment Corporation (“MPAC”) determined a current value of $33,642,000. MPAC believes that no adjustment to this value is required for it to reflect equitable assessment.

4The City of Hamilton (the “City” or “Hamilton”) is also a respondent in the case. The City believes the assessment returned was too low and that it should be increased to $42,040,000. Further, the City believes that this current value represents equitable assessment without a reduction.

Background

5The Subject Property is in the new multi-residential property class. The improvements on the Subject Property were built, pursuant to a building permit issued on or after April 20, 2017. The construction of the existing multi-residential building concluded in time for the 2022 roll return.

Areas of Agreement

6The parties agree that the Subject Property is in the new multi-residential property class. The parties also agree that the income approach to value is the correct valuation method.

Issues for the Hearing

7At issue in this proceeding is:

1. The determination of the current value of the Subject Property, and in particular:

a. The best source of fair market rents, vacancy allowance, expense allowance and capitalization rate; and

2. Whether a reduction in the current value should be made for the purposes of equitable assessment, and if so, the amount of that reduction and the correct method in determining the reduction.

Result

8The Board finds that the current value of the Subject Property is $35,430,731. The Board also finds that this value requires a reduction when reference is made to the assessments of similar lands in the vicinity. Accordingly, the current value determined is reduced to $34,368,000 for the purposes of equitable assessment.

PRELIMINARY MATTERS

9During the hearing, it became evident that the expert reports filed by the Appellant and the City contained some errors. Those errors were corrected in testimony and the parties undertook to circulate corrected copies of those expert reports after the hearing concluded. Where references are made to the Appellant’s and the City’s expert reports in this decision, those references relate to the corrected reports.

ANALYSIS

Description of Subject Property

10The Subject Property is a multi-family residential development, with occupancy in 2022. The improvements include two residential apartment towers with a common entry and amenity area connecting the two towers. The combined building contains 183 residential units comprised of 34 one-bedroom units, 138 two-bedroom units and 11 three-bedroom units. The site contains a total of 186 surface parking spaces on approximately 3.67 acres of land. The property lies at the corner of Garth Street and Rymal Road West, in the area of the City known as the Mountain, (“Mountain”).

Issue 1 – What is the Correct Current Value of the Subject Property during the years under appeal?

Income Approach to Value

11All three parties adopted the income approach in determining an opinion of current value. The income approach first determines the income derived from the rents achieved by a property. The result is the Potential Gross Income (‘PGI’). The PGI is then reduced by a vacancy and collection loss allowance. The result is the Effective Gross Income (‘EGI’).

12The EGI is then reduced by an allowance for expenses not covered by rental income. When the EGI is reduced by this expense allowance the result is the property’s Net Operating Income (‘NOI’).

13To determine the current value of the Subject Property, its NOI is divided by the capitalization rate applicable in the sector of the market related to the Subject Property.

14The result is the Subject Property’s current value and is widely accepted as being representative of the value of an income producing property that reflects the future income producing potential of that property to investors.

15The inputs used in the income approach are derived from those values reflected in the market of comparable properties.

MPAC’s Evidence and Submissions

Potential Gross Income

16MPAC’s methodology of determining the Fair Market Rent (“FMR”) at the Subject Property considered rental information from three sources. The first of these were the 2016 rents produced by two purpose built rental buildings in downtown Hamilton, known as 140 Main Street West (“140 Main”) and 149 Main Street West (“149 Main”). These were newly built multi-residential properties. The rents derived from that analysis ranged from $1,200 for a one- bedroom unit to $2,539 for a three-bedroom unit.

17MPAC also cited market rents of multi-residential properties in the broader City of Hamilton. Those market rents were drawn from documents provided to MPAC from property owners under MPAC’s Assessment Information Request Program. That rent summary indicated FMRs of one-bedroom through three-bedroom units ranging from $1,004 to $1,938 per month including utilities. MPAC testified that these rents were time adjusted to the valuation day.

18MPAC also considered the actual rents generated by the Subject Property, drawn from leases that became effective in 2020. Those rents were provided to MPAC by the Appellant. Those rents ranged from $1,125 to $2,213 for one-bedroom, two-bedroom and three-bedroom units.

19MPAC submitted that the Subject Property is unique with many features and amenities not found in older buildings and that these are features and amenities that would command a premium in the rental market on the Mountain. As a result, it was MPAC’s position that the best way to determine the adjustment required for this premium is to use the actual rents achieved.

20Further, MPAC submitted that where the Subject Property is newly built, the best evidence of market rents is a range of rents negotiated prior to move in.

21These rents were adjusted by MPAC to account for the effects of time, back to January 1, 2016 based on the Canada Mortgage and Housing Corporation 2016 Rental Market Reports (“CMHC 2016”) data that shows increases in rents from 2016 to 2020. MPAC testified that according to CMHC 2016, rents increased at 16.1 % during that time. MPAC then reduced the actual rents at the Subject Property by 16.1% to arrive at rents adjusted from 2020.

22The resulting FMRs relied on by MPAC are as follows:

Unit Type	FMR/Month	Number of Units	FMR per Unit Type/ Month	Total Annual FMR
1 BDRM	$1,004	23	$23,092	$277,104
1 BDRM (Large)	$1,177	11	$12,947	$155,364
2 BDRM	$1,262	24	$30,288	$363,456
2 BDRM (Large)	$1,514	114	$172,596	$2,071,152
3 BDRM	$1,938	11	$21,318	$255,816
Parking Spaces	$ 75	186	$13,950	$167,400
Total PGI				$3,290,292

Vacancy and Collections Loss Allowance

23MPAC determined a vacancy and collection loss of 2.4%, drawn from its Market Valuation Report (“MVR”). The MVR was not in evidence and in cross examination, MPAC’s expert witness admitted to assuming that the 2.4% figure was agreed to by the parties prior to the hearing. In any case, it was still MPAC’s testimony that 2.4% represented the correct vacancy and collection loss allowance for multi-residential properties in Hamilton.

24A 2.4% reduction for vacancy and collection loss amounts to a reduction of the PGI, under MPAC’s approach of $78,967.

25The resulting EGI is $3,211,325.

Non-Recoverable Expenses Allowance

26Using the same MVR, MPAC determined an expenses allowance of 45%, testifying that as of the date of the MVR it was MPAC’s understanding that this percentage was agreed to by the parties and held to that amount in testimony.

27By reducing the EGI determined after vacancy loss was deducted, MPAC’s calculation of the Subject Property’s NOI was $1,766,229.

Capitalization Rate

28Similar to its assumption of agreement on vacancy loss and expenses allowance, MPAC also proceeded on the same basis with respect to the applicable capitalization rate (“cap rate”) of 5.25%. This cap rate was derived from MPAC’s corporate data base. MPAC disregarded a comparison it undertook between the Subject Property and the sale of 140 Main as being indicative of the market cap rate in the City. MPAC’s position was that the comparison of the Subject Property with a single sale was not suitably indicative of a reasonable cap rate. MPAC preferred the cap rate determined from the broader data set.

29MPAC arrived at its opinion of current value of the Subject Property by dividing the NOI determined by the cap rate of 5.25 %. That result was $33,642,000, rounded.

The City’s Evidence and Submissions

Potential Gross Income

30To determine its opinion of the applicable FMRs at the Subject Property, the City analyzed the actual rental data at the Subject Property and adjusted those rents for the impact of changes over time between 2020 and the January 1, 2016 valuation day.

31The City adjusted the actual rents by applying the results of a review of rents among newer apartment buildings in Hamilton. The results of that analysis was not in evidence, but the City submitted that one these comparisons were made, the result was a ‘reconstructed rent roll as of January 1, 2016’, with results as follows:

Unit Type	Number	Estimated Market Rent	Monthly Rental Income	Annual Rental Income
Standard One-bedroom	23	$1,100	$ 25,300	$303,600
One-bedroom - Large	11	$1,295	$14,245	$170,940
Two-bedroom	24	$1,375	$33,000	$396,000
Two-bedroom - Large	114	$1,500	$171,000	$2,052,000
Three-bedroom	11	$2,000	$22,000	$264,000
Parking	186	$ 75	$13,950	$167,000
Total PGI			$279,545	$3,353,540

Vacancy and Collections Loss Allowance

32The City adopted a vacancy and collections loss allowance of 3.5% of PGI. That figure was adjusted from the CMHC 2016 vacancy allowance of 3.8% for properties on the Mountain. The City adopted the slightly lower value because the CMHC 2016 report was based on 2015 data and it was the opinion of the City that the rate would be lower in 2016. The City calculated the vacancy and collections loss allowance from its selected percentage at $117,293. When that amount was subtracted from the City’s PGI, the result was an EGI of $3,233,947.

Non-recoverable Expenses Allowance

33The City reviewed expenses incurred at newer buildings constructed in the City and surrounding municipalities and found a range of operating expenses in the 25% to 35% range. The City also reviewed the operating expenses provided by the Appellant on the Subject Property in 2020, 2021 and 2022, noting an increase from 2020 through 2022 from 24.66% to 36.32%.

34Specifically, the City cited operating expenses at two Downtown Hamilton properties; 140 Main and 149 Main with percentages ranging from 26.94% to 30.37%. From this range of percentages, the City adopted 30% as a reasonable operating cost. To that figure, the City added 2% as a structural reserve cost and a 3% management fee expense.

35The City’s position was a total of 35% in operating expenses, expressed as a percentage of EGI. That total is $1,131,881. When deducted from the EGI above, the result is an NOI of $2,102,066.

Capitalization Rate

36The City conducted a study of cap rates resulting from sales in Hamilton and St. Catharines. Those rates varied from 4.2 % to 5.5%, with the highest resulting from the sale of a 95-unit apartment building in St. Catharines. The average cap rate resulting from those six sales was 4.82%.

37The City also reviewed a “Q1 – 2016” cap rate analyses produced by Coldwell Banker Real Estate (“CBRE”) for market areas surrounding Hamilton, and combined as London-Windsor, Kitchener-Waterloo and Toronto:

CBRE 2016	Indicated Cap Rate Range	Mid-Range
Toronto	3.25% - 4%	3.625%
Kitchener-Waterloo	4.5% - 5%	4.75%
London-Windsor	5% – 5.5%	5.25%

38From this data, the City adopted a 5% cap rate as being reasonable and appropriate for the Subject Property.

The Appellant’s Evidence and Submissions

Potential Gross Income

39To determine the FMRs at the Subject Property, the Appellant elected to use historic rental data in the City and CMHC 2016 to adjust the actual, average rents achieved by the Subject Property in 2020. The Appellant then reduced those rents in accordance with the change in overall rental rates in the City.

40The Appellant testified that the actual rents at the Subject Property were as follows, as drawn from 2020 rent rolls:

Unit Type	Average Rent by Unit type
One-bedroom	$1,125
One-bedroom (Large)	$1,363
Two-bedroom	$1,421
Two-bedroom (Large)	$1,720
Three-bedroom	$2,214

41The Appellant also testified that based on CMHC 2016 data, rents in Hamilton increased from the valuation day of January 1, 2016 to January 1, 2020, the earliest year that rental data was available at the Subject Property. The Appellant testified that the differences were 17.38% for one-bedroom apartments, 17.55% for two-bedroom apartments and 17.69% for three-bedroom apartments.

42By applying these reductions to the 2020 actual rents, the Appellant testified that 2016 levels would be as follows:

Unit Type	Indicated 2016 Rent	No. Units	Monthly Income	Annual Income
One-bedroom	$929	23	$21,367	$256,404
One-bedroom (Large)	$1,126	11	$12,386	$148,632
Two-bedroom	$1,172	24	$28,128	$337,536
Two-bedroom (Large)	$1,418	114	$161,652	$1,939,824
Three-bedroom	$1,822	11	$20,042	$240,504
Parking	$50	183	$9,150	$109,800

43The Appellant then compared these 2016 equivalent rents with the average rents in Hamilton included in CMHC 2016, noting that in each comparison the rents calculated were higher than the CMHC 2016 published rents. The Appellant’s opinion is that this difference is to be expected given that the Subject Property is a new building and that the CMHC 2016 results incorporate rents in properties of all ages, condition and location.

44In addition, the Appellant compared these results to the range of rents included in MPAC’s MVR. By following the MVR with respect to adjustments related to unit size, building class, neighbourhood and whether a property was in a high-rise building, the Appellant arrived at the following rents:

Unit Type	Indicated Rent by MPAC MVR
One-bedroom	$996
One-bedroom(Large)	$1,226
Two-bedroom	$1,138
Two-bedroom (Large)	$1,403
Three-bedroom	$1,481

45The Appellant noted that MPAC’s MVR results are drawn from geographic areas outside of Hamilton and are derived from a series of adjustments, leading to the opinion that the actual rents, adjusted to the valuation day are the best indicator of FMR, given that the Subject Property is the only one of its kind in the identifiable area of the Mountain.

46To address the FMR of outdoor parking spaces, the Appellant submitted that MPAC’s application of $75 was too high, particularly when compared to the $20 to $35 it applies through the MVR for outdoor parking in the City, noting that if the same percentage increase were applied to parking as to apartment units, the result would be $62 per space, reduced from the $75 adduced by MPAC. The Appellant adopted a monthly parking FMR of $50, lying at a mid-point between the reduced $62 figure and the MVR figure of $20 to $35 per space.

47When the selected rents are applied to the number of units of each type and the available parking spaces, the Appellant’s opinion of PGI totaled $3,032,700.

Vacancy and Collections Loss Allowance

48Citing CMHC 2016, the Appellant noted that the vacancy in the Hamilton area was 3.8%. Using additional data in that report, the Appellant also noted that in the Mountain market specifically, vacancy rates for one-bedroom, two-bedroom and three-bedroom apartments had differing vacancy rates of 4%, 4.1 % and 5.9 % respectively.

49The Appellant determined an opinion that the appropriate vacancy rate for apartments in the Mountain area should be 4.2%, by using the CMHC 2016 data.

50When applied to the Appellant’s opinion of PGI of $3,032,700 the resulting vacancy and collections loss allowance adduced by the Appellant is $127,373.

51The resulting EGI from the Appellant’s evidence is $2,905,327.

Non-recoverable Expenses Allowance

52The Appellant testified that the operating expenses at the Subject Property were tracked for the three years of operation. Those expenses, expressed as a percentage of the PGI, were 26.88% in 2020, 28.9% in 2021 and 36.49% in 2022. The Appellant expressed an opinion that, given MPAC’s market-based calculation of 45%, the expenses allowance at the Subject Property should be 40% because:

1. MPAC’s MVR includes a range of apartment buildings with varying characteristics, making it less applicable to the Subject Property;

2. The actual 2022 expenses at the Subject Property do not reflect the stabilized, ongoing expense levels that are to be included in the capitalized income approach to value.

53The Appellant also testified that in addition to the operating expenses, other non-recoverable expenses need to be accounted for. These include a typical 2% allowance for structural repairs and maintenance and a separate management fee of 6%, citing the lower end of a range of 6% to 12% of PGI relied upon by the Appellant.

54The total expenses allowance adduced by the Appellant, including structural allowance and management fees is $1,394,557. When this amount is deducted from the EGI above, the result is a NOI of $1,510,770.

Capitalization Rate

55To determine a cap rate for the income approach valuation, the Appellant cited two sources of data. The first was a sample of four sales of multi-residential buildings. Three of these sales were of properties in Hamilton, with the fourth being a sale in Kitchener.

Address	Sale Date	Sale Price	No. of Units	Resulting Cap Rate
140 Main St. W., Hamilton	April 2017	$80,692,478	321	4.75%
718 Lawrence Rd., Hamilton	December 2017	$6,000,000	55	4.20%
355 Melvin Ave., Hamilton	February 2017	$11,050,000	118	5.45%
100 Old Carriage Rd., Kitchener	December 2017	$37,690,000	218	4.75%

56The second source of data cited by the Appellant was a 2016 Cap Rate Survey conducted by CBRE North America (“CBRE Survey”). The Appellant acknowledged that there is no separate category for the City in these survey results. However, the Appellant deemed the Kitchener-Waterloo Market and the London Market, both reflected in the CBRE Survey, to be comparable in rental levels, with Hamilton having a higher vacancy rate than either of the other two markets according to CMHC 2016.

57The CBRE Survey indicated a range of cap rates in the Kitchener-Waterloo market of 4.5% to 5.0% and a range of cap rates in the London-Windsor market of 5.0% to 5.5%. The Appellant further analyzed the CBRE Survey results and determined that, for a High-Rise Class B building in the Kitchener-Waterloo market, the range of cap rates is 4.75% to 5.25%. The Appellant considered the Kitchener-Waterloo market to be the most comparable to the Hamilton market.

58The Appellant selected 5% as the most appropriate cap rate for the Subject Property as it lies within the range determined for the Kitchener-Waterloo market. The Appellant considered this evidence to be superior to the evidence of cap rates in the sales comparison conducted owing to the limited comparability of the four sales in that analysis.

59When the 5% cap rate is applied to the NOI of the Subject Property, the Appellant arrived at a current value of $30,215,000.

Findings on Issue 1

Fair Market Rent and PGI

60All three parties filed previous decisions of the Courts relating to the question of what constitutes FMR. There was general agreement that the best evidence of FMR is rental data from comparable properties that represent the ‘market’. There is scant documentary evidence of FMRs for properties in this property class. The parties agree that the only two rental buildings in the same property class as the Subject Property are 140 Main and 149 Main referenced in all three of the parties’ materials.

61These are imperfect comparisons. 140 Main and 149 Main are much larger than the Subject Property and are located in the core of the lower City and not on the Mountain. There is clearly a distinction of these two market areas in evidence. All of the fourth party data cited by the parties (CMHC 2016, CBRE, Altus Group, Real track) differentiates the lower City and the Mountain into different markets.

62The Board prefers the actual rents derived from leases at the Subject Property. It is the only evidence of rents for new, multi-family residential property on the Mountain. The Subject Property was leased up quickly upon approval to occupy. There is no evidence that these initial leases are in any way compromised from the perspective of stabilization or that there are some other rents that might more suitably be considered ‘market rents’.

63All three parties modified the actual rents reported by the Appellant for 2020, recognizing that they needed to be adjusted to reflect the rents that would have applied at the valuation day, four years earlier. The process each of them took is detailed above. The Board finds that each of the three approaches to adjusting rents has merit. None of them, in the Board’s view can be considered wrong, or ill-conceived. In short, there is nothing in any of the three approaches to distinguish it from the others.

64The three positions on time adjusted, actual rents were developed by experienced professionals. The Board places equal weight to the three approaches and, using the average of the three values for each, finds that the correct fair market rents at the Subject Property are as follows:

Fair Market Rent Summary

Unit	MPAC	City	Appellant	Average	No. Units	Monthly total	Annual Total
1 bedroom	$1,004	$1,100	$929	$1,011	23	$23,253	$279,036
1 bedroom – large	$1,177	$1,295	$1,126	$1,199	11	$13,189	$158,268
2 bedroom	$1,262	$1,375	$1,172	$1,270	24	$30,480	$365,760
2 bedroom – large	$1,514	$1,500	$1,418	$1,477	114	$168,378	$2,020,536
3 bedroom	$1,938	$2,000	$1,822	$1,920	11	$21,120	$253,440
Parking	$75	$75	$50	67	186	$12,462	$149,544
Total						$268,681	$3,226,584

65When these average FMRs are used to determine PGI, the result is $3,226,584.

EGI

66To determine the vacancy and collections loss allowance the parties took different approaches. MPAC relied on its MVR value of 2.4%. The Appellant and the City referenced the CMHC rental market data in evidence and in particular the 3.8% vacancy rate derived by CMHC 2016 for the Mountain sub-market in 2016.

67The Appellant made an upward adjustment to that percentage owing to the timing of the data used in the CMHC 2016 data.

68The City adopted to reduce the CMHC 2016 figure to 3.5% owing to the result being driven by data collected in 2015. The City adduced no evidence as to how that 0.3% reduction was determined.

69MPAC’s reliance on the 2.4% vacancy allowance is unclear as to source and was adduced in evidence as having been agreed to by the Parties. That assumption turned out to be erroneous. The Board also has no documentary evidence pointing to the adjustments made to the CMHC 2016 vacancy figure by either the City or the Appellant. The Board finds that the best evidence of the correct vacancy and collection allowance is the 3.8% determined by CMHC 2016.

70When the vacancy allowance of 3.8% is applied to the Board’s finding of PGI, the vacancy allowance is $122,610, resulting in an EGI of $3,103,974.

NOI

71The parties’ positions on operating cost allowance were consistent in approach; only the opinions of the specifics differed. MPAC adopted a standard 45% operating expense, consistent with its MVR. It made no distinction between the components of operating expenses within that percentage. MPAC’s percentage was consistent with its MVR for multi-residential buildings.

72The City adopted a total expenses allowance of 35% EGI, made up of general maintenance and operation (30%), structural maintenance reserve (2%) and management fees (3%) which it considered standard for the purpose. The City selected the 30% portion of the total as a midpoint between a 25% to 35% range determined to be consistent with “…newer buildings constructed within the City and surrounding municipalities throughout southwestern Ontario.” The City also noted that the Subject Property had reported expenses for 2020, 2021 and 2022, ascending from approximately 24% to 36% during that time and that two newer buildings in downtown Hamilton had reported expenses in the 27% to 30% range.

73The Appellant cited the 2022 expense report generated from the Subject Property as evidence of higher expense allowance. That expense report totaled approximately 36.5% of PGI. The Appellant adjusted that figure upward slightly, indicating that expenses at the Subject Property had not yet stabilized by 2022 and that the correct stabilized operating expense was likely to be approximately 40%. That sub-total, the Appellant added a 2% structural reserve, consistent with the City’s findings.

74Lastly, the Appellant cited a “…review of multi-residential management company fees indicating a management expense rate between 6% and 12%.” Resulting from that review, the Appellant adopted a 6% management fee as part of the total expense allowance.

75The two approaches adduced by the City and the Appellant total 35% and 48% respectively. The Board finds that MPAC’s position on expenses is too generalized and not specific enough to the facts at hand to be considered with the other two parties’ positions.

76When equal weight is given to the City’s and Appellant’s positions, the result is a 41.5% expense allowance. When this percentage is applied to the EGI, the non-recoverable expense allowance is $1,288,149. When this amount is deducted from the EGI, the resulting NOI is $1,815,825.

Cap Rate

77The parties varied little in their respective positions on the cap rate value to be applied. The City conducted a study of cap rates resulting from sales in Hamilton and St. Catharines. Those rates varied from 4.2 % to 5.5%, with the highest resulting from the sale of a 95-unit apartment building in St. Catharines. The average cap rate resulting from those six sales was 4.82%. The City also reviewed cap rate analyses produced by Colliers and CBRE for market areas surrounding Hamilton that reported cap rates ranging from 3.5% to 5.5%. In consideration of this data, the City determined a cap rate of 5%.

78MPAC adopted a cap rate of 5.25% that it assumed to be agreeable to all parties. This rate was derived from MPAC’s MVR.

79The Appellant determined a cap rate of 5%, drawing on a process of considering sales in Hamilton and Kitchener and CBRE’s published cap rate analysis. Similarly to the results of the City, the Appellant adopted a cap rate from these comparisons of 5% for the Subject Property.

80The Board finds that none of the three approaches to the cap rate calculation are more compelling than the others in evidence. For that reason, the Board finds that on a balance of probabilities the cap rate to be applied to the Subject Property’s NOI is 5.125%; the midpoint between the two percentages adduced by the parties.

Current Value

81When the NOI determined is divided by the capitalization rate, the Board finds the resulting current value result is $35,430,731.

Issue 2 – Is a reduction in the Current Value determined necessary for it to reflect equitable assessment when reference is made to the assessments of similar lands in the vicinity?

Appellant’s Evidence and Submissions

82To determine the equity of the current value assessment, the Appellant conducted a sales analysis of 14 properties that sold in Hamilton between July 2014 and December 2017. The sale prices of those 14 sales ranged from $3,375,000 to $80,692,478. The Appellant time-adjusted these sale values as necessary, to allow those values to be compared with the Subject Property’s current value as though the sales occurred on the valuation day.

83The Appellant adopted a ‘paired sales’ method to determine the amount of value change along the timeline represented by the dates of 14 selected sales of comparable properties. That method compares a sale of a property that took place before the valuation day and compares that sale value to the value of a sale of the same property that occurs after the valuation day. From that comparison, the estimated sale value on the valuation day can be determined between the date range defined by the two sales.

84The Appellant arrived at a value change per month of 1.51%. This monthly change in value was then applied to the 14 sales the Appellant deemed to be similar to the Subject Property. The adjusted sale values were then compared to those properties’ respective assessments. The result was a range of Assessment to Sale Ratios (“ASR”) from 0.44 to 1.15 with a median of 0.76 and an average of 0.80.

85From this result, the Appellant submitted that similar lands in the vicinity of the Subject Property are assessed at a level that is 76% of their respective current values, as expressed as time adjusted sale prices. The Appellant then applied the median 0.76 % to the current value adduced of $30,215,000 to arrive at an adjusted, equitable assessment of $22,963,400.

City’s Evidence and Submissions

86The City submitted that no reduction in the current value determined was required for it to be considered equitable. It did so by comparing the assessment to a time adjusted sale value of the only new multi-residential property in Hamilton that sold in proximity to the valuation day. This sale at 140 Main is the same sale considered by MPAC for the same purpose.

87The City’s result differs from MPAC’s same comparison (see below) owing to an alternative method of time adjustment of that sale price. The City’s result on that sale was an ASR of 1.11, indicating an assessment above that time adjusted sale value and therefore requires an adjustment for the purposes of achieving equitable assessment.

MPAC’s Evidence and Submissions

88MPAC submitted that:

1. the onus to prove the current value assessment is not equitable lies with the Appellant;

2. the assessment is presumed equitable in the absence of evidence to the contrary; and

3. the Appellant has not provided evidence that the current value determined require a downward adjustment for it to be considered equitable when reference is made to the assessments of similar lands in the vicinity.

89MPAC also submitted that, while the Appellant’s expert witness provided an ASR study in an attempt to show that the assessment was not equitable, the properties used in the study do not reflect all points of comparison. Rather, the Appellant’s study only focuses on one point of comparison, use as a multi residential income producing property.

90MPAC cited Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299, where Nordheimer J. found that using a single point of comparison was not determinative of the equity of the assessment and that the idea of “all points of comparison” mirrors wording used in, Trizec Equities Ltd v Ontario (Regional Assessment Commissioner, Region No 27), [1988] OJ No 182, 27 OAC 203, 37 MPLR 175, 8 ACWS (3d) 399 (“Trizec”). Citing Trizec, MPAC submitted that Saunders J. was faced with the same issue, and that he found that the Board was required to “consider all points of comparison” and then concluded on the issue by saying:

All points of comparison must be considered. The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.

91Further, MPAC submitted that the Appellant’s ASR study failed to consider the age of the buildings, the size of the properties, the number of units in each building, or the suite mix. On cross examination, the Appellant’s expert admitted that the age of the properties used in his ASR study was significantly older with a majority having been built in the previous century.

92The Appellant’s own evidence also showed that the properties used in the ASR study are significantly smaller. Seven out of the 14 or in other words half of the properties used in the ASR study had less than 60% of the number of units than the Subject Property.

93To determine the time adjustment factor for its ASR study the Appellant completed a pair sales analysis of the11 properties. Nine of those properties had a sale that occurred in the shoulder years.

94MPAC determined that the only sale in Hamilton that could be used for a comparison for equitable assessment purposes was the sale of 140 Main. This was the only sale in MPAC’s records that involved a property in the new multi-residential property class. That property sold in April of 2017 for $80,692,478. MPAC adjusted that sale price downward by 15.19% to account for the value change between the valuation day and the date of the sale. That adjustment resulted in a time adjusted value of $70,764.

95In summary, MPAC submitted that the Appellant has not shown that the assessment requires a downward adjustment to make it equitable. It submits that the Appellant’s ASR study did not consider all points of comparison as the Board is required to do.

96MPAC submitted that the best evidence of equitable assessment is the ASR resulting from its comparison with the sale of 140 Main of 0.97. MPAC submitted further that this ASR result is within an accepted range to indicate that a reduction in current value for the purposes of equitable assessment is not required in this case.

Findings on Issue 2

97MPAC compared the time adjusted sale price of 140 Main, the only new multi-residential property that sold in proximity to the valuation day in Hamilton. That comparison rendered a time adjusted ASR of 0.97%. MPAC submitted that this ASR falls within a range of 0.95 and 1.05 that the International Association of Assessing Officers considers to be reflective of equitable assessment. MPAC’s position was therefore, that no reduction in the current value is necessary for it to reflect equitable assessment.

98Using the same sale evidence, but a different method of time adjustment that the City arrived at an ASR of 1.10 for the same property adduced by MPAC, resulting in an opinion that the adjustment was necessary.

99The Appellant submitted a comparison of the Subject Property’s assessment to those of 14 high rise apartment buildings in Hamilton. Those 14 properties varied in their time adjusted sale values from under $4 million, to just under $69,000,000. Unit counts at the 14 properties used by the Appellant ranged from 46 at one sale and 618 at another sale that appeared to apply to a multiple building transaction.

100In determining whether a current value determination requires a reduction for it to be considered equitable requires the Board to consider the vicinity of the Subject Property as compared to the other properties used in an analysis of assessment to sale value comparisons. The Board must also consider the similarity of the properties used in the analysis.

101During the hearing, it was clear that the parties agreed on one thing; the Subject Property has unique characteristics that make it difficult for comparison. This was evident in determining current value. It is also evident here, with a very small sample that reflects the characteristics and condition of the Subject Property.

102The Board disregards the Appellant’s equity analysis as it relies on multiple properties that cannot be considered suitably similar to the Subject Property due to differences in age, size, classification and other general characteristics. The Board prefers MPAC’s equity analysis where the only new multi-residential property at 140 Main, sold in proximity to the valuation day. The resulting ASR is 0.97. MPACs ASR is drawn from a mass appraisal data and the Board finds that this source is the best for the purpose because it applies to all properties of the type under appeal. This is good evidence that the most similar comparison of assessment indicates the current value determined for the Subject Property is 3% higher than its equitable assessment.

103The Board finds that the current value determined requires a downward adjustment for it to be considered equitable when reference is made to the assessments of similar lands in the vicinity. The current value determined herein is reduced by 3% from $35,430,731 to $34,367,809; $34,368,000 rounded.

CONCLUSION

104The Board finds that the current value of the Subject Property is $35,430,731. The Board also finds that a reduction in the current value is required for it to be considered equitable when reference is made to similar lands in the vicinity.

ORDER

105The Board orders that the assessment of the Subject Property be reduced to $34,368,000 in the new multi-residential property class for the 2022 through 2025 taxation years.

"Dan Weagant"

DAN WEAGANT

MEMBER

Assessment Review Board

Website: www.tribunalsontario.ca/arb