Tribunals Ontario - Assessment Review Board
Issue Date: August 25, 2025 File No.: ID 188197A Amended Interim Decision Issued: September 4, 2025
Assessed Person(s): Chiefton Investments Limited Appellant(s): Amazon c/o James Poliyanskiy Respondent(s): Municipal Property Assessment Corporation Region 15, City of Brampton
Property Location(s): 7850 Heritage Road Municipality(ies): City of Brampton Roll Number(s): 2110-140-099-00262-0000 Appeal Number(s): 3483055, 3483056, 3483057, 3512783, 3488642. 3525521 and 3535252 Taxation Year(s): 2021, 2022, 2023, 2024 and 2025 Hearing Event No.: 782169
Legislative Authority: Sections 34, 36 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, Rule 50(c) of the Board’s Rules of Practice and Procedure
Appearances:
- Amazon; James Poliyanskiy; Chiefton Investments Limited: Jamie Walker, Jack Walker
- Municipal Property Assessment Corporation: Karey A. Lunau
- City of Brampton: No one appeared
Heard: October 19 and 20, 2023 by video conference Adjudicator(s): Pierre R. Lavigne, Member
AMENDED INTERIM 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 Interim Decision is issued to correct error(s) in the Interim Decision regarding the removal of the words ‘average of the’ at paragraph [140]. The amendments have been underlined for ease of reference. There are no other changes in this Amended Interim Decision.
OVERVIEW
1Amazon (the “Appellant”) has appealed the 2021 supplementary assessment of $33,606,884 issued for a newly constructed 382,985 square feet (“sq. ft.”) warehouse/sorting centre located at 7850 Heritage Road (“Subject Property”), in the City of Brampton (“City”) in the Regional Municipality of Peel. The Appellant also appeals the 2022 annual assessment of $47,996,000 for the Subject Property as improved. The Appellant submits that the assessments are incorrect because they are too high.
2The appeals are brought pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). Pursuant to s. 40(26) of the Act, the Appellant is deemed to have been brought the same appeals in respect of the 2023, 2024 and 2025 taxation years.
3Pursuant to s. 40(11) of the Act the municipality is a party to the Appeal. In this proceeding the municipality did not appear on the hearing of the appeal.
4The principal issues are the retrospective January 1, 2016 current value of the Subject Property as improved by the warehouse/sorting centre, as well as the supplementary assessment for the building only value of the sorting centre newly constructed in 2021.
Background
5Prior to the construction and occupancy of the sorting centre the assessment of the 22.52 acre site for the 2021 taxation year was $14,389,116 as vacant land (appeals 3483055 and 3483057). The Municipal Property Assessment Corporation (“MPAC”) made a supplementary assessment of $33,606,884 for the completed sorting centre with an effective date of April 20, 2021, Appeal 3483056. This supplementary assessment was made pursuant to s. 34 of the Act. The assessment of the Subject Property as improved with the building was $47,996,000 for the 2022 taxation year.
6MPAC’s position is that the 2016 current value of the Subject Property as improved is $51,500,000. The Appellant takes the position that the 2016 current value of the Subject Property as improved is $44,500,000.
Areas of Agreement
7The parties appearing at this appeal hearing agree as follows:
a. With respect to the valuation of the Subject Property using the Income Approach, the Net Operating Income (“NOI”) is $2,579,355.
b. With respect to the valuation of the Subject Property using the Direct Comparison Approach, the Building Square Footage is 382,935 sq. ft.
c. With respect to the valuation of the Subject Property using the Cost Approach, the Replacement Cost Net Less Depreciation is $35,042,442 and the Site Area is 22.52 acres.
d. The equity reduction required by s. 44 (3)(b) of the Act is 12%.
Issues for the Hearing
8At issue in this proceeding are:
Preliminary matters a. Admissibility of late filed documents;
A determination of the 2016 current value of the Subject Property as improved; a. The relevant statutory provisions; b. MPAC’s expert witness’ credibility or reliability due to alleged breaches of the Assessment Review Board’s (“Board”) Rules of Practice and Procedures (“Rules”) and of appraisal Professional Standards; i. Failure to comply with Rule 50(c) of the Board’s Rules ii. Failure to state a Hypothetical Condition iii. Failure to particularize a Jurisdictional Exception iv. Failure to comply with Practice Notes v. Bias c. The most appropriate valuation methodology d. The value using in the Income Approach. i. The correct direct yield capitalization rate ii. 2016 current value conclusion
Whether, pursuant to s. 44(3)(b) of the Act, an equity reduction in the current value should be made?
The value of the 2021 s. 34 supplementary assessments.
Result
9The correct 2016 current value of the Subject Property is $49,600,000, derived from the Income Approach with a capitalization rate of 5.2%.
10The equitable reduction of 12% results in an equitable assessment of $43,650,000.
PRELIMINARY MATTERS
Issue 1 - Admissibility of Appellant’s Late Filed Documents
11On September 12, 2023, the day before the scheduled hearing, the Appellant filed documents to be admitted into evidence. The Schedule of Events (“SOE”) required parties’ documents to be filed by April 25, 2023.
12The Case Management Report and Order (“CMRO”) issued June 29, 2023 indicates that “the parties confirmed there were no outstanding preliminary matters.” The CMRO also advised that “If, after the settlement conference date, any matters arise that can be resolved on a preliminary basis prior to the hearing, the parties are to request their resolution by way of an Expedited Board Direction Form (“EBDF”) at the earliest possible opportunity.”
13At the Case Management Conference the parties agreed to a three day hearing to take place on September 13, 14 and 15, 2023.
14At the September 13, 2023 hearing the presiding Member recused herself for valid reasons and the hearing was rescheduled to October 19 and 20, 2023.
Appellant’s Submissions on Admissibility of Documents
15The Appellant submitted that the documents contained no new information, were uncontroversial and would be of assistance to the Board to better apprehend the evidence.
MPAC’s Submissions on Admissibility of Documents
16MPAC objected to the admission of new documents because they had not been filed by the due date and no exceptional circumstances permitted late filing.
Reasons on the Admissibility of Late Filed Documents
17At the hearing the Board ruled that the Canadian Uniform Standards of Professional Appraisal Practice (“CUSPAP”) and the Appraisal Institute of Canada Practice Notes 2022 (“Practice Notes”) were admissible evidence but refused to admit the other documents. The following are the reasons for this ruling.
18The CUSPAP and Practice Notes documents are technical information within the specialized knowledge of this tribunal. As such they are documents which the tribunal may take notice of pursuant to s. 16(b) of the Statutory Powers Procedure Act, RSO 1990, c S.22 without further proof. They were referred to in each expert witness’ report and were therefore also incorporated by reference.
19The other documents, compiled by the Appellant, were to support their expert witness’s testimony. No reason was advanced why they could not have been filed by the April 25, 2023 SOE date. No exceptional circumstances were advanced why they should be admitted, other than they would assist the Board in better understanding the evidence.
20Both parties relied upon the Board’s decision in Maple Lodge Farms v Municipal Property Assessment Corporation Region 15, 2023 CanLII 19281 (ON ARB) (“Maple Lodge”). In Maple Lodge late documents were not admitted as no exceptional circumstances were established.
21The Appellant submits that the documents submitted contain no new information and that this distinguishes the present proceedings from Maple Lodge. In the Board’s view this was not the basis of the decision in Maple Lodge.
22The decision in Maple Lodge does not rest on whether the documents compiled by the Appellant contained new information. There were only two issues in Maple Lodge - were the document served in time and were there exceptional circumstances. As the documents to be entered into evidence were not filed by the due date and as no exceptional circumstances were shown the Board ruled these other documents inadmissible.
Findings on Issue 1: Admissibility of Appellant’s late file documents
23At the hearing, the Board found the CUSPAP Professional Standards documents and Practice Notes admissible. All other late filed documents were ruled inadmissible.
ANALYSIS
Description of Subject Property
24The Subject Property is an irregularly shaped parcel of 22.52 acre. In 2021, the parcel was improved by the construction of a 382,935 sq. ft. warehouse-type sorting centre.
Issue 2 – What is the 2016 Current Value of the Subject Property as Improved?
Issue 2.a. - Relevant Statutory Provisions
25Section 19(1) of the Act provides that the assessment of land shall be based on its current value. Section 1 of the Act defines current value as “… the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.”
26Section 19.2(1) paragraph 4 of the Act requires that the valuation day for the 2017 to 2020 taxation years be as of January 1, 2016. Section 48.6 of Ontario Regulation 282/98 requires that the valuation day for the 2021, and subsequent taxation years be as of January 1, 2016, as well.
27Section 34(1)(a) of the Act permits mid taxation year supplementary assessments to add the increase in value due to the erection of any building on the Subject Property.
28Pursuant to s. 40(17) of the Act, the onus is on MPAC to prove the correct value of the Subject Property.
29Section 44(3)(b) provides for a reduction from correct current value to make the assessment equitable to similar properties in the vicinity.
Issue 2.b. – Credibility and Reliability of MPAC’s Expert Witness
30A central submission of the Appellant was that MPAC’s expert witness evidence was not credible and/or reliable because of cumulative failures of the expert’s report to adhere to the Board’s Rules and/or CUSPAP Standards and Practice Notes.
31As the allegation is one of cumulative failure affecting credibility and/or reliability, this question must be analysed before a detailed examination of property-specific evidence.
32For the reasons that follow, the Board finds that there has been no cumulative failure to adhere to the Board’s Rules or to professional standards by MPAC’s expert witness.
33The Board notes that the test for the admission of expert evidence is that outlined in the Supreme Court of Canada decision of White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 SCR 182. In assessment matters it is not necessary that an expert witness be a member of any accrediting organisation. While membership is evidence of expertise, the Board may admit as expert opinion evidence that of any witness who satisfies the legal test.
34For the reasons that follow, the Board finds that the most appropriate valuation methodology is the Income Approach. Accordingly, each of the Appellant’s grounds of challenge to credibility and/or reliability will be examined as they apply to MPAC’s expert witness who testified with respect to the Income Approach and the Direct Comparison Approach.
Appellant’s Evidence and Submissions
35MPAC’s Income Approach and Direct Comparison Approach expert witness (“MPAC’s witness”) was an Accredited Appraiser, Canadian Institute (AACI), accredited by The Appraisal Institute of Canada.
36In paragraph 13 of the June 29, 2023 CMRO, the Appellant confirmed it was not questioning the qualifications of any of MPAC’s expert witnesses. In submissions, the Appellant acknowledged that failure to raise a preliminary objection to qualification did not render expert evidence inadmissible but only went to weight.
37The Appellant’s expert witness, also an accredited appraiser (AACI), testified during evidence-in-chief that MPAC’s witness’ reliance on sales 16-20 months after the valuation date raised numerous concerns regarding the use of hindsight data as well as non-compliance with the requirements of CUSPAP.
38The Appellant relied on Ramakko v Municipal Property Assessment Corporation, Region 30, 2018 CanLII 104603 (ON ARB) (“Ramakko”) paragraph 39 where the Board decided that “It is obviously open to the Appellant to challenge the validity or reliability of the Assessor's analysis and conclusions by calling evidence referencing property appraisal standards…”.
MPAC’s Evidence and Submissions
39MPAC submits that in cross-examination MPAC’s witness clearly testified that her impugned expert report and evidence was in all respects compliant with the Board’s Rules, CUSPAP, the Practice Notes and past Board decisions.
Analysis of MPAC’s Witness Credibility and Reliability
40What follows is a detailed examination of each of the instances of non-compliance or breaches of MPAC’s witness expert report alleged by the Appellant.
Issue 2.b.i. - Did MPAC’s Witness Expert Report Fail to Comply with Rule 50(c) of the Board’s Rules?
41The Board finds that MPAC’s witness expert report did comply with Rule 50(c).
Appellant’s Evidence and Submissions of Non-Compliance with Rule 50(c)
42Rule 50 provides as follows:
Expert Reports
- An expert report shall contain the following information:
(a) the expert’s name, address and area of expertise;
(b) the expert’s qualifications, employment, and educational experiences in his or her area of expertise;
(c) the instructions provided to the expert in relation to the proceeding;
(d) …
43The Appellant submits that MPAC’s expert witness breached Rule 50(c) because the report did not include the retainer letter providing the instructions to the expert.
44The Appellant submits that the Board’s Rule 50 is based on R. 53.03(2.1) paragraphs 1-6 of the Ontario Courts of Justice Act Rules of Civil Procedure RRO 1990, Reg. 194. Case law interpreting Ontario Rule of Practice R.53.03(2.1) is persuasive to determine the requirements of Board’s Rule 50.
45The Appellant submits that the purpose of the Rule 50(c) is to determine the content of the instructions, who provided them, and when they were provided. The Appellant submits that the retainer letter is required to satisfy Rule 50(c). In support of this position counsel relied upon Browne (Litigation Guardian of) v. Lavery, 2002 CanLII 49411 (ON SC) (“Browne”).
MPAC’s Evidence and Submissions on Non-Compliance with Rule 50(c)
46MPAC submits that MPAC’s expert report complies with Rule 50(c) by stating that the instructions were in the introduction of the expert report as follows:
As requested, and as per the Terms of Reference provided herein, I have prepared this report to provide my opinion of the Market Value1, on an all-cash basis, of the Fee simple2 in interest in 7850 Heritage Road in Brampton (subject property) as of the effective date of January 01, 2016.
47MPAC submits that the Rule does not require the production of the retainer letter.
48MPAC also submit the Appellant failed to seek an early remedy for the alleged breach of the Rules, in effect saying the Appellant has waived any breach of the Rules.
Analysis: Rule 50(c)
49The Board disagrees with the Appellant’s submission that the Rule 50(c) requires an expert report to include counsel’s retainer letter.
50The Appellant’s reference to paragraph 70 of Browne does not assist. This decision did not address the production of instruction letters to comply with Ontario Rule of Civil Procedure 53.03(2.1), on which the Board’s Rule 50 is based. It dealt with whether communications between client and expert were producible on discovery.
51Though the Court in Browne ordered production of the instruction letter on discovery, the Court indicated that whether such letters should be produced was a controverted issue. The Court stated at para.71, that “This area of the case law cries out for appellate review.”
52The Ontario Court of Appeal resolved this controversy in Moore v. Getahun, 2015 ONCA 55 (“Moore”) at paragraph 72. It held that communications between counsel and the expert are covered by qualified litigation privilege. The Court stated at paragraph 78 that “Absent a factual foundation to support a reasonable suspicion that counsel improperly influenced the expert, a party should not be allowed to demand production of draft reports or notes of interactions between counsel and an expert witness”.
53The specific question of whether counsel’s instruction letter to an expert should be disclosed was answered in the negative by the Superior Court in Maxrelco Immeubles Inc. v Jim Pattison Industries Ltd., 2017 ONSC 5836 (“Maxrelco”) at paragraphs 36-38, relying on the Court of Appeal’s reasoning in Moore.
54In the present matter, as in Maxrelco, there was no factual foundation to support a reasonable suspicion that counsel improperly influenced the expert. Accordingly, the instruction letter was not required to be contained in the Expert Report to satisfy Board Rule 50(c).
55The purpose of the Board’s Rule 50(c) is to answer the question “What was the expert asked to do?” Absent a factual foundation to support a reasonable suspicion that counsel improperly influenced the expert, a description in the expert report of the nature of the task requested of the expert is sufficient to comply with Board Rule 50(c).
Finding on Issue 2 b.i.- Compliance with Board Rule 50(c)
56The Board finds that MPAC’s expert complied with the requirements of the Board’s Rule 50(c).
Issue 2.b.ii. - Did MPAC’s Expert Report Fail to Invoke a Hypothetical Condition, a Requirement of Professional Standards?
57The Board finds that the Appellant has not established that a Hypothetical Condition was required in MPAC’s expert witness report.
Appellant Evidence and Submissions on the Hypothetical Condition
58The Appellant alleges that MPAC’s expert report was non-compliant with Rule 6.2.8 of CUSPAP, which requires a Report to “identify any Hypothetical Condition”, because the Report failed to indicate that the sorting centre was constructed in 2021 and not in existence at the 2016.
MPAC Evidence and Submission on the Hypothetical Condition
59MPAC submits that MPAC’s witness’ evidence was that a Hypothetical Condition was not required. Further that the Report clearly indicated it was a retrospective opinion of value as of January 1, 2016 for a building constructed in 2021.
60MPAC submits that if a Hypothetical Condition was required, the Appellant’s expert report was also deficient in that it did not include an Extraordinary Assumption, contrary to Rule 7.10.3 of CUSPAP.
Analysis: Requirement of Hypothetical Condition
61Section 3.22 of CUSPAP defines Effective Date as follows:
The date at which the analyses, opinions, and conclusions in an Assignment apply. The Effective Date may be different from the Inspection date and/or the Report date. [see 6.2.5,7.7]
62Section 3.28 of CUSPAP defines Extraordinary Assumption as follows:
An assumption, directly related to a specific Assignment, which, if were not assumed to be true, could materially alter the opinions or conclusions. [see 6.2.7, 7.9]
Extraordinary Assumptions presume uncertain information about or anticipated changes in: the physical, legal or economic characteristics of the subject property; or about: conditions external to the subject property such as market conditions or trends, or the integrity of data used in an analysis to be fact.
63Section 3.36 of CUSPAP defines Hypothetical Condition as follows;
A specific type of Extraordinary Assumption that presumes, as fact, simulated but untrue information about physical, legal, or economic characteristics of the subject property or external conditions, and are imposed for purposes of reasonable analysis.
64Section 7.10.3 of CUSPAP states as follows:
A Hypothetical Condition requires an Extraordinary Assumption.
65The Appraisal of Real Estate, (3rd Canadian Edition), an authoritative text on real estate appraisal in Canada, dealing with Assignment Conditions, states at p.7.6:
It is of utmost importance that appraisers disclose information about assumptions and limiting conditions so that the client is not misled by the omission of essential information about the scope of work of the assignment.
66MPAC’s witness expert report clearly stated it was a retrospective report with an effective date of January 1, 2016. The report at paragraph 24, clearly indicates the building was constructed in 2021.
67The Appellant’s expert report included the following:
- The following hypothetical condition has been invoked in this appraisal report. • The building and site improvements that improve the Subject Property were constructed in 2021. Consequently, they did not exist as of the effective date of valuation and their inclusion in the estimated Current Value is based upon the hypothetical condition that they did exist.
68The evidence of the parties’ experts was contradictory. MPAC’s witness testified that a Hypothetical Condition was not required. The Appellant’s expert included a Hypothetical Condition but not an Extraordinary Assumption. No independent expert witness testified as to whether either or both reports were non-compliant with CUSPAP. On the evidence adduced, the Board is unable to conclude that either expert was in breach of professional standards.
69In any event, any alleged breach would be immaterial as the Board was not misled by either expert report, with respect to the retrospective nature of the opinion and the fact that building was constructed in 2021.
Finding on Issue 2.b.ii: Requirement of Hypothetical Condition
70The Board finds that the Appellant has failed to substantiate its allegation that MPAC’s witness was non-compliant with this professional standards.
Issue 2.b.iii - Did MPAC’s Expert Report Fail to Particularize the Jurisdictional Exception, a Requirement of Professional Standards
71The Board finds that MPAC’s witness did not fail to particularize a jurisdictional exception.
Appellant’s Evidence and Submissions: Jurisdictional Exception
72Paragraph 18 of MPAC’s expert report is as follows:
JURISDICTIONAL EXCEPTION
- A Jurisdictional Exception is declared for this report for the author who is an accredited member of the AIC. This report is prepared in accordance with the Assessment Act, R.S.O. 1990 c.A31 and the ARB Rules of Practice and Procedure for use in appeal hearings. Appeal hearings focus on the issues in dispute and as such the mandatory Appraisal and Consulting Standards contained in the CUSPAP exceed the Assessment Act and the ARB’s requirements, thus warranting a Jurisdictional Exception.
73Section 3.43 of CUSPAP definitions states in part:
JURISDICTIONAL EXCEPTION:
“An Assignment condition that permits the Member to disregard a part or parts of these Standards that are determined to be contrary to law or public policy in a given jurisdiction [see 5.3.9,7.10.6, 19.4.1, 19.8].
… In a Report the Member must identify the part or parts of CUSPAP disregarded as well as provide a reference to the law, regulation or legal authority that precludes compliance and supports the Jurisdictional Exception…. [see 19.8.3
74The Appellant submits that the expert report did not comply with s. 3.43 of CUSPAP because it did not state the CUSPAP standards which were disregarded.
MPAC’s Evidence and Submissions on Jurisdictional Exception
75MPAC submits that the expert report did not disregard any part of CUSPAP. MPAC’s witness simply stated that CUSPAP reporting standards exceeded the requirements of the Board.
Analysis: Jurisdictional Exception
76The Board finds no breach of s. 3.41 of CUSPAP’s definition of Jurisdictional Exception. The Board agrees with MPAC’s submissions that MPAC’s expert report did not state that any part of CUSPAP had been disregarded. The report simply stated that CUSPAP standards exceeded the requirements of the Board. Accordingly, there was no need to particularize that any part of CUSPAP had been disregarded.
Finding on Issue 2.b.iii. - Jurisdictional Exception
77The Board finds that MPAC’s witness did not fail to particularize a Jurisdictional Exception a requirement of CUSPAP definition s. 3.43.
Issue 2.b.iv. - Did MPAC’s Expert Fail to Adhere to s. 3.11.2 of the CUSPAP Practice Notes by using August 2017 Market Hindsight Evidence that was Inconsistent with the January 1, 2016 Effective Date, in breach of Professional Standards
78The Board finds that MPAC’s witness’ use of market evidence from after the effective date was in compliance with s. 3.11.2 of the Practice Notes.
Appellant’s’ Evidence and Submissions: Compliance with Practice Note
79CUSPAP Practice Note 3.11 provides as follows:
3.11 Retrospective Value Opinion (RSR 6.2.5)
3.11.1 A retrospective appraisal is complicated by the fact that the Member already knows what occurred in the market after the effective date. Use of direct excerpts from reports prepared at the retrospective effective date can provide information about market conditions as of the retrospective effective date,
3.11.2 In preparing a retrospective valuation, it is recommended that hindsight or after-the-fact evidence not be used unless the subsequent data is consistent with data as of the effective date.
80The Appellant submits that MPAC’s witness was required to comply with the requirements of CUSPAP as well as the Practice Notes.
81The Appellant submit that MPAC’s witness was non-compliant with s. 3.11.2 of the Practice Notes by relying on August 2017 hindsight or after-the -fact sales evidence that was inconsistent with data on the January 1, 2016 effective date.
82The Appellant also submits that MPAC’s witness, who conducted both the Income Approach and Direct Comparison Approach analysis, time-adjusted the sales used in the Direct Comparison Analysis but failed to do so in the Income Approach Analysis. The Appellant cite this as evidence of inconsistency with market data at the effective date which goes to credibility and reliability.
83The Appellant also submitted that MPAC’s 2017 sales were data inconsistent with the effective date of January 1, 2016 because capitalization rates were falling over that period. The Appellant cites paragraph 70 of MPAC’s expert report which refer to a) the Altus InSite Investment Trends Survey showing overall capitalization rates at the end of March 2016 of between 4.8% and 6.5% with an average at 5.4% for Greater Toronto Area benchmark Single Tenant Industrial Buildings; b) Appendix F, Colliers 2016 Mid-Year Review, which states “Cap(italization) Rates for big-boxes continue to decline, finishing mid year 2016 at 5.5%; and c) Appendix G, Colliers 2016 Year End Review, which states “Cap(italization) Rates for big-box buildings continue to decline, finishing 2016 at 5.3%.
MPAC’s Evidence and Submissions: Compliance with Practice Note
84MPAC submits that, using the Income Approach, MPAC’s witness’ 2017 sales evidence was consistent with market evidence at the effective date of January 1, 2016. MPAC submits that MPAC’s witness’ testimony was that any changes in capitalization rates were “marginal”.
85MPAC submitted that sales 12 months on either side of the valuation date are normally relied upon by the Board provided that this period can be extended to provide sufficient sales for a representative sample.
Analysis: Compliance with Practice Notes is not Mandatory.
86The Appellant incorrectly submits that the expert report was “required” to comply with the Practice Note. Only compliance with Definitions, Standard Rules and Standard Comments is mandatory (see CUSPAP Rule 2.2.1 and 2.2.2 and 2.2.3). A failure to conform to Practice Note 3.11.2 cannot found a breach of professional standards as submitted by the Appellant, as Practice Notes are not a professional standard.
87The Appraisal of Real Estate, 3rd Canadian Edition, confirms that Practice Notes are not a professional standard. It states at p.A-4 as follows:
Practice Notes:
Practice Notes supplement the general discipline of applying Standards that an appraiser learns through a combination of education and experience. The practice notes are not binding on an appraiser. They are intended to provide a convenient resource for everyday application, giving examples for application of the Rules for appraisal, review, and consulting….” (emphasis added).
88The Board finds that compliance with the Appraisal Institute of Canada Practice Notes is not a mandatory requirement, but are a non-binding resource of examples for application of the Rules.
Analysis: Compliance with s. 3.11.2 of Practice Notes
89It was MPAC’s witness’ evidence that though sale prices were increasing, changes in capitalization rates were marginal and consistent with market conditions at the effective date of January 1, 2016. This opinion was confirmed by MPAC’s witness continuous conversation with market participants and brokers.
90MPAC’s witness also verified this opinion with third party market information aggregators which had a March 2016 capitalization rate at an average of 5.4%, a June 2016 rise to 5.5% and a year end rate of 5.3%. This is consistent with MPAC’s witness evidence that changes in capitalization rates were marginal. Though rates were declining, the decline was marginal.
91The Board finds that the Appellant has failed to establish that the use of August 2017 sales was inconsistent with the January1, 2016 effective date.
Analysis: Error in the Expert Report
92In cross-examination, MPAC’s expert acknowledged a mistake in the Income Approach part of the expert report. The report, in the sales table, indicated that the 2014 and 2017 sales prices had been adjusted when in fact they had not been time adjusted. MPAC’s witness’ testimony was that the mistake was in indicating that the sales had been adjusted, not that there had been a failure to time adjust the sales.
93It was MPAC’s witness’ evidence that sales used to derive capitalization rate are usually not adjusted because of insufficient data. This is confirmed by the Appellant’s expert who also did not adjust sale prices used in its Income Approach, notwithstanding the use of a sale 11 months before the January 1, 2016 effective date.
94In the Income Approach, changes in markets over time are indicated by overall trends in capitalization rates for similar types of properties. The capitalization rate of any one sale is the quotient of the Net Operating Income divided by the sale price. If market Net Operating Incomes are increasing at the same rate as increases in market sale prices, capitalization rates can be stable notwithstanding the increases in sale prices. The question is not whether sale prices used in the Income Approach required time adjustments as used in the Direct Comparison Approach, but whether capitalization rates were changing between the January 1,2016 effective date and the time of the August 2017 sales. It was not an inconsistency to fail to adjust the sale prices in Income Approach, while adjusting them in the Direct Comparison Approach.
95The Board finds that MPAC’s witness use of time adjustments in the Direct Comparison approach while not using similar adjustments in the Income Approach is not an inconsistency in evidence of MPAC’s witness.
Analysis: Board Decisions on Period of Comparability
96The Board usually relies on sales within the period 12 months before and after the effective date of valuation. The Board extends this period beyond 12 months from the valuation date where sales outside the 12 month period are required to ensure a representative sample of sales (see 101 Bloor CREIF Inc. v Municipal Property Assessment Corporation Region 09, 2021 CanLII 123883 (ON ARB) paragraphs 34-36.)
97In the Appellant’s submitted Board decisions, the 12 month customary period of reliability is termed “elastic” rather than fixed. (see North Bay Plaza Ltd. v. Municipal Property Assessment Corp., Region No. 28, 2010 Carswell Ont 5610, paragraphs 104-105). Also in Ramakko at paragraph 18 the Board extended the period of comparability to two years.
98The Board accepts MPAC’s witness’ evidence was that there were insufficient valid sales within the one year period from the effective date of January 1, 2016 and that changes in capitalization rates were marginal.
99The Board finds that MPAC’s witness use of hindsight data was not inconsistent with data at the effective valuation date.
Findings on Issue 2.b.iv. - Compliance with the Practice Note
100The Board finds that MPAC’s witness use of hindsight data was in compliance with the Practice Note.
Issue 2.b.v. - Was MPAC’s witness Biased by providing Evidence of the Capitalization Rate before MPAC’s Pleadings
Appellant’s Evidence and Submissions
101The Appellant submits that rather than acting in a fair, objective and nonpartisan manner, MPAC’s witness was actively involved in preparing the capitalization rate determination in MPAC’s pleadings as early as October 3, 2022, which she acknowledged was subsequently carried forward into her March 27, 2023 report.
MPAC’s Submissions
102The early retainer of experts is explicitly encouraged by the Board to ensure the “most expeditious and least expensive determination of every proceeding,” and does not in any way undermine an expert’s independence and impartiality.
Analysis: Bias
103Rule 43 of the Board’s Rules provides that
Statements of Issues and Responses
- Statements of Issues and Responses must contain:
(a) If the issue is current value:
i. the current value requested and how it is calculated;
ii. a full statement of every issue that the party intends to raise, including identification of comparable property(ies) to be referred to, if any; and
iii. a list of all facts, legal grounds and documents that the party relies on in support of its position.
(b) If the issue is the equity of the assessment pursuant to section 44(3)(b) of the Assessment Act:
i. the assessment requested;
ii. identification of the vicinity claimed by the party;
iii. identification of similar lands in the vicinity to be relied on by the party;
iv. how the party proposes to calculate the adjustment for equity; and
v. a list of all facts, legal grounds and documents that the party relies on in support of its position
104In a complex matter such as the present it is difficult to see how any party could comply with Rule 43 without the input of expert appraisers.
105The Board finds that the involvement of expert appraisers to provide expert opinions for the parties’ pleadings is not evidence of bias.
Findings on Issue 2.b.v. - Bias
106The Board finds no evidence of bias on the part of MPAC’s Expert.
Findings on Issue 2.b. - Cumulatively: Challenges to Credibility and Reliability of MPAC’s Witness.
107The Board finds that the Appellant’s cumulative challenges to MPAC’s witness’ reliability have not been substantiated.
Issue 2.c. - What is the Appropriate Valuation Methodology?
108For the reasons that follow, the Board finds that the appropriate valuation methodology is the Income Approach.
MPAC’s Evidence and Submissions: Appropriate Valuation Methodology
109It was MPAC’s witness’ opinion that the Subject Property was an investment property, one that would be most appealing to an investor as an income producing asset. In MPAC’s witness’ opinion the Income Approach should be given the greatest weight when the property is an investment property.
110MPAC’s witness was of the opinion that the Direct Comparison Approach would be preferable when the Subject Property was being sold to an owner, occupier, or was vacant or only partially occupied; as such, it was not the most appropriate methodology for the valuation of the Subject Property, though it could also provide an indication of value.
111MPAC submitted that the Income Approach using a capitalization rate of 5% provided the best indication of value. This produced a current value of $51,500,000 (rounded).
Appellant Evidence and Submissions: Appropriate Valuation Methodology
112The Appellant’s expert witness was of the opinion that the greatest weight had to be placed on the Income Approach and the Cost Approach since these required the least amount of adjustments to arrive at an indication of value compared to the Direct Comparison Approach.
113The Appellant submitted that the Cost Approach was an appropriate valuation methodology as this was the method MPAC had used to generate the assessments of all sorting/distribution centres in Ontario.
114The Appellant submitted that the Cost Approach was “particularly useful in valuing new or nearly new improvements” such as the Subject Property, citing the expert report of their witness. In the Appellant’s submissions the Cost Approach was the most credible methodology for valuing the Subject Property since it was more likely to produce a result that was the most a transparent, predicable and accurate.
Analysis: Appropriate Valuation Methodology
115Both parties have in common the Income Approach as one on which great weight should be given. MPAC’s witness was of the opinion that because these types of properties are purchased for their income stream, the most appropriate valuation methodology was the Income Approach.
116The Appellant’s expert witness was of the view that the Direct Comparison Approach was the least reliable because it required the most amount of adjustments. The Board agrees with the Appellant’s expert witness that, in the present matter, the Direct Comparison Approach is the least reliable and rejects its use in this valuation.
117The Board rejects the Appellant’s submission that because the Cost Approach had been used to value all distribution centres in Ontario, the Cost Approach was an appropriate valuation methodology when conducting an individual appraisal.
118Whatever method MPAC used in its mass appraisal model to generate the initial assessment is not determinative of what valuation approach should be used in an individual appraisal. The issue is the current value as defined in the Act not how MPAC arrived at it’s the initial returned assessment. The Board’s decision in Montgomery v Municipal Property Assessment Corporation, Region 07, 2017 CanLII 279 (ON ARB) paragraph 22 states “…the Board does not concern itself with MPAC’s model for generating assessments for millions of properties throughout the province. Rather, the Board directs its attention to “current value” as defined in s. 1 of the Act.”
119Past decisions of the Board are also to the effect that the Cost Approach should only be used as a last resort. (see Melkuev v Municipal Property Assessment Corporation, Region 09, 2019 CanLII 122354 (ON ARB) paragraph 26, 1188004 Ontario Inc. v Municipal Property Assessment Corporation Region 31, 2020 CanLII 87158 (ON ARB) paragraph 17, Battaglia v Municipal Property Assessment Corporation, Region 15, 2021 CanLII 17425, (ON ARB) paragraph 27, Landry v Municipal Property Assessment Corporation, Region 30, 2022 CanLII 75946 (ON ARB), paragraph 19.
120The parties were able to identify seven sales of properties submitted as comparable at or near the valuation day to derive a capitalization rate for use in the Income Approach. The presence of sufficient similar competitive market sales makes the use of the Cost Approach not the most appropriate. The Board rejects the use of the Cost Approach for this valuation.
121The Board finds that the Income Approach is the appropriate valuation methodology for the Subject Property. MPAC’s witness’ evidence was that these types of properties transact for their income stream. Both parties also agreed that the Income Approach was one on which great weight should be placed.
Findings on Issue 2.c. - The Most Appropriate Valuation Methodology
122The Board finds that the Income Approach is the most appropriate valuation methodology for the Subject Property.
Issue 2.d. - Valuation using in the Income Approach.
Issue 2.d.i. - What is the Correct Capitalization Rate?
123In the direct yield income capitalization method used by the parties in their Income Approach analysis, the capitalization rate achieved by the sale of similar, competitive, and thus comparable properties will be used to derive a capitalization rate for the Subject Property.
MPAC’s Evidence and Submission: Correct Capitalization Rate
The Subject Property
124MPAC’s witness’ evidence was that the location characteristics which drive value are those that drive cost efficiencies: firstly, proximity to regional transportation routes, next would be access to intermodal terminals, then access to the airport.
125Physical characteristic drivers are: clear interior height, as this permits more storage per sq. ft.; loading doors per 1,000 sq. ft.; whether all components are heated and cooled; and site coverage as lower site coverage means more room for truck turnings and parking.
126MPAC’s witness characterized the Subject Property as having excellent access to transportation infrastructure and a functional physical site.
Appellant’s Evidence and Submissions: Correct Capitalization Rate
127The Appellant’s evidence was that the Subject Property was located in the far south west of Brampton and had less access to transportation infrastructure. The Board accepts the Appellant’s evidence that distribution centres located in the centre and eastern part of Brampton had generally better access to transportation infrastructure. Though there were distribution centres in the immediate vicinity of the Subject Property evidencing the appropriateness of the location, the Board agrees with the Appellant’s expert that the best and most efficient locations were developed first, leaving less efficient locations, such as the Subject Property, for later development.
128With respect to the building itself, the Appellant’s’ evidence was that the though the building itself was new with excellent efficient amenities, the physical site was hampered by the following site inefficiencies.
129Firstly, the site was irregularly shaped with part of the site subject to conservation area easements. In a purchaser’s view these easements could increase the regulatory risk.
130Secondly, there was only one point of access for trucks as opposed to one for trucks arriving and one for trucks leaving, leading to inefficiencies. Though the Appellant operated an adjacent distribution centre and could make available its adjacent property to facilitate truck movements, such efficiencies would not be available to a purchaser not related to the Appellant or if available would command a market price increasing the expenses of the Subject Property.
131Thirdly, the site was poorly serviced by public transportation leading to the potential for higher labour turnover and training costs. The Appellant’s expert testified that the Subject Property was equipped with recreation stations, an unusual feature in distribution centres, in an effort to accommodate workers who had to rely on less frequent public transit.
Analysis: The Subject Property
132The Board finds that the Appellant’s’ expert witness’ opinion of three site drawbacks is more reliable than MPAC’s evidence, because of the Appellant’s witness conversations with the occupant that confirmed these drawbacks. This leads the Board to conclude that the Subject Property site is of slightly lower quality than appreciated by MPAC’s witness. The Board’s adopts MPAC’s qualitative judgments of its comparable sales as inferior or superior, however the Board finds, because of site inefficiencies, that the Subject Property moves closer towards the inferior properties and away from the sales characterized as superior.
MPAC’s Sales Submitted as Comparable
133MPAC derived its capitalization rate principally from 5 sales of properties submitted as comparable. It obtained a rate of 5% from the median of the following sales:
Recent Investment Market Activity
| Index # | Building Details | Sale Details | Capitalization Rate |
|---|---|---|---|
| 1 | Civic Address: 25-35 Brownridge Road Municipality: Halton Hills Rentable Area: 331,795 Roll #: 241509010011181 |
Date of Sale: Dec-14 Sale Price: $36,175,000 Price psf: $109 |
5.40% |
| 2 | Civic Address: 440 Railside Dr Municipality: Brampton Rentable Area: 251,397 Roll #: 211006000108845 |
Date of Sale: Jan-15 Sale Price: $19,150,000 Price psf: $76 |
5.50% |
| 3 | Civic Address: 8875 Torbram Road Municipality: Brampton Rentable Area: 895,038 Roll #: 211010002526000 |
Date of Sale: Apr-17 Sale Price: $158,250,000 Price psf: $177 |
4.00% |
| 4 | Civic Address: 100 Sandalwood Pkwy W Municipality: Brampton Rentable Area: 764,182 Roll #: 211006000108500 |
Date of Sale: Aug-17 Sale Price: $101,000,000 Price psf: $132 |
5.00% |
| 5 | Civic Address: 2777 Langstaff Road Municipality: Vaughan Rentable Area: 471,051 Roll #: 192800023244200 |
Date of Sale: Aug-17 Sale Price: $73,400,000 Price psf: $156 |
4.77% |
Analysis of MPAC’s Sales Submitted as Comparable
8875 Tobram Road, Brampton, (b. 2015), April 2017 sale, 4% capitalization rate
134The Board does not retain MPAC’s sale of 8875 Tobram Road as comparable for the following reasons. MPAC’s witness judged 8875 Tobram Road to be superior in location and with slightly superior physical attributes because of higher clear indoor height and a higher density of loading doors per 1,000 sq. ft. However, the Subject Property’s rentable area is 382,935 sq. ft., while 8875 Tobram Road is 895,038 sq. ft., which is 2.33 times the size of the Subject Property.
135Furthermore, as the Appellant’s expert witness pointed out, 8875 Tobram Road is the closest sale to the Brampton intermodal facility. It is also the largest LEED Gold warehouse in Canada, meaning that it is more energy efficient to operate than the Subject Property and more attractive in the marketplace for buyers seeking to satisfy Environmental, Sustainability and Governance (ESG) attributes.
136In the Board’s view, 8875 Tobram Road is not comparable principally because it is so much larger than the Subject Property. It also has higher locational and quality characteristics. In the Board’s view a buyer contemplating the purchase of the Subject Property would not consider 8875 Tobram Road, such a larger and superior building on virtually all points of comparison, as a reasonably competitive alternative to the Subject Property. 8875 Tobram Road, is so superior to the Subject Property as to no longer make it a comparable sale.
Sandalwood Drive, Brampton, (b. 1982) August 2017, 5.00% capitalization rate
137Though the Sandalwood Drive property is also twice the size of the Subject Property, this superiority characteristic is offset by its negatives, such as older age (1982) and inferior interior clear height. MPAC’s witness judged this property to be comparable in the sense of neither inferior nor superior to the Subject Property. The Board agrees this sale would be comparable and competitive with the Subject Property.
2777 Langstaff, Vaughan, (b. 1990), August 2017 sale, 4.77 capitalization rate
138The Board accepts MPAC’s witness’ evidence that this sale is comparable and superior to the Subject Property on the basis of its close proximity to the CN Vaughan Rail intermodal terminal and superior number of loading doors.
139All other sales submitted by MPAC are comparable, though judged by MPAC’s witness to be inferior on account of location and physical characteristics. The Board accepts these sales as comparable and of inferior quality.
Appellant’s Sales Submitted as Comparable
140The Appellant derived their capitalization rate of 5.75% from the following two sales submitted as comparable:
| Location | Sale Date | Sale Amount | Building Size | NOI | Capitalization Rate |
|---|---|---|---|---|---|
| 1400 Church Street, Pickering | Jan 29, 2015 | $70,173,682 | 921,000 | $5,300,000 | 6.5% |
| 12333 Airport Road, Caledon | Mar 14, 2016 | $64,937,398 | 568,000 | $3,741,078 | 5.8% |
1400 Church Street Pickering, January 2015 – 6.5% capitalization rate
141The Board does not retain the Appellant’s sale of 1400 Church Street in Pickering as comparable for the following reasons.
142This property is too dissimilar to the Subject Property by its location on the east side to Toronto, a significant distance away from the Subject Property and MPAC’s available comparable sales. While other sales submitted as comparable have variable proximity to Pearson International Airport, to access this property from Pearson requires trucks to traverse the entire width of Toronto – a drastic locational impairment. It is literally, as well as comparatively, an outlier. This is particularly true in light of the Appellant’s’ opening statement and evidence that location was the most meaningful point of comparison.
143The Appellant’s’ expert witness, in his Direct Comparison Approach analysis, applied a 25% negative adjustment to account for the inferior location. Not only was this adjustment unsupported by evidence, but its magnitude confirms that the location is too dissimilar to be viewed as comparable.
144In addition, as in MPAC’s 8875 Tobram Road, 1400 Church is too large to be considered similar. At 921,000 sq. ft, it is 2.4 times the size as the Subject Property’s 382,935 sq. ft. This disproportion in size adds to the dissimilarity.
1233 Airport Rd, Caledon, March 2016 – 5.8% capitalization rate
145The Board rejects this sale as comparable. The Board agrees with MPAC’s submissions and the Appellant’s evidence that this property had a 45% vacancy rate. Such a large vacancy rate indicates a riskier property with a dissimilar income and expense profile rendering this sale not comparable.
The Board’s Conclusion of the Correct Capitalization Rate
146The Board has retained four of the five sales put forward as comparable by MPAC. None of the sales put forth by the Appellant have been retained.
147The average capitalization rate of the four retained MPAC sales is 5.1675%. The median rate is rate 5.2%. Both the average and median are valid measures of central tendency. To give effect to the Subject Property’s site inefficiencies and the marginally declining capitalization rates over the period of comparability, the Board opt to use the median rate 5.2% which the Board finds to be the fair rate for the Subject Property.
Findings Issue 2.d.i. - What is the Correct Capitalization Rate?
148The Board finds the correct capitalization rate is 5.2%.
Issue 2.d.ii. – What is the Correct January 1, 2016 Current Value?
149As the Net Operation Income (NOI) of $2,579,355 has been agreed to, and the value is the NOI divided by the correct capitalization rate of 5.2%, the correct January 1, 2016 current value is $49,602,981, rounded to $49,600,000.
Findings on Issue 2.d.ii – What is the Correct January 1, 2016 Current Value?
150The Board finds the correct January 1, 2016 Current Value to be $49,600,000.
Issue 3 – What is the Equitable Assessment?
151The parties have agreed that the reduction for equity required by s. 44 (3)(b) of the Act is 12%. Accordingly, the equitable assessment is $43,650,000 (rounded).
Issue 4 - What is the Correct Amount of the s. 34 Assessments?
152The 2021 s. 34 assessment of the Subject Property, Appeal 3483056 is $33,606,884 classified as Commercial (New Construction) Full). The Board finds that the amount of this s. 34 supplementary assessment for the new construction is $29,260,884. Appeal 3483055 is $1,765,000 classified as Commercial (New Construction (Excess Land) and Appeal # 3483057 is $12,624,116 classified as Commercial (New Construction) (Full). The equitable assessment found is $43,650,000, therefore the total value of the s. 34 supplementary assessments is $43,650,000.
CONCLUSION
153The Board finds that the correct 2016 current value of the Subject Property is $49,600,000.
154The Board finds that the equitable assessment for the taxation years 2021, 2022, 2023, 2024 and 2025 is $43,650,000.
155The Board finds the amount of the s. 34 assessment with an effective date of April 20, 2021 for the new improvement to be $29,260,884 (Appeal 3483056).
156The property database indicates that the classification of the Subject Property for the 2023 and 2024 taxation years has changed by removing the New Construction sub-class. More particularly, the classification for the 2025 taxation year changes the entire Subject Property to the Commercial (Excess Land) classification, at variance with the previous years’ classification. No evidence was heard or submissions made with respect to these different classifications for the 2023, 2024 and 2025 taxation years. The parties, including the municipality, require an opportunity to be heard with respect to these classification changes to the deemed 2023, 2024 and 2025 appeals.
157Accordingly, changes to the classification and assessments in accordance with Schedule A are suspended for a period of 30 days from the date of the release of this decision to permit any party to object to the classifications in Schedule A. If no party objects within 30 days, Schedule A will become final.
158If any party objects to the classifications in Schedule A within 30 days, the parties, including the municipality, are directed to attempt to agree among themselves on the required classifications, and submit their agreement by Minutes of Settlement within 30 days of any party’s objection to Schedule A.
159If the parties cannot agree, the Appellant is to notify the Board of their inability to agree and make written submissions on the issue of classification within 20 days of its notification to the Board. MPAC and the municipality are to make submissions on the issue of classification within 20 days of the Appellant’s submissions. The Appellant is to make any closing submissions within 10 days of the other parties’ submissions, whichever is later.
ORDER
160The Board orders that assessment for the 2021,2022, 2023, 2024, 2025 taxation years under appeal be reduced from $47,996,000 to $43,650,000, in accordance with Schedule A, attached. This order is suspended for 30 days from the issuance of this Interim Decision. If no party objects within 30 days, Schedule A will become final.
"Pierre R. Lavigne"
PIERRE R. LAVIGNE MEMBER Assessment Review Board Website: www.tribunalsontario.ca/arb
Schedule A
| Appeal Number | Tax Year | Section Number | Effective Date | Classification | Value | Classification Confirmed Or Changed to: | Value: Confirmed Or Changed to: |
|---|---|---|---|---|---|---|---|
| 3483055 | 2021 | 34 | April 20, 2021 | Commercial (New Construction) (Excess Land) | $1,765,000 | Confirm | Confirm |
| TOTAL VALUE | $1,765,000 | ||||||
| 3483056 | 2021 | 34 | April 20, 2021 | Commercial (New Construction) (Full) | $33,606,884 | Confirm | $29,260,884 |
| TOTAL VALUE | $29,260,884 | ||||||
| 3483057 | 2021 | 34 | April 20, 2021 | Commercial (New Construction) (Full) | $12,624,116 | Confirm | Confirm |
| TOTAL VALUE | $12,624,116 | ||||||
| TOTAL VALUE OF SECTION 34 APPEALS | $43,650,000 | ||||||
| 3488642 | 2022 | 40 | January 1, 2022 | Commercial (New Construction) (Excess Land) | $1,765,000 | Confirm | Confirm |
| Commercial (New Construction) (Full) | $46,231,000 | Confirm | $41,885,000 | ||||
| TOTAL VALUE | $43,650,000 | ||||||
| 3512783 | 2023 | 40 | January 1, 2023 | Commercial (Excess Land) | $1,765,000 | Confirm | Confirm |
| Commercial (Full) | $46,231,000 | Confirm | $41,885,000 | ||||
| TOTAL VALUE | $43,650,000 | ||||||
| 3525521 | 2024 | 40 | January 1, 2024 | Commercial (Excess Land) | $1,765,000 | Confirm | Confirm |
| Commercial (Full) | $46,231,000 | Confirm | $41,885,000 | ||||
| TOTAL VALUE | $43,650,000 | ||||||
| 3535252 | 2025 | 40 | January 1, 2025 | Commercial (Excess Land) | $47,996,000 | Confirm | $43,650,000 |
| TOTAL VALUE | $43,650,000 |