Tribunals Ontario
Assessment Review Board
ISSUE DATE: May 29, 2026 FILE NO.: WR 190742
Assessed Person(s): BWH-2023 GP Inc.; 415 Lakeshore Investments Inc. Appellant(s): BWH-2023 GP Inc. Respondent(s): Municipal Property Assessment Corporation Region 18 Respondent(s): City of St. Catharines
Property Location(s): 29 Queenston Street Municipality(ies): City of St. Catharines Roll Number(s): 2629-030-001-14400-0000 Appeal Number(s): 3521050, 3521663, 3521664, 3522486, 3525802, 3535648 and 3549962 Taxation Year(s): 2023, 2024, 2025, 2026 Hearing Event No.: 791980
Legislative Authority: Sections 32, 34, 36 and 40 of the Assessment Act, R.S.O. 1990, c. A.31
| Parties | Counsel/Representative |
|---|---|
| BWH-2023 GP Inc | Jonas Perov |
| 415 Lakeshore Investments Inc | No one appeared |
| Municipal Property Assessment Corporation | Kristina De Andrade |
| City of St. Catharines | No one appeared |
HEARD: March 31, 2026 in writing ADJUDICATOR(S): Karen Dawson, Vice-Chair
DECISION
OVERVIEW
1BWH-2023 GP Inc. (the "Appellant") appealed the assessment of 29 Queenston Street located in the City of St. Catharines (the "Subject Property") under s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the "Act") for the 2023 taxation year. Pursuant to s. 40(26) of the Act, the Appellant is deemed to have brought the same appeal in respect of the 2024, 2025, and 2026 taxation years.
2An appeal of the correction of errors assessment issued under s. 32 of the Act and effective September 15, 2023 was deemed pursuant to s. 40(26) of the Act.
3Appeals of two supplementary assessments issued under s. 34 of the Act and effective September 15, 2023 were also deemed pursuant to s. 40(26) of the Act.
4The Appellant appeals on the basis that the assessed current value of the Subject Property for the taxation years in question is incorrect and too high.
5The Appellant does not appeal classification of the Subject Property or the Municipal Property Assessment Corporation ("MPAC's") apportionment of current value among the different property classes for the taxation years in question.
Background
6The hearing of these appeals originally took place over two days before Member Lovrich. Member Lovrich left the Assessment Review Board (the "Board") before issuing a Decision, and unfortunately complete hearing recordings are unavailable. In these circumstances, the parties were asked whether they wished to have a new hearing or if they were content to have the appeals decided on the basis of the written record and submission of an agreed summary of the oral testimony given at the hearing. The parties opted to have the appeals decided on the basis of the written record and declined to file an agreed summary of the oral testimony given at the hearing.
7The following is the only evidence that was before the Board in making this Decision:
a. Appellant's Expert Report dated October 30, 2024 and Appellant's Supplementary Expert Report dated November 11, 2024; and
b. MPAC's Valuation Report dated October 15, 2024 and MPAC's Supplemental Valuation Report (undated), which included MPAC's Equity Analysis Report (undated).
8I note that the parties filed their Closing Submissions prior to being advised that a new hearing was required. Those Closing Submissions refer to oral testimony given at the hearing, including oral testimony from Zain Shafiq, a witness for the Appellant, which is not before the Board. In making this Decision, the Board has not considered any references to oral testimony in the Closing Submissions. The parties were given the opportunity to provide the Board with an agreed summary of the oral testimony given at the hearing before Member Lovrich but they declined to do so. As such, both parties are precluded from relying on their unilateral interpretation or recollection of that testimony in their Closing Submissions.
9Finally, the Appellant challenged the qualification of MPAC's expert witness Kyle Petterson as an expert witness at the hearing before Member Lovrich. MPAC advised in its Closing Submissions that Member Lovrich qualified Mr. Petterson as an expert witness at the hearing. If she provided verbal reasons for that decision at the hearing, those reasons are not before the Board in making this Decision.
10The Appellant raised the issue of Mr. Petterson's qualification as an expert witness again in its Closing Submissions, submitting that Mr. Petterson's involvement in the earlier request for reconsideration and the municipal application placed him in a conflict of interest. The Appellant's submissions in this regard relied on Mr. Petterson's oral testimony at the hearing, which, for the reasons noted above, is not before the Board in making this Decision.
11While there are documents filed with the Board that relate to the earlier municipal application, they are marked as exhibits to the affidavit of "794693". It is unknown who or what "794693" is, and in any event, to the extent that these documents may demonstrate Mr. Petterson's involvement in the municipal application, they could have and should have been put before the Board when Mr. Petterson's qualification as an expert witness was challenged at the hearing before Member Lovrich.
12As the evidence relied on by the Appellant in challenging Mr. Petterson's qualification as an expert witness in its Closing Submissions is either not before the Board or could have and should have been presented when the challenge was made at the hearing, the Board declines to consider the issue in its Decision.
Description of the Subject Property
13The Subject Property consists of two buildings (the "rear" and "front" buildings) and five parking spaces. During the taxation years at issue, the Subject Property underwent significant renovations that converted the commercial spaces to residential units.
14At the beginning of the taxation years under appeal, the front building contained seven residential units in the residential property class and a commercial unit of 1,004 square feet ("sq. ft.") in the commercial property class. The rear building was in the process of being converted from commercial space to residential units and was unoccupied. At that time the rear building was classified as commercial property.
15The first stage of the construction/renovation completed was the conversion of the rear building into seven residential units. The s. 32 and s. 34 assessments under appeal in this proceeding took effect when, in MPAC's submission, the rear building residential units commenced to be used.
16The next stage of the construction/renovation included conversion of the commercial space in the front building into three new residential units in the new multi-residential property class. Section. 32 and s 34 assessments were not issued by MPAC when these new residential units commenced to be used.
17When each of the spaces described in paragraphs 15 and 16 commenced to be used is at issue in these appeals.
18Concurrent with the conversion of the commercial space in the front building was the renovation of the seven original residential units in the front building. Neither party submitted that the classification or valuation of these units changed post-renovation.
Areas of Agreement
19The parties agree that:
a. The income approach should be used to value the Subject Property for the 2024 and 2025 taxation years.
b. A 4% vacancy allowance should be applied to the residential units.
c. A downward adjustment of 8% based on a 0.92 Assessment to Sale Ratio ("ASR") is required to make the Subject Property's assessed value equitable with similar properties in the vicinity, per s. 44(3) of the Act.
Issues for the Hearing
20The following issues must be determined:
What is the effective date of the s. 32 and s. 34 assessments?
What is the correct current value of the Subject Property for the 2023 to 2026 taxation years?
Is an adjustment under s. 44(3) of the Act required to make the Subject Property's assessed value equitable with those of similar properties in the vicinity?
Result
21For the reasons that follow, the Board finds the effective date for the s. 32 and s. 34 assessments is September 1, 2023. The Board further finds that the correct current value of the Subject Property, including an 8% downward adjustment in accordance with s. 44(3)(b), is:
a. For the period January 1, 2023 to August 31, 2023: $765,714.48
b. For the period September 1, 2023 to December 31, 2023: $1,189,234.96
c. For the period January 1, 2024 to November 30, 2024: $1,189,234.96
d. For the period December 1, 2024 to December 31, 2024: $1,297,191.77
e. For the 2025 taxation year: $1,297,191.77
f. For the 2026 taxation year: $1,297,191.77
ANALYSIS
Issue 1 – What is the effective date of the s. 32 and s. 34 assessments?
22As noted above, MPAC issued two s. 34 supplementary assessments and a s. 32 correction of errors assessment effective September 15, 2023. The purpose of the supplementary assessments was to add the value of the new residential units in the rear building that had commenced to be used in accordance with s. 34(1) of the Act. The purpose of the correction of errors assessment was to change the property classification of the newly converted residential units in the rear building from the commercial property class to the new multi-residential property class.
23The Appellant submits that the effective date of the assessments issued on September 15, 2023 is the date that the newly converted commercial to residential units were fully occupied. The Appellant takes the position that the new residential units in the rear building were not fully occupied until January 2024. It therefore argues that the effective date of the s. 32 and s. 34 assessments must be amended to January 1, 2024.
24MPAC submits that the effective date of the supplementary assessments is clear from the wording of s. 34(1)(a), namely, the date the improvement "commences to be used for any purpose." MPAC submits that there is no requirement in s. 34(1)(a) that all of the improvement be in use. It further argues that "for any purpose" supports its position that the entire improvement does not have to be used before a supplementary assessment may be issued.
25MPAC asserts that the first occupancy of the new residential units in the rear building was September 1, 2023 and relies on the Appellant's rent roll included in the Appellant's Supplementary Expert Report. The Appellant's rent roll indicates that occupancy of two residential units in the rear building commenced on September 1, 2023. MPAC's position is that the effective date of the supplementary assessments is the date of first occupancy of the new residential units.
26MPAC submits that the effective date of the s. 32 assessment is also September 1, 2023 because that is the date the rear building ceased to be used as commercial space and commenced to be used as new multi-residential space.
Findings on Issue 1
27Based on the Appellant's rent roll, the Board finds that first occupancy of the new residential units in the rear building was September 1, 2023. While the Board notes that the Appellant's rent roll states that a rear building residential unit was occupied as of January 1, 2023, the parties did not suggest that first occupancy occurred on this date, and as such the Board does not accept this date.
28The Board therefore finds that the effective date of the s. 34 assessments is September 1, 2023, not September 15, 2023.
29The Board further finds that the effective date of the s. 32 assessment is also September 1, 2023, as this is the date that the rear building ceased to be used as commercial space and commenced to be used as new multi-residential space.
Issue 2 – What is the correct current value of the Subject Property?
Current Value Legislative Provisions
30Section 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."
31Section 19.2(1)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 2023, 2024 and 2025 taxation years also be as of January 1, 2016.
32Pursuant to s. 40(17) of the Act, the onus is on MPAC to prove the correct value of the Subject Property.
Correct current value for the period January 1, 2023 to August 31, 2023
MPAC's Evidence
33For this period, MPAC valued the Subject Property as three components: front building, rear building and parking spaces. MPAC used the income approach to value the front building and parking spaces and the cost approach to value the rear building.
47MPAC costed the rear building structure at $200,295, stating that that amount appeared to be a conservative estimation of value.
48MPAC estimated that half of the land was to be valued in association with the rear building and completed a comparable sales analysis to estimate the value of half of the land at $82,730.56. MPAC's estimate of current value for the rear building was $283,025.56.
49The income approach to value involves the calculation of current value by first determining the Potential Gross Income ("PGI") of the Subject Property. This is calculated by determining the Fair Market Rent ("FMR") for each unit type at the Subject Property and multiplying it by the number of units of that type. The PGI is then reduced by an amount for vacancy and collection loss ("vacancy allowance") and non-recoverable expenses ("expense allowance") to arrive at the property's Net Operating Income ("NOI"). Finally, the NOI is divided by a market driven capitalization rate ("Cap Rate") to determine the current value of the Subject Property.
50MPAC estimated the current value of the five parking spaces at $14,194.29 using parking rates in the vicinity of the Subject Property. MPAC applied a FMR of $240 per parking space, 8% vacancy allowance, 10% expense allowance and 7% Cap Rate.
51During this period, the front building contained 1,004 sq. ft. of commercial space. MPAC applied a FMR of $10.50 per sq. ft., vacancy allowance of 8%, expense allowance of 8% and a Cap Rate of 7% to arrive at an estimate of current value of $127,467.84 for the commercial space in the front building.
34To establish the PGI for the front building residential units, MPAC looked at FMRs for bachelor, one-bedroom, two-bedroom and three-bedroom units in identified properties within the Subject Property's competitive market. MPAC reviewed income information in its corporate databases and determined the FMRs for the Subject Property were the median actual rents for each unit type:
| Unit Type | Median |
|---|---|
| Bachelor | $ 649.00 |
| One-Bedroom | $ 799.00 |
| Two-Bedroom | $ 850.00 |
| Three-Bedroom | $1,150.00 |
52During the period January 1, 2023 to August 31, 2023, the front building contained two bachelor units and five one-bedroom units.
53From the calculated PGI, MPAC deducted the agreed 4% vacancy allowance and a 59% expense allowance.
54To determine the Cap Rate applicable to the residential units, MPAC reviewed the sales of nine comparable properties that transacted between February 2015 and August 2016. MPAC calculated and applied a time-adjustment factor to the actual sale prices of these properties. Using the time-adjusted sale prices and modelled NOIs for the nine properties, MPAC determined the Cap Rates of these sales ranged from 3.80% to 5.46%, with a median of 4.71% and average of 4.76%. Based on this, MPAC chose a Cap Rate of 4.71%.
55Applying this Cap Rate, MPAC's estimate of current value for the front building residential units was $530,530.98.
Appellant's Submissions
35The Subject Property has transacted twice since the January 1, 2016 valuation day: on July 4, 2016 for $530,000 and on March 20, 2023 for $2,335,000. The 2023 sale was to the Appellant.
36The Appellant submitted, relying on Municipal Property Assessment Corporation Region No. 15 v Kommatas-Vastis, [2013] OARBD No. 86, 76 OMBR 431, 2013 CarswellOnt 7058, [2013] OARBD No 86 that the July 4, 2016 sale of the Subject Property for $530,000 was the best evidence of current value as of return of the roll for the 2023 taxation year. The Appellant asserted that the sale was an arm's length sale on the open market and that between 2016 and 2023 the Subject Property was not significantly altered.
Board's Findings on correct current value for the period January 1, 2023 to August 31, 2023
56The Board does not accept the Appellant's position that the July 4, 2016 sale of the Subject Property is the best evidence of current value for the period in question. Both MPAC and the Appellant presented evidence that the Subject Property was considerably improved between the July 4, 2016 sale and the 2023 taxation year. For example, a letter from Inspired Custom Design Inc. included in the Appellant's Expert Report stated that the following work was completed at the Subject Property during the period June 20, 2022 to December 15, 2022:
- Framing
- Plumbing
- Electrical
- Drywall
- Mechanical (including furnaces, air conditioners, ducting)
- Tiling
- Exterior Stucco
- Fire protection
- Interior/Exterior Painting
- Waterproofing
- Cabinetry and other Kitchen related items
- Interior finishings (flooring, baseboards, etc.)
- Appliances as applicable
57Moreover, MPAC's expert inspected the Subject Property on May 3, 2023. During the inspection he observed that the rear building had new exterior cladding, new windows, doors, all new interior finishes and partition walls including new individual HVAC units per apartment and a new main sewer lateral line to the street. His observations were supported by photographs taken during the inspection and included in MPAC's Valuation Report. As a result of these observed changes, MPAC's expert concluded that the state and condition of the Subject Property was significantly improved compared to when it sold in 2016.
58While it is possible that some of the changes MPAC's expert observed during his May 3, 2023 inspection were completed after roll return for the 2023 taxation year, many of the changes he noted were included in the work completed by Inspired Custom Design Inc. between June 20, 2022 and December 15, 2022.
59Based on the letter from Inspired Custom Design Inc., MPAC's expert's observations and the photographs in MPAC's Valuation Report, the Board finds that the Subject Property at roll return for the 2023 taxation year was significantly improved compared to at the July 4, 2016 sale date. As a result, the Board finds the July 4, 2016 sale of the Subject Property is not the best evidence of current value for the period January 1, 2023 to August 31, 2023.
60The Board accepts MPAC's position and finds that the Subject Property should be valued for the period in question using the income approach for the front building and parking spaces and the cost approach for the rear building.
61The Appellant did not address MPAC's use of the cost approach in its expert reports. While the Appellant complained in its Closing Submissions that the underlying costing data was not provided by MPAC, the Appellant could have requested that this information be disclosed by MPAC prior to the hearing. Based on the record before the Board, the Appellant did not do so.
62The Appellant also submitted in its Closing Submissions that MPAC's comparable sales analysis included properties that were "highly dissimilar" from the Subject Property with no meaningful analysis of the differences between them, no adjustments for those differences and "minimal identification." The Appellant did not explain what it meant by "minimal identification." The Board notes that MPAC's Supplemental Report clearly identified the addresses and assessment roll numbers of the properties considered in its comparable sales analysis. If the Appellant required further information about the properties it could have requested this information be disclosed by MPAC prior to the hearing. Based on the record before the Board, the Appellant did not do so.
63Moreover, the Appellant's critique of MPAC's comparable sales analysis was presented for the first time in its Closing Submissions prepared by its legal representative and not in an expert report or an agreed summary of oral testimony given at the hearing. It is not expert evidence and for that reason, the Board gives it no weight.
64In the absence of expert evidence disputing MPAC's cost approach analysis, the Board accepts that the best evidence of the value of the rear building and associated land for the period January 1, 2023 to August 31, 2023 is MPAC's evidence.
65The Appellant did not present any evidence related to current value of the parking spaces for the 2023 taxation year or any other taxation period. The Board therefore finds MPAC's evidence is the best evidence of the current value of the parking spaces for this period.
66The Appellant did not present any evidence related to current value of the commercial space in the front building for the 2023 taxation year or any other period prior to conversion of that commercial space to residential units. The Board therefore finds MPAC's evidence is the best evidence of current value of the commercial space in the front building for the period January 1, 2023 to August 31, 2023.
67The Appellant did not specifically address MPAC's estimate of current value for the front building residential units during this period, but it did address them for the 2024 and 2025 taxation years. Given that MPAC used the same FMRs, expense allowance and Cap Rate to estimate the current value of these units in the January 1, 2023 to August 31, 2023 period as in subsequent periods, the Board has considered the Appellant's objections here.
68The Appellant submitted that the modelled rents used by MPAC in its January 1, 2016 current value assessment of the Subject Property should be used to determine NOI instead of MPAC's market-derived FMRs. While the Appellant's reliance on the modelled rents implies that the modelled rents reflect the actual rents obtained by the Subject Property, the actual rents were never provided by the Appellant in this proceeding. The rent roll provided in the Appellant's Supplementary Expert Report did not include rents.
69The Board has consistently held that when the income approach is used to calculate current value, market rents must be used over actual rents. See Adelaide North Developments Inc. v Municipal Property Assessment Corporation, Region 23, 2020 CanLII 19343 (ON ARB), relying on Re Cardinal Plaza Ltd. et al. and Regional Assessment Commissioner, Region No. 19 et al., 1984 CanLII 1841 (ON CA) ("Cardinal"). Using market rents ensures the most accurate reflection of the market where the actual rents for similar properties "may vary considerably and can fluctuate according to the length and other terms of the lease as well as the market conditions which obtain when the lease is entered into." See Cardinal.
70The Board agrees with and adopts the reasoning of the Board and the Court of Appeal in those cases. As only MPAC used market rents, the Board finds MPAC's evidence is the best evidence of FMRs.
71The Board notes the Appellant's criticism in its Supplementary Expert Report that the MPAC Valuation Report "has not attempted to perform any sort of rental analysis, the [Valuation Report] just inserted rents without data, without leases, without commentary, without analysis without any documentary evidence." However, the Appellant could have requested that MPAC disclose that information or information about other properties prior to the hearing. Based on the record before the Board, the Appellant did not do so.
72Moreover, despite the above general criticism of MPAC's FMRs, the Appellant's Supplementary Expert Report only identified two properties in MPAC's rent study that it submitted were not comparable to the Subject Property.
73The Appellant raised further objections to use of MPAC's FMRs in its Closing Submissions based on oral testimony given at the hearing. However, as previously stated, because no agreed summary of oral testimony given at the hearing was provided to the Board, the Board has not considered any references to oral testimony in the parties' Closing Submissions.
74The Appellant disputed MPAC's Cap Rate of 4.71% on the basis that MPAC's cap rate study used modelled NOIs calculated from modelled rents that were lower than the FMRs used to calculate the NOI for the Subject Property. The Appellant submitted that the rents used to determine appropriate FMRs for the Subject Property must also be used to determine its Cap Rate, or the resulting valuation will be inaccurate.
47The Board agrees with the Appellant that MPAC's Cap Rate of 4.71% is artificially low because of the modelled NOIs used in MPAC's cap rate study.
48The Appellant submitted that a Cap Rate of 5.25% would be appropriate if modelled rents were used instead of MPAC's FMRs. However, if FMRs were to be used, the Appellant determined a Cap Rate of 5.75% would be appropriate. In support of this rate, the Appellant referred to Cap Rate data from Colliers for Q1 2016 and CBRE for Q1 2017. The Board finds the Q1 2016 Colliers data is not the best evidence of Cap Rate for the Subject Property because the data provided is for larger markets across Canada, such as Ottawa, Toronto and Winnipeg. The Board prefers the Q1 2017 CBRE data, which includes Cap Rate ranges for the following smaller markets in Ontario:
| Apartment | London-Windsor | Kitchener-Waterloo |
|---|---|---|
| Low Rise A | 5.75% - 6.75% | 5.00% - 5.75% |
| Low Rise B | 6.00% - 7.25% | 5.50% - 6.00% |
49The Appellant did not provide an explanation of the difference between "Low Rise A" and "Low Rise B" apartments, nor why it relied on the latter over the former. Nonetheless, the Board finds that both the Low Rise A and Low Rise B ranges generally support the Appellant's proposed Cap Rate of 5.75%.
50Having already determined that the best evidence of FMRs is MPAC's evidence, the Board declines to apply modelled rents as proposed by the Appellant. The Board does, however, agree with the Appellant that a Cap Rate of 5.75% should be applied to MPAC's FMRs.
51Finally, the Appellant submitted in its Closing Submissions that MPAC's time adjustment study was flawed. The Appellant's Closing Submissions are not expert evidence and the alleged flaws in the time adjustment study were not addressed in the Appellant's expert reports or in an agreed summary of oral testimony. The Appellant's Closing Submissions are not expert evidence and for that reason, the Board gives the submissions on this issue no weight.
52For the reasons set out above, the Board finds the correct current value of the Subject Property for the period January 1, 2023 to August 31, 2023 is:
Correct Current Value for the period Jan. 1, 2023 to Aug. 31, 2023
| Front building | |||
|---|---|---|---|
| Residential units | |||
| Bachelor | 2 units | 649 | 15,576.00 |
| 1-bedroom | 5 units | 799 | 47,940.00 |
| 2-bedroom | 0 | 850 | |
| 3-bedroom | 0 | 1150 | |
| PGI | 7 units | 63,516.00 | |
| Vacancy | 4% | 2,540.64 | |
| Expense | 59% | 37,474.44 | |
| NOI | 23,500.92 | ||
| Capitalization | 5.75% | 408,711.65 | |
| Commercial unit | 1,004 | $10.50/sq. ft. | 10,542.00 |
| PGI | 10,542.00 | ||
| Vacancy | 8% | 843.36 | |
| Expense | 8% | 843.36 | |
| NOI | 8,855.28 | ||
| Capitalization | 7.00% | 126,504.00 | |
| Parking spaces | 5 | $240/space | 1,200.00 |
| PGI | 1,200.00 | ||
| Vacancy | 8% | 96.00 | |
| Expense | 10% | 120.00 | |
| NOI | 984.00 | ||
| Capitalization | 7.00% | 14,057.14 | |
| Rear building | 200,295.00 | ||
| Land | 82,730.56 | ||
| Total | 283,025.56 | ||
| Total | 832,298.35 |
Correct current value for the period September 1, 2023 to December 31, 2023
75As the Board has found that the new residential units in the rear building commenced to be used on September 1, 2023, it is necessary to determine the correct current value of the Subject Property as of that date.
MPAC's Evidence
76As a result of the rear building commencing a new use as residential units on September 1, 2023, MPAC changed its valuation approach for the rear building from the cost approach to the income approach.
77MPAC used the FMRs and agreed vacancy allowance applied to the front building residential units as well as the 4.71% Cap Rate discussed above. MPAC applied a lower expense allowance of 44% to the new residential units in the rear building because the rear building is considered new.
78MPAC submitted that no changes affecting current value occurred to the front building or parking spaces during this period.
79MPAC's estimate of current value of the rear building for this period was $937,785.67 and for the entire Subject Property for this period was $1,609,978.78.
Appellant's Evidence
80As noted above, because the Appellant asserted that the effective date of the supplementary assessments was when full occupancy of the rear building residential units was achieved, it presented no evidence as to the current value of the Subject Property for the period September 1, 2023 to December 31, 2023.
Board's Findings on correct current value for the period September 1, 2023 to December 31, 2023
81The Board accepts MPAC's position and finds that the rear building should be valued using the income approach from September 1, 2023 onwards.
82With respect to expense allowance, the Appellant objected to MPAC's use of the lower 44% rate for the new residential units in the rear building. The Appellant submitted that the 59% expense allowance used for the original residential units in the front building should apply to the new residential units, too. However, the Appellant's position appears to be based on a misreading of the MPAC "Your Property Profile" ("Profile") for the Subject Property, included as Appendix A to MPAC's Valuation Report. While the Appellant submits that the Profile uses 59%, it in fact uses 44% for the new residential units. As such, the Board accepts MPAC's 44% expense allowance and finds that MPAC's evidence is the best evidence of expense allowance.
83The Board has addressed the Appellant's objections to MPAC's FMRs and Cap Rate above.
84The Board finds that MPAC's evidence is the best evidence of FMRs for the new residential units in the rear building.
85With respect to the Cap Rate to be applied to the rear building, the Board rejects MPAC's 4.71% Cap Rate and, for the reasons given above, finds that the Appellant's 5.75% Cap Rate is the best evidence of Cap Rate for the rear building.
86The Board finds the correct current value of the Subject Property for the period September 1, 2023 to December 31, 2023 is:
Correct Current Value for the period Sep. 1, 2023 to Dec. 31, 2023
| Front building | |||
|---|---|---|---|
| Residential units | |||
| Bachelor | 2 units | 649 | 15,576.00 |
| 1-bedroom | 5 units | 799 | 47,940.00 |
| 2-bedroom | 0 | 850 | |
| 3-bedroom | 0 | 1150 | |
| PGI | 7 units | 63,516.00 | |
| Vacancy | 4% | 2,540.64 | |
| Expense | 59% | 37,474.44 | |
| NOI | 23,500.92 | ||
| Capitalization | 5.75% | 408,711.65 | |
| Commercial unit | 1,004 | $10.50/sq. ft. | 10,542.00 |
| PGI | 10,542.00 | ||
| Vacancy | 8% | 843.36 | |
| Expense | 8% | 843.36 | |
| NOI | 8,855.28 | ||
| Capitalization | 7.00% | 126,504.00 | |
| Parking spaces | 5 | $240/space | 1,200.00 |
| PGI | 1,200.00 | ||
| Vacancy | 8% | 96.00 | |
| Expense | 10% | 120.00 | |
| NOI | 984.00 | ||
| Capitalization | 7.00% | 14,057.14 | |
| Rear building | |||
| Bachelor | 0 | 649 | |
| 1-bedroom | 0 | 799 | |
| 2-bedroom | 4 | 850 | 40,800.00 |
| 3-bedroom | 3 | 1150 | 41,400.00 |
| PGI | 7 units | 82,200.00 | |
| Vacancy | 4% | 3,288.00 | |
| Expense | 44% | 36,168.00 | |
| NOI | 42,744.00 | ||
| Capitalization | 5.75% | 743,373.91 | |
| Total | 1,292,646.70 |
Correct current value for the period January 1, 2024 to November 30, 2024
MPAC's Evidence
87MPAC submitted that no change occurred to the Subject Property during this period that would affect its estimate of current value.
Appellant's Evidence
88The Appellant submitted that as of January 1, 2024 the rear building's construction was completed and the units occupied. The Appellant valued the rear building using the income approach for the 2024 taxation year. It used modelled rents of $759 for the two-bedroom units and $890 for the three-bedroom units, a vacancy allowance of 4%, an expense allowance of 59% and a Cap Rate of 5.25% to calculate an estimate of current value for the rear building for the 2024 taxation year of $513,344.
89The Appellant submitted that as of January 1, 2024 the front building was unoccupied and under construction and therefore asserted that no value should be attributed to the front building for the 2024 taxation year.
Board's Findings on correct current value for the period January 1, 2024 to November 30, 2024
90The Board rejects the Appellant's submission that no value should be attributed to the front building because it was under construction and unoccupied. The front building did not cease to have value simply because it was undergoing improvement. The Board agrees with MPAC that the pre-improvement valuation of the front building continues to apply until the improvement commences to be used.
91Regarding the Appellant's estimate of current value for the rear building, the Board has previously considered and rejected the Appellant's use of modelled rents to value the Subject Property.
92As such, the Board finds that no change in value of the Subject Property occurred during this period. The Board finds the correct current value of the Subject Property for the period January 1, 2024 to November 30, 2024 is $1,292,646.70.
Correct current value for the period December 1, 2024 to December 31, 2024
MPAC's Evidence
93MPAC submitted that the three new residential units created from the commercial space in the front building commenced to be used on December 1, 2024. MPAC's position was based on the rent roll in the Appellant's Supplementary Expert Report, which stated that occupancy of all three of these units was expected to be December 1, 2024.
94As a result of these new residential units commencing to be used, MPAC removed its valuation of the commercial space in the front building from its estimate of current value and replaced it with a valuation of the three new residential units using the income approach. MPAC also submitted that upon the new residential units in the front building commencing to be used, their classification changed from the commercial property class to the new multi-residential property class.
95MPAC used the same FMRs, vacancy and expense allowance and Cap Rate to value the three new residential units in the front building as it did to value the new residential units in the rear building.
96This resulted in an opinion of current value as of December 1, 2024 for all new residential units (in both the front and rear buildings) of $1,245,406.75 and for the Subject Property of $1,790,132.02.
Appellant's Evidence
97In its Closing Submissions, the Appellant presented a "corrected" rent roll based on the testimony of Mr. Shafiq at the hearing. The "corrected" rent roll asserted that first occupancy of the three new residential units in the front building was "Vacant expect jan – march 2025" and that they did not commence to be used until March 2025. The Appellant submitted that these three units were the last units to be occupied in the front building and the appropriate date for supplementary valuation of the improvements to the front building was the date upon which the building commenced to be fully used.
Board's Findings on correct current value for the period December 1, 2024 to December 31, 2024
98Applying the same reasoning as for the new residential units in the rear building, the Board finds that the new residential units in the front building commenced to be used when occupancy of the first of these units occurred.
99The Board rejects the Appellant's attempt to correct the rent roll in its Closing Submissions. As stated earlier, the parties declined to file an agreed summary of the oral testimony given at the hearing before Member Lovrich. As a result, Mr. Shafiq's alleged corrections to the rent roll in his testimony are not before the Board. The only evidence before the Board on occupancy dates at the Subject Property is the Appellant's rent roll in its Supplementary Expert Report. That document states that first occupancy of the three new residential units in the front building was expected to be December 1, 2024. As this is the only evidence before the Board on this issue, the Board finds the new residential units in the front building were first occupied on December 1, 2024.
100For the same reasons as provided above finding that MPAC's evidence was the best evidence of FMRs and expense allowance for the new residential units in the rear building, the Board finds MPAC's evidence is the best evidence of FMRs and expense allowance for the three new residential units in the front building. However, the Board rejects MPAC's 4.71% Cap Rate, for the reasons noted above, and instead finds that the Appellant's 5.75% Cap Rate is the best evidence of Cap Rate for these units.
101The Board finds the correct current value of the Subject Property for the period December 1, 2024 to December 31, 2024 is:
Correct Current Value for the period Dec. 1, 2024 to Dec. 31, 2024
| Original residential units | |||
|---|---|---|---|
| Bachelor | 2 units | 649 | 15,576.00 |
| 1-bedroom | 5 units | 799 | 47,940.00 |
| 2-bedroom | 0 | 850 | |
| 3-bedroom | 0 | 1150 | |
| PGI | 7 units | 63,516.00 | |
| Vacancy | 4% | 2,540.64 | |
| Expense | 59% | 37,474.44 | |
| NOI | 23,500.92 | ||
| Capitalization | 5.75% | 408,711.65 | |
| Parking spaces | 5 | $240/space | 1,200.00 |
| PGI | 1,200.00 | ||
| Vacancy | 8% | 96.00 | |
| Expense | 10% | 120.00 | |
| NOI | 984.00 | ||
| Capitalization | 7.00% | 14,057.14 | |
| New residential units | |||
| Bachelor | 1 | 649 | 7,788.00 |
| 1-bedroom | 2 | 799 | 19,176.00 |
| 2-bedroom | 4 | 850 | 40,800.00 |
| 3-bedroom | 3 | 1150 | 41,400.00 |
| PGI | 10 units | 109,164.00 | |
| Vacancy | 4% | 4,366.56 | |
| Expense | 44% | 48,032.16 | |
| NOI | 56,765.28 | ||
| Capitalization | 5.75% | 987,222.26 | |
| Total | 1,409,991.05 |
Correct current value for the 2025 taxation year
MPAC's Evidence
102MPAC submitted that no changes occurred to the Subject Property that would affect its estimate of current value for the 2025 taxation year.
Appellant's Evidence
103In its Supplementary Expert Report, the Appellant submitted that construction of the front and rear buildings was completed and all of the units occupied as of January 1, 2025. Its estimate of the current value of the rear building was the same as for the 2024 taxation year, namely $513,344. Its estimate of current value for the front building was $555,718.
104In arriving at its estimate of current value for the front building, the Appellant used modelled rents of $533 for the bachelor units and $654 for the one-bedroom units and the same vacancy allowance, expense allowance and Cap Rate as it used to estimate the current value of the rear building residential units.
Board's Findings on correct current value for the 2025 taxation year
105The Board has previously considered and rejected the Appellant's argument that use of modelled rents, as well as the expense allowance and Cap Rate it applied to the three new residential units in the front building.
106The Board reiterates its finding that the new residential units in the front building commenced to be used on December 1, 2024. No party argued that the renovations completed to the original residential units in the front building resulted in a change in current value of those units. As such, it is unnecessary to determine when first occupancy or full occupancy of those units occurred.
107The Board finds that no change occurred to the Subject Property that would affect its current value for the 2025 taxation year. The Board finds the correct current value of the Subject Property for the 2025 taxation year is $1,409,991.05.
Correct current value for the 2026 taxation year
108The Board was not presented with any evidence of a change in value of the Subject Property for the 2026 taxation year. The Board therefore finds the correct current value of the Subject Property for the 2026 taxation year is $1,409,991.05.
Issue 3 - Is the current value equitable with the assessments of similar lands in the vicinity?
109Section 44(3) of the Act directs that, after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed and "adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land".
110The parties advised the Board in their Closing Submissions that they agreed a downward adjustment of 8% (based on a 0.92 ASR) was required to make the Subject Property's assessment equitable with those of similar properties in the vicinity.
Findings on Issue 3
111Having reviewed the parties' expert evidence on this issue and given the parties' agreement, the Board accepts that an 8% reduction to the current value is required for purposes of achieving equitable assessment.
CONCLUSION
112The Board finds the effective date of the s. 32 and s. 34 assessments should be amended to September 1, 2023, the date the new residential units in the rear building commenced to be used.
113The Board finds that an equitable reduction of 8% is required pursuant to s. 44(3) of the Act for each taxation period in question. The correct current value adjusted for equity for each taxation period is:
a. January 1, 2023 to August 31, 2023: $765,714.48
b. September 1, 2023 to December 31, 2023: $1,189,234.96
c. January 1, 2024 to November 30, 2024: $1,189,234.96
d. December 1, 2024 to December 31, 2024: $1,297,191.77
e. 2025 taxation year: $1,297,191.77
f. 2026 taxation year: $1,297,191.77
ORDER
114For the 2023 taxation year, for the period from January 1, 2023 to August 31, 2023, the correct current value of the Subject Property adjusted for equity is $765,714.48 apportioned as follows: Commercial $130,171.46, Multi-Residential $635,543.02.
115For the 2023 taxation year, for the period from September 1, 2023 to December 31, 2023, the correct current value of the Subject Property adjusted for equity is $1,189,234.96 apportioned as follows: Multi-Residential $392,447.53, Commercial $130,815.85, New Multi-Residential $665,971.58.
116For the 2024 taxation year, for the period from January 1, 2024 to November 30, 2024, the correct current value of the Subject Property adjusted for equity is $1,189,234.96 apportioned as follows: Multi-Residential $392,447.53, Commercial $130,815.85, New Multi-Residential $665,971.58.
117For the 2024 taxation year, for the period from December 1, 2024 to December 31, 2024, the correct current value of the Subject Property adjusted for equity is $1,297,191.77 apportioned as follows: Multi-Residential $392,447.53, New Multi-Residential $904,744.24.
118For the 2025 and 2026 taxation years, the correct current value of the Subject Property adjusted for equity is $1,297,191.77 apportioned as follows: Multi-Residential $392,447.53, New Multi-Residential $904,744.24.
"Karen Dawson"
KAREN DAWSON VICE-CHAIR Assessment Review Board www.tribunalsontario.ca/arb