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Ontario Tax - Assessment - Equitable Valuation. Municipal Property Assessment Corp. v. Bell Canada
In Municipal Property Assessment Corp. v. Bell Canada (Div Court, 2024) the Divisional Court dismissed an MPAC appeal against an Assessment Review Board ruling, here that related "to MPAC’s assessment of a telecommunications switching station in downtown Toronto owned by the respondent Bell Canada".
Here the court briefly explains the Ontario property tax assessment regime, including it's downward 'equitable' component:[6] The Assessment Act provides for the assessment of land in Ontario for the purpose of municipal taxation. The assessment of land is based on the land’s current value: Assessment Act, s. 19(1). The “current value” of land is defined 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”: s. 1(1). As explained below, in order to determine a property’s value for purposes of assessment, the property’s current value may be adjusted downward to make its assessment equitable with that of similar lands in the vicinity (referred to as an “equity adjustment”): s. 44(3)(b).
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[8] To determine the amount of an assessment on appeal, s. 44(3) of the Assessment Act directs the Board to determine the property’s current value and then adjust that amount by reference to similar properties in the vicinity if the adjustment would result in reduction of the assessment. Section 44(3) provides:(3) For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,
(a) determine the current value of the land; and
(b) 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. ....
VI. MPAC’s position
[29] In response to the question in the leave endorsement, MPAC submits that the Board erred in its interpretation of s. 44(3)(b) and failed to apply the correct test or measure of equity.
[30] Based on previous case law, MPAC submits that in order to determine whether (and to what extent) it is necessary to make an equity adjustment under s. 44(3)(b), the Board is required to undertake a two-step process. MPAC says that this analytical framework is consistent with the legislative purpose of s. 44(3)(b) to ensure that the municipal tax burden is distributed fairly among similarly situated owners, relative to the values of their properties, consistent with the purpose of the Assessment Act: see Re Allen and Town of Mimico, [1920] O.W.N. 150 (Co. Ct.), at p. 151; Re Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto, 1968 CanLII 183 (ON CA), [1968] 2 O.R. 388, (C.A.), at p. 390; Municipal Property Assessment Corp. v. BCE Place Ltd. (2009), 98 O.R. (3d) 510 (Div. Ct.), at paras. 61, 63, varied in part, 2010 ONCA 672, 103 O.R. (3d) 520.
[31] The first step in the analytical process is to determine “similar lands in the vicinity”. Making that factual determination requires consideration of “all points of comparison”: Loblaw, at para. 23; Trizec, at paras. 7, 9.
[32] MPAC submits that the second step it to determine the relationship between the current values and the assessed values of those similar lands. Where similar properties are assessed at less than their current values, s. 44(3)(b) permits the Board to adjust the assessed value of the appealed property to be consistent with the ratio of current value to assessed values of the similar properties: Bayview Summit Development Ltd. v. Regional Assessment Commissioner, Region No. 14 (1998), 36 O.M.B.R. 161 (Div. Ct.), at p. 163, leave to appeal to C.A. refused.
[33] With respect to the first step, MPCA submits that the Board erred in its determination of “similar lands in the vicinity” by limiting its equity analysis to 220 Simcoe because it was (in the Board’s view) “more similar than all other properties in evidence” based on its use as a switching station: Board Decision, at para. 70. MPAC says that focusing on the Asquith property’s use to the exclusion of other points of comparison is contrary to the judicial direction in Trizec and Loblaw to consider all points of comparison to determine “similar lands in the vicinity”. Among other things, MPAC also argues that even if the Board was justified in focusing on use as the basis for determining similar lands, it failed to explain why it did not consider evidence of another Bell Canada switching station at 76 Adelaide Street West, which was assessed at 100 percent of its current value.
[34] With respect to the second step of the equity analysis, MPAC submits that in order to determine the relationship between the current values and the assessed values of the similar lands, the Board must have evidence of those values before making an equity adjustment, typically in the form of an ASR study setting out the ratio between the assessed value and the sale price of the similar properties. MPAC says there was no such evidence before the Board in this case.
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The Board did not err in determining “similar lands in the vicinity”
[38] After determining the Asquith property’s current value pursuant to s. 44(3)(a), the Board was required by s. 44(3)(b) to have reference to values at which “similar lands in the vicinity” were assessed and, if appropriate with reference to similar lands in the vicinity, apply a downward adjustment to produce an equitable assessment for the Asquith property. Determining what was “similar” and what was in the “vicinity” are factual findings of the Board based on the evidence. Those findings are not subject to appeal absent an extricable error of law. I see no such error in this case.
[39] In its equity analysis, the Board correctly cited Loblaw, the leading case on the application of equity, and applied the “all points of comparison” framework: Board decision, at paras. 65-66. The Board found, as fact, that the telecommunications centre located at 220 Simcoe was similar to the Asquith property in use, location, configuration, age, condition, was subject to section 11 of the BCA, and was valued on the cost approach: Board decision, at paras 67-73.
[40] The parties agreed that the Asquith property’s highest and best use was a telecommunications centre: at para. 11. A property’s HABU “is a primary, if not determinative factor … when determining whether a candidate property is similar to the subject property”: General Motors of Canada Co. v Municipal Property Assessment Corp. Region 23, 2023 CanLII 12249 (Ont. A.R.B.), at para. 211. On the evidence before the Board, the only property with the same HABU that the Board accepted as “similar” and in the “vicinity” was the 220 Simcoe telecommunications centre: at paras. 71, 73. The Board was entitled to rely primarily on one point of similarity as determinative for this purpose: Trizec, at para. 9; Loblaw, at para. 23. I see no extricable legal error in the Board’s analysis.
[41] Contrary to MPAC’s submission, I also see no legal error arising from the fact that the Board did not specifically refer to Adelaide switching station or other Bell Canada property in making that determination. There is no obligation on a tribunal to mention every piece of evidence or record every argument or aspect of the deliberation process: Quadrexx Hedge Capital Management Ltd. v. Ontario (Securities Commission), 2020 ONSC 4392, 151 O.R. (3d) 709 (Div. Ct.), at paras. 120-121.
To make an equity adjustment, the Board was not required to determine the relationship between the current value and the assessed value of similar properties
[42] As previously noted, in order to make an equity adjustment, MPAC submits that after determining similar lands in the vicinity, the Board is required as a second step to determine the relationship between the current value and the assessed value of the similar lands, typically based on an ASR study setting out the ratio between the assessed value and the sale price of the similar properties. As the Board noted, at para. 63, an ASR study is “a common means of determining whether a reduction in the current value determined is necessary and if so, by how much.”
[43] As the Board correctly stated, at para. 64, however, “an ASR study is not the only means of deciding whether a current value should be reduced to reflect equitable assessment.” Given the unusual nature of telecommunication centres (including the statutory restriction on alienation), there would be no sales data to develop an ASR study for such properties.
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