In Ontario there are two aspects of a property’s assessment that must be considered on any appeal to the Assessment Review Board. First, the Assessment Act requires that the Board determine the correct “current value”, or market value, of the property. Once that is determined, the Board must decide if it would fair and equitable to assess the property at that current value, or if the assessment should be reduced to make it fair. This second step is known as an equity adjustment.
Equity is a core principle of assessment law in Ontario. The Court of Appeal stated in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) that a “prime objective of municipal taxation is the equitable distribution of the burden.” The issue in any argument for a reduced assessment on equity principles is how to prove that there is an unfairness that needs to be cured.
The Board has held, in cases such as Denomme v Municipal Property Assessment Corporation, Region 27, 2019 CanLII 9704 (ON ARB), at paragraph 28, that the “concept of reducing the current value determined to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.” What is compelling evidence of unfairness? That is an open question.
The Divisional Court stated in Municipal Property Assessment Corporation v Schumacher et al., 2016 ONSC 3239 (CanLII), at paragraph 18, that the Assessment Act “does not specify any particular methodology.” But the Board has been clear that there is preferred evidence to test for equity.
In Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation, Region 05, 2018 CanLII 70338 (ON ARB) the Board stated, at paragraph 110, that the “best evidence that there is an inequity is a statistically reliable level of assessment study.” This is commonly known as an Assessment to Sale Ratio or ASR study and is prepared by MPAC at most hearings.
But how do you determine if there is an unfairness or inequity from a level of assessment study. MPAC generally takes the approach that if the median of a sample of 30 or so assessed values is between 95% and 105% of time adjusted sale value of the properties then there is no fairness problem. It is only if the median ASR is below 95% that MPAC will admit that there is a fairness problem that needs to be addressed.
In Jay Patry the Board observed that any conclusion from a level of assessment study is a statistical exercise because the “party presenting a level of assessment study is asking the Board to draw an inference about the state of all property form a subset of that property.” The Board went on, at paragraph 112 to set out some statistical principles:
The Board has applied that method in a few cases, including Itwar v Richmond Hill (Town), 2019 CanLII 122815 (ON ARB), where the Board found that an equity adjustment was required even when MPAC’s median ASR was 96.9%, well within their fairness range of 95% to 105%. The Board found, at paragraph 33, “that the mean ASR is 0.9586 with a confidence interval of 0.0204. These results indicate that the true mean is likely between 0.9382 and 0.979. Any time the high end of the likely range is below 1.0 it is highly probable that other property in the vicinity is under assessed therefore requiring a downward adjustment based on a mean ASR of 0.9586.”
That case demonstrates that a statistical analysis should always be conducted. It may be that there is compelling evidence of unfairness in a study that MPAC says shows there is no unfairness. Using statistics to your advantage is very important in the context of proving an inequity, or unfairness, in the assessment of your property.
NextGenLaw LLP has experience in addressing fairness through a statistical lens, as well as looking at equity from other angles. Contact NextGenLaw LLP to see if a reduction in your assessment is possible.