TAXPERTS PROPERTY SERVICES LIMITED

5. COMMERCIAL, MULTI-RESIDENTIAL & INDUSTRIAL PROPERTIES

Tax Appeal Deadline

If you choose to appeal the assessment of a commercial, industrial or multi-residential property you can choose to either file a Request for Reconsideration (RFR) with the Municipal Property Assessment Corp. (MPAC) or file a formal appeal to the Assessment Review Board (ARB). It would appear that the filing of an RFR to MPAC by March 31, 2009 is a good way keep your option open to later file a formal ARB appeal. If you file an RFR, the formal deadline for filing an ARB appeal is 90 days from the mailing date of the MPAC decision. There is no fee for filing an RFR with MPAC while there is a fee of $150 for an ARB appeal for each property with an individual Roll Number. NOTE: Multi-Residential properties are those with seven or more “self-contained units”. That would include seven-plexes up to the largest residential apartment buildings. Secondly, these rules also relate to the class for the assessment of “pipelines” which is one of the seven classes under the assessment system. Our position is that companies with pipeline ownerships will have more than enough lawyers on staff or retainer to internally handle the issue of the assessments on their pipeline properties.

The onus remains on MPAC to prove the “accuracy and fairness” of the January 1, 2008 property assessment. There are three approaches for determining the value of commercial, industrial and multi-residential properties. The three main methods of valuing property are: 1) the sales comparison approach also known as the direct comparison approach; 2) the cost approach; and, 3) the income or direct capitalization approach. It is common for a combination of one, two or all of the approaches to be used to determine the fair and accurate assessment value for these types of properties. The fact is, compared to the “current value” approach used for residential properties, the process of determining the proper assessed value for commercial, industrial and apartment buildings is much, much, much more complicated than with residential properties.

The Walker/Grad materials on property appeals in their publication “Ontario Property Tax Assessment Handbook”, describe the process of defining what the correct value of a property is as a value that:
a) is the most probable price, not the highest nor the lowest or average price
b) is expressed in terms of money
c) implies reasonable time for exposure to the market
d) implies that both buyer and seller are informed of the uses to which the property may be put
e) assumes a willing buyer and a willing seller with no advantage being taken by either buyer or seller
f) assumes an arm’s length transaction in the open market and
g) recognizes both the present use and potential use of the property

The key principle which will determine the ultimate figure of the correct assessed value is the application of the test of the “highest and best use”. This simply means that the assessment will reflect the “current value” for what the property would be worth based on getting the highest benefit from use of the property. Another way of stating it is, what is the highest value it would bring in an open market with an informed purchaser who intends to maximize the value of the property. In terms of residential assessments where there is a small, old building on a lot with a high value, the final result will be determined by fixing on the “land value of the property. This would result where it is apparent that the primary and even sole intent of the purchaser would be to buy the property based on the value of the land. This is the case where there is a buy, the building or home is razed and a new home or building is constructed.

A new development for these properties for property appeals affecting the 2009 through 2012 tax years is that once you are at the ARB level with a formal appeal, there is provision for the setting of a “Prehearing” for properties assessed above certain dollar threshold for each neighbourhood. Typically, MPAC is not indicating what that dollar threshold will be but it will certainly vary for each area of Toronto and for each of the commercial, industrial and multi-residential classes of properties. The prehearings are purportedly for the purpose of clarifying issues and procedures including such as agreeing on certain facts to simplify issues left to be dealt with at a formal ARB hearing. The rationale is to save time at the formal ARB hearing but it can also be seen as adding an extra level of complication in the context of procedures. It presumes dealing on good faith on the part of MPAC and counsel acting for the municipality yet they are deep-pocketed and funded jointly on a shared basis all of the cities and municipalities in Ontario. You need an experienced and capable representative to get substantial reductions on appeals of commercial, industrial and multi-residential properties,

At the formal ARB hearing, there will be legal counsel acting for the city of Toronto, the MPAC Assessor will give expert evidence to justify the accuracy of the January 1, 2008 assessment and the owner appealing the assessment can challenge the MPAC Assessor’s evidence call their own expert evidence to try and obtain a substantial reduction of the assessment. The rules of procedure are similar to those for formal civil trials in the regular courts and are set out in the Assessment Review Board “Rules of Practice and Procedure” which you can review on their website at www.arb.on.ca.

TAXPERTS PROPERTY SERVICES LTD. WILL BE HANDLING ONLY RESIDENTIAL PROPERTY APPEALS WHICH WOULD INCLUDE HOMES AND CONDOMINIUMS. CLICK HERE TO GO TO THE WEBSITE FOR BEN BLUFARB, BARRISTER & SOLICITOR, WHO SPECIALIZES IN COMMERCIAL, INDUSTRIAL AND MULTI-RESIDENTIAL PROPERTY TAX APPEALS.

CLICK HERE TO ACCESS HIS WEBSITE AT WWW.BENJAMINBLUFARBLAW.COM