Dramatic increases in borough property tax assessments on the lower Kenai Peninsula have raised a storm of protest. After assessments came out March 1, property owners and real estate professionals have criticized them as being too high, too sudden and not an accurate reflection of market changes.
“The real estate professionals working in Homer on a day-to-day basis are not seeing the increases the assessors are saying,” said Kirk Olsen, a certified appraiser. “That’s it in a nutshell.”
Although some taxpayers have been able to get assessments adjusted through informal conversations with borough assessors, those unable to resolve differences should file an official appeal by the 5 p.m. Friday, March 31, deadline. Appeals must be received in the borough clerk’s office in Soldotna or Homer and have a Friday postmark. Appeal forms also can be picked up at the borough annex on Pioneer Avenue and dropped off there. That office will stay open until 5 p.m. to take appeals. The forms also are available online at www.kpb.us/assessing-dept. Filing an appeal preserves a property owner’s right to take grievances to the borough Board of Equalization.
Borough Mayor Mike Navarre also holds a meeting to discuss assessments and the process in Homer from 3-4:30 p.m. Thursday, April 6, at the Alaska Islands and Ocean Visitor Center. He also holds a Town Hall meeting at 5:30 p.m. the same day and place to discuss economic development, the Alaska Permanent Fund, state finances and broad based taxes.
Borough Assessor Tom Anderson said his office has been trying to respond to as many phone calls as possible before Friday, but may not be able to respond to all of them. His office has been swamped with calls, he said.
Debra Leisek, owner of Bay Realty, said she’s gotten so many calls from clients she has sent appeal forms to anyone who bought property in the last year.
“We’re encouraging everyone who calls to file an appeal immediately,” Anderson said. “We’re not sure every appraiser can call within the deadline.”
There is a filing fee of from $30 to $1,000 depending on land value. For properties of $100,000-$499,000, the fee is $100. Anderson said after the deadline his office will still work informally to answer questions and make adjustments if warranted.
If the informal process satisfies a property owner’s concerns, they can then withdraw the appeal and get their filing fee back. The fee also gets refunded if the appeal goes to the Board of Equalization and the appellant shows up for the hearing.
“We can resolve an appeal informally at any time before the Board of Equalization,” he said.
Borough Assembly President Kelly Cooper, who represents the city of Homer and part of the lower Kenai Peninsula, said she also has gotten a lot of phone calls from citizens concerned about the new assessments.
“I can’t tell you how many calls I’ve gotten,” she said.
About half have said the assessments are crazy and the others have been understanding, Cooper said. Most of the calls have to do with a huge spike in land value assessments, she said. Most of the increases have been for smaller lots, while larger acreage has gone down.
Holly Van Pelt, who has a home in the Westwood Subdivision at the top of West Hill Road, saw her land nearly double in value.
“I don’t mind paying my fair share of taxes, but an 81-percent increase is a bit much,” she said.
Leisek said, for example, that lots in Diamond View Estates that were listed for $50,000 have had assessments raised to $100,000 and higher. One of her employees who lives on West Hill will see her monthly mortgage payment increase $100 because of the higher assessment.
“They’re whacked,” she said. “They really need to go back and readjust.”
Anderson said people are seeing higher assessments for several reasons: a canvass or physical inspection of property was done last summer on the lower peninsula, the borough now assesses at 100 percent of property value, and it uses a new assessing model. The canvass also picks up improvements like garages and additions that have happened since the last visit.
“We’re playing catch up,” he said. “We also recalibrated the land model this year. We included a new variable we hadn’t included before this year. That’s probably the main reason some of the land values went up and some went down.”
Leisek some people have called her about assessments going down, especially for larger parcels.
“Size is probably the most important adjustment we make,” Anderson said. “We observe in the market place a large parcel of land sells for a lower price per unit than a small piece of land.”
In the city of Homer, while land and improvement assessments in specific cases rose or fell, overall the taxable base went up 10 percent. He did not have exact figures for other areas.
Anderson also noted that the borough uses information voluntary submitted in a questionnaire by buyers and sellers, about a 30-percent response rate. Alaska does not have a mandatory real-estate transaction disclosure law like some other states. The assessor’s office also can get sales figures reported in the recorder’s office — but not everyone provides that information.
Olsen said he thinks the borough assessments are off.
“As an appraiser I see in many cases assessments getting ahead of market value of land,” he said.
Olsen provided a graph of 122 parcels sold in the past year with selling prices compared to borough assessments. The total deviation from sale prices was $1.7 million. Of the parcels, 65 percent had assessments over the sale price and 35 had assessments below the sale price. Olsen based his data on Multiple Listing Service information that’s proprietary to real estate professionals and that the borough cannot legally use.
Cooper said that low-response rate on sales questionnaires throws the data off.
“It doesn’t take much to skew that curve. Their hands are tied,” she said of the assessor’s office. “By law they can’t call a Realtor and say, ‘What does it sell for?’”
Anderson said assessors look at factors that affect the value of land such as land type, neighborhood and utilities, and adjust for things that might affect the value such as lot size, topography, wetlands and view. A lot of the complaints have been about how assessors qualify view property.
Borough property assessments determine the taxable totals for cities and service areas. That number is used by the borough assembly and cities to determine the mill rate — the amount charged to a property owner as a property tax. One mill is equal to $100 per $100,000 of assessed value. The mill rate also is tied to a city or service area budget, although some cities set caps on how much a mill rate can be increased.
Michael Armstrong can be reached at firstname.lastname@example.org.