By Naomi Klouda
When Melanie and Doug Meeker opened their latest property tax bill, they should have been sitting down.
According to the Kenai Peninsula Borough assessment, their property value at Lighthouse Village went up by 60 percent in the past year. Another parcel was up 80 percent.
“It is just stunning. We are in shock,” Melanie Meeker said Friday. She figures the tax bill amounts to a $400 to $600 monthly check to the borough. The Meekers own Lighthouse Village rental cabins, a quonset hut and a home in Homer. The quonset hut likewise came in at a higher appraisal.
It didn’t make sense, so they made phone calls. The borough assessor’s office is working with them.
While a few landowners say their assessment went down, others are sticker-shocked. One taxpayer who owns a downtown parcel in Homer calculates her property taxes rose 226 percent. Another has unimproved land, without a road or water and sewer, that rose from a valuation of $30,000 to $120,000.
Bay Realty owner Debra Leisek said that what’s needed is a legislative solution. Alaska is one of the only states that doesn’t bar governments from tripling or quadrupling property taxes from one year to the next.
“We need the Legislature to look at this. No other state is allowed to tax property so it comes in double and triple what it was the year before,” Leisek said. “There needs to be boundaries on the amount these things can be.”
KPB Assessor Tom Anderson said that anyone who doesn’t agree that their taxes are calculated correctly can ask for an informal review by March 31. If, after that, landowners aren’t satisfied with adjustments, they can then file an appeal. March 31 is also the appeal deadline. Borough code allows for 30 days to appeal after notice. The bills went in the mail Feb. 29, Anderson said.
Anderson explained that the borough assesses private and commercial properties according to market values. In an area like Homer, where land models had not been updated in eight years and no trend factor had been applied in four years, many land values changed significantly for 2012. These value changes are based upon recent land sales in Homer, he said.
“If property owners have questions about their 2012 assessed values, they should call or visit the assessing department office (907) 714-2230 and ask to speak with an appraiser, who will review the property record and the value with the owner,” Anderson wrote in an email. “Owners should keep in mind that their assessed value should represent market value as of Jan. 1, 2012. While it may be tempting to focus on the change in value from last year’s assessment, the only standard for review is whether the assessed value represents market value.”
In the case of the Meekers, the 2011 assessment on the land value of one parcel was $132,300. The 2012 assessment says it is worth $219,400, an increase of 60.3 percent. The 2011 assessment on the second parcel said the land was valued at $154,700. The 2012 assessment says the land is $278,600, an increase of 80 percent.
“Nothing has changed on these properties. How can the borough justify these tremendous increases? That’s our question,” Meeker said in a letter to borough Assemblyman Mako Haggerty, who asked her to document the matter. “As a layman, it makes us wonder if they need more money for retirements, more money for offices, more money for benefits, etc. If that’s the case, the borough should be scaling back their expenses instead of passing on their expenses to their taxpayers in an increasingly difficult economy.”
Anderson said that all properties in Homer were re-inspected and revalued for 2012, both land and improvements.
“Residents may have noticed that our appraisers were there last summer and fall canvassing the entire area,” he wrote. “You probably understand that improved properties are re-valued by the department every year. We do this by analyzing all known sales by neighborhood and property type and setting our valuation models to market value based upon these sales.”
However, when they canvass an entire area, many properties change in value due to a change in their physical description.
“We find improvements whose observed condition has changed through physical deterioration, remediation of deferred maintenance or remodel. We also find new buildings that we didn’t have record of, additions to existing buildings, and buildings that have been removed. Any of these changes can cause a property’s value to change, sometimes significantly,” he wrote.
Unlike improved properties, vacant land values are not updated every year. Homer land values have not been comprehensively reviewed since 2004, although a market trend factor was applied in 2008. Land values for 2012 were developed using all known land sales in Homer, deriving from those sales a unit value for each neighborhood, and adjusting for lot size and all land features and amenities affecting value. Features and amenities that might affect value include access, available utilities, topography, view, lake or ocean frontage, and wetlands, among others.
“The assessing department is legally required to value property at market value annually. Market conditions do change significantly over time and if assessed values aren’t updated every year they can lag behind market value, as was the case with Homer land values,” Anderson wrote. “The department is working to implement land models boroughwide which will allow us to update all land values to market value annually.”
Even so, residents say that if their land were to go on the market at the assessed value, it more than likely would not sell for that price.
Property appraisals are based on what the market can bear, while government assessments are based on government estimates.
If the borough assessors are basing their valuations on market value, they need to be sure to look at what lands and properties actually sell for after the fact, not based on pre-sale MSL listings, say Realtors.