2020 property assessments incur the wrath of residents
April 9, 2020
This year’s property tax assessments have generated more ire than usual among Haines residents. Many have complained about a spike in assessed property value as the world braces for an economic downturn.
Resident Christopher Thorgesen, who owns a number of properties throughout Haines, said he received a stack of property assessment notifications on March 30, and nearly all valuations had been significantly raised with increases ranging from 12-71%. He said the assessment value for many of these properties had gone up the previous year as well and several assessments were significantly higher than what he had originally paid for the property.
“That day I started getting phone calls from people who were mad that their property taxes went up and wanted to know if mine went up as well.”
Thorgesen said he thinks the borough is trying to increase property tax revenue without raising the mill rate, and while he understands that some properties are undervalued, now is not the time to make up a budget shortfall on the backs of “citizens who are barely getting by as it is.” He said he does not have time to save for the increases, so if he is unable to successfully appeal them, he will have to put off planned building improvement projects.
Barabara Mulford said her Lutak property value increased 30% from last year despite the fact that she made no improvements to it. She said she estimates income from her business has dropped by 99% as a result of the pandemic. Like individuals who have had to cut nonessential spending to match reduced income, the borough should cut costs rather than attempting to raise revenue to fill any coronavirus-related deficits, she said.
Chilkat Restaurant and Bakery owner Miki Atkins, whose assessment rose by 22%, said the increase makes no sense given the current economic crisis.
Every year, as soon after Jan. 1 as possible, notice of property assessments for the Haines Borough are mailed to landowners, and every year, as soon as notices start hitting mailboxes, the borough begins receiving complaints from dissatisfied property owners, assessor Dean Olsen said.
Common complaints include: “How could my value increase by x percent in one year with the economy the way it is, school enrollment being down and tourism on the decline?” and “How could my value increase when I haven’t made any improvements to the building or the land?” Olsen said.
Oslen said the response this year differs from past years. This year’s assessment notifications were mailed on March 16 just as COVID-19 concerns were ramping up.
“People are afraid of what will happen as a result of (the pandemic),” Olsen said. As people have lost the ability to work and seen their incomes plummet, they are concerned about how they will be able to pay for their expenses. Property tax, one of the largest bills a person pays in any given year, is at the top of many people’s lists, he said.
However, this year’s property tax assessments were completed before “coronavirus” was a word in the vocabularies of people outside the medical profession and well before it looked like the virus would trigger a worldwide economic downturn.
Under Alaska law, municipal assessors are required to assess the “full and true” value of a property as of Jan. 1 of the assessment year. That means the estimated price a property would sell for under prevailing market conditions.
There are many reasons property value could increase significantly in a single year, Olsen said. One of the most common is the lag time between assessments. The borough requires a property’s value be reassessed at least once every six years. “A lot can happen to market value in the six years your building value has not been updated,” even if no major changes are made to the property.
Olsen said this year’s assessment process began as soon as property tax bills for the preceding year were sent out on July 1, 2019. Assessors and staff began reviewing valuation models, collecting new sales data, updating accounts and conducting site visits to inspect properties that have undergone changes in the past year (like new construction).
“The assessment… of real property is not an exact science,” Olsen said. Assessors attempt to determine the value of a property based on characteristics including location, land area, structure size, quality of materials, style and observed condition, but assessors do not always have access to the necessary tools and information. If an assessor is unable to gain entrance to a building, they may have to judge from the outside whether a basement is finished. One method for determining a property’s value involves knowledge of the sale price of other similar properties in the area. Alaska does not require disclosure of sale prices, which means this information is often unavailable.
An assessor’s aim is to create an accurate, fair assessment of property value as this, in turn, ensures equitable distribution of property taxes to support borough services. Olsen said the best steps a property owner can take ahead of time to ensure an accurate assessment are honestly disclosing the sale price of their property and contacting the assessor to “report the progress made to new construction, additions or removal of buildings on their property.”
The borough must assess at least one-sixth of parcels in the community each year in order to keep up with the six-year assessment cycle. “In 2019, there were 2,681 parcels on the tax roll, so 446 properties needed to be inspected to keep up with the annual requirement,” Olsen said. If an owner notifies the borough of changes to their property, it ensures their property’s value will be reassessed in that same year. For this reason, an owner could see their property value change several times in consecutive years.
If a person believes their property’s assessed value is incorrect, there is an appeals process for correcting errors. This is the time when owners can submit information to correct inaccurate records of property attributes or demonstrate that their assessed value is too high compared to other similar properties. As soon as an owner receives a notice they believe contains errors, they should follow instructions contained in the notice for submitting an appeal.
Olsen said most appeals “are resolved with an exchange of information that gets the correct data on the account.” In many cases, the change in value translates to less than a $100 difference in their annual tax bill.
Appeals that are not resolved to an owner’s satisfaction through direct communication with the assessor go before the borough’s Board of Equalization for a hearing. The board is composed of Haines Borough Assembly members, or others appointed by the assembly, and meets on the second Monday in May.