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Property taxes going up

Market forces drive up property increases, owners ire

Posted: Thursday, April 12, 2007

Editor’s Note: A story looking at pending borough and state legislation addressing property values and taxes will be printed in Friday’s Clarion.

Living along the Kenai River has been a dream for Ron and Mary Oman. Recent borough tax assessments, however, have been more of a nightmare.

“Our assessment has gone up over $160,000 in two years!” Ron Oman said in a recent interview.

The couple moved from California five years ago in order to be closer to their daughter and two grandchildren living in Wasilla.

The price of coveted property along one of Alaska’s premier fishing streams would be expected to rise, Oman admitted, but just how the borough’s assessing department reached its conclusions concerning his home and acreage escapes him.

His property, house and lot combined, was recently reassessed at $600,100. Public information available through the assessor’s office shows that two years ago, that figure was $437,800, a difference of $162,300.

Oman said that while he lives by the river, the water is at the base of a steep bluff and not very accessible.

“If I lived in a place where you could build a boat dock, like Soldotna, it would be different,” he said.

Comparing just his lot to a neighbor’s across the street demonstrates the disparity, he said.

“His lot is assessed at $22,500. Ours is $127,000,” Oman said. “We agree our lot should be more because we’re on the river, but then there is this location adjustment charge. It’s like getting hit twice.”

Furthermore, Oman said, at least four homes in the neighborhood have been on the market for two or three years. They aren’t selling.

Oman said he and some of his neighbors have gone to the borough assessors’ office to inquire why their assessments rose so quickly. Oman complains he came away less than satisfied.

“No one would give us any answers,” he said. “Their standard response was, ‘We’ll research it and get back to you.’ Everyone is up in arms.”

Borough Assessor Shane Horan said he wasn’t personally familiar with Oman’s complaint, but said whenever a resident comes in to inquire about a tax assessment, office personnel do take the time to go over the property file, discuss current sale prices and how market forces affect assessments, and what’s been occurring in that market generally.

If someone is still not satisfied, the assessor’s office may ask for an on-site, inside inspection. Horan said assessors only get inside about 20 percent of the homes they must assess. Most of it is done from the outside, meaning that assessors often make educated guesses about how finished the interior actually is.

An interior inspection that found, for instance, that drywall was in bad condition, or a basement or second floor was not finished, assessments could easily change, Horan said.

Oman said their house has had an interior inspection.

If an inquiry fails to produce a result satisfactory to a resident, that property owner can appeal to the Board of Equalization, an appointed panel that adjudicates differences over assessed values.

Appeal filing fees are applied depending on a property’s value; in Oman’s case, $200. That sum is refundable if an appeal results in an assessment reduction, or if an appeal is withdrawn two weeks or more before a BOE hearing. The Omans have filed an appeal.

Roughly 40 appeals a year go to the BOE, and perhaps four, or about 10 percent, result in assessment reductions, he said.

State law dictates how assessments are conducted. The assessor can do little to change that, and must abide by the complex rules. A newly acquired computer program called ProVal was used to produce the current batch of assessments. It replaced an in-house program called ACE, Horan said.

ProVal takes into account location, market prices, property attributes, and much more in short, a whole retinue of factors needed to calculate the state-required “full and true market value.” The borough sets values at about 95 percent of the state target “to provide a degree of conservatism,” Horan said.

Any lower would start drawing attention from the state assessor’s office.

While assessing is not an exact science, it is close. What borough residents face are market forces that have sent property values through the roof because people want to live here and seem willing to pay ever higher prices for homes especially those along the Kenai River.

Horan said raw land along the river got an across-the-board 20 percent increase this year. Overall, the net increase for river properties, including improvements (homes), was about 15 percent. The Omans’ $162,300 increase over two years translates to about 18 percent a year, a figure not far off the overall net increase.

“We are still considerably low in assessments,” Horan said. “We are trying to catch up. To avoid our ratio getting too low, it’s fairly easy for us to do a batch update and still be well within our ratio tolerance.”

The values of properties across the street from the Oman’s residence simply haven’t risen as high or as fast, Horan said.

“It’s the principal of supply and demand in play here,” he said.

Hal Spence can be reached at harold.spence@peninsulaclarion.com.



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