2013 Real Property Assessments

We have all received our 2013 real property assessments. And now we have to understand how the numbers were generated.  Like you, I could have been better prepared for the changes and thus, minimized my surprise. But unlike you, it is nominally my "job" to help keep you informed.  I am very sorry. 

To catch up, let's start with the contracted assessor himself, James Canary.  Mr. Canary responded quickly to yesterday's request for explanation:

To: Mayor Stephanie Scott;  Assembly Members

First of all thank you for the opportunity to be the Haines Borough Assessor and to allow me time to explain my methodology for assessed values for the Haines Borough.

As you are probably aware Alaska Assessment Services was asked to come in and help the Haines Borough with assessments for the tax year 2013. This was after an audit by the State Assessor was conducted.  My job was to help establish equity within the Borough and to bring assessments up to their full and true value as of January 1, 2013 based on Alaska State Statute, Title 29, Section 49.110, Full & True Value.

Background: Having knowledge of the Haines area as a real estate appraiser for over 17 years and as an Assessor for Juneau, Petersburg and Pelican along with working within the assessment system in Ketchikan, Craig, Petersburg and Juneau since 1984, I’m pretty familiar with the State of Alaska, Title 29, Section 49 and the assessment process.  Please understand, none of my confidential private Real Estate Appraisal information was used within the valuation process for the Haines Borough 2013 Assessment process.

Research:  After taking the job as the Haines Assessor in January 2013, my first course of action was to see what sales information the Haines Borough had collected.  I was pleasantly surprised to find some good sales data has been collected over the past number of years. I started out analyzing the last 3 years of sales data collected.  Of the sales data collected there were 236 Deed Title Changes with 126 Confirmed sales prices obtained (53% collection rate).   

Analysis: My second course of action was to analyze each and every confirmed sale and breakdown the difference between land and building for each sale. In some cases a site visit and questions to the buyer were needed to gather additional information.  I’d like to extend my appreciation to all that were willing to give me additional information, it really did help.  As most citizens in Haines are aware this job was very difficult as there are many different market areas in Haines and each was weighted on its own merit based on the sales obtained.  My analysis extracted raw land values by  location, density, upland vs. waterfront adjustments, view adjustments, topography adjustments, site development and other adjustments where noted.

Findings from the Sales Analysis:   What became evident from researching vacant (unimproved) sales and then improved sales (Buildings & Land), the difference was minimal with additional value given to improved sites for the driveway, site pad, water, sewer, electricity and telephone.  For developed properties with all of the above an adjustment of $20,000 was extracted from the sales on average.  While $20,000 is probably low for actual cost to develop a site an average was run for each and every parcel at this time minus some of these features resulted in a lower site development adjustment (Example: no roadway access, no power, etc).  This adjustment was on top of the raw land value given to each and every parcel within a specific location.  View adjustments were made at $10,000 for filtered views and $20,000 for good views this again was an average and run consistently throughout the Haines Borough.  Sites were run at a specific unimproved land value and then adjusted for density, size, view, topography, other adjustments along with the site development adjustment. I also researched the cost approach for buildings for each and every sale and found that some clean up still is required before implementing the cost approach across the board for the Haines area. Overall no change was made to the building cost as the prior costs were close to the new updated cost and local multiplier derived.

Applying Assessed Values for each parcel:  After the market analysis was concluded, I set up an excel spreadsheet and went through each and every market area based on the sales obtained, made the adjustments appropriate to the specific location, then went back and double and triple checked the numbers verses the sales. From the final draft an audit with the help of Dean Olsen was done and corrections were made as needed.

In Conclusion:  After the research, analysis and implementation of the 2013 Assessed values for the Haines Borough were completed the final verdict was that the Haines Borough Assessed Values had gone from a 85% sales ratio (Assessed  Value/Sales Price) in 2012 to a 98% sales ratio in 2013 with a total Assessed value increase of 18% overall.  I understand as a tax payer this increase is hard to swallow, but my job as the Assessor is to assess each and every property at full and true value as of January 1, 2013.

Let me field a couple of questions received so far:

1)     What if I feel my property is not assessed enough?   Answer you can also appeal to have your value raised.

2)     What if I feel I could not sell my property for what it is assessed at?  Answer is to appeal your assessment and allow the Assessor or staff to do a full inspection of the property.  If there is a reason to change it we will.

3)     What if my neighbors are assessed with different value methods?  Answer:  this can happen, but mostly in the downtown area where different zonings are taken into account or the neighboring properties are much larger than the parcel in question (Density: low, medium, high).  Let me clarify further:  Some areas of the downtown sold at different rates because of zoning, actual use or lot size.  Example a raw commercial lot in the downtown area sold for $3.00/SF and a residential house on a commercial zoned lot sold for $1.03/SF (side by side). The residential home sale on a commercial lot sold similar to a residential zoned home up the street.  In appraisal methodology a residential property in a commercial zoned area has an external loss either in the land or improvements.  I determined the land value should suffer the loss, each lot in a commercial zoned area in the downtown area is run at least $3/SF up to $10/SF.  A residential property in a commercial zoned area is run at $3.00/SF with a market adjustment (external loss) which brings the final land value to $1.03/SF before the other adjustments are applied (location, density, waterfront or upland, view, topography, other, and site development).  If on the other hand a lot is over let’s say half an acre and based on sales indicated a per acre basis should be applied then it was (residential zoning and residential lot).  (Half an acre is only an example, the valuation is based on the sales within the area in question)

4)      I live out the road and my lot is valued higher per acre than my neighbor?  Answer:  Out the road everybody within the area is run at the same per acre basis, but lots are adjusted based on size.  Based on the market sales size adjustments were required.  Example:  a 5 acre lot should sell for more per acre as compared to the neighboring lot of 50 acres.

5)     My lot is an upland lot, was it run the same as the waterfront lot below?   Answer: No, ocean waterfront, lakefront and riverfront properties were run at a different valuation, based on their sales for the area or a similar area.

6)     While I can’t disagree with the current market assessed value, I don’t like the fact I’m going to have to pay more taxes.  Answer: The Assessor is charged with full and true value determination as of the 1^st of each year.  Taxes are assessed by the millage rate which is adopted by the Haines Borough.  This can go up or down depending on the budget set by the assembly.

7)     How can you justify increasing my assessment by more than 20% in one year?  Answer:  Your assessment was based on prior sales data for your area.  Now if you are having problems with your house or lot (rot, settlement, ants, erosion, etc.), appeal your assessment, the Assessor may not know about these issues.  An appeal gives the property owner the chance for the Assessor to take another look at the property.  That doesn’t mean that the Assessor will change the value.  If not satisfied the appellant can go to the board of equalization for a final hearing. 

I hope this sheds some light to the current 2013 Assessed Values for the Haines Borough.  If you have any further questions please ask.

Cordially;

James W. Canary, Assessor

I have some more questions that I have posed to the state assessor, Steve Van Sant today.  Please check back and I will post his responses as soon as I receive them.  Meanwhile, KHNS News Director Margaret Friedenauer also engaged Mr. Van Sant.  This is his response, received today,  to her inquiries:

There have been no changes in the state assessment laws in years with the exception of various exemptions that have been added.

Based upon our experience with the Haines Borough and the increases that residents have seen this year, the primary reason behind the increases is most likely the assessor attempting to catch up to the market.

State law requires municipalities to assess property at 100% of market value.  This has been the assessment standard for many years and it has not changed.  In our latest audit of the Haines assessments we noted that assessments appeared to be inequitable and many needed to be updated with current values as that did not appear to have been done in many years.  The 18 page report lists several areas that needed to be addressed and the borough is attempting to make needed corrections.

The Borough hired Mr. James Canary to get its values completed and assessment notices mailed out this year and Mr. Canary attempted to get most of the land values in equity and up to market value. He informed my office that he rebuilt the valuation models and tried to get most, if not all, properties valued in this fashion helping to assure more equity in the process.

Anytime a city or borough goes through a re-evaluation process values will usually increase and hopefully produce a more uniform assessment roll.

But the answer to your direct question is that the standard for assessments, market value, has not changed.

I note Mr. Van Sant's reference to an "18 page report."  I know I have seen that report but I need to see it again.  It may help give some context to our situation.  I will ask the Clerk to post it under key documents on the Borough website.