Hot market drives property values

March 27, 2005

JOEL DAVIDSON/Frontiersman reporter

MAT-SU - The average single-family home in the Valley is now worth $187,000. That's an increase of 15 percent over last year, but it's hard to find homeowners who are pleased with their increased property values.

Many residents are shocked and upset by the new assessments. Mat-Su Borough Assessor Alan Black is at the center of property assessment debates, but he said his office is just doing a job mandated by state statute.

The law requires the borough, each year, to reassess all properties by Jan. 1. Black said this year's assessments, while substantially higher, are just reflections of the market.

"My office mimics the market," he said in an phone interview this week. "Really it is the property owners that dictate what I do. It's a hot market out there and a lot of people are moving here to buy reasonably priced homes."

Black said properties may also have been undervalued in past years, but the greatest influence on rising property values, he said, is the market. With people moving from Anchorage and elsewhere in the past two years, the demand for land and homes has increased. The less land available, the more valuable it becomes.

"Competition drives the market," Black said.

In the two years Black has been the borough assessor, property values have risen dramatically. Black said his office uses some different techniques than were previously used in assessing property and, as a result, he said assessments are probably more accurate.

With so many new building projects and subdivisions under construction, Black said borough appraisers are now focused more on evaluating new constructions rather than looking for accuracy in existing structures.

While establishing this year's assessments, a team of nine borough appraisers drove down every single road in the borough looking for new constructions and property improvements.

In addition, Black said his office looked at sales of 1,800 properties with structures on them, along with another 2,000 vacant property sales.

To evaluate individual properties, the assessment office looks at the average sales of similar properties in a general area, while also taking into account improvements and descriptions of individual lots.

Other factors that influence property assessments are the age of the houses, the cost to build a similar house, brand-new, and any rental income the house might generate.

"We have an inventory of every property in the borough," Black said. "We go out and measure buildings. We evaluate them during construction and go into homes if people invite us in."

The borough's description of each property is entitled property characteristics. Unlike legal descriptions, which contain only the physical location of the property, the borough's property characteristics include information, when available, on garages, bathrooms and other structural additions and improvements. If appraisers see changes to a property, they update the borough's record.

In the past, Black said the assessment department attempted to get more accurate sales information from local realtors, but he said realtors have generally not been open to sharing information.

If people think their property is described inaccurately by the borough, Black said there is still time, through March 30, to file an appeal. Borough residents can access the descriptions of their property by going to the borough's Web site at www.co.mat-su.ak.us/ and clicking on "my property." Black said every home should be on the Web site.

If people want more information than what is provided online, Black said they are welcome to come down to the assessor's office directly.

Since mailing out the new assessments earlier this month, Black said more people than usual have come in to protest their property assessments. When people come in, Black said he tries to work with them to get things right.

"The first thing we do is check and make sure we have your property described accurately," he said.

If there are discrepancies, they will be adjusted and the property re-assessed.

Despite the drastic increases, Black said property assessments are still probably a few percentage points lower than the market values, but at this point he said they are as accurate as he can get them.

"They're as accurate as the budget will allow," he said. "We can make them extremely accurate, but my budget would have to go up."

Despite increased assessments, taxes on individual properties are still uncertain. Those numbers depend on how the borough Assembly decides to set the mill level. Last year, the mill rate was set at 11.8 or $1,180 per $100,000 of property value, a slight increase from the 2003 rate of 11.483.

Borough Finance Director Tammy Clayton said the increased mill rate last year was due largely to new debt the borough incurred from school bonds for new schools, land and building renovation projects. Those bonds were approved in 2003 and the first payment was due in October 2004.

In 2004, the typical Mat-Su homeowner paid an average of $1,947 in property taxes. If the mill rate remains steady, borough taxes on the average single-family home could increase by more than $250.

With a group of borough citizens working to get a tax-cap initiative on the October ballot, Assembly Member Mary Kvalheim said the borough is in a real pickle.

"We have a huge increase in assessed property values, but if we lower the mill rate and the tax-cap initiative passes, then we are stuck with that mill rate," she said. "Although the assessments are high, that doesn't mean your property taxes will go up, but people see the assessments and they panic and I understand."

Kvalheim said she would like to see a severance tax ordinance on the October ballot this year, which would require companies to pay taxes on raw materials such as timber, gravel, coal and gas that are taken from the borough.

"I'm going to ask to get that on the ballot," she said. "Everything we do is put on the backs of the property owners and there are a lot of other people who enjoy the benefits."

As borough Assembly members wrestle over setting mill rates and ironing out next year's budget, one thing appears certain - property values will likely continue their long climb for the foreseeable future.

In 2002, property valuations from new construction in the borough were $126 million. This year, that number climbed to $357 million. According to Black, the last time borough records showed a drop in overall property value was between 1985 and 1988.

"It's been climbing ever since then," he said.

Contact Joel Davidson at 352-2266, or joel.davidson@frontiersman.com.