Valley property values soar

KRISTEN SEINE/For the Frontiersman

The sign on the door reads like this: "Obscene language or coarse behavior will not be tolerated."

The location? It's not a bar, or a racetrack, or even a sixth-grade classroom. It's the Mat-Su Borough Administration building. Specifically, the assessments office; the place where they determine, in large part, how much you are going to pay in property taxes.

And this week, the sign is well placed, if not always complied with. On Monday, the borough mailed out approximately 69,000 postcards stating the newly appraised value of homes, lots and other properties across the Valley. By 9 a.m. Tuesday, people started showing up at the office to protest that theirs had been valued too high.

"Most people are just a bit grumpy or stubborn," said Kathi Johns, an appraisal technician whose desk, as you walk in the office, is right in the line of fire. Most people, she said, stay within the realm of acceptable behavior.

However, in February, when the final tax payments for 2004 were due, the borough actually had to post a guard outside the finance office. "There is one person who has been denied access to this building," she said.

For many people, especially those whose property is situated in one of the Valley's real estate "hot spots," this year's property valuation came as something of a shock. While overall, the borough's total property valuation rose by about 24 percent, some individual properties doubled and even tripled in value.

Allen Black, borough assessor, said he understands that "there will be some upset people." However, he said what many people do not understand is that his office is required by law to determine and assess values based on what a property is worth on Jan. 1 of that year. Every year. And as more people move to the Valley and land becomes more scarce, it becomes more valuable.

A hot market

Right now, the Valley real estate market is hot. It's no secret that this is the fastest-growing area in the state Š "by a long shot," says Black. "We had about 2,000 newly improved properties this year. That means a building, a house or some improvement on the lot that it didn't have last year, and that number's up by about 15 percent over the year before."

To put the numbers in perspective, Black said that in 2002, new construction accounted for about $126 million in property valuation. The next year, it was $170 million. In 2004, that figure had risen to $223 million. This year, Black said, it was $357 million.

And that, Black said, "is huge, in my mind. That is showing an awful lot of growth."

But the new construction only accounted for a little more than a third of the 24-percent increase over last year's valuations. Black said the rest is due to rising real estate prices. There are certain areas of town - around the construction site of the new hospital, for example - where home values have skyrocketed.

Helga Larson, a realtor in the Valley for 21 years and chair of the borough's planning commission, said she has seen home and land prices go up as sales have gone up, and has noticed that property valuations have risen as well. "And I don't see any relief coming," she said. "It's not going to get any better."

"A lot of people are moving here, retired people, and young families who have no other choice as they can't afford anything in Anchorage," she said.

Larson said she remembers that not long ago, you could buy a lot in a subdivision for $10,000-$15,000. "Now, it's more around $35,000 to $45,000," she said. "Some are even asking $60,000 to $80,000."

"It's pretty hot everywhere right now," Larson said. "I haven't seen the real impact of the hospital yet, personally, but I'm sure it's right around the corner. I've been told that a lot of the land in the surrounding areas has been purchased - I don't know by who - but purchased with the intent of probably building doctors' offices, that sort of thing."

Larson said she's been taught that the idea behind value assessments is that "they should be right up there with the market value. However, that isn't always the case. At least not here, not yet I don't think," she said.

Wealth, not cash

As Black explains, "property taxes were originally meant to tax wealth, not income."

In other words, a person might be "wealthy" because their assets are very valuable, and still not have a lot of money in the bank. And while Black said he sympathizes with the plight of those who will have a hard time paying their property taxes now, he said, "We cannot take that into account. Otherwise, I'm put into the position of assessing taxpayers based on their ability to pay, and I can't do that."

Ronald Stocker of Palmer is one of the Valley residents who found himself quite a bit "wealthier" Wednesday after looking at his home's newly assessed value. His home and land increased in value by about 20 percent, but his yearly tax bill - if the mill rate remains unchanged - will be a whopping 22 times higher.

That's because Stocker, a 63-year-old disabled Army veteran, is eligible for the senior citizen/disabled veteran property tax exemption application, which means the first $150,000 of his home's assessed value is tax-free.

Last year, the value of his home was only a few thousand dollars over that amount. But not this year. "My house went up by about $30,000," he said.

"I'm on a fixed income," Stocker said. "I am 60-percent disabled. I'm 63 years old. There is no way I'm going to be able to go back to work and make any more money to pay my bills. What are they trying to do, run us out of our homes?"

Stocker lives near North Star Speedway, which is also near the site of the new Mat-Su Regional Medical Center. "The irony here is that a few years ago, an appraiser knocked on my door and said they were lowering my appraised value because of the racetrack and the noise. They lowered it! Well, the racetrack is still here and it is just as noisy as ever. And now, in their great wisdom, the borough has gone and put up a hospital a mile away."

Seventy-year-old Gordon Benedict and his wife, Annie, are also on a fixed income. He said they never took out a loan to build their Wasilla home, but "built it out of our own pocket, back in the early '80s, going a bit at a time, as we could."

The assessed value of the Benedicts' home rose by about $10,000 - not nearly as high as some others, but high enough to bump up their tax payments by about $35 a month if mill rates remain unchanged. When you're on a fixed income, Gordon said, $35 a month is a lot of money.

"Every year it gets harder and harder to keep up (with property taxes)," he said. "It's getting way out of hand. Pretty soon, between the cost of maintenance and repairs and the higher taxes, if it gets much worse, we're going to have to sell the place. We won't be able to afford it."

You can fight City Hall, sometimes

Stocker, for one, said he plans to challenge his valuation.

"This can't be allowed to stand," he said. "They can't be allowed to continue to raise property values and mill rates on us like this." Stocker said he doesn't know if he will be successful in his attempt, but he has to try.

Black points out that Alaska is the only state in the country that gives seniors and disabled veterans a $150,000 break on valuations. "There's no deal like it." The next-best deal is in Florida, he said, where senior citizens who make less than $20,000 are not taxed on the first $50,000 of their assessed values.

And he adds that nationwide, the average amount property tax payers pay is around 2 to 3 percent of the value of their properties. "Here, it's more like one and a half percent," he said.

Black also said the $150,000 exempted from seniors and disabled veterans is made up by the rest of the taxpayers in the borough. Last year, he said, non-exempted taxpayers paid about an additional eight percent more in property taxes to make up the difference.

While Black says with a sigh that "it's going to be a long March" as challenges pour into his office, he welcomes tax payers who want to call or come in with any problems or questions they might have regarding their valuations. People have through March 30 to officially protest their valuations, he said.

And Black has advice for those who want to do so. "First," he said, "you should carefully look over how we've described your property and make sure everything is correct. We do make mistakes, no doubt about it. And if we haven't done our job right you don't really have to fight us, we'll be happy to say we blew it and correct the problem."

If everything is correct, the next thing is to come up with evidence, Black said.

"Bring in some paperwork showing the values of homes that have recently sold in your area," he suggested. "Some real estate agents are happy to assist you with that. Show us a concrete reason why your home was valued incorrectly."

Black said usually a few thousand people contest their valuations. In most cases, they talk with someone at the assessor's office and that clears it up. Last year, Black said only about 140 people actually brought their cases before the Board of Equalization. Of those, only a handful won.

It won't be until after the board has heard all appeals that the current valuations are finalized and tax revenues will be determined and sent to the borough Assembly. Once that happens, and once the Assembly has set its budget for the year, Black said, the mill rate will be set for 2005.

"That won't happen until the end of May," Black said. "Then we'll have a better idea of what our taxes are going to be."