City faces 169 property assessment appeals
It was standing room only in Council Chambers at City Hall last Wednesday as property owners, who had appealed the assessment of their property values, wanted their cases heard before the Board of Equalization. But swamped with a record amount of 169 appeals, there was just not enough time to review the appeals and for the assessor to meet with each appellant to try and resolve their cases. Facing a room of property owners upset about the steep increase of the value of their properties, assuming that with the increase in value there would be an increase in the property tax bill, assessor Arne Erickson explained how property assessments work.
Assessments are done by what is called a market-driven cost approach for the mass valuation of property. What that means is that not each house or property is looked at individually, but as a mass. The assessors look at the value of land derived from dollar amounts of actual land sales. Then they look at “improvements”, which is a real estate term for buildings or structures on the land. The biggest misunderstanding from property owners is stemming from the assessment letters that list land value and “improvements”. ‘Hey, wait a minute, we didn’t make any improvements, so why is our property value skyrocketing?’ is the most commonly asked question. Adam Verrier, appraiser with the Appraisal Company of Alaska, explained that the buildings are assessed using a combination of a national cost service and then com- paring the values of known purchase prices of comparable homes or buildings that have sold in the particular market, say, Nome. “So a big part of our work, a critically important part of our work, is tracking down actual sales, finding out what people sold their houses for,” Verrier said.
They then compared the sales to what the homes were assessed and found out that the prior assessments were undervalued at about 75 percent. Now comes another complication. The state assessor states that property values ought to be assessed at 100 percent of market value. Arne Erickson said with the current assessed value, he believes the value of Nome’s property is still undervalued, but with current assessments is closer to the 100 percent, namely at 86 percent. He also made clear that just because the value is higher, it doesn’t mean that the property tax will rise. That is up to the City Council when they set the mill rate, which is currently at 12 mill. This means that property owners pay $12 for each $1,000 of assessed value.
From now until the end of May, Erickson will go through the appeals, one by one, and speak with appellants to determine whether the assessment was done properly. Upon explaining the process, the assessor could convince the appellant that the value is reasonable and the appellant would withdraw the appeal. Another possible outcome is that the appellant shows the assessor that the assessment should be changed in some way because, for example, the structure is not finished inside, and the assessor can make adjustments. Or, if the appellant and the assessor don't come to an agreement, then the case will go to the Board of Equalization so that it can be resolved.
The Nome Common Council serves as the board.
Since the flood of an unexpected 169 appeals arrived by deadline day on April 28, there was not enough time to give appellants the chance to work things out with the assessor. The new dates for the Board of Equalization are set for May 31, June 1 and 2.
