Legislature(2023 - 2024)BELTZ 105 (TSBldg)
02/29/2024 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
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| Audio | Topic |
|---|---|
| Start | |
| SB242 | |
| SB236 | |
| SB161 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 242 | TELECONFERENCED | |
| += | SB 236 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 161 | TELECONFERENCED | |
SB 242-PROPERTY ASSESSMENT
1:31:49 PM
CHAIR DUNBAR announced the consideration of SENATE BILL NO. 242
"An Act relating to assessment of property, boards of
equalization, and certification of assessors; and providing for
an effective date."
CHAIR DUNBAR said that this is the first hearing of SB 242. At
the request of the bill sponsor, the intention is to consider
adoption of a Community and Regional Affairs committee
substitute (CS) to correct a technical error in the bill.
1:32:15 PM
CHAIR DUNBAR solicited a motion to adopt the CS.
1:32:18 PM
SENATOR GIESSEL moved to adopt the committee substitute (CS) for
SB 242, work order 33-LS1141\R, as the working document.
1:32:31 PM
CHAIR DUNBAR objected for the purpose of discussion and invited
the bill sponsor to explain the changes in the CS.
1:32:45 PM
SENATOR JESSE KIEHL, District B, Alaska State Legislature,
Juneau, Alaska, Sponsor of SB 242. He clarified that the CS
retains the definition of full and true value, noting that its
omission in the original bill version was unintentional. He said
there was confusion whether the proposed standards, which will
be set in regulation or by local ordinance, would replace the
statutory definition. He reaffirmed his intention to keep the
definition intact, explaining that the standards outline the
method for determining full and true value, rather than replace
the definition itself.
1:33:31 PM
CHAIR DUNBAR withdrew his objection. He found no further
objection and CSSB 242 was adopted as the working document.
1:34:19 PM
SENATOR KIEHL stated SB 242 is a fairness and transparency bill.
The bill maintains the important principle of local control and
local government while setting some basic rules to create
balance for property owners who disagree with the tax assessor
about the value of their property. Citizens are entitled to fair
treatment and a fair hearing when they disagree with local
government, and SB 242 proposes the following changes to ensure
that outcome:
• Establishes a Baseline Set of Standards
The Department of Commerce, Community and Economic
Development, where the state assessor's office is located,
would establish a baseline set of standards for assessors.
These standards would guide assessors in determining the full
and true value of properties. Local governments would retain
local control and could deviate from these standards if the
state assessor's methodologies do not fit their community's
circumstances. For example, communities without building codes
or with other significant differences could adopt alternative
assessment standards. These communities may adopt their own
standards that apply to assessment. The most crucial aspect is
to ensure that taxpayers can clearly understand the standards
used to determine a property's full and true value.
1:35:55 PM
• Access to Elected Officials throughout the Process
He explained that SB 242 changes the default body responsible
for hearing tax appeals. Currently, Alaska Statute assigns
this role to local governing bodies, which can create
challenges for property owners when broad issues impact the
assessment process. He pointed out that the Board of
Equalization (BOE) serves as a quasi-judicial body, which
prohibits citizens from discussing assessment matters with
board members if it could influence an individual appeal. As a
result, property owners lose the opportunity to raise
important public policy concerns with elected officials who
serve on the board.
SB 242 reverses this current statutory default. It requires
municipalities that levy property taxes to appoint an
independent BOE, separate from the local elected body, unless
the governing body passes an ordinance to continue hearing
appeals. This allows very small municipalities, which may
struggle to form a separate board, to create a Board of
Equalization composed of experienced individuals. He
emphasized that the principle of local control remains intact.
1:37:29 PM
• Tax Assessor Qualifications
SB 242 modifies some basic qualifications for tax assessors.
This is not a licensure bill; however, it requires that a tax
assessor either hold, or work under the supervision of someone
who holds, a level three certification from the Alaska
Association of Assessing Officers (AAAO). This certification
equates to six years of experience, relevant class work,
experience and capability with various methods of valuation,
income sales, and similar areas. SB 242 does not prevent
individuals from entering the profession and working their way
up. However, someone with only two years of experience would
not be permitted to operate independently and contract with a
municipality to do the whole job independently.
1:38:26 PM
• Assessments May Not Be Raised During Appeal
This change addresses a citizen's right to appeal without fear
of retaliation. Assessors have a legal obligation to tax
property at true and full value. When citizens exercise their
right to appeal, assessors in many municipalities request to
inspect the home. If they discover discrepancies between the
actual condition of the home and their records, they may raise
the assessed value, sometimes above the amount originally
stated in the mailed notice. This practice is currently
allowed in about half of Alaska's municipalities. SB 242
challenges this approach, asserting that it is inappropriate.
He argued that the local government's opportunity to determine
assessed value occurs when it issues the notice of assessment.
Once a taxpayer appeals, the property value should fall
between the government's assessment and the taxpayer's
estimate. Allowing increases during an appeal could deter
taxpayers from exercising their rights.
SB 242 would prevent municipalities from increasing the
assessed value during an appeal, except in cases where the
taxpayer appeals for higher valuation, which typically happens
when individuals plan to sell their property. In this way,
SB 242 preserves the right to request an upward adjustment if
desired.
SENATOR KIEHL reiterated that these major points provide a
fairer process for someone who disagrees with City Hall.
1:41:34 PM
CATHY SCHLINGHEYDE, Staff, Senator Jesse Kiehl, Alaska State
Legislature, Juneau, Alaska, paraphrased the sectional analysis
for SB 242 on behalf of the sponsor:
[Original punctuation provided.]
Sec. 1 requires local assessors to use published
standards. Default standards will be adopted by the
state, or a local governing body can adopt alternate
standards by ordinance.
Sec.2 requires the Department of Commerce, Community,
and Economic Development to adopt the default
assessment standardsbased on those published by the
International Association of Assessing Officersby
regulation.
Sec.3 requires a local assessor to have or be
supervised by someone who has a level 3 certification
from the Alaska Association of Assessing Officers.
Sec.4 says a local governing body must appoint a Board
of Equalization unless it adopts an ordinance to set
itself as the Board of Equalization.
Sec.5 prohibits a local government from raising the
assessed value of the property during the appeals
process, unless requested by the appellant. Sec. 5
also requires a Board of Equalization to make specific
findings on the record if it disagrees with a fee
appraisal.
Sec.6 lets the Department of Commerce, Community, and
Economic Development adopt regulations setting the
default assessment standards.
Sec.7 sets an immediate effective date for the
department to put out regulations.
Sec.8 sets a Jan. 1, 2025 effective date for all other
changes in the bill.
1:42:59 PM
CHAIR DUNBAR announced invited testimony for SB 242 and invited
Ms. Josephson to put herself on the record.
1:43:21 PM
BRENDA JOSEPHSON, representing self, Haines, Alaska, testified
in support of SB 242. She expressed gratitude for the
committee's service and their dedication to Alaska and its
constitution. She said that the constitution lays out the ideals
of equal protection under the law, ability to petition the
government in due process, and the right to fair and just
treatment. All Alaskans universally accept these ideals. She
found that last year the Haines assessment process was in
conflict with these ideals. She said that Haines hired an
uncertified contract assessor. He enacted a new, exotic, hybrid
mass appraisal valuation system that combined replacement-cost-
new with some sales data to generate valuations that were not
tied to market. The stated goal was to equalize property values
across large areas of the community. However, the replacement-
cost-new approach failed to properly consider specific property
characteristics. For example, it did not give due weight to the
physical and functional obsolescence of buildings; it did not
consider the desirability of some of the view lots; and the
approach did not consider homes that were more valuable to the
second homeowner market. This approach resulted in assessments
that were in excess of their full and true market value. It
appeared to create a regressive taxation system where older,
medium, and lower valued properties were assessed in excess of
full and true market value. Whereas higher-end property
assessments were lower than fair market value. She said that
this had the unfortunate situation of transferring a burden of
taxation to those who could least afford to pay for it. Haines
Borough received more than 200 property tax appeals.
Unfortunately, appellants were not given due consideration on
the merits of their claims. She said that appellants who spoke
out about unprofessional interactions with the assessor
recounted the following:
• An unwillingness to correct errors.
• Retaliatory increases in assessed values.
• Willfully inaccurate descriptions of properties during Board
of Equalization proceedings.
1:46:25 PM
MS. JOSEPHSON said there is not enough time to go into detail,
but she provided the following synopses of some of the appeals:
Canfield Property
The Canfields appealed the assessment of $864,000. They brought
in a fee appraisal with an assessed value of $620,000. A local
realtor with 26 years of experience in the community supported
this assessed value. The Board of Equalization remanded it back
to the assessor who returned with a replacement cost, new
valuation of $1.1 million. The new valuation put the appellants
in the position of having to defend against a valuation nearly
double theirs.
Smith Property
The Smiths appealed four parcels. The Assessor's Office
threatened to increase the valuations if the Smiths did not
withdraw their appeals. The Smiths moved forward with the
appeals. Ninety minutes before the Board of Equalization packet
deadline, they received an email notification of increased
valuation on all four properties. The new valuation was not
justified with an additional site visit or additional justifying
information.
1:47:33 PM
Orman Property
This appellant received an assessment that exceeded the
property's value and was unable to resolve the valuation issue
with the assessor. As a result, she filed an appeal. During the
appeal process, the public testimony portion proved personally
difficult for her as she was compelled to testify in a way that
undermined the accomplishments of her single mother, who had
built the home.
Unfinished Property
This appellant lived in a home that was originally a house
trailer. She built a porch then built a roof over it. She
removed the trailer then built up some walls, but never finished
it. She lived in a small portion of the unfinished property. The
assessor considered the property to be of fair to average
quality, average construction, and 49 percent unfinished which
more than doubled the assessed value using the replacement-cost-
new assessment method. This property owner was one appellant who
could least afford the increase. The community members took up a
collection to help pay the excess costs but this solution is
unsustainable for the community.
1:48:49 PM
MS. JOSEPHSON said that the assembly serves as the Haines Board
of Equalization (BOE); therefore, taxpayers were unable to
discuss these issues with assembly members due to ex parte
communication prohibitions. She noted that at the time, the
borough administration supported the assessor's actions. BOE
members began to grasp the issue little by little, fifteen
minutes at a time. In the meantime, many unjust actions
occurred.
1:49:23 PM
MS. JOSEPHSON said SB 242 establishes needed guardrails for fair
and transparent processes and it protects the citizen's right to
redress the train wreck that happened in Haines last year. She
expressed her belief that the situation could have been avoided
if the Haines Board of Equalization had been independent of the
assembly. She noted that the elected officials were initially
unaware of the problem and, once informed, were sympathetic. She
described the experience as heartbreaking for the entire
community and voiced her support for the bill.
1:50:16 PM
CHAIR DUNBAR asked whether the Alaska Municipal League (AML) has
a position on SB 242.
1:50:41 PM
NILS ANDREASSEN, Executive Director, Alaska Municipal League
(AML), Juneau, Alaska, replied that AML does not have a position
at this time. He said he is working with local governments that
have assessors to ensure SB 242 benefits all affected
communities and ultimately strengthens local governments.
1:51:20 PM
CHAIR DUNBAR commented that, as a former chair of the Anchorage
Assembly, he was glad that Anchorage had a BOE so the assembly
did not have to handle appeals. He commented that it is
difficult to find people willing to sit on the board. He said
that the appeals process can be unpleasant for both appellants
and board members, as it is often technical and emotionally
charged. He asked Mr. Andreassen to reach out to AML communities
that levy property taxes and inquire whether they are able to
establish a Board of Equalization, and what their plan are for
recruiting members serve on it. He reiterated that this had been
a challenge in Anchorage.
MR. ANDREASSEN replied, certainly.
1:52:26 PM
CHAIR DUNBAR opened public testimony on SB 242.
1:53:14 PM
FRANK BERGSTROM, representing self, Juneau, Alaska, testified in
support of SB 242. He attended a City and Borough of Juneau
(CBJ) workshop on this subject last week where he learned the
assessor and finance staff work under the auspices of the
following two certifying agencies:
- International Association of Assessing Officers (IAAO), and
- Alaska Association of Assessing Officers (AAAO).
MR. BERGSTOM said appraisers conduct fee appraisals for real
property under the auspices of these two certifying
organizations. The entire mortgage and banking industry conduct
business based on their property evaluations. He said that it is
logical these definitive fee appraisals are the standard by
which a homeowner would combat an overly robust property
valuation. He said that a CBJ representative equivocated when
asked about this. He argued that there is no logical reason why
professional, certified assessors and appraisers would come up
with entirely different numbers using the same tools. He
expressed hope that SB 242 would rectify this situation and that
fee appraisals could be a definitive defense for true and full
value under current market conditions for any residence.
1:55:40 PM
JOE GELDHOF, representing self, Juneau, Alaska, testified in
support of SB 242, stating that citizen taxpayers of Alaska need
the kind of certainty that goes with this kind of legislation.
This bill puts forth clear, appropriate standards needed to
resolve some of these of issues. The critical need is to ensure
that standards are based on tried-and-true valuation methods,
such as:
- market-driven comps;
- cost, usually replacement costs; and
- the income approach.
MR. GELDHOF said relaxed assessors have used a weird hybrid
approach that has driven some of these issues and is a solvable
problem. He concurred with the previous testifiers; mainly, the
burden should shift back to the municipality to justify its
valuation when somebody obtains a self-paid, fee appraisal. He
said that appraisals trump assessments, asserting appraisals use
longstanding, established methods.
1:58:13 PM
HOWARD BEERY, representing self, Juneau, Alaska, testified in
support of SB 242 with a recommendation. He pointed out there
appears to be no limits in SB 242, explaining that his property
tax increased over 40 percent. He said Californians passed
Proposition 13 in 1978, which put caps on property taxes.
Proposition 13 capped the mill rate and it is still in effect in
California. He stated SB 242 makes positive changes, but
emphasized the bill lacks sufficient protection against
excessive property tax increases.
1:59:19 PM
DAVE HANNA, representing self, Juneau, Alaska, testified in
support of SB 242. He stated that several years ago Juneau had
hundreds of appeals with much more egregious circumstances. He
said that he developed considerable expertise on the subject and
the rules. There is no reason SB 242 should not pass. The bill
has no fiscal cost and does not require extra personnel. He said
that some personnel are not following the rules, noting that
state law allows this. He said that state law gives due
deference to city assessors who:
- are not required to have any training,
- may use any valuation methodology of their choosing, and
- are not obligated to disclose the details of a valuation if
confidential information was involved.
MR. HANNA said this is ludicrous. There are instances of rogue
assessors who misled and improperly trained equalization boards.
He implied a link between this and the mysterious resignation of
a state assessor who recently resigned. He said that he has
numerous examples of Boards of Equalization that were trained in
direct violation of IAAO standards, calling the situation
horrific.
MR. HANNA said when he attempted to introduce evidence into the
record, the Board of Equalization disallowed it. He pointed out
that, on appeal, the Superior Court may only consider evidence
introduced into the record. The situation was so frustrating and
egregious that the city ultimately agreed to pass an ordinance
similar to SB 242. In exchange for complainants dropping their
lawsuits, the ordinance was enacted to ensure the situation
would not recur.
MR. HANNA urged the committee to advance SB 242 to provide the
same protections statewide that were secured in Juneau.
2:01:43 PM
SHANNON GREENE, representing self, Juneau, Alaska, testified in
support of SB 242 with a recommendation. She stated that she
supports this bill but believes it does not go far enough.
MS. GREENE said the bill does not sufficiently address the
issues raised during the hearing. She referred to her 2023
property assessment to illustrate the problem. She said that her
home valuation increased 50.5 percent in one year; in 2022 the
increase was 8.1 percent; and in 2021 the increase was 2.2
percent. She reported that home valuations on her street
increased between 7.7 and 39.7 percent, while on another street
they ranged from 8.2 to 43.4 percent. Of the 31 houses she
reviewed in her neighborhood the two highest increases, 43.4
percent and 50.5 percent, were owned by disabled veterans.
MS. GREENE said she appealed the assessments, and the city
subsequently reduced them. She spoke with the Board of
Equalization regarding the wide disparities in percentage
increases, which she described as unequal and improper. She
stated that the state needs to implement limits on both
increases and mill rates to ensure fair property assessments.
She expressed a willingness to share her data with the
committee.
2:05:08 PM
LARRY NORENE, representing self, Anchorage, Alaska, testified in
support of SB 242 and offered recommendations. He gave an
overview of his background as an assessor, appraiser, broker,
and taxpayer and his experience with the Board of Equalization.
He said this is the first time he has seen a bill introduced to
protect the taxpayer's interest in over two decades. While the
pendulum previously swung in favor of the assessor, SB 242
brings it back to the center. He emphasized that Alaskans need
both good protection and good assessors.
MR. NORENE said that he agrees with much of the previous
testimony, but not all. He offered the following suggestions to
amend the bill:
• Insert language to ensure "due process" is provided to all
parties. He said this would reinforce fair procedures for
assessors, BOE members, and appellants.
• Remove the sentence, "The appellant bears the burden of
proof." He said this language often leads to
misinterpretation.
• Revise the verbiage that states, he only grounds [for
adjustment of assessment are proof of] unequal, excessive,
improper, or [under valuations etc...]. He said this language
is confusing, it is fodder for attorneys, and BOE members
misunderstand it. He recommended reverting to the original
wording: "uniformity, equity, and fair market value."
MR. NORENE said that he has additional suggestions and expressed
hope that taxing jurisdictions would review his recommendations.
2:08:36 PM
CHAIR DUNBAR closed public testimony on SB 242. He announced
that the public may email written comments to
[email protected].
2:09:00 PM
CHAIR DUNBAR held SB 242 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 242 ver. A.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 242 |
| SB 242 Sponsor Statement.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 242 |
| SB 242 Sectional Analysis ver. A.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 242 |
| SB 161 Explanation of Changes Ver S to R.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 161 |
| SB 161 Sectional Analysis Ver R.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 161 |
| SB236Testimony.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 236 |
| LTR IN SUPPORT OF SB236 (2-28-24).pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 236 |
| SB 242 Additional Public Testimony as of 2024-02-29.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 242 |
| SB 242 Fiscal Note.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 242 |
| SB 161 Fiscal Note Version R DCCED 01.26.24.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 161 |
| SB 161 Work Draft Committee Substitute Version R 2.27.24.pdf |
SCRA 2/29/2024 1:30:00 PM |
SB 161 |