It is hard for Larry Hooton to understand why the city's assessors determined that his two-bedroom log house is worth $252,000, a 45 percent increase from last year's assessment.
His house, which he has built from scratch since 1989, is 34 miles from downtown Juneau on the rocky cliffs of Lynn Canal. The property is not on the AEL&P power grid. Telephone service is not available. The nearest Capital Transit is 21 miles away. The fire department said that it cannot provide effective services to this remote area yet. The police make an occasional trip to this neighborhood, usually just to check on a wrecked car or to raid a teenage party in the summer.
The state does maintain the 700-foot long driveway to his waterfront house.
"I have no idea why my house is worth more," said Hooton, 66. "I am completely independent of the borough. Why should I pay for services that are not available to me?"
Upset with the city's assessment, Hooton is one of the three property owners that were able to appeal their assessment at the Assembly Board of Equalization meeting on May 26. A dozen more property owners are scheduled to appeal to the board later in the summer.
The state requires assessors to assess property at full and true market value as of Jan. 1 every year. Taxpayers who want to appeal their assessment must file an appeal within 30 days after the date of mailing of the assessment notice.
Every year, between 200 and 400 property owners in Juneau question their assessment. About 90 percent of them settle with the city and the rest appeal to the Board of Equalization, normally to complain that the assessed value is excessive.
Most people have mixed feelings about the increase of their property assessment.
"We like the fact that our house is worth more but it is human nature that we want to pay as little tax as possible. If you are not in a position to sell your house, it doesn't really matter how much your house is worth," said PeggyAnn McConnochie, president of ACH Consulting.
The increase in the assessed value mainly results from the continuation of low interest rates and an ongoing supply and demand imbalance that has pushed the real estate market up significantly.
Juneau's unique geographical features also contribute to its high housing cost.
"We have huge mountains that prevent us from building. And the only way we get our construction supplies in and out Juneau is by barge," said McConnochie, who has been a real estate broker in Juneau since 1982. "A lot of our lands are owned by the state or the city, which keeps us from expanding. Although the city is opening up its land, the process is very slow."
For the city as a whole, the increase of property assessment results in a 6.19 percent increase in property tax this year, which will offset the funding shortfall from the state and pay for the city's increasing expenses.
But for many people, Juneau's ever-growing property tax has become a big financial burden.
"The property tax has gone up so high that I am afraid I wouldn't be able to keep the house and give it to one of my children," said Richard Lyon, who bought a house on 12th Street for $16,280 two years ago. The house was assessed at $120,000 this year.
Although seniors over 65 and veterans qualify for property tax exemption, an increase in property tax is difficult for people who live on a fixed income.
But the property tax is likely to be even higher next year, because of an increase in the assessed values (5.1 percent or $138.7 million) and an increase in the mill levy.
A mill levy is the rate applied to assessed valuation to determine the amount of property tax. A mill is $1 of tax for each $1,000 of assessed value. Although voters approved a 12 mill operational property tax levy restriction on all taxable property, the restriction doesn't apply to the tax levies used for the payment of debt services on voter-approved bond indebtedness, such as the bond for the construction of a new high school.
Recently, the Assembly has been talking about increasing the mill levy to fund education.
Hooton said he doesn't like the increase of property assessment or the increase of property tax. And at the Board of Equalization meeting on May 26, he was able to convince the Assembly to lower the assessment of both his land and house.
"I am not selling the house. It doesn't matter to me whether my house is worth more," Hooton said. "I am still building it."
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