A disagreement has erupted between a business owner and the City and Borough of Juneau concerning the assessment of land values.
City Assessor Robin Potter says there are certain procedures in place for the proper evaluation of an address' worth, yet it is a complicated processes that can take a long time to determine a single site's value.
David Coates, co-owner of the Red Dog Saloon and the A&J Building, both on South Franklin Street, said these methods are unfair to the businesses and consequential taxes.
Potter said assessors use mass appraisal methodology, including statistical analysis and multiple regression modeling.
She described such modeling as grouping properties by area and zoning and use.
"We then have to evaluate reproduction cost with depreciation and then we adjust to what market data we have," she explained. "We then have to analyze that information and establish a model and that model will contain a base rate plus adjustments. That's then applied to the parcels to derive an assessed evaluation."
She said this is still only part of the complicated procedures in determining assessments. Other factors include location, use, zoning, ability to build in an area and others.
"Location takes in an awful lot," she said.
She said assessing property is a continuous process. Properties are re-canvassed every five years and the interim time is used to tend to the market. She said the re-canvassing is done to help bring equity in values and correct errors. The city is currently being canvassed for 2011.
Coates said these procedures have failed in downtown Juneau. He cites the Red Dog Saloon as an example. The restaurant at 278 S. Franklin St. is valued on the city's database at $250 per square foot. Its neighbors on the same block and across the street are listed to $135 per square foot.
"My opinion is that they are very unfair, and I feel that CBJ has gone up and down the street and selected certain properties for certain values," said Coates, adding "The truth is they've made some terrible mistakes."
Potter said the values on those properties were based on her predecessor's assessments so she could not speak to how they were derived. She believes location did play a part in the Red Dog lot because it's at an arterial corner.
Kim Wold, an appraiser with Alaska Appraisal Associates, stated in an e-mail to the Empire, "Equity in the development of an assessment roll is the most important standard because the Alaska Constitution requires equal treatment under the law. As an example of equitable assessments, two adjacent lots which are identical in all pertinent value attributes should have the same assessed value."
Potter said there are appeal procedures in place for landowners who are dissatisfied with assessments. She said assessment notices are made every year and an owner has 30 days from the time it's issued to file an appeal. Those appeals are intended to address errors that occasionally occur and this allows the property owners to alert the city if that happens, she said. If an error is present, then a correction can be issued. Yet if the problem is a difference of opinion, that must go before the Board of Equalization.
The Red Dog's owners filed a timely appeal for the restaurant, and it was granted. Coates and Potter both said the original assessment per square foot at this address was about $300.
"We filed a protest on the Red Dog because our property was over double the amounts on both sides," said Coates.
However, Coates said the appraiser who met with him after he filed his appeal tried to talk him into settling on the higher price and it was only until after Coates threatened to go to the media that the appraiser agreed to lower it.
Furthermore, he says this appraiser, Eric Ehmann, openly condemned city assessments during this meeting and quit his job not long after this meeting.
Potter agrees with Coates on some things about this incident, but not others. She said the appeal was granted because it was filed on time and just cause for the price reduction was found. She said Ehmann was sent because he had reviewed those land values and his job was never to convince Coates otherwise.
She said Ehmann, who was hired as an appraiser a few months before this meeting, had been a problem employee all along. She said she had heard of several reports of him being "derogatory to everything Juneau," saying this was unprofessional and inappropriate. She said she had spoken to the city manager about this, and Ehmann did quit his job shortly after.
"The problem was we had a person representing the city who wasn't behaving appropriately," she said. "Mr. Coates is correct in saying he behaved inappropriately, and I apologized to him for the behavior."
Ehmann's last available contact information was a Wisconsin phone number. The number was not in service when the Empire called it, so he could not be reached for comment.
Coates also objects to higher land values closer to the docks where the A&J building is. Potter said properties around this area can be higher because they are in a better area for more potential income and sales because of their locations near the docks, and that can go into account in the value modeling. She said because Alaska is a non-disclosure state - meaning businesses aren't required to provide sales records to appraisers - the city can only analyze the sales they receive and adjust accordingly.
Coates disagrees that sales should affect land values.
"We've never given figures but I don't think that should have a bearing on the dirt," he said. "If we sell and those new guys never make a dime, they can't say we'll lower the value of land," he said.
Coates also said he feels artificial prices have been placed on properties to work with specific buyers. He cited 356 S. Franklin St., owned by Archipelago Properties and valued at $130 per square foot, as an example. He said it is his opinion this is a better plot of land, yet is priced lower than the A&J Building located at 425 S. Franklin St. and priced at $450 per square foot. Other buildings in the 400 block of South Franklin Street are also appraised at $450 per square foot.
Archipelago Properties LLC is a subsidiary of Morris Communications, owner of the Juneau Empire.
He said the higher values on buildings can result in overtaxation.
Potter said Coates is the only one who has complained about the assessments. She said she believes the argument stemmed more from anger over an appeal on the A&J Building she said was not timely filed and therefore denied. She also said the owners paid an inflated price for the building and land, which may be a factor in this debate now.
Another notion the debate brought up was the difference between assessing and appraising. Potter described the difference as assessing looks at a range of properties' factors plus factors from previous years and uses a formula to do so, while appraising looks at single properties, is tailored to specific properties and doesn't necessarily entail a formula.
She added appraising can sometimes be called an "opinion of value" and different appraisers can generate different values.
Wold described the difference as: "An appraiser is an individual who develops an analysis, opinion or conclusion relating to the nature, quality, value or utility of specific interests in or aspects of specific real estate. An assessor is an appraiser that values real or personal property for ad valorem tax purposes. This contrasts to a fee appraiser who is paid a for the appraisal assignments performed."
"In fee appraising they're valuing a single property. Single property appraising is typically used in appraising and that's not assessing," Potter said.
Contact reporter Jonathan Grass at 523-2276 or at email@example.com.