Volunteer groups in Juneau have heard calls for 68 commercial property appraisals this year. So far, the owners have lost all cases. 111 other cases are unresolved.
The fight is primarily over whether the city assessor was legally justified in increasing commercial land values in Juneau by 50% earlier this year. These values directly affect property tax bills and the balance of who pays for city services. Many owners have pledged to take the fight to court.
A Juneau lawyer named Robert Spitzfaden represents many commercial property owners who are challenging the rising value of their land. He was very frustrated with the process, especially with the deadlines the city’s appeal boards imposed on each hearing.
At a hearing on October 21, a panel member tried to move the case forward when Spitzfaden ran out of time, and Spitzfaden objected.
“It is a constitutional question! You are interrupting us before we can give our full testimony, as you can clearly see,” Spitzfaden said.
Many of Spitzfaden’s objections are specifically for the record; he speaks to a judge in the future, who will hear the next appeal in state court.
At least twice, Spitzfaden went out of his way to insult the panels during the proceedings by calling them a “kangaroo court”. He’s basically saying these hearings are just for show and it’s impossible for him to win.
In at least one case, the call went very badly for him. An internal review revealed an error in the assessment. After it was fixed, the Spitzfaden client owed almost $18,000 more in taxes on that property this year than if he hadn’t appealed at all.
Part of Spitzfaden’s frustration is being told by panels that he is not presenting enough evidence. His approach at these quasi-judicial hearings is to interview expert witnesses, grill assessor’s office staff and try to find “trapped” moments with questions referencing hundreds of pages of documentation. He said he didn’t have enough time to answer her questions to get that evidence.
In some hearings, lay property owners who presented their own appeals seemed to have more success with low-key, factual explanations of why they thought their properties were overvalued. At least one appellant managed to convince one of the three panelists hearing his case to vote in his favour. Sharing otherwise private real estate or business records and highlighting apparent disparities between close comparable properties seemed to resonate better with panel members.
The city’s Chief Financial Officer, Jeff Rogers, has watched numerous appeal hearings, which can last several hours a night.
“What I take away from watching the hearings is that the public doesn’t fully understand how a government assessment process works,” Rogers said.
It is this process that Spitzfaden really wants to question. He wants to argue that the appraiser’s methodology that led to the massive increase in commercial land values was fundamentally flawed.
Earlier, Spitzfaden and city officials discussed the possibility of holding some kind of group hearing for this argument. City attorneys ultimately decided it would not fit city codes and would be unfair to other callers following due process.
Rogers said it would also create practical issues. City appeal committees are volunteer subsets on what city and state codes call an equalization board.
“It’s technically complicated under the law,” Rogers said. “Thus, the BOE is required to produce a decision and conclusions on each package subject to an individual appeal. So the question really for us on a mechanical basis was if we had a consolidated hearing, how would the Equalization Board then render a decision with findings on each individual plot? »
Similarly, a group hearing would have clouded potential appeals in state court.
City officials say the assessor’s methodology is sound, consistent with national and professional standards, and backed by decades of Alaskan case law.
PeggyAnn McConnochie is a real estate expert and one of the first Spitzfaden clients to lose a call last month for a commercial building she owns. She is also something of a spokesperson for the homeowners group that Spitzfaden represents.
Homeowners who lose these cases at the city level have 30 days to appeal in state court. Thursday, none had. McConnochie’s deadline is looming. She said, “hell yeah” she’s going to court.
“There is no way I am allowing the Equalization Board to limit the appellant’s ability to present a reasonable and conscious case,” she said.
McConnochie’s additional taxes resulting from this year’s assessment hike could easily be dwarfed by attorney fees.
“It’s not the short term we’re looking at. It’s the long term,” she said.
City officials say this year’s increase in commercial land values is the first step toward correcting years of “neglect” in Juneau’s commercial property values. Next year, the surveyor’s office intends to catch up with the values for buildings and other improvements. For most commercial properties, neither had changed in a decade or more.
However, the values of other properties have increased over this period. Rogers said that means homeowners, for example, have paid more than their fair share of city taxes.
“I’m mad as hell,” McConnochie said. “Like many of us. It won’t just be a year-long fight. This is going to be a fight that we will fight for two or three years.
There is already a way to complain to the state assessor’s office about the local assessor process. This office has received no complaints about Juneau’s assessments this year.
Rogers said if all landowners in unresolved cases go through appeal hearings, he expects the Equalization Board could continue until February. Some cases, 31 so far, are resolved without hearings.
Disclosure: Journalist Jeremy Hsieh worked for PeggyAnn McConnochie’s company in the summer of 2012.