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‘Don’t tax us out of town,’ public responds to new Kodiak Island Borough property assessments

The Kodiak Island Borough building during a heavy rain, May 10, 2023. (Brian Venua/KMXT)
The Kodiak Island Borough building during a heavy rain, May 10, 2023. (Brian Venua/KMXT)

New property assessments for Kodiak went out in the mail starting February 29. On Thursday night, March 7, disgruntled residents filled the Kodiak Island Borough Assembly chambers to voice their concerns over the significant increases. KMXT’s Davis Hovey was at the assembly meeting and has this report:

“Please don’t tax us out of town,” Sylvia Kavanaugh said.
“In my adult lifetime, this is the first time that I have thought about leaving Kodiak, just because of the increased expenses of things like this,” David Hilty said.

Sentiments like these were repeated over and over during last week’s assembly meeting by many Kodiak residents. “You’re going to tax people that have lived in this community for a long time out of this community,” Alexus Kwachka exclaimed.

Some residents saw their property values increase by 30 to 40% with the recent property assessments. Hailey Ivanoff told the assembly that her property in Monashka went up $80,000 and no one lives on the property.

“At the time of this assessment [Jan. 1], it didn’t have plumbing, it didn’t have electrical, it wasn’t framed. No one is living in it,” Ivanoff stated. “Yet it is worth close to half-a-million dollars. We can’t afford the taxes when we don’t live in the house. I don’t know how we’re going to be able to afford the taxes when we do live in the house.”

Alaska law requires the assessment of Kodiak Island properties to be at full and true value. That means “estimated price that the property would bring in an open market and under the then prevailing market conditions in a sale between a willing seller and a willing buyer,” at a given time, specifically January 1.

Borough Manager Aimee Williams said if the local assessor isn’t valuing properties at current market values, then the state assessor could get involved. And that is something Williams, and the Borough, would prefer to avoid.

“So when you got your notice of value, if you added 20% to that, you could say ‘oh this is what my house might be worth if I sell it.’ But that’s not what the law is and if we fall too low the state assessor kind of slaps our knuckles with a ruler, metaphorically, and they say you need to raise your values,” Williams said. “And if you don’t raise your values to an acceptable level then we [the state] will come in and do it for you.”

If the state assessor finds that the local assessing office has not been performing its duties and assessments are below acceptable ratios or are not equitable across the market strata, he or she can give the borough a notice of major errors. The borough would have until the next assessment period to correct those errors. If errors in the assessment valuation result in a loss of revenue to the state, the borough could be mandated to reimburse the state for the amount of that loss. Williams said if the state assessor gets involved then the borough would have to pay to fly their staff to Kodiak Island and front the bill for their stay while they do their own property assessment across the whole borough.

With property assessments and subsequent taxes going up across the Borough, the public has called for the Borough to do something to reduce the burden on residents, like lower the mill rate. Currently the borough’s mill rate is set at 10.25 mills as the base for the whole borough.

Lowering the mill rate is something the Borough Assembly is already planning to do. That’s because the Borough is expecting to exceed its tax cap given the current tax revenue and mill rate.

“In order to adjust for that, then we would have to go down to a lower mill rate just so we can be within our maximum allowable [tax cap],” Assembly member James Turner explained. “So hopefully people are hearing all of that.”

Manager Williams agreed with Turner, reiterating that the Borough has a Maximum Allowable Property Tax Revenue or MAPTR that prohibits the Borough from collecting more property tax in fiscal year 2025 than it collected last fiscal year [FY24]. That threshold, when adjusted for inflation, is $16,144,487. But in order to stay below the tax cap, Williams said, assembly members have more options than just lowering the mill rate.

“They [the borough assembly] can change exemptions; they can raise senior/disabled veterans’ [exemptions]. We can lower the mill rate, there is a variety of choices that you have,” Williams stated.

The Borough Assembly’s final decisions on changing the mill rate or taking other actions won’t be made until the fiscal year 2025 budget is discussed, which could be weeks away. And property assessments won’t be certified until May, according to Williams.

In the meantime, Kodiak Island property owners wishing to contest or discuss their property assessments can contact the borough assessor Seema Garoutte and staff from now until March 29 via phone at 907 486 9353. Please note that Kodiak Island Borough offices will be closed on March 25 in observance of Seward’s Day.

The Kodiak Island Borough Assembly saw dozens of residents give public comment at a recent meeting, like Cort Neff who is pictured here. (Davis Hovey/KMXT)
The Kodiak Island Borough Assembly saw dozens of residents give public comment at a recent meeting, like Cort Neff who is pictured here. (Davis Hovey/KMXT)