Auditor’s report identifies issues in borough assessment department

More than six months after controversy erupted in Homer over property appraisals, the Kenai Peninsula Borough assessing department is looking to make a few changes to its operations.

The Office of the State Assessor completed an audit of the borough’s assessing department this year, the first since 2008. Initially launched in February, the assessment was intended to be a regular review and only last a month or so, but then appeals of property assessment valuation began pouring into the borough after the assessing department released the tax rolls for Homer in March. The state assessor’s office instead held the audit through the summer and tried to evaluate what was happening, releasing it Sept. 26, said state assessor Marty McGee.

The audit report noted that there was evidence that not all real property taxpayers in the borough are being treated equally or uniformly in land valuation. The technology, written instruments, organizational structure and job descriptions are adequate, the report noted.

“The root cause of this non-uniform treatment is directly related to the development of the valuation models, the quality of the data used to estimate value, and with the training, skill and experience of the persons performing this work,” the report stated. “… The management procedures and internal controls must be improved, understood, and used by all staff members.”


The assessing department staff canvasses different regions of the borough on a roughly six-year rotation cycle, visiting properties to check for material improvements that would affect the value. About a fifth of the borough’s properties are reevaluated every year; the rest are adjusted based on trends in sales data until the areas are due for re-inspection. The appraisers then use a land valuation model based on what they know about the real estate market to determine a value for each property, on which taxes are based.

The assessing department staff builds the land valuation models with a specific mathematical model. It includes influence factors for each parcel, such as whether a piece of property has waterfront access, has a paved road or access to natural gas.

However, land valuation has been a problem in the borough for a number of years. Alaska is a nondisclosure state — property owners are not required to disclose the sale price of a piece of property to the borough, nor are they required to inform the borough when they improve a piece of property. The borough sends out optional questionnaires when a property is sold, asking for details about the sale, and about 30 percent of them come back. The borough typically has more information about improved property sales than vacant land sales.

The audit report states that it appears that land appraisal staff wasn’t properly trained on how to effectively develop, calibrate, input and establish land models.

“Much of the current knowledge of the land valuation system appears to have been obtained from texts and by ‘trial and error,’” the report states. “This limitation is understandable given the limited amount of training available on mass appraisal of land and recognizing that the previous KPB land specialist is retired.”

In Homer’s case, a new land valuation model went into place just before the canvassing for the year began, so properties were revaluated with a new framework and new land influence factors. One of those pieces that led to a number of complaints was the adjustment factor based on a view.

The report recommends the department undertake additional training and that the assessing department consider borough-wide land influence factors rather than region-specific ones. Mathematically, there is also a fairly large dispersion between the valuation and sales prices of land, which could trace back to the lack of sales data and that a sample of sales data may not accurately represent the whole market, according to the report.

Other identified issues included the workload assigned to the assessing staff given the size of the borough and remoteness of some of the property — “it appears that the current level of staffing and the management practice of having all staff based in Soldotna are not sufficient to meet the expectation of regular inspection of property,” the report states — and some vagueness in borough codes. One of the code areas the state assessor recommended modifying was a section that defines the operation of the assessing department consistent with its identified mission and goals; another was to clarify a potential loophole in the borough’s optional portion of the senior property tax exemption.


The assessing department has identified some changes in response to the audit, said borough assessor Tom Anderson to the Kenai Peninsula Borough Assembly at its Tuesday meeting.

Instead of gathering information and applying the land valuation models right away, the department will wait until the next year to apply them, allowing time for fine-tuning, Anderson said.

“We’ve decided that going forward, we’re going to roll out new land models a year following the canvas area, which will give us more time to internally review the collection of the land influences, to do quality control, to possibly identify errors or identify places where they need to be more consistent or uniform, or possibly to do more analysis,” he said.

In regards to the land valuation models, the assessing department will aim to keep the dispersion within the recommended professional standards. They’re also looking at additional training opportunities for staff, but that’s a challenge in Alaska, where training classes are somewhat sparse, he said.

There are a number of points the auditor brought up that the borough has considered but may not tackle, Anderson said, such as the recommended code changes and implementing borough-wide land influence factors right away. The code changes are still under review, and on implementing borough-wide land influence factors, doing so right away would take up too many resources and staff members wouldn’t be able to handle both that project and their regular duties, Anderson said. As they reevaluate models and make it through the canvas cycle, they’ll eventually get there, he said.

“…We have too many other things that we need to do that we can’t just set aside,” he said. “It would also be logistically not possible for us to cover the entire borough and it would be prohibitively expensive.”

In 2003, the borough assembly asked the assessing department to aim for a five-year cycle for reviewing properties. With the current staff, the technology they have available and the number of parcels they have to visit, that may not be possible, Anderson said. One thing that would help is having a mobile app that would allow appraisers to upload data while in the field — currently, they make their notes on paper and hand it off to a data transcription clerk at the Soldotna office to enter into the database. The borough’s database vendor doesn’t have an application that would work for that and won’t allow the borough to partner with a third-party developer to make one, so they’re hopeful the vendor would develop one in the future, Anderson said.

One of the reasons for the outcry in Homer was that some properties jumped dramatically in value and thus taxes. The time differential between when properties are assessed may have led to a larger jump than people were expecting, said Borough Mayor Mike Navarre at the assembly meeting.

“People will say, ‘My house quadrupled in value over the last year,’” he said. “Well, it didn’t. It was over the period of time that it was last really physically visited and assessed, (when we) canvassed that area, that those changes took place. It’s sometimes difficult to explain.”

Anderson said he thought people are beginning to understand the appraisal and appeal process better after the outburst of concern in Homer. After the tax rolls came out, the borough received 701 appeals, but of those, only 79 went all the way to the Board of Equalization, and of those, 64 were upheld and 15 were adjusted. The assessing department worked with some of the ones that did not go to hearings and adjusted some of them, too, Anderson said.

“As we went through the appeals process … and worked with the property owners, we got a lot of positive response from the property owners,” he said.

Reach Elizabeth Earl at

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