The sale price of most real estate transactions will now have to be confidentially reported to the City and Borough of Juneau assessor’s office following an ordinance passed Monday night by the Assembly.
Assembly members dove straight into business in their first meeting since the election, passing a number of ordinances and introducing more for public hearing.
Though it eventually passed 6-3, one of the evenings more contentious debates centered around an ordinance requiring the disclosure of the sales price of real estate transactions within the borough. Currently, Alaska is one of only a handful of states that do not require sales price disclosures. The city hopes the requirement would give the assessor’s office more information with which to conduct its annual assessment. The assessor’s office uses multiple factors to determine a property’s values, but the city doesn’t have access to sales prices unless it’s voluntarily disclosed by the buyer. City officials have said more accurate property assessments will result in more equitable taxation.
A 2014 research report for the Division of Legal and Research Services for the Alaska Legislature looked at disclosure laws in Alaska and recommended pursuing laws similar to states where, “local assessors can obtain real estate data, but the information is kept confidential with some limited exceptions.”
Opponents argue requiring such a disclosure would complicate an already complicated process and was an invasion of privacy. Representatives from the real estate industry called in to oppose the ordinance. Assembly member Wade Bryson, who said real estate was one of his professions, also voiced opposition to the ordinance.
“I opposed this the moment I heard this,” he said. “The current method that we use is currently the fairest way to do it, I’ve seen the words ‘sterile,’ it takes bias out of the property assessment process. If we switched to disclosure, the people with the lowest amount of income, the lowest amount of house buying experience, will pay the steepest price in this not knowing the best way to properly pay the least amount of money for your property.”
Although the ordinance itself doesn’t raise taxes, Bryson and other critics accuse the ordinance of being a backhanded way of raising taxes, which the Assembly voted not to do last year. Furthermore, he argued, being the only municipality requiring disclosures in a nondisclosure state might disincentivize outside investments.
The issue gained attention last year, when Norwegian Cruise Lines paid $20 million for a plot on the downtown waterfront. Had that property not been sold by the Alaska Mental Health Trust Authority, a government agency, city officials may never have known how much it sold for. The sale price was $20 million, roughly $16 million more than the city offered for the plot.
Assembly member Loren Jones asked city staff to look into disclosure laws following the sale and in January, CBJ Finance Director Jeff Rogers told the Empire the city was likely undervaluing property in the borough. But the property most likely to be undervalued are high-value properties whose asking price often don’t appear on public listings.
The city currently uses a variety of items to assess a property’s value, and adding the sales price to that list would help the assessor’s office better determine the value of a property. Assembly member Maria Gladziszewski said she was supporting the ordinance because the sales price was simply adding to a list of many other things.
“From what I’ve seen, when people have their disclosures, I don’t think the other variables carry much weight,” said Errol Champion, a member of the Alaska Association of Realtors and former Juneau Assembly member. Champion also questioned how confidential a disclosure to a city assessor’s officer would be, considering CBJ is a public entity.
The arrangement would not be unheard of. There are some states that require disclosure of a sales price to a government entity but do not make that information publically available.
Realtors who pay their dues have access to a listings database, Champion said, which is used mainly by Realtors and real estate appraisals.
But Jones didn’t see the issue. Confidential disclosures are already made to government entities regarding sales price, he said, as well as real estate agents.
Jones and other members said they had received a number of emails voicing concern about the ordinance, many of which said disclosing the sales price would create a bias in the assessor’s office. More than ten of those emails used the phrase, “sterile environment,” Jones said, but remained unclear on how the disclosure would bias the assessor.
“I’m trying to figure out why there would be a bias if the true sale price was submitted,” he said. “What kind of bias is there when I sell my house for $400,000, and that’s what I report, $400,000. I don’t understand how there’s a bias there?”
Assessments are different from real estate appraisals for the purposes of taxes, Jones said, and assessments often came in lower than appraisals.
The bias comes from complication, Bryson said, particularly when it comes to commercial property.
“There are too many unknowns and too many variables when it comes to buying commercial property and higher-end property,” he said. “The people that have the money and the expertise are the ones who are going to be able to control and manipulate those prices.”
Assembly member Greg Smith introduced an amendment to send the ordinance back to the Assembly Finance Committee, as was suggested by City Manager Rorie Watt’s note on the ordinance, but that motion failed.
The ordinance passed with only Bryson, Smith and Mayor Beth Weldon voting against it, but near the end of the meeting Jones mentioned he might rescind his vote on the ordinance at the next meeting. Jones did not immediately respond to request for comment.
• Contact reporter Peter Segall at email@example.com. Follow him on Twitter at @SegallJnuEmpire.