Wrestling with a taxing issue: Increased value of commercial properties could reduce property tax rates

Increasing value for commercial properties could reduce property tax rates

Jeff Rogers, CBJ's finance director, joined the April 22 Greater Juneau Chamber of Commerce Alaska Business Roundtable's Zoom meeting to explain why commercial properties have recently been reassessed and what it means for business and property owners in the borough. (Screenshot)

Owners of commercial property in the City and Borough of Juneau recently received an unwelcome surprise — news from the assessor that their property’s assessed valuation has increased for tax purposes.

But, rising tax bills for commercial properties could reduce the property tax burden on residents.

As CBJ City Assembly members mull the city’s tax rate for fiscal year 2022, news of increasing commercial valuations and the associated increased tax revenue could reduce the property tax mill rate for homeowners.

Jeff Rogers, CBJ finance director, joined the Greater Juneau Chamber of Commerce Alaska Business Roundtable meeting Thursday to explain why the reassessment happened now and what it means for business and property owners in the borough.

City kicks off the budget-review process

Commercial assessments

“Commercial assessments have been flat for about 10 years. We’ve long suspected we were under assessing value,” Rogers said. “Up until now, we haven’t had the tools and expertise to change it.”

Rogers explained that historically, property values were generally assessed at 72.86% of the amount that the property might sell for given typical selling conditions. Based on the 2021 assessment, valuations have moved closer to 88.53% of expected value, closing in on the city’s goal of assessing property at 98% of its fair market value.

He said this is the first adjustment that will take place over the next few years to get local property assessments closer to the 98% goal.

Commercial property assessments increased by about 7% across the borough, though there’s significant variability in individual properties.

“Each parcel is assessed independently. It’s not a 7% across-the-board increase,” he said. Rogers added that assessed values between similar properties could vary for several reasons, including views, size and condition.

Rogers said that the assessor is not seeing declining property values, which might lower projected selling prices.

“We see no evidence of softening sales data for property, and replacement costs continue to rise,” he said. “Sellers are unlikely to sell for less, and buyers are looking to the rebound.”

Rogers encouraged any commercial property owner who questions the assessment of a parcel to appeal the decision by the May 3 deadline. He said that about 98% of appeals are resolved locally based on additional information provided by owners.

Heavy snow drives successful ski season

Link to residential property taxes

Rogers explained that when commercial properties are under-assessed, the tax burden to pay for city services falls more heavily on residential property owners.

In early April, City Manager Rorie Watt proposed a .02 mill increase to the city’s 10.66 mill rate to help fund child care. However, based on the larger-than-expected commercial base, city assembly members learned Wednesday that a reduced mill rate could still raise the money needed to cover the budget.

“We calculated that to receive the same amount of tax with new property valuation, we could go with a mill rate as low as 10.4. It has not been that low in more than 10 years,” Rogers said. “Only the assembly can choose where to set the mill rate.”

Rogers pointed out that the city is ending fiscal year 2021 with about an $8 million deficit. The city manager has proposed using federal money to fill the budget hole.

“When we have this debt, do we reduce the mill rate? I think the assembly will wrestle with this,” Rogers said.

Bartlett hospital considers 4% price increase

About the budget process

The proposed citywide budget of $396 million is down $22.1 million from the 2021 amended budget. The citywide budget aggregates the spending for all city government operations, including those that operate as enterprise operations. Enterprise operations include Bartlett Regional Hospital, the airport, water utilities and docks and harbors. It also has money earmarked for capital improvements and debt service.

Every Wednesday until the end of May, assembly members will review proposed budgets from all component pieces to pass the final budget and associated tax rate.

• Contact reporter Dana Zigmund at dana.zigmund@juneauempire.com or 907-308-4891.

More in News

(Juneau Empire file photo)
Aurora forecast for the week of March 25

These forecasts are courtesy of the University of Alaska Fairbanks’ Geophysical Institute… Continue reading

The aging Tustumena ferry, long designated for replacement, arrives in Homer after spending the day in Seldovia in this 2010 photo. (Homer News file photo)
Feds OK most of state’s revised transportation plan, but ferry and other projects again rejected

Governor’s use of ferry revenue instead of state funds to match federal grants a sticking point.

The Shopper’s Lot is among two of downtown Juneau’s three per-hour parking lots where the cash payments boxes are missing due to vandalism this winter. But as of Wednesday people can use the free ParkSmarter app to make payments by phone. (Mark Sabbatini / Juneau Empire)
Pay-by-phone parking for downtown Juneau debuts with few reported complaints

App for hourly lots part of series of technology upgrades coming to city’s parking facilities.

A towering Lutz spruce, center, in the Chugach National Forest is about to be hoisted by a crane Tuesday, Oct. 27, 2015, for transport to the West Lawn of Capitol Hill in Washington, D.C., to be the 2015 U.S. Capitol Christmas Tree. (Photo courtesy of the U.S. Forest Service)
Tongass National Forest selected to provide 2024 U.S. Capitol Christmas Tree

Eight to 10 candidate trees will be evaluated, with winner taking “whistlestop tour” to D.C.

Annauk Olin, holding her daugher Tulġuna T’aas Olin, and Rochelle Adams pose on March 20, 2024, after giving a presentation on language at the Alaska Just Transition Summit in Juneau. The two, who work together at the Alaska Public Interest Research Group’s Language Access program, hope to compile an Indigenous environmental glossary. (Photo by Yereth Rosen/Alaska Beacon)
Project seeks to gather Alaska environmental knowledge embedded in Indigenous languages

In the language of the Gwich’in people of northeastern Alaska, the word… Continue reading

The room where the House Community and Regional Affairs Committee holds its meeting sits empty on Tuesday. A presentation about an increase in the number of inmate deaths in state custody was abruptly canceled here. (Claire Stremple/Alaska Beacon)
Republican lawmakers shut down legislative hearing about deaths in Alaska prisons

Former commissioner: “All this will do, is it will continue to inflame passions of advocacy groups.”

(Michael Penn / Juneau Empire file photo)
Police calls for Monday, March 25, 2024

This report contains public information from law enforcement and public safety agencies.

Employees at the Kensington Mine removing tailings from Johnson Creek on Feb. 17 following a Jan. 31 spill of about 105,000 gallons of slurry from the mine, although a report by the mine’s owners states about half slurry reached the creek 430 meters away. (Photo from report by Coeur Alaska)
Emergency fisheries assessments sought after 105,000-gallon tailings spill at Kensington Mine

Company says Jan. 31 spill poses no risk to Berners Bay habitat, but NOAA seeks federal evaluation.

Dozens of people throw colors in the air and at each other during a Holi festival gathering Monday night outside Spice Juneau Indian Cuisine. (Mark Sabbatini / Juneau Empire)
Holi festival in Juneau revives colorful childhood memories for some, creates them for others

Dozens toss caution and colored cornstarch to the wind in traditional Hindu celebration of spring

Most Read