PROPERTY ASSESSMENT AND TAXATION

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1 History of the Community and Service Area Structure Juneau's existing City and Borough concept was adopted in 1970 with the unification of the Cities of Juneau and Douglas and the Greater Juneau Borough. The unification agreement included provisions placing restrictions on the services to be retained by each service area. These restrictions were to meet the terms of the then outstanding bond covenants. Since unification all bonds containing service area restrictions have matured and the service area legal restrictions no longer apply. In 1988, the Assembly formed Roaded Service Area #9. Under this revised concept, some services previously funded as areawide were transferred to the new Roaded Service Area (see below). The functions transferred provided tax funded services not considered reasonably available to rural property owners. In March 1994, the Assembly again modified Juneau's service areas by consolidating the existing seven fire service areas into a single service area. Consolidation of the fire service areas provides residents with improved fire response service flexibility. This consolidation also resulted in a common property tax mill levy for all parcels in the fire service area. General governmental services are presently separated into three specific taxing areas; Areawide, Roaded SA#9 and Fire SA#10. Areawide Services: Direct funded - Legislative (Mayor and Assembly) Library Building Maintenance Manager and Administration Finance Parks and Recreation Law Personnel Social Services Administration Clerk s Office Community Development General Engineering Management Information Systems Capital City Rescue (Ambulance) Capital Projects Indirect funded (financial support to) Education Social Services Capital Projects Roaded SA#9 Services: Direct funded - Police Streets Parks and Recreation Indirect funded Capital Transit Fire SA#10 Direct funded Capital City Rescue Assessed Values Changes for 2000 The 2000 (FY01) assessment roll for taxable real and business personal property within the City and Borough of Juneau has been certified by the Assessor at $2.324 billion. This is an increase of $180 million or 8.4% over the previous year's (1999) borough wide assessment. The 2001 (FY02) assessed value has been estimated at $2.345 billion which is 1.0% above The while the real property increase from 2000 to 2001 is fairly large it is limited specific types of property. In general terms we are anticipating a relatively flat real estate market and a slow down in new construction. The majority of this year's property increase is due to new construction and increases in existing waterfront property values, commercial real property land values, and two story residential housing values. The increases in commercial property land value was due to a review and determination by the Assessor's Office that these property values had been historically undervalued. 51

2 Assessments by Service Area 2000 CERTIFIED ASSESSED VALUES (in millions) Service Area 1999 Certified Assessment Roll Real Property Personal Property Total Certified Value 2001 Est. Value Capital City Fire/Rescue $1,998.1 $2,026.2 $138.4 $2,164.6 $2,186.2 Roaded Service Area $2,049.8 $2,057.9 $166.7 $2,224.6 $2,246.8 Areawide $2,144.0 $2,115.4 $206.7 $2,322.1 $2,345.3 Millage Rate and Restrictions The assessment amount does not include the required (State Program) exempting of $122.1 million in senior citizen and disabled veteran property values. Under State law, the responsibility for paying this property tax levy falls to the State government. However, the State has not appropriated funds for the State' Senior Citizen and Veterans Property Tax Exemption Program. The total amount of proper tax revenues not collected in FY01, under the State mandated program, is estimated at $1.5 million. One mill levy is equal to one tenth of one percent (0.1%). One mill assessed borough-wide will generate $2.32 million in property tax revenues in FY01 and $2.35 million in FY02. The CBJ has three overlapping taxing areas (Areawide, Roaded, and Fire). Property can be subject to taxation in one, two or all three of these areas. Just over 93% of taxable property is subject to the combined overlapping mill levy for the three taxing areas. In 1995, the CBJ voters' approved a 12 mill operational property tax levy restriction on all taxable property. This levy restriction does not apply to the tax levies used for the payment of debt service on voter approved (general obligation) bond indebtedness. The debt service mill levy has been defined to be the total amount of general governmental support to the debt service fund less amounts received by the CBJ from the State's School Construction Debt Reimbursement Program. (See the "Major Revenue Analysis" for further explanation). The debt service mill levy is in addition to the operational mill levy. FY97 FY98 FY99 FY00 FY01 FY02 Operational Mill Levy Areawide Roaded Service Area Capitol City Fire/Rescue Total Operational Debt Service Mill Levy Total Mill Levy Change - (0.60) (0.19) (0.01) % Change - (4.80) % 1.09 % 1.66 % (1.55) % (0.08) % 52

3 Taxpayer Impacts Assessed values for the 2000 assessment year (the FY01 budget year) are projected to increase $180 million or 8.4% over the 1999 assessment. As previously noted the majority of this year's property increase is due to new construction and increases in existing waterfront property values, commercial real property land values, and two story residential housing values. The CBJ is required by State law to assess taxable property at full and true value. Full and true value is defined as the "estimate 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 " (AS ). Commercial real property values had not been reviewed in many years and were found to be substantially below market value, in some cases by as much as 100%. Waterfront real property continues to increase in value at a rate exceeding that of other residential real property indicating the desirability and scarcity of this property Property Value Changes- Property Category % Change in Property Within Category % Change After Mill Levy Reduction % Impact to Total Property Value Residential real (includes Senior Citizen) Commercial real Business personal property Nil Rural non-roaded real (includes mining) Total before new construction NA NA 4.6 New construction real NA NA 1.9 Total NA NA 6.5 Note: The percentage amounts shown above are estimated. The exact amount of property increase cannot be determined until after the appeal period ends and final property values have been determined. It was assumed that real property values would be reduced a net of 3% and business personal property 10% during the appeal process. The "existing property" reference is a term which identifies real property, both residential and commercial, assessed in 1999 and not significantly remodeled or altered between the January 1, 1999 and January 1, 2000 assessment dates. The change in values noted above are in relationship to total borough-wide assessed values. The actual change in individual property types (commercial and residential) will be more or less when compared with the total for that property type. The total FY01 overlapping "operational" mill levy has increased slightly from in FY00 to in FY01 but dropping again to in FY02. The total mill levy including debt decreased from to This decrease is the result of voter-approved debt being retired. This change is equal to a decrease of $19 for every $100,000 of assessed property value. However on average the increases in assessed values combined with the decrease in mill levy will result in the average residential taxpayers' tax bill going up by 2.8%. 53

4 The actual FY01 mill levy is determined once the final assessed values have been certified and the budget adopted by the Assembly. The adopted FY01 mill levies are based on the certified assessed values. The approved FY02 mill levies are based on estimated assessed values. Debt SERVICE AREA TOTAL OVERLAPPING Fiscal Service OPERATIONAL LEVIES OPERATIONAL LEVIES Total Operational Year Mill Areawide Roaded Fire Service Areawide (non Areawide & Areawide, and Debt Service Ending Levy Operating Operating Operating roaded) Roaded Roaded, & Fire Levy to to to to to to to to to to to to to to to This chart shows the individual as well as the overlapping millage rates for the three City and Borough of Juneau taxing areas and for debt service. This graph shows the historical average borough wide mill levy since The mill levy represents the mill average for each fiscal year. Levies vary by service area and can be greater or less than the average. The average mill levy shown below has been calculated by dividing the total tax levy by the total assessed value after the exclusion of the senior citizen and disabled veteran property exemptions. FY82 was an abnormal year due to a large influx of State funding allowing for a decrease in the mill rate for that year. 54

5 Average Mill Levy Mill Levy Fiscal Year 55

6 This graph shows the trend in borough-wide certified assessed values since Values are displayed for both inflation adjusted, "constant", and non-adjusted, "nominal" dollars. The "constant" dollar line has been included to help separate real property value increases from increases that include both growth and inflation. The CPI purchasing value adjustment, deflator, used was the average of Anchorage s and Seattle s CPI. Senior citizen and veteran property has been excluded so accurate comparisons can be made. $2.50 Assessed Values $2.00 Value in billions of dollars $1.50 $1.00 $0.50 $ Fiscal Years Nominal Dollars Constant Dollars - FY80 as base year 56