okay we will start this work session it is friday january 11 2013 and let's go around these two tables and introduce yourselves i'm jennifer johnson assembly wc under assembly adam trump assembly dick training assembly paul holman assembly marty mcgee he said [Music] okay thank you and as you proceed with your uh presentation will you be taking questions during it or do you want us to stay with the end i can take questions during um we have about uh 40 minutes of presentation uh so we're anticipating an opportunity for questions and answers [Music] okay thank you and patrick flynn has just joined us all yours okay we're ready to issue the notices uh for value for taxation on their property the notice of the date has been compiled and has gone to the printer and the notices will go in the mail january 15th so taxpayers in anchorage will be receiving their green cards and the days that follow and as usual we expect they'll call you with questions about what's going on and what happened so the purpose of this presentation is to inform you of what is happening the basis for that give you as complete an answer as i can about what's going on and it also i'm trying to incorporate some information about how i see changes that are affecting real property value in the economy and anchorage as we've done our work and putting this tax role together so the tax base that i'm going to talk about is all property which is taxable in the municipality one of the messages that we're going to talk about is that the inventory of property is aging and that's having some interesting effects on the real estate market and we're going to talk about the economic factors that have to do with real property value tax base goes all the way from uh eclutinide to gerdwood primarily concentrated on the coastal areas in anchorage and so there's no change in that it's just a reminder of what we're talking about the basic composition of the tax base includes commercial real property 29 residential real property which includes does not include four plexes but up two four plexes 62 of the tax base and the personal property which is the inventory and equipment owned by businesses not the property owned by individuals in anchorage that composes 90 of our total tax base this is another diagram showing the impact of the various components of the tax base one of the things i'm trying to point out by this illustration is the relative importance of different parts so you can look at office buildings as a quite a wide blue band within the commercial section retail property isn't very well represented because of some issues with the way my computer system works so it's actually more than is represented by that band of property and then another one which draws attention is hotels and you can see it's a pretty narrow band as compared to the rest of the tax base so the majority of your tax base is still residential property that always has been in anchorage yes and i don't know i don't have color on the black and white right and then maybe i'm going color blind but some of those colors look pretty close too that big white band below the solid blue at the bottom what does that represent apartments or the green uh is industrial this part right here [Music] right here yeah that's industrial property apartments is a sort of light blue band is it above the the very big block at the bottom the one right above it it's a pretty good sizeable chunk it's a light blue or something it looks like that well the next one above green the very bottom oh that's right here this is all residential property here on lightsabers so those are that hasn't changed but we're going to talk more in depth about retail and office buildings as we go along and when i talk about the age of the property we're getting some interesting market dynamics with a lot of buildings close to 30 years or older than 30 years old as opposed to new buildings and what's going on and so one of the fundamental things we go to the next slide with the economic impact one big trend which is important for us now and in the future is the aging of the population the way the department of labor looks at our economy and our population we have no in-migration there's a kind of a net most of the in-migration that's happening in our region is going to matsu matsu has built almost twice as many houses in the last few years as anchorage has on an annual basis so that's interesting the infrastructure development in matsu means that those people don't have to come to anchorage to shop so retail and office stuff being built in that area means that there's somewhat less and then when we look at our community and we see new buildings being built or new businesses coming into the community what they're doing is competing for the same amount of basic market as we had before so you can understand the dynamics and the shifts that are occurring and there's some that have to do just with the preferences of the community what type of building or service and its location to them that they want the aging of the population being this enormous and important trend affects that too whether people are willing to drive across town or want convenient shopping nearby whether they want to go to big box stores and whether they want stuff located near them and strip retail centers and then the demand for health care is another important trend and then of course with the aging the population there's a big issue associated with our senior and veterans exemption which is important to us so these are major trends that are affecting property value in the community so as i said what's going on with population growth now we're in a great position compared to most communities in the united states anything i say here is not intended to say we're in trouble especially relative to other communities california has still has 29 percent of their mortgages under water unable to pay their mortgages so it's huge that's what's going on the rest of the country we haven't lost people we haven't lost jobs we haven't lost the ability to pay rents but we haven't grown much either in this hard economic time and of course we exist in the same capital pool and the same economy as the rest of the united states so we're affected by what goes on outside even though locally we're very stable and have a pretty good situation uh senior citizen growth we're going to show you some more information about that if there's a growth in exemptions and it'll be significant in the next few years there's a growth of demand for health care services there's a an effect on what type of residential real property is demanded by the community which is beginning to manifest itself they don't need the three-bedroom houses in the suburbs as much as they like something else and what is the something else is yet to be solved but that's a growing trend both here and in the whole united states and then income as people retire their income spending levels typically go down so disposable income for those folks tends to go down so this graphic which is updated to 2012 shows the trend now we have done projections out into the future because the big uh move the goose egg in the population the way the economists talk about it is yet to happen but it's starting and so this trend line will actually increase in its slope as we go forward in time and we have made a rough projection of what is going to happen next and could go to 55 million dollars of taxes offset to other taxpayers as more seniors come into the program when we look at the number of seniors currently enrolled um excuse me one second dick martin excuse me for a second up the top of that you've got senior disabled veteran tax right we have some people to get both or can they get both can they just take that well they just save one it's just two ways to qualify for one exemption so an individual can't have two exemptions they just have one now the residential exemption adds to the available senior or veteran exemption so the maximum benefit currently is 170 000. okay what if you've got i've got people for example the spouse of disabled and they're both 65 so could one claim the senior the other claimed the veterans well it's one per property okay so the owner of the property qualifies but the property is what receives the benefit and it's one for property so a husband and wife or whatever just gets the one on a single uh thanks uh i noted senior and disabled but i don't see non-profits for uh well all we're talking about in this particular graphic is the senior and veteran program the other things i haven't provided much information to you but that would be additional the reason i say that is because it appears that there are several non-profits that are continuing to expand and got more land that was taxable at one point well in particular the health care and there's quite a shift i think as we go forward and as this aging of the population happens more healthcare provided by not-for-profits would be the developing trend nationwide as well as local and in the exemption of hospital property owned by not-for-profits which has been a major issue across the united states and i would point you to what has developed in massachusetts in particular i am chicago has two landmark areas where they tried to deal with that issue because it their community faced in a bigger scale the same thing we do you know this growth in that element of the economy and then in an exempt status they don't pay for any of the municipal services so it begins to be a bigger and bigger impact on all the taxpayers the solution that they found in massachusetts was a payment in lieu of tax situation that they worked out with the universities and hospitals in the boston area so these are things for you to look at because that's a growing trend an important thing to look at now other types of not-for-profit owners like cooking with housing and in housing for low-income people in particular that also was a growing trend that's the only kind of residential multi-family being currently being developed and built is not-for-profit related or it's not entirely non-taxable because the low-income tax credit is the mechanism that's being used most right now but again it's a developing trend that needs to be paid attention to how are we paying for municipal services if we're not going to tax owners of this property so how did they engage in that guilt discussion initially was there some kind of a specific well in chicago it was through lawsuits filed by the city yes by the taxing authorities or vice versa as they challenged it because it was it was within their authority to decide well the there is no definition of hospital there is no definition of charitable in the law so there are lots of opportunities for different interpretations and the municipality the cook county got very aggressive about their definition of what constitutes a hospital and not for profit it wasn't resolved through the courts because before it got to that point the legislative fix was put in place but so much of it in alaska is determined at the state level in terms of the definition state law generally is the governing guiding thing but in alaska there is no definition of state law or no definition defined by the courts for what constitutes a hospital use or in alaska that's correct interesting so we've had a few cases that we've been working on not directly associated with providence but other cases where we have challenged that well that's been a bigger challenge we don't have any decisions out of either the superior court or the supreme court uh on that i think the assembly be interested if you see any windows of opportunity you might want to share well in and i don't know i assume providence is aware of these other developments so i think in in massachusetts the result was a threat of legislation which would make those diseases taxable which brought them to the table for negotiation at the state level uh yes and resulted in a in a result but these things tend to originate locally but because it's state law that governs it it becomes there but they don't originate at the state level unless we go to court and it's the state courts to make the rulings okay thank you mr freddie last year he gave us a listing of all the properties in anchorage that had a church exemption can you do that again so i get calls from people all the time complaining about you know this is already a church but they've taken the department of textuals so last year we got if you send it to us again i sure appreciate it and just for clarification the exemption is for religious purpose it isn't specifically a church so we get into some issues of defining that too as we try to administer the law and does the spine therapy center relate to what you're talking about remember we used to tax from that then the state exempted the building well that originated because the property the land underneath that was exempted for educational purposes to the university to the private university and then they leased it to a for-profit medical clinic and at the end it's taxable and we didn't tax it and do continue to tax it but as apu specifically develops its property which we have another some new pieces this year on that it keeps coming back up as an issue of defining exactly what's taxable and what isn't and their expectations and hours in terms of how we're going to tax the property there's a hotel out there on lease land and usgs has expanded their facility and that's another issue that we're dealing with mr probably thank you martial yeah under the new health care act that that's uh being implemented one of the things that we're going to start seeing is coming in 2014 we're going to have payments to hospitals we're going to start being cut by about 14 billion next year so is that now if we're going to start talking about taxing places like providence their reimbursements from the federal government is starting to get cut back and then we want to raise taxes on them is that a trend that you can follow because the end of the day what's going to hurt is is people getting care the less money that they're getting reimbursed the more money they're paying in taxes the less money they have for care for people we're trying to follow everything that's developing and there's a lot going on in healthcare the the uh there are elements of problems providence owns lots of its subunits as separate business units there are elements of province particularly providence imagery which is taxable and we've been taxing it their properties they own for future development which they have leased out like the strip mall and we are taxing that so we're following that as it develops now it's very interesting though because we have a for-profit hospital and a not-for-profit hospital the for-profit hospital which we've been fighting a long drawn-out battle over their values and so forth there's a major component of that that's vacant right now and hasn't found new users that's an interesting situation in a market where basically all of our other healthcare facilities are full and looks like we need more we're expanding so why is that situation existing we're trying of course to provide fair treatment to all of them whether they're taxpayers or exam and consistent definitions of what we see is taxable and exempt and how we determine its value so it's a very challenging area that we're trying to stay on top of yeah and i would just appreciate it if you guys do watch that and start to see what happens in places like chicago where the hospitals maybe are getting taxed and they weren't before another rain person richard what that actually does to characters i don't want to bring that to alaska yeah so and i don't want to start legal battles that are expensive for the city if uh changes to law or so forth is the right way to deal with it i'm going to try to communicate with you folks about what we need to do and be tiny thanks that's all and one one question as you're looking at these chicago boston um if you their payment lower taxes is it for primary services police and fire or is it for for yeah that's an interesting part of it because it's you know that's a negotiated thing typically um you know what portion of the tax they pay for what they don't is interesting part of the problem thank you [Music] um so the majority of our tax base is 30 years old or older our usual expectation for commercial buildings is a 30 to 50-year useful life so we're approaching the end of the useful life on a lot of real estate in anchorage the new property like i said tends to displace at least the income from the old property every time they move a tenant from an old building to a new building it creates a vacancy in the old building which is hard for the landlord to fill concessions have to be given you typically in order to attract new tenants and we don't have in-migration of businesses or expansion of local businesses there's some but not enough to completely occupy all of this property so we're beginning to see vacancies both in the old property and we have some significant vacancies in new new constructed property which is something to pay attention to and we are and it will bring us some issues on the assessed value as we move into this year okay now we're going to give you the overview a typical one we do most of these slides are the same they're just updated with the data from year to year so you can see this is a one percent year that's the story on average but the story also is that individual taxpayers that's not the story that there are a lot of people which have value changes both upward and downward and many of them in excess of 10 percent we're going to hear from those folks so that's what i'm trying to inform you about why that happened and what the basis for that is you can see the breakdown between residential and commercial it's pretty much the same kind of breakdown profile we had last year one of the interesting things is where the new construction is happening and it looks like there's quite a bit more new construction in the commercial segment than there is in a residential segment this is another way to look at new construction i wanted this to give you a historical perspective so the amount of new construction we had in 2012 is about the same level of new construction as we had in 2009 we're in recovery from the recession more activity is happening there's a lot of things going on in financing the real property right now there's a lot of dynamics about businesses and relocations and stuff so there's a lot of change but it's real subtle inside it's covered up by the average effect we use the same techniques we have that i've informed you about before we go directly to the owners of property buyers and sellers request information from them we go to financial institutions to ask about lending programs how many loans they're making what their criteria is we get appraisals submitted to us and we look at those we have fewer of those this year than in prior years and we go to real estate professionals both the realtors involved and the appraisers in the community and ask them questions about whether our perspective on things is correct and if it isn't why so we think what we've done is consistent with what the rest of the community is going to tell you about what's happening in the real estate market in anchorage we use the three basic approaches to value that all appraisers do we put a lot of emphasis on the cost approach and assessment so most of the houses in anchorage are done on the cost approach most of the commercial buildings are done on the cost approach but we pay a lot of attention to the income approach in commercial real estate we use it as a way to calibrate our cost models and we're tracking what's going on with rents and vacancies and operating expenses [Music] we have visited a lot of property this year we over 17 000 pieces of real estate were inspected that exceeds our basic requirement so we're meeting our mandate but also that leaves us the potential that 17 000 pieces of real estate changed in value significantly because we changed the description of the property when we visited either to better condition or worse additions have been made deletions have been made changes occur we've been of course staying on top of that so we think the changes we've made are correct and warranted but that would be the most common reason somebody would come to you and say my value changed more than my neighbors because we visited the property and changed its description they can review the description of the property on our website so they can go there and look and see how we described it that should be obvious if we've changed something and they can inform us of it and if it's not right we'll send somebody out right away to reinspect the property and make a correction that's the way we make most of the informal adjustments under this appeal period the next 30 days is that mechanism we talk to people about what happened if they provide us appraisals or closing documents for contractors estimates of repair we take those into consideration we can often change the value without need of a formal appeal so that's the informal process that we're using and that same information is relevant to a formal appeal and could be presented to the board of equalization as evidence of what the correct value so now you see the picture of what's happened historically with regard to appeals last year we were at a record low in terms of total number of appeals overall property value changed about the same amount as they did this year so we kind of expect something a volume of appeals in about the same order you can see that we're basically holding up in terms of direct contacts and informal reviews that's the informal process to try to fix or adjust value what's reduced is the formal appeals and i think that's good news i think the system is working as a result of that a website we have had a lot of people visiting our website and it's an increasing volume and that's good news also that number is a little bit distorted at a one million one hundred sixty the data got uh mangled up with visits to the taxes website so that slightly overstates the people that were just coming to my website but we believe it definitely is in excess of 900 000 people visiting this site this year now we'll break down into the specific different categories of property so this is information about what we're doing in residential now this is information that tells you that as of when we set the value [Music] we knew about 200 2 700 need transactions property had changed ownership we have documented approximately one-third of those sales to use to calibrate our evaluation models that's typical and normal for us that we're at about that level [Music] is that because that's the number of people who reported yes and when we use a pool in residential of three years of sales so when you look at the whole pool it's more like 50 of the transactions that we know about not just one-third for a three-year period of time but in the 2012 year when things happened in 2012 we know about approximately one-third and that's been pretty stable yes and then value change the majority of the property what this is trying to show you is that these two columns here the majority of the property is changing about one or two percent of that now that's the typical story it affects the majority of the property owners but then these out here will be the ones we'll hear from on the appeal period because their value changed more there's a reason why it changed it isn't just arbitrary but that's that gives you a picture of how this looks for the whole community by the way i also have behind me here two maps which are showing the value change the top one is residential property in the bowl area and the bottom one is commercial property changes stuffing green here is a negative five to five percent value change this year you can see the majority of the property in most areas is like that and yes i apologize for not having maps for north america i need four maps okay higher up there well it's just you know my old district's gone yeah and and her glasses on since it's gone yeah no taxes hey i have nothing in my office but i can't get them printed right now marty don't do this president now but you can't look at it so i have stuff for you so i hope you come visit you personally huh that's always preferred then you get a fellow appeal on your taxes with it maybe there's two stories you know there's land change and there's total property value chains the only thing that really matters is the total property value change because that's what the tax is based on land change is there's more land change values going on than total property value changes so people are going to ask about that too why would all this land value change it isn't that the market changed a lot part of it is the lag we have in terms of ability to collect data on land values part of it is the work we did in trying to calibrate the valuation models for total property value that we had to change land and most of the changes have to do again with changes to descriptions of property the way we looked at the type of road that accesses the property where the utilities are lot size and so forth and one thing we've done though modeling wise is we've changed the relative impact of some of the influence factors we talk about so the influence of being on a major arterial like o'malley road we have found to be less than what we thought it was in prior years so when we reduce the impact of that influence that the land value goes up now we've controlled the total property value change but that's going to precipitate some calls and questions from people why did my land value change more than other people especially when the market is relatively quiet there isn't a lot of economic growth and value going on you have to explain it i'm sure yeah you have to explain if you don't mind just a bit just for a second the synopsize o'malley road that example you gave yeah you're saying that the influence on o'malley road at one point devalued land right off of o'malley and now you're saying because a high traffic arterial we had observed from the market that that wasn't as desirable as something that was off that didn't have direct frontage on the high value arterial now you're finding that's not the case well it's not as significant as it was before it's still the case and then some of it is just correction is that subjective or is it based on sales we have sales data to back up what we're doing there's always an element of subjectivity when we analyze and come to the conclusion but we do have data to back up what we want that's the complaints i get is whose opinion or this decision is that so if it's based on data it's easy to justify it well because somebody believes we will always have a challenge in anchorage on land valuation issues because we don't have a lot of vacant lot sales to use as determining of land value we have to do a lot of analysis of improved property sales and then try to extract out the difference associated with the lot specifically so this is not i would not represent to you that we have you know the rock solid case to show you sales to say this is why your land value is what it is we could do that with the total property value the improved you know including the improvements but very difficult to do with land only so there's a lot of subjectivity in what we do in land valuation that makes it difficult for us to answer constituents you know subjective challenges thank you in the past marty you've shown us particular neighborhoods where you told us there were significant changes with internal to a neighborhood right and so to expect that has is the change fairly uniform across the municipality are there neighborhoods that got more of a spike than other places there are locations that have more influence it would help us if you could highlight those locations for us yeah i can do this two ways one i could try to communicate with you folks directly about your represented area or if i can show you these maps and try to explain what's going on as you look at the whole community but that's the reason we created these value change maps for you as you can see i know and they're really valuable it helped last time that you did that because then i could explain the rationale because even if it's not my district i'd get calls from some of those folks so it does help us to get ahead i could distribute these maps to you they're they're one of the challenges we have is that they're really hard to see the detail on a map when i print the whole whole or the whole community well but if you like know something and you could point to folks this neighborhood where you might get calls because this happened yeah that's helpful yeah the other thing you've got the map at the ends of the power points yeah why don't you just pull it up and show it i would that would be cool and even though the resolution is small i think the conversation generally yeah and we did incorporate them uh just in case that'd be super and they're there so why don't you just okay the other thing marty is i've been told by several people that actually eagle river is the hottest real estate market right now and well it is in some respects okay i just want you to residential growth uh and with what's going on on the basis eagle river is a very desirable location residential and so where we will see most of the new construction of residential property will happen in new river and it has the most entry yet and it has the most potential for filling in you know because of vacant lots it's almost non-existent in the rest of the community a little bit in the hillside in south anchorage but most of the rest the community is built out and the vacant lots have a problem with them that's the reason they're still vacant i'm just hoping you're going to tell me that there's a spike out there yeah no we're not spiking value but commercially there are some other issues yeah so that's a different dynamic all right we'll talk about i'm trying to be quiet nick are you fine martin's question for you on dowling road are we going to see an increase in the value now the states come through and they've made dowling road with improvements is it going to no property along there oh yeah uh what we what we always do is we look at historic fact and we're looking at what happened in the year prior to the lean date january 15th so the impact of dowling road improvement hasn't manifested itself in sale prices or rents so maybe next year yes okay and if anything is depressed right now because the construction activity limited access to it and made it less desirable in the short term and same thing with the extension or the change to uh raspberries it connects to dowling you know that will have an impact but not not this year in the future now there's a little bit of that because people anticipate one way or the other as to what's going on but uh it you know i would say that hasn't manifested itself yet because i know it's moving traffic remarkably faster across town oh yeah it's a big improvement it's going to really help traffic flow and it will change patterns of people using property thank you appreciation and let me remind all that we just have a little over 20 minutes for the rest of it we just checked what we have at the back of the slideshow and we we have deleted that residential slide so i apologize for that but i'll be getting back with you guys with specific maps and some comments to you about in your area or generally what's going on they're not a lot see as we look at these red spots on the residential up here we can kind of point out a few areas where we know and in the hillside area down there and some in mountain view where there's a significant amount of change and things are happening and folks will be calling us about those but most of the community it isn't a big story in terms of they'll get a 1 change in their value and they probably won't react very strongly to that you may ask when you when you send it send it to the clerk so go up to everybody and sure and if the digital maps we can blow them up and and hopefully they're they're the kind that we can we can change sizes probably come across as a pdf or a jpeg document okay and if you have trouble with it you can always contact me and we'll try to make it so it's useful in the past especially with the two yakin eagle river area i printed out large-scale maps for debbie because she was trying to stay on top and there was a lot of things going on in that area of town with all the development and so forth there's just a lot of changes happening we've got 20 minutes okay so we'll try to move on through this now this is the breakdown of the residential clusters the way we divide up the residential market and you can see when you look at the percent change column most of them are one or two percent but there's a couple notable exceptions um the uh [Music] the duplex triplex model 10 uh five percent increase uh that's based on market data we're pretty strong in our ability to defend that what's going on i think it's a good investment for small investors when they can't get a decent return on anything else so that's what's driving it yes just quickly is that city-wide is there an area that's concentrated that that was precipitation that's city-wide and so it just depends upon your zoning in your area whether you have a lot of them or not uh another one that's uh of interest is uh the the apartment style smaller condominiums which is 19 which is down in value i don't really have an explanation for that it's just an observed fact and that's where so we have adjusted value down to reflect what the market is doing and we talked about four plexes that be in with the commercial stuff and it'll be a six percent increase but we'll get to that in a second but you can see by looking at that what's going on and then how many pieces of property are in these different groupings uh so this is the a you know something we reported each year as a comparison statistics now these are unrelated statistics so this comparison is not really other than being interesting it's not very useful mls looks at what's sold that's not the whole population that's not all the property so the average sale price in mls and the average assessed value it's an interesting comparison but you can't really make much of it uh this is the average value of a single family home including all these property types is one percent and the average is not what's going to happen to each individual so but it does tell us what's going on the whole tax base and it's not a bad representation based on how much is changing at that rate commercial property we have less market data that we're working with there's things going on commercial which we have not been able to document but we have some idea of what's happening we do pay attention to listings we pay a lot of attention to rents and vacancies because we can observe that and we have fewer we've had up to 30 appraisals in our pool of appraisal commercial property we only have 13 in this calendar a year yes sir uh the slide before this you showed a one percent increase and um that was just single family home yeah what's the what's the what's the percentage change as a whole and the reason i ask is because when we when we pass the budget in 2013 yeah and we look at the projections out to the future in the six-year fiscal plan from the administration it assumes a three percent an overall three percent increase in assessed values and i'm just wondering what can we expect that because if we're only seeing one percent change overall that's going to drastically change that that's true of the total tax base too and one of the earlier slides i showed you we showed the value of the whole tax base um so it's in here at the beginning of this presentation okay and if you want more information of course i'll provide it and i know that's fine i just don't remember and i work pretty closely with the treasury folks when they're doing revenue projections and so forth in fact that's one of jerry's major jobs is predicting uh how much taxable value we'll have at the end of the day for their work so we're on a almost daily basis conversation with them sharing information yeah mr trump um one percent is the existing properties mostly are moving at about one percent but the tax base itself has moved up two percent with the including new construction if that helps sure thanks adam i just want to clarify your three percent in the six year fiscal plan we didn't incorporate assessed values we just assumed a tax rate increase and so maybe you were thinking of text well maybe i think the tax rate increased but i guess it was a then it was a conversation that you and i had yeah offline it i guess it was yeah it was a six-year fiscal plan we had planned for two percent um total value increase which is exactly what parties all right thanks appreciate that okay [Music] so this is information about what's going on in the development of retail office buildings how much square footage has been added and where the two big big box store buildings of course have added a lot of square footage associated with retail it's kind of interesting that in one year we had the retail development occur and in the other year we had most of the office building new construction occur but right now we're sort of thinking that the new construction in 2013 is going to be a relatively slow year for more buildings being built and this is commercial value change so like i said four plexes are a major story with a six percent increase that affects a mountain view more heavily and but they were the reason why is that they were depressed by the foreclosure activity in prior years that has stopped uh we don't have hardly any foreclosure activity market is recovered the rents have recovered and so we're bringing their value back up to what fourplexes are worth in most of the communities so eastside and mountain view are particularly heavily impacted maybe higher than six percent maybe 10 or 11 percent on individual pieces of property as the change occurs the multifamily is still at two percent nothing's being built rents haven't moved operating expenses are increasing uh it is not profitable to build new uh apartment buildings the majority that's being built is some kind of not for profit hotels now in hotels we use an income approach and we use an average of the prior three years income as the basis for what we're doing we dropped off a very bad year for hotel income and recent years we've been recovering and gaining so that accounts for why we have a four percent increase in hotel value but within hotels there's a really interesting dynamic going on with older hotels being moved to alternative purposes and some of this so the new hotels are taking market share away from the old stuff and it's having to find something else to do in order to exist in the community that'll be the story as we go forward we have at least one more hotel proposed as new construction so it's interesting to me that we can afford to build more hotels but they're still being used and profitable generally already very interesting comment about new units being constructed that were non-profit can you give an example well what went on in chester valley with the low-income housing being built there the cookielet housing is building stuff in mountain view mostly smaller stuff two and three units so when seahawk builds a single-family home that they then sell to a homeowner is that not taxed well that is taxed that's under a different program okay so the only stuff they retain ownership of and rent yeah right and even most of these others are actually low income tax credit so they're restricted in terms of their value but they're not entirely exempt from tax even multi-family and multi-family so most of the new multi-family even if it's owned by a not-for-profit is actually contributing to the tax base but it's limited because it was limited in companies yeah they effectively get a subsidy out of that in order to subsidize their operations thank you mr training we have seen an explosion of hotels from midtown as you know is this new one planning to come into midtown we're at amazing isn't it it's just crazy i've said for two years i don't see how this community can absorb more hotel rooms and they keep building them and and then we have the hotel bedcage to look at to see whether they're successful or not and they're finding people to stay in them they when you talk to the operators they say each one is aimed at a different market niche and apparently there's still a market niches available for them to go after because we haven't over built there now there's a classic economic trend when the cost of capital is low communities tend to over build especially in commercial property so i'm cautious of that but i don't really think it's happened yet in english that's what my observation is thank you mark because i just watched midtown exposed with hotels yeah you wonder how we can have another one of those little monopoly hotels and it would be successful but they are they're shutting down the older hotels they are yeah because they're a superior product and a better location so it's a classic people get into apartment buildings or what yeah uh efficiency apartments is what they're going through can i remind you ten more minutes yeah they're almost done too this graphic is intended to show you the age of the tax base how much of the tax base i showed you that office buildings were a big component of our tax base look how many office buildings are 30 years old so yeah it's great that we have new office buildings being built but they're that small piece over there and the big piece in terms of the condition of our tax base is the large column and then the retail information is also on there go ahead to the next slide which is a little bit different picture but we definitely have a relatively new retail space that isn't occupied we have older retail space which is suffering and we have more retail space being built so the competitive market situation on retail is very interesting a lot of what you see occupied as strip retail especially is going to alternative uses office type uses storage type uses lower value tenants which pay lower rent than your typical retail sales type tenant so the value of that property is going down as a result so it's an interesting dynamic and it's just something to pay attention to as the community develops and changes personal property mobile homes mobile homes are ancient in anchorage they haven't basically haven't brought any new mobile home units in since the 1980s the majority of our population is that old they were intended to have a 15 year life and they're still in service at 37 years old they retain value they're still being traded and maintained so it's an interesting situation to try to appraise every year the total part of the tax base associated with personal property is in good condition and about the same as it was in prior years [Music] that's that's the end of it uh well we have to uh these are being reported to you about our performance value we're meeting our goals uh both in valuation the number of properties we inspect and then our appeal response uh so we're doing fine on those measures of our success mr probably yeah uh going back to the personal property tax i've heard from a couple business owners and and their biggest strike with that the personal property type basically inventory tax is that there's no relationship between the business owner's ability to move that product and the tax associated with it i'll give you an example say someone owns a snow machine dealership they have a 2011 stone machine sitting there they didn't sell in 2011 they didn't sell in 2012 and will come on 2013 but that individual while the profit margin on that on that machine may be anywhere from two to three percent all their profit has been eaten when they do sell that because it's been taxed as inventory and so their gripe is that it's not it's not a fair tax it's not it doesn't meet the definition of of the assessor's office of taxing personal [Music] here is a property tax it's based on the value of property that people own it isn't an income tax it is associated with the profitability of the enterprise it's strictly what do you own on that date and the property you own so that element of property tax is always a reality for any kind of property it isn't uniquely singling out personal property is the thing we do you know i've had a lot of conversations with that taxpayer as well and you know one of the things we say to merchants is that it's their business and their responsibility to move their merchandise or what they hold or get rid of and i'm not managing their business and i'm not taxing the profitability of their business i'm just looking at the value of the property they own and they report that to me i don't go out and collect that i have no way of knowing what they own as of a given date now it's not just inventory inventory is very important part of it one reason for the growth and we've had a lot of growth in personal property is our work going to discover what they own but i'll give you an example of federal express as a major taxpayer in that category and that's all equipment it's the stuff that they own to handle the packaging it's not the inventory that they own so there and then another might be uh you know fuel and fuel tanks and things like that those are primarily personal property items car washes it's all equipment as to what they value their taxes and the city allows them to remember the proper term not devalue that every year does that appreciate depreciate thank you yeah um and the city's allowed they allowed them to appreciate that over time right so is there a minimum line that fedex i mean yeah for 40 years as long as property is in service we don't let it fall below 15 of its original acquisition cost okay and then when they take it out of service or get rid of it you know it's become surplus then it can go lower but we hold it at a level okay and what we do is we assume on most personal property it's short-lived so it's something inside of ten years in terms of its total life typically a lot of it is five three to five years of life sure mr flynn on that discussion mr trump you might be interested to know there's a remarkable uh in this version to know this there's a remarkable arm wrestling contest that takes place between the refiners and and sellers of fuel and buyers are fueled in about the december 29 to 31 time frame whose it is in the tank at an international airport because whoever has possession pays tax and it's uh it's it's a it's a remarkable dance that you don't want to be a part of i've also heard that some people they actually take inventory out of whistler so they don't have it they've tried i've heard that you know we recognize that it is an issue that it is that a single point in time and we've actually evaluated changing the code to incorporate it to be an average for over 12 months which would eliminate a lot of work so we've been talking about that okay is that a code change that would need to come forward and you guys are working on something we've been talking about trying to come to more fairness and equity associated with that i'd be interested in being involved in those conversations as much as possible and just for the taste that was mrs mahoney and mr birch is doing this well we've used all our time and we will try to respond back to you with specific information as always where if you want to come to me with questions mark i know she did not give us our shield this year thank you what's the exemption of personal property twenty thousand dollars the first twenty thousand dollars thank you we'll take a five minute break okay um [Music] i'd like to tell you that i did it just for you good representation charlie thank you oh uh oh