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2023-05-01 Regular MeetingKODIAK ISLAND BOROUGH Board of Equalization Meeting May 01, 2023 A meeting of the Kodiak Island Borough Citizens Board of Equalization was held on May 01, 2023, in the Borough Chambers of the Kodiak Island Borough Building, 710 Mill Bay Road. The meeting was called to order at 5:30 p.m. Present were Board of Equalization Members Mark Anderson, Bryan Ferris, Robert Tucker, Lee Robbins, and Jascha Zbitnoff. Staff members present were Borough Assessor Seema Garoutte, Borough Clerk Nova M. Javier, Deputy Clerk Lina Cruz, and Assistant Clerk Irene Arellano. ELECTION OF OFFICERS F-AW63 : F1 I :7» :W41 ON Eel a 1: I :111 YiL\ N FERRIS moved to nominate Board member Anderson as chairperson of the board. VOICE VOTE ON MOTION CARRIED UNANIMOUSLY. B. VICE -CHAIRPERSON OF THE BOARD FERRIS moved to nominate Board member ROBBINS as vice -chairperson. VOICE VOTE ON MOTION CARRIED UNANIMOUSLY. APPROVAL OF AGENDA FERRIS moved to approve the agenda. VOICE VOTE ON MOTION CARRIED UNANIMOUSLY. APPROVAL OF MINUTES 1. Special meeting minutes of May 3, 2022. TUCKER moved to approve the minutes as submitted. VOICE VOTE ON MOTION CARRIED UNANIMOUSLY. ITEMS OF BUSINESS Clerk Javier read the following aloud: The granting of any appeal or part thereof shall require the concurring vote of at least three board members. Any appeal or part thereof which is not granted by the board shall be considered denied. The burden of proof rests with the appellant, who must convince the board by clear and convincing evidence that the assessment was unequal, excessive, improper, or undervalued based on the facts stated in a written appeal or proven at the appeal hearing in accordance with the Borough ordinances. If the valuation is found to be too low, the board may raise the assessment. Kodiak Island Borough May 01, 2023 Board of Equalization Minutes Page 1 Evidence shall only be presented by the appellant and the assessor or their authorized representative. The board shall not be restricted by the formal rules of evidence; however, the chairperson may exclude evidence irrelevant to the issues appealed. The board of equalization may, in its discretion, decline to accept documents offered at the hearing which should have been provided by April 171, 2023. In exercising this discretion, the board shall consider the relevance and probative value of the documents which are under consideration, accepting those documents which in all fairness are necessary to a fair resolution of the appeal. Prior to the board meeting, the appellant and assessor may agree to an extension of time for the production of evidence. Clerk Javier administered the oath to Borough Assessor, Seema Garoutte Clerk Javier administered the oath to the appellant, Mr. Melvin Mr. II. APPEAL NO. 2023-01, APPELLANT: MR. II, MELVIN The order of presentation went as follows: a. Appellant — 5 minutes — ask the Clerk to administer the oath b. Assessor — 5 minutes c. Appellant rebuttal — 2 minutes Rebuttal shall be directed solely to the issues raised by the Assessor No new evidence may be submitted d. Assessor address rebuttal — 2 minutes Mr. Stephens provided oral testimony before the Board noting the following: • The hearing required the board to determine the full and true value of a currently uninhabitable single-family residence. The house was built in 1975, it has been uninhabitable for some time, and was uninhabitable on January 1, 2023. • The value of the property is a little over $101,000, and the Assessor says it is a bit more than $146, 000. • Mr. Stephens stated that his assessment was better than the Assessor's because his estimate stems from a real -world event. A contract between Mr. Manuel DeSantiago and himself, back in 2020, sells this property for $99,000. He felt that the arm's length transaction for this property is very important because both parties were familiar with the property and it was, by definition, setting the true and full value of the property at $99, 000 at the time. • Mr. Stephens stated that the Assessor has made a number of erroneous statements regarding the contract between him and Mr. Santiago. The Assessor used a cost approach to evaluate this property which is a very indirect approach. There was no way to verify the figures and the accuracy of those figures. The cost approach is not appropriate for dealing with the valuation of an old, depreciated, and highly distressed property. • Mr. Stephens presented exhibit eight, a syllabus from a seminar given by Core Logic, the owner of Marshall and Swift Service, which states explicitly that the cost approach is not particularly reliable when you are dealing with older properties with lots of depreciation. He felt that this method was not appropriate for valuating this particular property. • Mr. Stephens suggested the Assessor's valuation numbers be rejected and his be accepted. Assessor Garoutte provided oral testimony before the Board noting the following: • For tax year 2023, Mr. Stephens believed that because he has a contract for the property located at 1510 Ismailov, this constituted an arms -length transaction. It should be the assessed value an arms -length. • Transaction referred to a business deal in which the buyers and sellers act independently without one influencing the other, asserts that both parties act on their own self-interest, and Kodiak Island Borough Board of Equalization Minutes May 01, 2023 Page 2 are not subject to pressure from one of the other party ushers others that there is no collusion between the buyer and seller. • In the interest of fairness, both parties usually have equal access to the information related to the deal, it is important to know that any existing relationship tends to influence the terms which provide for a non arms -length transaction. • The terms of this transactions in the contract Mr. Stephens provided stated that DeSantiago has had possession of the property since 2014. It included monies owed to DeSantiago by Mr. Stephens on a different matter which would be credited in this matter, and Mr. Stephens is not paying interest in the monies that to Santiago is owed. • DeSantiago is paying interest to Mr. Stephens. Additional discrepancies in this contract to consider are the original contract which is dated September 2020 but Mr. Stephens did not sign until September 2021. The contract has been amended four times these amendments were not to the sale price but to the renewal fee and the amount that would be credited back. • Mr. Stephens is now keeping some of the money, but nowhere had monies into the sale price scratched out. New dates are added, but no signatures are dated in the appeal to Assessing staff. Mr. Stephens stated that there was a language barrier between him and DeSantiago. • Mr. Stephens, for the sake of this appeal hearing, added an unsigned memo dated April 13, 2023, which legitimized the language barrier but only now wants to make sure that Santiago understands. If DeSantiago walked away, it would leave him with nothing if he defaulted. • In real estate market, value refers to the actual value of your property when placed for sale on the open market. • The assessed value for this property was $79,500 in 2020, the contract price of $99,000 would've been 20% more than the assessed value. • Mr. Stephens could have seller -financed this property without rehab for that 99,000 in 2020 because that is what he believes the value of the property. • In the assessor's statement, we supplied estimate for the cost material some of the work DeSantiago has done while labor cost for each upgrade were not included. Typically, labor cost is anywhere from 1/3 to double the price of the materials. For example, if materials cost $2000, labor could be anywhere from $2600-$4000. • Materials have also increased. While plywood would've cost between $28 and $30 in 2020 is increased to almost double the price between 2020 and 2021. Now in 2023 sits between $40 and $42 a sheet. That's a 30% increase in material alone. ROBBINS moved to convene into executive session for deliberation as a quasi-judicial board. ROLL CALL VOTE ON MOTION TO CONVENE INTO EXECUTIVE SESSION CARRIED UNANIMOUSLY: Anderson, Ferries, Robbins, Tucker, and Zbitnoff FERRIES moved to invite the board members, the borough attorney, and the clerk's office staff into executive session. VOICE VOTE ON MOTION CARRIED UNANIMOUSLY. The Board of Equalization came out of executive session and had discussion which are reflected in the summary of findings and conclusions of law below. ZBITNOFF moved to reduce the assessment to $101,400. ROLL CALL VOTE CARRIED UNANIMOUSLY: Ferris, Robbins, Tucker, Zbitnoff, and Anderson. Kodiak Island Borough Board of Equalization Minutes May 01, 2023 Page 3 SUMMARY OF THE FINDINGS/CONCLUSIONS OF LAW The BOE findings and conclusions are as follows: 1. The appellant presented a contract for sale which represented an arms -length transaction negotiated between a willing seller and a willing buyer both conversant with the property. 2. The contract for sale had been updated as recently as July 9, 2022, and represented a fair market value for the property which was near in time to the assessment date. 3. Work had been done to improve the property, but the cost of that work does not translate into an automatic increase in the value of the property due to additional discovered defects in the property including but not limited to not finding the sewer line. 4. Without a list of tasks to restore the property the record does not include the evidence needed to support an adjustment from the full repaired value using the cost approach. Therefore, the contracted sale price is a better indicator of the full and true value for this property. 5. The appellant has established by clear and convincing evidence that the assessment was unequal, excessive, or improper. 6. The contract price for the property identified by the appellant through an arms -length negotiated purchase and sale agreement is the proper value for the property. 7. The BOE finds the property value for 2023 is $101,400.00. CONCURRENCE WITH FINDINGS/CONCLUSIONS OF LAW BY VOICE VOTE CARRIED UNANIMOUSLY. Chairperson Anderson read the following statement: According to Appellate Rule 602, the Appellant or the Assessor has the right of appeal to the Superior Court of the State of Alaska from our final decision. Should you wish to exercise your right of appeal, you must do so by notifying the Borough attorney and initiating the process within 30 days from the date of our written decision. Failure to do so will forever bar you from any appeal of this decision. GENERAL COMMENTS AND QUESTIONS The board agreed to a Special Meeting on Tuesday, May 2, 2023, at noon, to certify their actions to the Assessor. ADJOURNMENT CHAIRPERSON ANDERSON adjourned the meeting at 6:31 p.m. VOICE VOTE ON MOTION CARRIED UNANIMOUSLY. �� ATTEST: Mark Anderson, Chairperson Nova M. Javier, MMC, Bo ugh Clerk Approved: 05/02/2023 Clerk's note: Per KIBC 3.35.050 (E1) The board of equalization summary certification will constitute the board minutes. Per KIBC 3.35.050 (E9) Certification. The board shall certify its actions to the Assessor within seven days following its adjournment. Kodiak Island Borough Board of Equalization Minutes May 01, 2023 Page 4