By WIN GRUENING
In October 2020, the Juneau Assembly voted to require mandatory disclosure of property sales prices. The ordinance requires buyers of property in the City and Borough of Juneau to disclose to the city assessor under signed oath their full purchase price. Prior to this, disclosure of sales information was voluntary. Currently, Juneau is the only city in Alaska that mandates full disclosure of real estate transactions.
Subsequently, the Assembly amended the disclosure requirement to include a penalty of $50/day for failure to comply within 90 days of the sale date. Falsifying information on the form is a Class A misdemeanor. The city’s justification for the ordinance was that the information was necessary to more accurately determine assessed values on which property taxes are based.
The Assembly action was controversial at the time but there was limited discussion and testimony and it passed on a vote of 6-3 with Assemblymembers Smith, Bryson, and Mayor Beth Weldon voting against it.
Since then, dissatisfaction with the new rule has mounted. A group, “Protect Juneau Homeowners’ Privacy”, was formed to educate the public about the ordinance and gather enough signatures to place mandatory disclosure on the ballot in October’s municipal election.
While there are exceptions to the disclosure rule, as an example, for transactions between close family members and associated businesses, the rule covers almost all real estate transactions in the borough, whether commercial or residential. In addition to the buyer and seller’s name and sales price, the city disclosure form requires the buyer to list terms of the sale (including financing methods), the value of any personal property, the value of any included business, whether the property was publicly listed, and any other information that may have affected the value of the property.
The information disclosure requirement is extensive and proponents of placing the rule on the ballot assert that it is so far-reaching and invasive that the public should be given the opportunity to either support or reverse the Assembly’s action.
There are many variables that factor into the sales price of any property. For residential sales, the condition and age of the home, special features of the land, closing cost allocations, needed repairs and upgrades, and current interest rates can affect the sales price dramatically. Commercial property is even more complex where sophisticated sales terms, location, and prevailing rental rates play an even larger role in establishing value.
In other words, the sales prices in many transactions are difficult to compare based on square footage and other visible and quantitative factors alone and will likely be subject to the same variability affecting assessment methods Juneau has historically used.
Has the Assembly carefully considered alternatives or the lack of precision inherent in relying more heavily on sale prices and weighed that against the privacy concerns raised by the new disclosure rule? Some states have chosen to maintain privacy on residential sales by developing algorithms based on mortgage amounts or other reported data to arrive at pricing information.
There is also a great deal of unease among Juneau property owners who have seen what often transpires in other states when real estate disclosure is mandated.
Armed with that information, taxing authorities, like the City and Borough of Juneau, have eyed those transactions as a potential source of additional revenue. In some states, governmental units levy “transfer taxes” or similar fees anytime properties change hands. These fees can amount to thousands of dollars depending on the value of the property. This is another way for municipal governments to tax property owners in excess of the taxes they already pay.
There are 35 other U. S. states that, like Juneau, began with a voluntary request for property sales information. Those states later mandated disclosure and now charge a transfer fee, a sales tax, or an excise tax on property sales.
The National Association of Realtors historically has opposed real estate transfer taxes, calling them a “major burden to buyers and sellers.” The NAR contends they are discriminatory and regressive because they target only one type of financial transaction and increase housing costs, placing a disproportionately higher burden on low-income families and those who move often.
While the Assembly has not yet contemplated such a tax, gathering private information on real estate sales is one step toward doing so. Considering the prevailing penchant of Juneau to “over-collect” property taxes and deficit-spend, this should give taxpayers pause.
Juneau voters who are interested in supporting this effort can sign a petition at most Juneau realty offices or get more information by visiting either of the Protect Juneau Homeowners’ Privacy websites: ProtectJuneauHomes or facebook.com/protectJuneauhomeowners. Petition signatures must be submitted by Friday, June 3.
Regardless of your opinion on Juneau tax policy, and especially in light of the strong and fundamental right to privacy explicitly recognized in Alaska’s constitution, voters should have the opportunity to decide on an issue as significant as whether private real estate information should be disclosed.
After retiring as the senior vice president in charge of business banking for Key Bank in Alaska, Win Gruening became a regular opinion page columnist for the Juneau Empire. He was born and raised in Juneau and graduated from the U.S. Air Force Academy in 1970. He is involved in various local and statewide organizations.