Gov. Bill Walker (right) and then-Sitka Mayor Mim McConnell visited the site of the Kramer Avenue landslide on Wednesday, August 19, the day after three people lost their lives. The home of Rebecca and Andrew Friske was not yet finished when the slide came down, but it sustained heavy damage. Neighbor Christine McGraw’s house — also unfinished — was obliterated. (Rachel Waldholz, KCAW)

All individual parties in litigation surrounding a fatal landslide in Sitka in August, 2015, have settled out of court, averting a 6-week trial.

Ketchikan Superior Court Judge Trevor Stephens signed orders dismissing three lawsuits in January and February.

One dispute — between the developer of the Kramer Avenue neighborhood and the City of Sitka — remains in litigation.

Christine McGraw and her neighbors Andrew and Rebecca Friske filed suit against Sound Development a few months after the August 18, 2015, landslide slammed into their newly-built homes. Neither plaintiff had moved into their houses at the time of the slide. McGraw’s home was being painted by the brothers Elmer and Ulises Diaz, both of whom lost their lives when tons of uprooted trees and mud obliterated the structure.

The Friske’s home was heavily damaged, and has stood unfinished since the slide.

The lawsuits brought by McGraw, the Friskes, and the estate of Elmer and Ulises Diaz were consolidated by the court in June of 2017. At the time, attorneys estimated that it would take six weeks to try the case, beginning in 2019.

In a statement prepared by its legal counsel, the City of Sitka confirms that the matter — for all three plaintiffs — has been settled.

The statement reads, in part “Sitka is pleased … that the Diaz and Friske families have settled their legal claims related to the August 2015 Kramer Avenue landslide. The City denies wrongdoing, and the settlement does not acknowledge wrongdoing. The City respects and cares about the families involved and their claims, and the settlement avoids lengthy, costly, and uncertain litigation for all parties and the community. The insurance carrier for the City funded its portion of the settlement.”

Reached for comment, municipal attorney Brian Hanson stated that there was no cash outlay from city in the settlement. Additionally “the assembly had to make no decision by policy” in the matter — hence, there was no public deliberation or vote.

The amount of the settlements has not been disclosed. Both McGraw and the Friskes remain the legal owners of their damaged properties. In her original lawsuit, Christine McGraw asked for an amount “believed to exceed $100,000 — the exact amount to be proven at trial.”

The settlements do not completely close the case, however. Defendant Sound Development filed a cross-claim against the home builder, McG Constructors (formerly McGraw’s Custom Construction), and against the City of Sitka itself, for subdividing the area known as the benchlands and offering it for sale.

The claim against McG Constructors has now been dropped, along with the individual claims, but Sound Development is continuing litigation against the city. In court documents Sound Development argued that the City of Sitka “represented the property to be ‘prime’ residential development property” at the time the 20 acres of land were sold.

The next hearing in the case is scheduled for 10 a.m. Friday, March 9, in Sitka Superior Court.

The Aspen Hotel was one of 100 properties with a value estimate contested by the owners. In the case of the hotel, the city decided to lower the value of the building but hold on the value of the land. (Emily Kwong/KCAW photo)

One hundred Sitkans contested their property values last month, but the vast majority of those cases were resolved with the city.

Assessor Wendy Lawrence and staff worked through the stack of appeals between March 14th and April 14th, the deadline to file. Most of filers said their appraisal came in too high.

Of the 100 appeals, Lawrence agreed to reduce the value of 60 properties. “Some were errors that we had made or some were overvalued. That just happens when you’re doing mass appraisal because you’re valuing with a model. And so ideally that model would reflect market value, but sometimes it doesn’t because of a data error,” Lawrence said.

Lawrence would verify the data, then look at sales numbers and anomalies in the land value or development. She’s working to bring all of Sitka’s property values up to date. Most property owners saw an increase of 8% on this year’s assessment.

The Sitka Assembly – acting as the Board of Equalization – holds hearings if the city and property owner can’t reach a compromise. They convened Tuesday night (05-01-17) with the expectation of hearing an appeal from the Aspen Hotel, but that got resolved before the meeting.

The owners of the hotel – Sitka Residencies LLC – thought both the value of land and the building was too high. In talks prior to the meeting, Lawrence lowered their building cost estimate to $1.2 million, but maintained the value of the land at $750,000. The owners accepted the “corrected assessment” and will take the issue up next year, when the hotel construction is complete.

In the same meeting, the Board of Equalization denied a hearing for Christine McGraw who filed her appeal after the April 14th deadline.

In March, when the city mailed out all property assessment, they sent one to McGraw’s last known address. McGraw says she never received it and that her address had changed. She submitted a late-file appeal on April 21st.

McGraw’s house at 410 Kramer Avenue was destroyed in a major landslide in 2015. The city assessed the land at $24,900, but in her appeal, McGraw said the property had no value in a high risk landslide zone. Her appeal describes the property as “unbuildable and unlivable” and that no banks would loan money against it for purchase.

As the property owner, Sitka General Code prohibited McGraw from speaking before the Board of Equalization. She was not present at their meeting.

Aaron Bean thought the Board should give her a chance to heard, while Tristan Guevin said the rules are the rules. Guevin commented, “Notices are sent out to everybody and it’s the responsibility of the property owner to update their address with the city. Valuations were noticed in the paper a number of times, on the city website, and the letter was sent to the property owner. So I just don’t see this rising to unusual circumstances.”

After some deliberation, the Assembly rejected her request 2-4, with Aaron Swanson and Aaron Bean voting in her favor.

McGraw appealed paying property taxes at last year’s Board of Equalization, on the same lot, but was also denied on the grounds there wasn’t enough evidence. She is currently suing Sound Development for property damage and the city is a third party defendant. The trial dates for that case have not been set.

This year, Sitka’s real property value went up a net $48 million. Of that, nearly 15 million was in new construction. Senior citizens and disabled veterans received exemptions amounting to $2 million. Property taxes are due August 31st.

The Kramer Avenue landslide on August 18th wiped out Christine McGraw’s house and much of the road. The road has since been cleared and the area temporary blocked off for further development. (Rachel Waldholz, KCAW)

A Sitka property wiped out by last year’s deadly landslide is still taxable, at least according to city code. The Sitka Assembly met Monday (5-2-16) as the Board of Equalization, to hear an appeal from the owner of a home on Kramer Avenue. The home was demolished in the August 18th landslide, killing three men working on the subdivision.

Downloadable audio.

The question at the center of the appeal is a confounding one: does land have value if a landslide went through it? During an appeal before the Board of Equalization, Chris McGraw said no. “Paying property taxes on a piece of property that you’ll never live on and never use is difficult for [Christine McGraw],” he told KCAW.

Christine was traveling during the appeal, so her ex-husband Chris represented her before the Board of Equalization.

Christine bought the land – Lot One in the North Woodbury Subdivision – for $110,000 in 2014 to build a home. It was partially complete when the landslide hit, killing two construction workers painting inside and the city’s building inspector. Speaking on Christine’s behalf, Chris McGraw said, “She lost her house and it was not insured and so it is a significant financial loss on her part.”

Here’s the tricky part about this case: Sitka does not have anything in code about how to adjust value after a natural disaster, which left Assessor Wendy Lawrence in a tough spot. She told that Assembly that in previous Sitka landslides, property values were seldom adjusted, and dropped 20 to 30% at most. The Kramer slide is a unique case. Lawrence said, “This was an unprecedented event. We didn’t have loss of life in the prior, I realize that. But I have to have a standard procedure to evaluate everyone.”

Without a legal compass in Sitka, Lawrence followed Juneau’s Mass Wasting Ordinance for landslides, which advises property values be reduced by 50%. The Assembly approved. And when the January 1, 2016 assessment rolled around, Lot 1’s new value was $52,700. The McGraws think it should be zero.

Chris McGraw told the Assembly, “In August you,  couldn’t find a buyer anywhere that would pay $5 for that property. So if what we’re going by is fair market value and you’re not going to be able to sell that property for years to come – 10, 20 – then it has no value.”

Saying that is one thing, but proving the land would flop on the market is a different story. In these appeals, the burden of proof is on the petitioner, not the assessor. And the McGraws didn’t bring any factual or written evidence that the land could not be sold, because Christine hasn’t put the property up for sale. Four parcels in the vicinity have sold since the landslide.

Basically, the argument Lot 1 would have no buyer – for even building a storage shed – needed more proof. Mayor Mim McConnell said, “If you have anything in writing, someone who looked at it and said ‘No, I’m not going to buy that,’ that would be some evidence that we could accept. You’re asking us to take your word for it, but we need to have some evidence.”

On those grounds, the land’s value was upheld at $52,700, which means Christine McGraw will have to pay $312.60 on property taxes.

As the Board of Equalization, the Assembly is bound by pretty strict legal standards. But Hunter lamented this is the way it has to be. “It’s a really awkward situation because we’re kind of stuck by code and the process we’ve created. It’s going to require a change to Sitka General Code in order to change this,” he said.

Hunter added that next year, when the Board meets, he hopes Christine McGraw will have more evidence. Chris McGraw said the same. After the meeting, he told KCAW, “You know my hope is for next year, now that they have the hazard assessment, they may reevaluate those parcels up there.”

The two other parcels damaged by the Kramer Avenue landslide belong to Andrew Friske and Scott McArthur. On January 1st, the city prohibited construction in the area, until an engineer does a hazard assessment. And those findings may be the key to truly valuing the land for what it’s worth.

The other case before the Board of Equalization proved that you can be the world’s second-largest airline and still get your taxes wrong.  DAL Global Services LLC, doing business as Delta Airlines, eventually withdrew its appeal after realizing that it was simply confused over who owned what.  

The problem arose when DAL Global Services filed their property tax return and listed a disabled passenger ramp as their only asset, with a depreciated value of $1,862.

When Sitka’s assessors inspected the Delta section of airport, they saw a lot more: kiosks and office equipment, signage and bag rollers, and a variety of computer technology. They said that passenger ramp was worth nearly twice that amount. The department force-filed for $89,700.

Delta planned to challenge that assessment, until they realized those assets – which were owned by DAL – had been accidentally overlooked by both companies. 

Paige Brown is Delta’s property tax manager, based in Atlanta. Brown told KCAW this kind of mix-up is rare and attributes it to the fact that Delta is brand new to Rocky Gutierrez airport. “We’re really sensitive to the communities we serve. They are the lifeblood – not only the employees, but also our passengers and we want to make sure we abide by everything. We want to be a good partner with the City and the Borough of Sitka.”

Assessor Wendy Lawrence e-mailed KCAW and said, “Delta is quite conscientious about working with us in the community and worked with us on getting things straightened out and set up so that this won’t happen next year.”

Now that it’s been ironed out, Brown said Delta and DAL will file separately in the future.