News - Local

Thursday, Jul. 24, 2008

More than 12,000 county homes are assessed at lower values

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Owners of more than 12,000 homes county-wide will see their property taxes reduced - sometimes dramatically - or face no tax increase this year after the county Assessor's Office lowered valuations a total of about $732 million.

All of the properties affected were those bought since January 2005. The lowered tax valuations reflect reductions in market value caused by the real estate downturn.

San Luis Obispo County Assessor Tom Bordonaro's office has sent out more than 12,000 notices to property owners notifying them of the changes, which would take effect on the December 2008 and April 2009 tax bills.

While those 12,000 residential properties were reduced in value, the total tax roll for the county increased by the smallest margin since 1998, according to county figures.

The tax roll includes all property in the county subject to property taxes, and its valuation increased by 5.26 percent to $40.7 billions. That's more than twice what the tax roll was worth in 2000.

The rate of increase is down dramatically from recent years, however, when increases at or near 10 percent annually had been the norm, reflecting soaring real estate values.

Many values down, not all

Bordonaro said that houses in subdivisions were down by 18 percent on average, and custom homes were down by 8 to 10 percent. He said his staff did see a few extremes of 20 to 25 percent.

"Geographically, the North County and the South County were affected the most," he said. "Nipomo, Atascadero and Paso Robles, mainly the subdivisions."

The values of homes have dropped across the state because of a general decline in real estate linked to a high number of foreclosures and problems in the credit and lending markets.

But foreclosures and dropping prices have not been as dramatic in San Luis Obispo County as some other parts of California.

One in every 478 homes in San Luis Obispo County is in foreclosure, compared with one in every 192 statewide, according to RealtyTrac, a company that tracks housing data.

While the tax roll here is up 5.26 percent, it fluctuates across California, with inland areas that have seen strong growth in recent years suffering the most.

The 2,000 San Luis Obispo County homes that sold since early 2005 that held their value did not fall into any property type, Bordonaro said. He said their value seemed instead to be tied to the dates when they were sold.

Those sold in early 2005 seem to be valued correctly, reinforcing his belief that housing values have dropped to approximately the same levels as then.

But he said that properties sold in late 2007 and early 2008 also seemed to be priced correctly and have not dropped in value. Most of the homes whose property taxes were adjusted were sold from spring of 2005 through early 2007.

"We saw it (prices start to level out) starting in September and October of 2007," he said. "The market was pretty much dead at that point. It wasn't the type of home that mattered, as much as the time of the sale."

Tax roll facts

Bordonaro said that the total tax roll showed an increase because commercial and agricultural properties have continued to rise, offsetting drops in residential.

Proposition 13, which passed in 1978 and rolled back property values to 1975 levels, is also playing a role in keeping the overall tax roll up. It allows for only a 2 percent increase in assessed value annually, but if a property sells, its sale price becomes the new assessed valuation.

That's how some neighborhoods can end up with side-by-side comparable houses with drastically different values - one home valued at $75,000 because it has not sold since 1975; and one valued at $900,000 because it sold more recently.

"If one of those pre-1975 homes sells, the increase in assessed value is so huge that it makes up for dozens of homes that see a 10 to 20 percent decline in value," Bordonaro said.

There are 89,000 single-family-home properties in San Luis Obispo County. Such properties mostly include houses, but they also include land zoned for single-family homes.

San Luis Obispo was not the only county to review property taxes at homes sold since 2005. Properties statewide were reviewed because of the decline in real estate values, and because of the passage of Proposition 8.

Proposition 13 was passed in 1978 and lowered property assessments to 1975 levels. But in 1979, California voters approved Proposition 8, requiring assessors to monitor property values and temporarily lower assessments if values drop.

Budgetary effects

The good news about lower taxes for individual proerpty owners means bad news for people who run public agencies with budgets that rely on property taxes.

County Auditor-Controller Gere Sibbach said his office still is working to determine the amounts that different agencies will receive.

He said it could be the second week in August before he knows what school districts and cities would receive from property tax revenue.

Most of the school districts in the county receive property tax revenue, but also rely heavily on the state budget, which is also in flux because the Legislature has not adopted a spending plan for fiscal year 2008-2009, which started July 1.

Three local school districts - San Luis Coastal, Cayucos Elementary and Coast Union in Cambria - are all "basic aid" districts that rely primarily on property taxes.

Sibbach said that assessments have not declined in those districts as much as in the county.

He said the cities of Paso Robles and Atascadero might face budgetary problems becuase of hte reduction in property tax valuations.

County Administrative Officer David Edge said the county has to absorb any proeprty tax defaults at least until property is sold, so he expects the increase in property taxes to the county budget would be closer to 3 percent for the year.

"The challenge is that for the past decade we have been used to double-digit annual increases so the whole budget balancing act is made more challenging as the revenue side doesn't keep pace with cost-of-living adjustments," Edge said.