Bay Area property assessments hit $1.6 trillion after 7.4% rise
Thanks to new construction, rising real estate prices and higher inflation, the assessed value of Bay Area real and personal property rose to about $1.6 trillion for 2017-18, up by $110 billion, or 7.4 percent, from the year before.
The three main things that add to a county’s roll are new construction (which is generally added at market value), reassessments triggered by property sales and inflation.
Under Proposition 13, real property (residential and commercial) is generally reassessed when it changes hands. In between changes of ownership, the assessed value can go up by an inflation factor not to exceed 2 percent a year, and by the value of major improvements or additions. When real estate prices are soaring, counties can reap big tax gains when property is transferred.
The inflation factor this year was 2 percent, up from 1.525 percent last year, so that was an automatic gain for all counties.
Personal property is not covered by Prop. 13. It is assessed at market value each year. If a business installs new equipment, it adds to the county’s roll, but the contribution from existing equipment falls each year as it depreciates.
What contributes most to the roll varies depending on the year and the county.
In Santa Clara County, ownership changes accounted for 47 percent of this year’s $31 billion roll increase. New construction and inflation each accounted for about 19 percent, and business property contributed 9.4 percent.
The completion of Apple’s new spaceship campus in Cupertino was the single biggest contributor. Its assessed value grew by $975 million this year to $2.7 billion. “And that’s just the real property,” Santa Clara County Assessor Larry Stone said. The total assessed value of all Apple real and business property is $6.7 billion, “No. 1 in the county,” he added.
In San Mateo County, ownership changes accounted for more than half of the increase, but the single biggest contributor was a state-mandated change in the way aircraft are assessed. The new method increased the assessed value of aircraft at San Francisco International Airport by about $800 million, Assessor Mark Church said.
In Marin County, the inflation bump was the biggest contributor, Assessor Richard Benson said.
San Francisco had the biggest percentage jump, 10.8 percent, but the assessor’s office has not yet done the analysis to determine what drove the increase.
Although all nine Bay Area counties posted robust gains, San Francisco and San Mateo were the only ones that had a larger percentage increase this year than last, and San Mateo’s was only a smidge higher.
Marin had the lowest percentage increase of any Bay Area county: 5.3 percent this year compared with a 6.3 percent gain the previous year.
In Napa County, the roll increased by $2.4 billion, or 6.9 percent, down from a 7.1 percent increase the previous year. “This is the largest dollar increase ever, but not the biggest percentage increase, because our base keeps growing,” Napa County Assessor John Tuteur said.
Assessors cited two main reasons why their growth rate slowed a bit.
One is that fewer properties changed hands — something real estate agents have been complaining about the past few years.
In Marin County, the number of single-family homes and condos sold or transferred has fallen in each of the past four years — to 2,947 in 2016 from 3,452 in 2013.
In Alameda County, only 20,961 one- to four-unit residential properties were sold or transferred in 2016, down from 25,403 in 2012.
The other reason rolls grew a little more slowly this year is that assessors have been reversing fewer temporary reductions.
When a property’s market value falls below its assessed value, California assessors can lower its assessed value — but only temporarily. When the market value recovers, assessors can restore the assessed value — eventually to where it would have been had it never received the temporary reduction. That can lead to annual increases that far exceed 2 percent, surprising homeowners who didn’t realize their property tax break was not permanent.
During the recession, assessors granted loads of temporary reductions, which diminished their rolls. As they began reversing these reductions, their rolls grew, but the boost has been getting smaller as fewer properties remain in reduced status.
Contra Costa County had about 30,000 properties in reduced status this year, compared with 45,000 last year and almost 190,000 during the worst of the recession, Assessor Gus Kramer said.
In Solano County, only 14,430 parcels remain in reduced status, compared with 78,000 in 2012.
Most property owners will get their 2017-18 assessed values with their tax bill in October, although a few counties send out notices in June or July. Those who want to dispute their assessment should check with their county assessor to determine the process and deadline.
Source: San Francisco Chronicle, July 8, 2017 2:48pm
Author: Kathleen Pender
Image Credit: Justin Sullivan/ Getty Images
Read More: http://www.sfchronicle.com/business/networth/article/Bay-Area-property-assessments-hit-1-6-trillion-11274054.php