Almost 90,000 Santa Clara County property owners will soon
receive a notice in the mail letting them know their assessed
property values are lower than they were last year, and in most
cases a lot lower.
Almost 90,000 Santa Clara County property owners will soon receive a notice in the mail letting them know their assessed property values are lower than they were last year, and in most cases a lot lower. Homeowners will likely see lower tax bills, but their joy will be local governments’ pain – particularly in South County, where property values have seen the sharpest decline.
About 25 percent of residential properties will receive a lower assessed value, losing an average of $173,000 each, County Assessor Larry Stone said.
Out of about 200,000 properties chosen for re-appraisal by the assessor’s staff, about 89,000 residential and 600 commercial properties have fallen in value since their last purchase. The re-evaluations will lop off about $17.4 billion from last year’s $303 billion tax roll, dealing a difficult blow to cities and school districts who depend on value-based property tax revenues to deliver services.
“That’s serious,” Stone said. “It’s very stressful for property owners. In a lot of cases, the largest single asset that people own is their home. These are not good times by any means.”
In February, the assessor decided to review all properties in the county that had been purchased since Jan. 1, 2000. Data about those transactions including recent sale prices, surrounding properties, and the unique market activity within each geographic area were plugged into a computer-assisted model that helped county appraisers determine which properties have declined in value and by how much, Stone said.
Because a high proportion of property sales took place in southern Santa Clara County, where an abundance of new homes have been built in the last 10 years, South County will be hit the hardest by the reassessments, he said.
In Morgan Hill, property values could fall by about 3 percent once the tax roll is closed June 30. As a result, city staff are projecting $6.9 million in property tax revenue for 2009-10 – a 12 percent drop from what they expected last year.
“Most of that decrease is due to the reduction in valuations,” said city interim Director of Finance Kevin Ryper. “Part of it is due to development coming to a halt.”
Morgan Hill school district officials did not return phone calls by press time.
Santa Clara County’s recommended budget for 2009-10 projects a countywide decline in property values of 1.12 percent, and $20 million less property tax revenue to fund county programs and services. Total projected county property tax revenues for the year are about $624 million.
In Gilroy, property values may decline by up to 10 percent. The city’s 13,000 parcels are currently worth a total of $5.9 billion – about $600 million less than their value last year, according to Gilroy Revenue Officer Irma Navarro.
As a result, the city has had to revise its property tax revenue projections for the 2009-10 fiscal year downward by about $1 million to $5.1 million, Navarro said.
The property tax revenue projection for 2010-11 looks even more dire, as Gilroy is projecting $4.9 million in property taxes – a $1.5 million drop.
The 2010 tax roll could be even worse as commercial, industrial and retail property value fluctuations typically lag behind those of residential parcels, and this year’s re-assessment accounts for few commercial value changes, Stone said.
Also, this year’s re-assessments do not account for any deterioration in the market in the last six months, as the assessments are based on values as of the Jan. 1 valuation date, Stone said.
Last year, the assessor’s office conducted a similar re-assessment but on a smaller scale. Stone said his office re-assessed the values of about 45,000 properties, which lost a total of $5.3 billion for an average decline of about $130,000.
Most of those properties were re-assessed again this year and are included in the $17.4 billion drop.
Individual property tax bills for properties that were assessed lower than their sale price will likely be in mailboxes by September. Homeowners will see an average tax decrease of at least $1,730, assuming a minimum tax rate of 1 percent – though most properties are taxed more than that.
About half the property taxes collected in counties go to the state, Stone said. Of the remaining revenues, school districts see about 45 percent, the county receives 18 percent, cities receive a cumulative 14 percent, redevelopment agencies receive 10 percent, community colleges get 7 percent and special districts such as the Santa Clara Valley Water District see 6 percent, according to the 2007 assessor’s annual report.
All property owners will receive a notice of their assessed property value before any bills are sent out, Stone said. The assessor’s office will begin mailing those notices June 26. Property owners who disagree with the assessment have until the middle of August to appeal.
