Rate of growth slows throughout the county
Although Morgan Hill once again saw positive growth in property values in the 2004-05 assessment report, the rate of growth continues to slow. However, Morgan Hill and Gilroy were still among the highest growing cities in Santa Clara County.
In the annual report comparing 2004 with 2003 assessment rolls, released by county Assessor Larry Stone, the two South Valley cities were in the top five of the fastest growing cities in the county; only Los Altos Hills and Los Altos grew faster.
Gilroy came in third with a 7.28 percent change, compared to a 7.16 percent change in Morgan Hill. Los Altos Hills and Los Altos grew by 8.31 percent and 7.58 percent, respectively. Unincorporated areas – such as San Martin – grew at the fifth highest rate, 6.72 percent – followed by Los Gatos at 6.47 percent.
In the previous assessment, for 2002, released last year, Morgan Hill had the highest property growth in the county at 12.27 percent.
Despite a slower growth from the previous year, Morgan Hill still beat out the “golden triangle” made up of the cities of Mountain View, Sunnyvale, Santa Clara and Milpitas, which saw 5 percent decline in assessed valuation.
The report suggests that cities with fewer businesses and more residential properties did better because the business economy is depressed, while homes are still selling at or near market rate.
Morgan Hill’s assessed valuation increased from 4.49 to 4.81, an increase of 7.16 percent.
The city limits of Morgan Hill contain 10,081 parcels at a land value of $1.79 billion, an improvement value of $2.85 billion and a total value of $4.64 billion. Gilroy has 11,483 parcels with a total value of $4.40 billion. Land and improvement values were lower in Gilroy – $1.75 billion in land value and $4.40 billion in improvement values.
The assessment roll accounts for the value of all residential and commercial property as of Jan. 1. Property taxes are paid according to assessed value. Public education received more than half of the county’s total property tax revenue allocation this year. Redevelopment agencies and the county each received 12 percent, while cities and community colleges each received 9 percent. The remaining 6 percent went to special districts.
As Morgan Hill’s property value growth declines, taxes paid to the Redevelopment Agency and the city will arrive at the city treasury at a slower rate.
Jack Dilles, the city’s finance director, said Monday that, while the rate of increase will decline, the city is still getting money.
“It just takes longer to reach the ($147 million) cap,” Dilles said. “The RDA is not threatened in any way. We will still have money for our projects.”
RDA funds have paid for the community and aquatics centers and are scheduled to pay for an indoor recreation center and much of a new library.
A more serious hit to the RDA, Dilles said, is the $2 million the state is talking about taking away from Morgan Hill’s RDA this year and next.
Assessor Stone sketched the change in serious terms.
“In just four years, we’ve gone from double-digit assessment growth, to barely any at all,” Stone said.
However, the City of Morgan Hill’s rate of growth was 9.17 percent and the Redevelopment Agency’s was 4.86 percent, better than expected, Dilles said.
“We budgeted 5 percent,” he said. “The RDA budget almost made it but the city budget did really well.”
Gilroy’s rate of growth continues to hover around its typical 5 percent, growing by 7.28 percent in 2004.
The assessment roll, taken Jan. 1, reflects the local economy during 2003. Included in the assessment are office buildings, shopping centers, industrial property and research and development campuses. Business property – such as machinery, equipment, computers and fixtures – is also a factor.
Morgan Hill business lost value during 2003 because of the failure of Kmart and other retail stores but should pick up for 2004 because Home Depot opened and a competitor, Johnson Lumber/Ace Hardware, has expanded.
Gilroy’s numbers are likely bolstered by the two retail centers open east of U.S. 101 on Pacheco Pass Highway.
The assessment figures came in two parts: secured and unsecured.
“A secured asset would be a building,” Dilles said, while unsecured assets tend to be furnishings and computers.
“If a company goes out of business,” he said, “the building is still there (on the tax rolls) but computers and furniture can just disappear (as assets).”
The Morgan Hill School District operating budget will not be affected by swings in the property taxes, except that it does affect bonds, which pay for new and improved schools.
Bonds are paid for by expected increases in property taxes. If the value of the land changes, then the amount of taxes they yield will change as well.
When it comes to day-to-day operations, there is little effect. Schools receive operating funds based on pupil attendance. That money comes from taxes, but the state covers short falls.
Despite the decline in values, the market is still going strong, said Jennifer Galido, sales and business consultant at First American Title Company.
Since January, home prices in Santa Clara County have increased by nearly 20 percent to $672,000 for the month of July. Listings also increased to 161, an all time high, said Galido.
Home sales are averaging 98 percent of their asking price.
“That means, sellers are getting at their list price, just over or right below,” Galido said.
As for the future of property values, Stone said it’s difficult to make any sure predictions, but residents would be wise to look north.
“When things happen in Silicon Valley, they happen very quickly and usually affect the entire county,” Stone said. “Gilroy and Morgan Hill folks should look at what is happening in North County, and they’ll get an idea of what might happen in their areas.”
Galido said real-estate in a seller’s market, meaning inventory is selling of relatively quickly. She did say, however, the market is starting to settle down, and she is seeing homes on the market for 90 days, the average time a home is on the market.
Details: www.scc-assessor.org
Staff Writer Katie Niekerk contributed to this report. Cheeto Barrera is an intern at the Morgan Hill Times, he can be reached at cb******@*************es.com
