Uproar over property tax hike
An estimated 100 to 200 Nevada County property owners have called the county assessor to challenge a 2 percent increase on their tax bills that comes at a time when home values are falling.
The owners are asking for a reassessment of their property tax rate, arguing their taxes should go down or stay flat because of the drop in home values – but definitely not rise. In many cases, the property owners bought their house several years ago when the market was higher, and they can no longer sell at the same price, county Assessor Dale Flippin said.
Next month, Flippin will address the issue during a presentation at the Nov. 6 Board of Supervisors meeting.
People who already are struggling to keep up with mortgage payments often get a shock when they find a higher property tax bill as well. Knowing their home often is worth less money than it was several years ago only adds to the misery.
The current property tax bill, landing on doorsteps now, comes right before the holidays.
Some residents also complain the county didn’t warn them of the increase, and they were caught off guard.
“Financially, I’m more stressed,” said Alta Sierra resident Virginia Moran, who was surprised to see the increase to her taxes last year. “It’s a bit more of a burden to me.”
The increase was set in place in 1978, when California voters approved Proposition 13 as a “safety valve” to cap property taxes at a maximum of 2 percent each year based on the original assessment made when a person first acquired their property.
“They set a threshold so people could stay in their houses,” said Skip Lusk of the Nevada County Association of Realtors.
Starting Jan. 1, the assessor’s office will look more closely at the real estate market, the large number of homes that aren’t selling and the drop in home value.
“We certainly are aware of the changes in the market,” Flippin said.
The county is required by law to implement an increase but can look at each individual house and temporarily withhold an increase if the value of the home has dropped since the owner purchased it, he added. The bills going out now reflect property values as of January 2007.
In the 1990s, the real estate market dropped sharply, and the county adjusted tax rates until the market recovered, Lusk recalled.
Flippin doesn’t believe the county will hit rock bottom like it did in 1993, when property tax revenue had negative growth.
“I just don’t think the economy, job market and interest rates will be there again,” he said.
Nevada County has about 57,000 assessed parcels, according to Flippin.
For September, the number of homes on the market in western Nevada County dropped to 1,134 from 1,416, according to the Nevada County Association of Realtors. Some of the drop stemmed from exasperated home sellers who gave up and took their homes off the market, he said.
Although fewer homes are up for sale compared with the same month last year, the market still is saturated compared with the 400 or so homes on the market four years ago, Lusk said.
This year the average days that homes were on the market grew from 105 in September 2006 to 128 for last month.
The median sale price of homes on the market in western Nevada County fell to $439,000 last month from $455,000 for the same month a year ago, the Nevada County Realtors Association said.
The county remains optimistic that it can weather the fallout from falling property tax revenue – although the exact drop-off is hard to predict.
For the 2007-2008 tax year, the county anticipates receiving $38.1 million in property taxes, representing 86 percent of the county’s discretionary revenue. As much as 66 percent of discretionary revenue is used for public safety, including money for sheriff and jail expenses, the district attorney’s office and other expenses.
Most of the property in the county is still assessed at well below market value, according to Supervisor John Spencer, because many people bought their homes a long time ago.
In 2005, county supervisors began setting money above the projected 6 to 7 percent growth rate aside in the “general purpose reserve” in case the market fell flat, said Joe Christoffel, deputy county executive officer.
“We could weather roughly 10 percent of a downturn,” Christoffel said.
For more information, visit the county assessor’s Web page at http://www.mynevadacounty.com/ assessor/
To contact Staff Writer Laura Brown, e-mail lbrown@ theunion.com or call 477-4231.
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