As home sales boom, at least for now, the county’s property tax roll is hitting new heights. Photo/L.A. Times
As Los Angeles’ housing market recovery moves from anemic to heated, county coffers are reaping the benefits of a record-setting, nearly $1.130 trillion property tax roll—more than $50 billion bigger than last year’s.
But thousands of homeowners whose taxes went down when the assessed value of their properties plunged during the recession are catching an upward wave, too. That means higher tax bills for 196,200 property owners, who’ll be forking over an average of $820 more in property taxes this year.
The rise in values isn’t universal: some 121,800 properties that declined in assessed value are staying at the same level this year, while 50,600 properties are experiencing further reductions.
But overall, the trend is positive, with this year’s 4.66% increase in the county tax rolls representing a marked improvement from the 1.49% and 2.24% increases in the previous two years. The upswing reflects a hot market for real estate in many parts of the county, with once dismal home prices rebounding in a big way.
“Strength in the residential real estate market was the largest single factor for the increase in roll value,” Chief Deputy Assessor Santos Kreimann said in a statement.
Assistant Assessor George Renkei added: “In addition to closing the roll at a new record level, we are proud of the accuracy of this year’s forecast as well as the other substantial improvements that were developed and implemented over the past twelve months.”
Even as “SOLD!” increasingly replaces “Bank-owned” or “Foreclosure” on local real estate signs, there are limits on how much a rising market can help the county’s bottom line. Under Prop. 13, property tax increases are tied to the Consumer Price Index and capped at 2%. Most of the time, it’s an uphill progression that allows the county’s tax roll to grow even when individual home prices are in the doldrums. But it’s a testament to how bad things were during the recession that in 2010, the CPI entered negative territory, posing interesting questions for the Assessor’s Office. It had to determine whether, by the law, property assessments would stay level or reflect the CPI’s dip. After consulting with the state Board of Equalization, the assessor granted a .237% reduction to all the eligible properties in the county. Since then, the adjustments have been in positive territory: less than 1% in 2011, 2% in 2012, and 2% again this year.
Property taxes represent a major part of the county’s budget, and the 4.66% increase that pushed the roll to its highest level ever this year translates to an estimated $180 million more in the county’s general fund.
Such increases are welcome news for the county’s budget—but small potatoes compared to the potential infusion that the county will realize when thousands of properties that haven’t changed hands in decades eventually are sold and their values adjusted to current market levels.
Prop. 13 rolled back property assessments to 1975-76 levels until a property is sold, when the new value is allowed to adjust upward. While the vast majority of L.A. properties have changed hands at least once since 1981, 362,710 of them haven’t, representing 19% of the parcels in the county, according to an analysis by the county’s Chief Executive Office. The “stored value” in those properties represents a potential multimillion dollar infusion for the county’s general fund when they’re sold in the years to come.
Posted 7/25/13
