November 28, 2012

Few owners disputing tax value of Stanislaus homes as market stabilizes

Friday is the deadline to file property assessment appeals for the 2012-13 tax year, but relatively few landowners seem interested.

Several years ago, when Stanislaus County home values were in free-fall, homeowners flooded county officials with demands to have their property assessments — and thus their taxes — lowered.

Refusing to take no for an answer, more than 4,600 of them filed formal assessment appeals from 2007 through 2011. They lined up to argue their cases before the county's assessment appeals board, often waiting more than a year to get their chance.

Most of them ended up resolving their disputes through negotiations with the county assessor's staff. Only about 170 property owners held out for formal hearings, and fewer than 100 of them persuaded the appeals board to lower their assessments.

Those five years were wildly busy for Stanislaus' assessment staff, but the frenzy seems to be over.

Friday is the deadline to file property assessment appeals for the 2012-13 tax year, but relatively few landowners seem interested.

As of Wednesday, property owners for only 210 of the county's 175,000 parcels had filed assessment appeals. Compare that with 2007 when 1,540 appeals were demanded, mostly by upset homeowners.

There's a good reason for the drop: Assessment values already have been reduced for most Stanislaus properties.

"When people look at their assessments now, they know they're being treated fairly or they figure the assessment is close enough to their property value not to be worth their time to appeal," said David Cogdill Sr., who took over as Stanislaus assessor in 2011 after Doug Harms retired.

"Our goal is to make assessments as accurate as we can," said Cogdill, who praised his 55-member staff.

Accurate assessments were tough to make in 2007, as the market value of homes plummeted by $200 per day. Homes sold for an average $355,000 at the start of the year, but they were worth only about $281,000 by the end of 2007.

Home prices continued to plunge throughout 2008 as the real estate downturn began infecting commercial property values.

In response, county workers systematically have reviewed assessments for virtually all Stanislaus properties and reduced assessments on about 60 percent of them.

Additionally, all parcels that have changed ownership — such as the nearly 28,000 homes that have been lost to foreclosure since 2007 — have been reassessed.

"I think we've established a floor now," Cogdill said about real estate values, which started becoming stable in 2010.

Nowhere to go but up?

That floor may look more like the basement to tax collectors, who base property taxes on county assessments.

In 2007, when Harms announced that Stanislaus' total assessed property value was nearly $43 billion, it was a record. That theoretically was what all property in the county was worth on Jan. 1, 2007.

Assessment totals have dropped every year since.

This Jan. 1, according to Cogdill's assessment, the county's total property value was less than $34 billion. That's a $9 billion decline.

Of the 122,511 homes in Stanislaus, 83,060 — nearly 68 percent — have had their assessed values lowered, and they now must face what's known as Proposition 8 reviews every year.

Historically, such reviews have been rare.

Back in June 1978, California's landmark Proposition 13 limited property taxes and capped how much assessments could increase each year. That so-called Jarvis-Gann initiative stopped assessments from rising by more than 2 percent per year, except for when properties changed hands or made major upgrades.

It doesn't matter whether a home's market value increases 25 percent in one year (as Stanislaus homes did in 2005); assessments for property taxes can increase only 2 percent per year.

For those uncommon times when property values drop dramatically, Proposition 8 (approved by voters in November 1978) requires that assessments be lowered to reflect their current value. But that doesn't mean those Proposition 8 values will keep assessments or property taxes low for long.

Say you purchased a Modesto home 10 years ago for $200,000, which was typical at the time. That house may be worth only about $145,000 now, but Proposition 13 allowed its base assessment to increase by up to 2 percent per year.

If the real estate market had been normal during the past decade, that home's assessed value now would be about $243,800 after increasing 2 percent per year.

That home's owner may pay property taxes this year based on only a $145,000 assessment. If property values suddenly soar, however, that home's assessment could jump all the way back to $243,800 on Jan. 1, 2013.

Soaring property values would be a welcome change after a five-year market decline, but Cogdill expects some homeowners won't be happy about big jumps in assessments because that would mean higher property taxes.

The first installment of 2012-13 property taxes is due Dec. 10. Property tax bills were mailed several months ago, and they include details about each home's assessment.

To ask questions about property assessments, call the assessor's office at (209) 525-6461. For information about how to appeal an assessment by Friday's deadline, call (209) 525-6414.

Bee staff writer J.N. Sbranti can be reached at or (209) 578-2196.

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