Values in Silicon Valley Face Unavoidable Slowing Despite Growth, Says Assessor
In Larry Stone’s annual report from the Santa Clara County Assessor, property values as a whole grew over 7% over 2016 in 2017- but he does not expect the growth to continue due to key indicators.
In the past, new office spaces saw up to 80% leased before construction even started. In 2017, this was nearly cut in half to 48%. Most of the tenants used to be startups. Today, large companies like NVIDIA, FaceBook, and Google, have bought much of the land and new buildings. Due to Prop 13 loopholes and complex ownership structures of large commercial entities that cloud the change of ownerships, over 20% of commercial properties are taxed based on assessments from before 1998.
So, who bears the tax burden? Homeowners. 65% of the county’s tax burdens to be specific. This was to be expected since the creator of Prop. 13 was the Los Angeles Apartment Association lobbyist, Howard Jarvis.
According to Stone, all of this has been especially unfair to new home buyers and reform is essential. Hypothetically, two homeowners who live next to each other in identical homes with identical values could be paying massively different amounts in property taxes. One could be paying tax based on assessments from decades ago, while the other from an assessment from last week.
Public interest groups find this exceedingly troubling, to the point of being “un-American,” because these two households are being provided with the exact same public services (police, fire departments, roads, etc.)… so why should they be charged differently?
One solution could be requiring commercial owners to pay taxes based on current assessments while letting homeowners take advantage of assessments from their original purchase.
When experts like Larry Stone predict an inevitable down-turn, it emphasizes the importance of reviewing and appealing assessments that may be excessive.
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