Condo Owners Hurt by Slump Seek Tax Cut

In the late 1970s, it was condominium buying fever. Then the market crashed, and now it’s condominium reassessment fever.

In the wake of a sharp drop in condominium values, especially in the San Fernando Valley and on the Westside, condo owners are queuing up to get their property taxes reduced.

In response to their requests, the Los Angeles County assessor’s office is checking the resale values of more than 26,000 condominium units, including 4,200 in the Valley.

After processing the first several hundred requests, officials predicted that assessments will be reduced on 50% to 60% of the 26,200 units.

Thus far, assessment reductions have ranged from 1% to 15%, said James Hurst, senior appraiser in the assessor’s Van Nuys office.

Lower Tax Bills

On a $150,000 condominium, a 10% reduction in assessed value would reduce the owner’s annual tax bill by $150.

It’s no substitute for lost equity, but the prospect of lowered property taxes seems likely to take some of the sting out of lost property value.

Proposition 13, approved by California voters in 1978, fixed property taxes at 1% of 1978 market value, with annual increases limited to 2%. New or resold properties are taxed at 1% of their sales price.

“The Proposition 13 rates are ceilings, not floors,” said County Assessor Alexander H. Pope. “Nothing says the assessed value has to increase 2% each year or that the assessment cannot go down when there has been a decline in value.”

Pope, who in June sent letters to all condominium associations in the county suggesting that they apply for reappraisal if property values have declined, said he hoped that “expectations are not raised too high by this process.”

“There seems to be a tendency on behalf of some to think of themselves as having lost money on their condominiums,” Pope added, “when in fact all that really has happened in many cases is that they have not kept up with inflation.”

He said that the pending reappraisals will have only a “minimal” effect on county revenues. Property owners who responded to Pope’s letter represent 18% of the 145,000 condominiums in the county.

The assessor said the most likely candidates for reductions are people who bought condominiums between 1980 and 1982, “when the market peaked and after which values went down pretty rapidly.”

Pope said that the decline in values “usually gets the attention of owners when someone who paid $150,000 during the peak period notices that an identical condominium sold recently for $140,000.”

Boom Began in 1975

Building industry officials said the condominium building boom began in 1975, started tapering off in 1980 and dropped rapidly in 1982--a victim of high interest rates and a declining economy.

Hardest hit by the downturn, said a spokesman for the California Building Industry Assn., were apartment complexes converted to condominiums. Many converted units lacked the amenities of newly constructed condominiums and “couldn’t compete when the market became tight,” he said.

Pope said that the response to his letter inviting reassessment requests confirms that the decline in values was largely limited to the Valley and the Westside. Only 2,200 of the units under review are in other areas of the county.

In the Valley, units under review are concentrated in the prosperous south Valley communities, which are under the jurisdiction of the county assessor’s Van Nuys office.

The Chatsworth office, which covers the part of the Valley west of Balboa Boulevard, has fewer than 200 units under review, said Mark Ryavec, a spokesman for the assessor’s office.

Hurst said that the units under review in the Van Nuys office are in 116 complexes.

“In almost all cases,” he said, “when we get a request from one condominium owner for a reassessment, we will check the entire complex.”

Hurst said assessors almost never visit the complexes, but make their decisions based on computerized records of recent sale prices.

He said the review process should be completed in about two months.

Those dissatisfied with the assessor’s decision have the option of turning to the Assessment Appeals Board, which is appointed by county supervisors and is independent of the assessor’s office.

A spokeswoman at the board’s office said there has as yet been no surge of appeals from condominium owners and that the number of appeals filed annually has remained at 10,000 for several years.