County Catching Up on Property Changes : Some Homeowners Shocked by Supplemental Tax Bills

Irvine homeowner Debbie Carden was unpleasantly surprised this week when she opened her mailbox to discover a bill from the Orange County tax assessor for close to $800 in additional property taxes.

“Anytime you get a bill you weren’t expecting, it causes problems,” Carden said. “And you have to pay it before Christmas, so you have to rearrange things.”

To handle the deluge of questions and complaints from angry homeowners, the Orange County tax assessor’s office is planning to hire four additional people to staff a special phone bank.

Although many homeowners may be startled by their mail this week, it’s no longer unusual for the county to send out supplemental property tax bills about this time of the year.

Progress by County

For the past three years, the county has slowly but surely been catching up with homeowners who owe additional property taxes because they purchased their home in the middle of the year or made substantial mid-year improvements to their homes that were not recorded until the regular March 1 assessment.

Last week, 17,819 supplemental property tax bills were mailed to Orange County homeowners. This batch of supplemental assessments is expected to bring in revenues totaling more than $6.8 million, said Chuck Krueger, manager of the property tax unit in the county’s auditor-controller office.

Since July, 1983, the state has required that property be reassessed immediately upon completion of a sale or improvements, said Webster J. Guillory, a manager in the Orange County assessor’s office.

Formerly, taxes were based on what a property was worth on March 1 of each year, Guillory said. If a property was sold or new construction finished after that date, the property was not reassessed at the higher value until March 1 of the following year.

Assessment Explained

The new supplemental tax assessment now “covers the changes in property value for the time period when you received your change of ownership or completed new construction” up to the regular March 1 assessment date, Guillory said.

In other words, a supplemental bill is the property tax for the interim period between the date of a property sale or completion of building improvements and the time that the regular assessment takes place every March 1.

Just so there are no surprises for homeowners, Guillory said, everyone facing a supplemental tax increase is notified by letter at least three months before the extra property taxes are levied.

The letter states: “The law now directs that supplemental assessments be made for change in ownership and new construction events as they occur rather than waiting until March 1.”

But several homeowners said Wednesday that they did not receive any prior notice of the supplemental tax bill before it arrived last week. “Nobody here (in the neighborhood) remembers getting a notice informing them that they will have to pay more,” Carden said.

Dottie Hull, whose mail contained a $1,400 supplemental tax bill for her three-bedroom Irvine home, said: “I was in shock. We sure never saw anything in the paper or on TV that there would be a supplemental increase. When we bought the house, there was nothing said about increasing taxes.”

However, the supplemental property tax is “not something the local assessors pulled out of the woodwork,” Guillory said. Instead, it is a statewide effort by county governments to “pick up the period of time that was dead time, when you escaped assessment.”

Under Proposition 13, the tax reform measure passed by California voters in 1978, property tax assessments are limited to 1% of full market value at the time of sale or when new improvements have increased that value. Previously, property taxes were reassessed only once a year, on March 1. And a home purchased after March 1 was not taxed at the higher sale value until the following March.

Year-Round Updating

But in July, 1983, that so-called “grace period” was eliminated as part of an agreement between Gov. George Deukmejian and Democratic leaders in the Legislature to raise $1 billion in new taxes. Now, county tax assessors throughout the state are required to update the tax rolls continually.

For those who received supplemental tax bills mailed last week, the first installment is due Dec. 10, Krueger said. The second is due April 10.

Guillory said the next batch of supplemental bills, which will be mailed to about 100,000 Orange County homeowners, will be sent in November.

Then, he said, the county again will have to hire additional staff to answer the questions and complaints that inevitably pour in.