S.D. County Adopts Break for Seniors on Property Taxes

Expanding a major property-tax break for senior citizens, the San Diego County Board of Supervisors on Tuesday approved a program that will enable seniors to pay lower than normal property taxes when they move across county lines.

By a unanimous vote, the supervisors adopted the provisions of Proposition 90, a measure approved by statewide voters last November that makes it possible for people 55 and older to transfer their lower, pre-Proposition 13 property values to another county if the home they buy costs less than the one they sell.

By the board’s action Tuesday, San Diego joined Orange, San Mateo and Kern counties in adopting Proposition 90. Five other counties--Monterey, Sacramento, Santa Cruz, Sonoma and Tulare--have voted not to accept the out-of-county property-tax transfers permitted by the measure.

Hailed by supporters as a boon to older homeowners and young home buyers alike, Proposition 90 broadens the impact of 1986’s Proposition 60, which permitted seniors to transfer their lower assessed property values from one house to another so long as both were within the same county.

Aimed at ‘Empty Nesters’

Aimed primarily at “empty nesters”--older couples living in houses bigger than they need after their grown children move out--the measure is designed to offer a financial incentive to seniors to move to smaller replacement or retirement homes. That, in turn, will make their existing large homes available to young buyers with growing families, thereby easing the need for new housing, proponents argue.

Current tax laws, however, discourage some older homeowners from leaving their current residences, even if they would prefer to live in a smaller home.

Under Proposition 13, the landmark tax-cutting initiative approved in 1978, property assessments generally were frozen at mid-1970s levels. However, property values are reassessed and higher property taxes are imposed whenever property is purchased or changes ownership.

Therefore, seniors who have been living in their current homes since the 1970s face the likelihood of having to pay higher property taxes by moving elsewhere, even if they move to smaller homes. Propositions 90 and 60, however, eliminated that financial concern, assuming that the seniors’ new homes are not more expensive than their existing ones.

“It’s a freeing thing for all of us so we don’t feel trapped in the homes we’ve lived in for many years,” Supervisor John MacDonald said.

Gave Counties Option

Because some local governments feared that the transfer of the lower assessment values could reduce property-tax revenues, Proposition 90 gave individual counties the option of accepting or declining transfers from other counties.

Based on current projections, however, County Assessor Greg Smith predicted during Tuesday’s debate that San Diego’s property-tax revenues will do no worse than remain about the same, and, at best, could increase under Proposition 90.

Those estimates are based on how the county’s property tax rolls have been affected by Proposition 60 over the past two years. During that time, the 650 Proposition 60 claims processed by the assessor’s office have increased the county’s property tax revenues by $81 million, Smith said.

Taking Advantage of Prop. 90

In a report to the supervisors, county administrators also predicted that San Diego’s relatively high property values will cause more people eligible to take advantage of Proposition 90 to move out of San Diego County than to move here. Under that scenario, any income lost as a result of seniors’ transfer of lower property rates to San Diego from elsewhere would be offset by the higher reassessments made possible by the sale of seniors’ local homes.

“I think it will just about be a wash,” Smith said. “Because of relative property values, people from a lot of smaller counties aren’t going to be able to afford to move here. About the only areas that could hurt us are ones like Orange County and San Mateo County.”

With real estate brokers telling the board that numerous potential sales and escrows hinged on its action, the supervisors designated Tuesday’s vote as an urgency ordinance, allowing it to take effect immediately. The realtors had encouraged the board to make the ordinance retroactive to last November’s election, but County Counsel Lloyd Harmon Jr.’s office determined that the measure could not take effect until after the board approved it.