County Property Tax Rolls Down $2.6 Billion in ’96

County Assessor Kenneth P. Hahn shaved $2.6 billion off the county’s property tax rolls as real estate prices continued their slide of the past several years. But officials voiced hope that the market was coming out of its tailspin.

In his assessment roll release this week, Hahn noted positive signs: more new construction, a slower drop in prices than in previous years and the first downturn in the rate of foreclosures in five years.

The 0.5% drop was the second time in two years that property tax rolls have declined, but economists were hopeful that brighter days were ahead.

“I was not pleased that we had another negative year,” Hahn said Friday, “but I am pleased and do look forward to the future because I really see a turnaround coming.”

“In terms of real estate values, it takes a while for these sort of things to heal themselves,” said Jack Kyser, chief economist of the Economic Development Corp. of Los Angeles County. “You have a lot of restructuring, a lot of hard economic times.”

Times were toughest last year, when Hahn lopped $10.2 billion from the property tax rolls. The 2.1% plunge was the worst in decades, and the first time in years that the rolls had declined. In 1994, the rolls had grown by an anemic 1.7% after years of averaging about 9% growth.

Hahn aide Gil Parisi blamed some of last year’s dip on the Northridge earthquake, which drained the rolls of $4.7 billion because of devaluation of damaged property. (All damage from the quake was factored into last year’s assessments, he said.) But much of the decline was attributed to a tough real estate market bottoming out and cutbacks in the aerospace industry.

This year’s gains are measured in small steps. One positive sign is that for the first time in five years, the percentage of transactions that were foreclosures declined--from 18% to 17%.

*

The assessor lost $10 billion this year because of the devaluation of real estate under Proposition 8, $1 billion less than in 1995, Parisi said. Although total real estate transactions were down this year--possibly due to interest rates and trepidation about playing such a tough market--the value of the transactions rose.

“It’s still a pretty low increment of change, but people are still holding on to property--and I can’t blame them,” Hahn said. “Where people have always gone out and said, ‘Well, let’s buy a house,’ it’s now cheaper to add on to an existing house.”

Hahn said this year’s decline is slightly less than his earlier assessments and should not cause any new budgetary pain.

*

In fact, the improvement should be a welcome relief for local officials, experts say. “All the cities around L.A. County have felt the impact” of the recent slide in the market, Kyser said. “This probably is going to be looked at by a lot of people in local government and bring smiles to their faces.”

Look for sudden, dramatic changes in the years to come, Kyser said. Developments like the refurbishment of the western end of Hollywood Boulevard can cause real estate values to abruptly tick upward, he said. Projects like the Alameda Corridor and planned downtown Los Angeles sports arena may also create unexpected boosts, he said.