Tax to Rise for Some Owners Shielded by 1978 Measure

Some of the 70,000 Ventura County property owners given tax breaks in the wake of Southern California’s real estate crash a few years ago can expect a surprise to hit them square in the pocketbooks:

Higher property taxes.

According to the county assessor’s office, 30% to 40% of the property owners who won tax breaks in the years following the regionwide real estate meltdown can count on a far heftier bill when assessments are mailed in July.

“There are two ways to look at this,” County Assessor Dan Goodwin said. “Those property owners who lost equity in the mid-1990s have regained it, but the bad news is that the assessor has taken notice.”

Total property appreciation in Ventura County is estimated to be increasing by about 4% this year--from $48 billion to $50 billion.

Most of that increase has been concentrated in the eastern part of the county, where residential and commercial real estate prices have marched steadily upward since 1996.

The residential real estate market is in fact so strong now that the median home price is just a few thousand dollars shy of its record of $241,000 set in 1989.

All across Southern California, property values are rising as the real estate market continues to rebound from the near-devastating plunge in the early 1990s.

After the market collapse, those owners most affected were shielded from high tax rates by Proposition 8--a 1978 measure that allowed owners to apply for a tax cut if their property value fell below its base price.

Now that property values have increased to near- and above-normal levels in some areas, those owners will have to pay taxes based on the new valuation, which in some cases could increase their taxes by more than 10% this year.

Of the county’s 235,000 property owners, about 70,000 received shelter under the proposition. That number is expected to decrease by as much as 30,000 after assessors complete their latest round of property valuations.

That is probably not going to sit well with owners, some of whom have enjoyed a relatively low property tax rate for the past five years.

“Some people are going to be pretty angry when they get their tax bill,” said John Karevoll, an analyst at the real estate research firm Acxiom / DataQuick in La Jolla. “But this really shouldn’t come as a surprise to anyone. . . . Values in Ventura County have pretty much regained everything they lost.”

Tax rates for property owners who did not seek protection under Proposition 8 will also increase this year, but by no more than 2%. That cap, which was set in 1978 with the passage of Proposition 13, keeps property tax hikes from exceeding that rate.

This latest round of new valuations could continue for several years if the momentum in the county’s real estate market carries, as many analysts and economists believe that it will.

According to a recent report by Chicago Title Co. and UC Santa Barbara’s Economic Forecast Project, sales and price increases for commercial and residential real estate are on a pace to beat last year’s frenzied market.

“There is literally nothing on the horizon that makes me think the market is going to soften,” Karevoll said. “As long as that happens, taxes are going to keep going up.”