Presentation on theme: "PROPERTY TAX REVENUE GOT YOU DOWN? CSMFO Conference Los Angeles – February 18, 2009 The HdL Companies 909.861.4335 Sales Tax Property Tax Municipal Software."— Presentation transcript:
PROPERTY TAX REVENUE GOT YOU DOWN? CSMFO Conference Los Angeles – February 18, 2009 The HdL Companies 909.861.4335 Sales Tax Property Tax Municipal Software
BUDGETING PROPERTY TAXES IN THIS REAL ESTATE MARKET CSMFO Conference Los Angeles – February 18, 2009 The HdL Companies 909.861.4335 Sales Tax Property Tax Municipal Software
VALID PROP 8 REDUCTION If the market value of property as of January 1st (lien date) is determined to be lower than the factored Prop. 13 value (usually the purchase price factored by 2% per year) the assessed value will be lowered to the market value. The lower adjusted value will be reflected on that year’s annual tax bill, which is mailed by the Tax Collector in September. IMPORTANT: A Prop 8 reduction is a temporary reduction and does not change your base year value.
Proposition 8 Reductions Huge wave of Prop. 8 reductions impacting 2009-10. Estimated at over $250 billion state-wide. Hardest hit counties saw 7%-12% AV reduction. Merced 15.9%, Riverside 11.9%, Solano 11.4%, San Joaquin 10.9%, San Bernardino 9.4%, Yuba 8.6% All communities not created equal. Expect 2010-11 Prop. 8 reductions to be less severe. While reviewed annually-reinstatements will take time.
Proposition 8 Value Reductions Change between 2008-09 and 2009-10 – Largest % Decline Source: HdL Coren & Cone
The little understood elements of Property Tax Apportionment (AB-8) Shared (pooled) Revenue Sources-General Fund Supplemental Revenues Assessment Appeal - Tax Payer Refunds Roll Corrections between tax years Redemption allocations in Non-Teeter Cities
Property Tax Issues to consider as you Prepare your Agency’s Budget CPI for 2010-11 has been set at a negative.237%. Properties that have not already been reduced per Prop. 8 will receive a reduction. With a continued decline in SFR sales prices, year over year, Proposition 8 reductions are still likely in 2010-11 in some jurisdictions. Commercial and Industrial appeals have started to be filed, reductions will lag 1-2 yrs. The VLF in Lieu allocation is tied to year over year assessed value change. This will be lower in 2010- 11 for most cities. What to consider as you budget property tax revenues in this real estate
LOOKING FORWARD TO 2012-13 For many agencies, property tax receipts will be lower in 2010-11 than those received in 2009-10. While economists are suggesting that the economic recovery has begun, it won’t be fast enough to impact property values and the related taxes for 2010-11. The next year of measurable property tax growth for most cities will be 2012-13.
REAL ESTATE MARKET UPDATE CSMFO Conference Los Angeles – February 18, 2009 The HdL Companies 909.861.4335 Sales Tax Property Tax Municipal Software
Home Sales The median price of an existing single family detached home in December 2009 was $306,820. The median price increased by 8.4% from December 2008. Homes sales have increased on a year-over-year basis for the last 17 months. 41% of all homes sales in December 2009 were properties that were in foreclosure, down from 57% in December 2008.
Orange County Detached Single Family Sales (January 2000 to December 2009) -25.4% Source: HdL Coren & Cone
Solano County Detached Single Family Sales (January 2003 to December 2009) 67.9% Source: HdL Coren & Cone
Foreclosures Hardest hit sub-markets represent 25% of the state’s housing stock and account for more than 50% of the default activity in 2009. Number of mortgage default notices filed in 4Qtr 2009 fell by 24% from the prior quarter. Federal actions not providing much relief. NODs peaked in the 1 st quarter of 2009. Highest default counties were Merced, Stanislaus & Riverside.
California Foreclosure Activity January 2006 – December 2009 Source: RealtyTrac SB 1137
California Foreclosures Percent of Households – 20 Largest Counties Source: RealtyTrac
Unsold Inventory Unsold inventory index for existing, single-family detached homes in Dec. 2009 was 3.8 months, compared to 5.6 months in Dec. 2008 and 13.4 months in Dec. 2007. Long-term average of unsold inventory is 7.2 months. Greatest supply is in the high end of the market $750,000 to $1,000,000+. Many homeowners without an urgent need to sell are keeping homes off the market amid falling prices.
Unsold Inventory Index January 1988-July 2009 Source: California Association of Realtors Long Term Avg. 7.2 months
Impact on Redevelopment Agencies Source: HdL Coren & Cone
Questions to Ask When were my project areas adopted? How much new development occurred during the development “boom”? What is the mix of commercial, residential, etc…? What is the current vacancy rate for commercial, industrial uses? How much vacant land is in the RDA?
Recovery ain’t what it used to be! Recovery will vary significantly by region. Prop. 8 reductions will continue to have a negative impact on revenues. Commercial property appeals will increase and value reductions will occur through 2011-12. Impact on VLFAA - property tax in-lieu of VLF. Many economists do not expect property values to fully recover until 2014.
Contact Information Paula Cone email@example.com Andy Nickerson firstname.lastname@example.org www.hdlcompanies.com 909.861.4335 Rob K. Braulik email@example.com