An Issue Re Property Tax Assessments.

The misinformation at the outset led me to believe one thing, and in fact, it is something else...

So, now I get it. I have been wondering why the Tax Increment Finance (TIF) folks have been so quiet. It was eery. It did not fully make sense until yesterday.

I was clued into a little snag. Some call it a SNAFU. For those who do not know what the acronym means, it is Situation Normal, All F*cked Up. Well, rebuild 101, we have SNAFUs. Information moving in real time. Trying to make sense of everything as we move at that pace.

Here it is folks. Back in January, we thought the rebuild would allow property owners to go back to 120% of their original structure size and maintain their existing property tax (I hear it is now 110% but who is counting).

The LA Times gave us a whole Q & A on it. The information was also confirmed by a major law firm in March. Yet, according to our County Property Tax Assessor, the property tax assessment for the rebuild is based on the cash value of the home not the square footage. He claims the Statute only includes cash value, and therefore, he is going with that interpretation.

So, what does this mean? For those of you who have an assessed value of say $100,000 on your home, and the cost of rebuild assessed value of the structure(s) exceeds $100,000, that exceeded value will be taxed.

So, where did the confusion come from? There was a bill in 2019 which clarified this situation, AB 885 from Jacqi Irwin. The information being disseminated is from that bill, particularly the square footage question.

The key sentence reads as such (God we have poor language in legislation in this State).

This bill would define the term “substantially equivalent” for purposes of the provisions described above to mean the size of the improvement after reconstruction does not exceed 120% of the size of the improvement prior to damage or destruction or the full cash value of the improvement after reconstruction does not exceed 120% of the full cash value of the improvement prior to damage or destruction. The bill would apply this definition to real property damaged or destroyed by misfortune or calamity on or after January 1, 2017 (emphasis added).

That information jives with what was being said. The bill passed both legislatures. But, what happened to this bill? It was vetoed by Governor Newsom. His reasoning? The effect on local property taxes. You can read the whole thing. Someone missed that piece.

Well Altadena, it seems it comes back now full turn. Those who think their property tax was going to remain the same are in for a rude awakening. It seems the Times led us astray with the information being disseminated.

The TIF folks have it right. They are going to see an even greater increase in value in Altadena and the Palisades than we may have thought. You can TIF the entire rebuild. Now, however, those people who are “reassessed” will have to see their property tax go up to pay for that “reassessment.”

So, if your house was valued at $100,000 and now is $800,000 after the updates, the $700,000 is your increase and will be taxed unless something changes. Who are most affected? Those who have their taxes at the lowest Prop 13 rates. Here is the catch 22. If the values are increased, it can price a lot of property owners out of their homes. If the values remain, it limits the rebuild to those who will be increased in the near term.

AB 1283 in the Assembly is stalled. It would allow a rectification to this question and allow assessors to make a change in property tax assessments. One wonders if the County Supervisors could do the same on their own?

Perhaps the Governor can get back to looking at AB 885 from Jacqui Irwin and what it intended to do originally as it is probably the cleanest way forward for such a recovery. There are other ways we can raise money, and the increment is only a portion of the financing pool. Maybe make it apply to the current owner and when ownership/title shifts, then the increment increases without the “grandfathering” policies which exist for properties otherwise.

Either way, this issue is material to those who were on fixed incomes, in homes which were destroyed not by the actions of their own, and without recourse.

Maybe the media can help us understand the issues and shine a light on the question of these taxes since we were led astray by them at the outset. For those who thought things would remain the same, well, I guess it is time to start paying attention. Again, no wonder SB 782 has so many people salivating though it also begs the question of who will truly benefit as the homes being rebuilt will have to be paid for somewhere. I still want to see that accounting.

Just thought you all in Altadena should know what is on the horizon. Thank you to that person who made me aware of this gaping hole.