Dive in home values hits San Mateo County governments 

click to enlarge Budget busted: Libraries are among the casualties of San Mateo County’s falling property values, which have affected property tax revenue. (Mike Koozmin/The Examiner) - BUDGET BUSTED: LIBRARIES ARE AMONG THE CASUALTIES OF SAN MATEO COUNTY’S FALLING PROPERTY VALUES, WHICH HAVE AFFECTED PROPERTY TAX REVENUE. (MIKE KOOZMIN/THE EXAMINER)
  • Budget busted: Libraries are among the casualties of San Mateo County’s falling property values, which have affected property tax revenue. (Mike Koozmin/The Examiner)
  • Budget busted: Libraries are among the casualties of San Mateo County’s falling property values, which have affected property tax revenue. (Mike Koozmin/The Examiner)

As property values decline in San Mateo County, governments are feeling the pain.

According to county data released this month, Peninsula property values declined a whopping $4 billion in the 2009-10 tax year, which worked out to $40 million less in property tax revenue for governments.

“Coming at a time when San Mateo County itself is running a $50 million deficit, it’s just another hit,” said Rebecca Irwin, legislative aide for county Supervisor Rose Jacobs Gibson, whose website links to the report.

And between 2010 and 2012, governments will lose another $30 million, the report predicts.

In 2010, the county reassessed property values, taking a huge bite out of tax revenues that year, said Terry Flinn, special assistant to the county assessor.

Flinn said the average county property lost 19 percent of its value last year, although the impact was unevenly distributed. For example, Burlingame’s average property values fell 16 percent, yet in East Palo Alto, they fell 30 percent, he said.

The newly assessed values were so low, they surprised Daly City officials, resulting in 10 percent lower property tax revenue than had been expected, according to budget documents. And rather than improving, the problem could actually worsen.

Although the report shows that foreclosures have had a modest impact on property values, accounting for just 2.3 percent, or $1.67 million, of the overall revenue decline for city and county governments between 2009 and 2011, that could change.

The reason is that a stunning 70 percent of homes that have gone through foreclosure have yet to hit the market. When the growing backlog of largely bank-owned foreclosed properties is dumped back on the market, property values could be in for another storm.

Cities and the county aren’t the only agencies facing the triple threat of diminishing state funding, rising costs and vanishing property tax revenue, factors which have led to cuts in everything from the courts to cops to library hours. Many school districts also face these budget challenges.

For instance, if property taxes decline further, the finances of the Brisbane Elementary School District could drop below the baseline level required to trigger supplemental state aid, said Chad Carvey, principal of Panorama and Brisbane elementary schools.

That is how the ailing Millbrae Elementary School District is funded. In the past two years, that district has eliminated summer school, teacher in-service days and gifted-and-talented programs, while increasing K-3 class sizes from 20 to 28 students, among other cuts, district Trustee Caroline Shea said.

Carvey is hoping to avoid all that, but if property taxes continue to decline, he might be in a squeeze. “Right now, Brisbane is on the cusp,” Carvey said. “If property taxes went down further, we are pretty close to kicking over into revenue limit district.”

Lower assessments, lower revenues

As the assessor has reduced the assessed value of properties in San Mateo County, property tax revenue to schools and local governments has plunged.

2009-10
Decline in property value: $4 billion
Government revenue loss: $40 million

2010-11
Decline in property value: $1.5 billion
Government revenue loss: $15 million

2011-12*
Decline in property value: $1.5 billion
Government revenue loss: $15 million

*Projection

Source: “The State of Foreclosures in San Mateo County” report by county

nkyriakou@sfexaminer.com

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Niko Kyriakou

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