Got you down CSMFO Conference Los Angeles February 18 2009 The HdL Companies 9098614335 Sales Tax Property Tax Municipal Software BUDGETING property taxes IN THIS REAL ESTATE MARKET ID: 568281
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Slide1
Property Tax RevenueGot you down?
CSMFO Conference Los Angeles – February 18, 2009
The HdL Companies
909.861.4335
Sales Tax
Property Tax
Municipal SoftwareSlide2
BUDGETING property taxesIN THIS REAL ESTATE MARKET
CSMFO Conference Los Angeles – February 18, 2009
The HdL Companies
909.861.4335
Sales Tax
Property Tax
Municipal SoftwareSlide3
VALID PROP 8 REDUCTIONIf 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.Slide4
VALID PROP 8 REDUCTIONSlide5
INVALID CLAIM FOR A PROP 8 REDUCTION Slide6
Proposition 8 ReductionsHuge 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.Slide7
Proposition 8 Value ReductionsChange between 2008-09 and 2009-10 – Largest % Decline
Source: HdL Coren & ConeSlide8
The little understood elements of Property Tax Apportionment (AB-8)Shared (pooled) Revenue Sources-General FundSupplemental RevenuesAssessment Appeal - Tax Payer RefundsRoll Corrections between tax yearsRedemption allocations in Non-Teeter CitiesSlide9Slide10
Property Tax Issues to consider as you Prepare your Agency’s BudgetCPI 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 Slide11
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.Slide12
REAL ESTATE MARKET update
CSMFO Conference Los Angeles – February 18, 2009
The HdL Companies
909.861.4335
Sales Tax
Property Tax
Municipal SoftwareSlide13
Home SalesThe 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.Slide14
Orange CountyDetached Single Family Sales (January 2000 to December 2009)
-25.4%
Source:
HdL Coren & ConeSlide15
Solano CountyDetached Single Family Sales (January 2003 to December 2009)
67.9%
Source:
HdL Coren & ConeSlide16
ForeclosuresHardest 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 1st quarter of 2009.Highest default counties were Merced, Stanislaus & Riverside.Slide17
Negative Equity Drives ForeclosuresSlide18
California Foreclosure ActivityJanuary 2006 – December 2009Source: RealtyTrac
SB 1137Slide19
California ForeclosuresPercent of Households – 20 Largest Counties
Source: RealtyTracSlide20
Unsold InventoryUnsold 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.Slide21
Unsold Inventory IndexJanuary 1988-July 2009
Source: California Association of Realtors
Long Term Avg. 7.2 monthsSlide22
Impact on Redevelopment AgenciesSource: HdL Coren & ConeSlide23
Questions to AskWhen 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?Slide24
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.Slide25
Contact InformationPaula Conepcone@hdlccpropertytax.comAndy Nickerson
anickerson@hdlccpropertytax.com
www.hdlcompanies.com
909.861.4335
Rob K. Braulik
rbraulik@ci.fairfield.ca.gov