Sonoma County’s record $81 billion property tax roll reflects economic turnaround

Rising home values, new housing construction and inflation have boosted the value of Sonoma County’s taxable property to an all-time high of $81 billion - reflecting economic growth that county officials said bolsters a tremendous turnaround since the recession undermined local real estate.

The benchmark figure comes from the county’s latest property tax assessment roll, including all taxable residential, commercial and industrial property. Home values, which have risen gradually for the past four years, have fueled the largest share of the growth, county officials said Tuesday.

“Residential property values have been the driving force behind these increases,” said Greg Walsh, the county’s chief deputy assessor. “We were lowering these values during bad years of 2008, 2009 and 2010…. Now we’re seeing increases at swifter rate than anyone anticipated. Projections during the recession showed that we wouldn’t get here for 15 years.”

This year’s assessment roll is up 5.9 percent - or $4.5 billion - from last year, and 31 percent since the start of the recession in 2007. The rise signals mixed news for property owners. The now-robust real estate market has pushed the median single-family home price to $600,000 in June, slightly below the all-time high of $619,000 set in August 2005.

But with that rally, more homeowners are now receiving higher tax bills. Most of the county’s 130,000 residential properties will be subject to higher property tax bills this year.

During the recession, more than 55,000 residential properties had their assessed value temporarily reduced as the real estate market slumped. Many homes lost half of their value, Walsh said, but the county has gradually increased those assessments as the economy recovered.

“There were a lot of people who were underwater,” Walsh said, referring to residents who owed more on their mortgage than the value of their home. “Now a lot of properties are to where their base-year values were.”

To date, only about 15,000 residential properties remain below their base-year value under Proposition 13, the voter-approved 1978 initiative that guides property tax policy in California.

Cloverdale and Rohnert Park experienced the largest rise in property values among local cities, with increases of 7.61 percent and 7.37 percent, respectively. Cotati’s property values grew 6.36 percent, while Petaluma grew 6.26 percent. Sonoma grew 6.1 percent; Healdsburg 5.94 percent; Santa Rosa was up 5.57 percent; Sebastopol 5.2 percent and Windsor saw an increase of 4.88 percent.

The increase in unincorporated Sonoma County was 5.89 percent.

Property taxes, based on annually assessed property values, provide about half of all public school funding and support local governments and special districts including fire services. For the county, the taxes are the largest source of discretionary dollars for the general fund.

The tax roll’s growth accounts for $10 million in additional revenue for the county’s $443 million general fund, including $1.6 million the county hadn’t projected in its new budget. The Board of Supervisors welcomed the influx Tuesday.

“It’s always a positive sign when we have additional resources,” said Supervisor Efren Carrillo, the board chairman, who suggested the additional discretionary dollars could help fund a host of county services and initiatives. “There’s quite a large array of unmet needs we have, whether it’s housing or preschool or roads or infrastructure.”

But Carrillo and Supervisor Shirlee Zane, the two supervisors who took office during the recession, and Supervisor David Rabbitt, who joined them two years later, also cautioned against launching additional programs or initiatives that could face cuts in a future economic downturn.

“When Supervisor Carrillo and I took office back in 2009, we faced the darkest days of the recession … we made very painful cuts,” Zane said. “This is very good news… but we still have to be prudent with our finances.”

Rabbitt floated an idea to use the unanticipated $1.6 million increase to the general fund to help pay for a planned $12 million tunnel to transfer inmates between the Sonoma County Jail and the new courthouse on the county administrative campus in Santa Rosa. The idea appeared to have support of other board members.

Construction of the $174 million courthouse is expected to begin later this year and be complete in 2020.

Home values are expected to continue to climb, with next year’s property tax assessment roll projected to grow an additional 3 percent, according to Christina Rivera, the county’s budget manager.

You can reach Staff Writer Angela Hart at 707-526-8503 or angela.hart@pressdemocrat.com. On Twitter @ahartreports.