For the first time in five years Sonoma County has recorded an increase in assessed property values, a trend driven by the rebounding housing market and one set to add revenue for local governments still emerging from a period of recession-wracked budgets.
The assessed value of residential, commercial and farm property in the county jumped 3.32 percent over last year. That far exceeds previous county projections, which had envisioned a more conservative growth rate of 0.75 percent.
The $2.1 billion increase, to a net tax roll of $66.7 billion, offers further evidence of and hope for a local economic recovery, government officials said.
"It is a very positive benchmark," said Bill Rousseau, Sonoma County's clerk-recorder-assessor. On Tuesday he presented the annual report on property values to the Board of Supervisors.
For thousands of homeowners it reflects the end of a half decade underwater, with mortgages higher than home values.
The flip side is that many who had seen their taxes drop in recent years will now see them rise, based on either partial or full returns to their properties' previous assessed base value.
The county has 182,000 properties assessed for tax purposes. Among the 55,000 that previously were reduced in value, more than 38,000 will see higher tax bills in December and April.
About 17,000 properties will see no change or will have their assessed value dropped.
The largest group of properties, representing about 70 percent of the total roll, are set for incremental tax increases under Proposition 13, the voter-passed initiative that caps annual assessed value increases at 2 percent.
The higher 2013-2014 roll — based on 2012 activity — is fueled by a combination of restored home values, sales, new home construction and a 2 percent rise in the consumer price index, county officials said.
The uptick is the first since a tumbling housing market and global economic downturn in 2008 sent property values on a historic downhill slide, erasing $10 billion in assessed value countywide and drying up hundreds of millions of dollars used by local governments to support staffing and services.
The decline bottomed out in 2012-2013 tax roll of $64.6 billion, down $4 billion from the 2008-2009 peak.
With the turnaround this year, the county is set to receive an additional $3.5 million for its $412 million general fund, offering more cushion for discretionary spending.
City coffers, which depend more on sales tax revenue, also are set to benefit.
County officials said the numbers would not trigger significant revision to the current budget, which provides hold-the-line funding for most programs.
"An increase in real estate values is welcome news," said Supervisor Mike McGuire. "But we also know that a new financial reality has set in."
The countywide jump in assessed values beat the statewide increase of 2.9 percent.
The increases ranged from about 5 percent in Sebastopol, Cloverdale and Sonoma to under 3 percent in Santa Rosa, Windsor and the unincorporated area.
The most pronounced growth came in the upper end of the residential home market, at $700,000 and above, said Greg Walsh, a Sonoma County chief deputy assessor. Growth in the mid-range market, including the now $439,000 median home price, also was a factor, he said.
Given the new figures, Rousseau on Tuesday revised his projections for when the county might return to its peak median home price of $619,000, reached in August 2005.
He'd previously said it might take 11 years. The timeline now could be considerably shorter, at three to four years, Rousseau said. Strong growth in commercial property values could make a return to the peak property tax roll even quicker, he said.
"Barring any major economic disaster, I think we are going to see slow growth on the assessment roll from here on out," he said.
County officials said the more conservative projected growth rate used to set the county budget in June resulted from preliminary work without all of the real estate data.
The better numbers could bolster members of county labor groups who've claimed the county has cleared its most significant fiscal hurdles and doesn't need the pay and pension concessions it is seeking from employees.
Chris Thomas, the assistant county administrator, said Tuesday he would not speculate on how the figures might affect collective bargaining.
Property taxes account for 44 percent of the current county general fund, covering most discretionary spending, including public safety and administrative departments. Barring unanticipated shortfalls, the additional revenue is to be set aside in the fund balance, according to a staff report.
Rousseau's report to the Board of Supervisors included another welcome piece of news: His office has finally reduced what had been a lengthy backlog for the thousands of homeowners waiting to appeal their assessment.
The office has resolved 2,135 of the 2,400 appeals filed in 2011-2012. A little less than half of the cases resulted in an assessed value lower than the county's initial number; most of the remainder were either withdrawn or denied.
The office has begun work on the 1,600 appeals received last fiscal year. Rousseau said he expects the number of challenges filed this year to drop. Homeowners can review their property's assessed value through the county assessor's website and have until November 30 to file an appeal.
"We're hoping to see a decline (in appeals)" Rousseau said. "People are starting to realize that the market is moving upward."
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