Property values in Sonoma County hit record $94 billion as home values continue to soar
Sonoma County property values grew at a stronger-than-?predicted clip between the start of last year and this year, escalating to a record $94.2 billion and marking the seventh straight year of gains in the county following the Great Recession.
The 5.87% increase was driven largely by the ascending value of residential properties, which make up 68.7% of the total value of property in the county. The swollen inflow of tax dollars reflects the continued strength of the local residential real estate market. For most homeowners, the growth translates to a property tax increase limited to 2% a year under California’s landmark 1978 ballot measure, Proposition 13.
The new high mark in the assessment roll also tees up more money for public entities ranging from schools to fire districts. Among the biggest benefactors is county government, which will receive an extra $4.4 million over projections, setting up what is likely to be a lively debate on the Board of Supervisors about how to spend the money.
At least 95% of the parcels captured in Sonoma County’s assessment roll for property - including residential, commercial, industrial and agricultural lands - saw an uptick in value since the Jan. 1, 2018, Sonoma County Deputy Assessor Greg Walsh said Tuesday at the Board of Supervisors meeting.
The report comes amid growing anxiety about the possibility of another recession on the horizon. The county, like most in California, is heavily reliant on property taxes paid by homeowners - making the specter of another economic downturn worrisome for local government officials.
Since 2012, local governments have relied on a swelling revenue stream from property taxes, but that trend isn’t expected to last.
“We really should not expect to see the increased percentages we have seen for the past six years going forward,” Walsh said before offering a disclaimer. “But I also told you that for the past several years!”
Board Chairman David Rabbitt said he was glad the county was conservative in its predictions for property tax growth, estimating 4% growth instead of the 5.87% the county got.
“I think we should (do that), and then be pleasantly surprised,” Rabbitt said, adding that the extra money and decisions on how to spend it was “a good dilemma to have.”
County supervisors in June agreed to put 40% of any extra revenue toward deferred maintenance. With $4.4 million coming to the county, that means $1.8 million will go toward deferred maintenance, leaving $2.6 million for supervisors to sort out.
Rabbitt, who described himself as the “curmudgeon” during June budget talks, said he’d like to put the extra money in the bank.
“We’ve already balanced our budget without that money,” he said.
But Rabbitt also left the door open to spending on new board priorities, namely the 72-acre Chanate Road property. Supervisors on Tuesday tapped the largely vacant, unsecured county property for demolition.
“If there’s something that can’t wait or has an extraordinary reason behind it, or if we’re being proactive and saving money in the long term…” Rabbitt said, trailing off. “Chanate is certainly falling into that category.”
The property, once home to the old county hospital, will cost the county $768,000 to maintain this year, including security patrols at the site, which still shows evidence of break-ins and active living spaces for transients five years after Sutter moved to its new hospital.
Earlier this year, county officials were under fire for proposed budget cuts to mental health services. Although many of the most severe cuts were put off, the county still slashed funding for a variety of programs.
Leaders must balance the pressure to address such funding needs with their stated desire to brace for the financial fallout of a recession. In June, supervisors put $2.5 million into an “economic uncertainty” fund to help weather a downturn, that the county said in a statement, “economists are predicting will likely happen at the end of 2020.”
Both Rabbitt and County Administrator Sheryl Bratton warned then that funding would be tighter in 2020, underscoring Rabbitt’s proposal Thursday that the county hold onto its newfound windfall, perhaps to supplement its ?$41 million in reserves. That’s enough to cover one month of operations, but officials want to sock away enough to cover two months of operations.
Supervisor Shirlee Zane, whose district includes the Chanate property, noted that she had governed through the Great Recession and its aftermath, when hundreds of county jobs and tens of millions of dollars in spending were cut at the county level.
But she still wants to put the extra money into tearing down the Chanate campus buildings.
“We’ve got to pay for a demolition, so it’s good to have the extra dollars,” Zane said. “If it’s less, I’ll advocate to put more money into mental health services. There’s a very definite need.”