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Sticker Shock

Property taxes ride the real estate roller-coaster up, up and up

By Will Harper

THE VALLEY'S RESURGENT real estate market finds property values going through the proverbial roof. But for 13.5 percent of Santa Clara County homeowners--about 57,000 of them--that is not purely good news: The boom has sent their tax bills skyward this year.

Tax law, following Proposition 13, generally limits annual property-tax increases to 2 percent of a home's assessed value. But actual tax bills this year went up by as much as 10 percent for residential properties--and as much as 50 percent for 3,000 commercial, industrial and apartment buildings. That's because the properties' assessed value skyrocketed along with the properties' real value.

But don't blame county tax assessor Larry Stone. A state law passed in 1980 forces him to raise taxes on homes that previously have gotten breaks during periods when the real estate market was on the skids. When home prices rebound, the assessor must reappraise those properties and restore tax rates to reflect the better market conditions. "I hate administering this part of the law," Stone says. "It is so confusing."

For those taxpayers grumbling about their higher bills, Stone tries to explain: "[D]uring the economic downturn, their assessment and property taxes went down, while three-quarters of their neighbors continued to receive a 2 percent Proposition 13 increase."

Former assessor Al Carlson chose to cut tax bills during the valley's slump between 1991 and 1995, which affected 96,000 homes--about one-quarter of all the parcels in the county. Despite this tax cut, the total assessed value for single-family homes countywide gradually increased between 1993 and 1996, from $48 billion to $55 billion.

But over the past year, assessed valued shot up to almost $60 billion.

That is partly explained by the fact that 7,000 new homes have been built since 1993, adding more property to the tax rolls, according to Stone's office. However, the vast majority of the new money in the swelling tax coffers results from the fact that a median home price in the county is now $319,000--up 14 percent from this time last year. And, with Stone in charge, assessments are closely mirroring properties' actual values.

Meanwhile, electronics manufacturing firms have seen taxes on their land remain steady at about $5.5 billion over the past five years. Nevertheless, the growth of high-tech firms in the valley has helped swell tax rolls in other ways. Despite having been granted more favorable tax rates on their aging computer equipment, high-tech firms appear to be buying plenty of new equipment. That means more items to tax, resulting in a 21 percent increase in computer and electronic equipment property taxes since 1995.

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From the August 7-13, 1997 issue of Metro.

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