San Mateo County’s 2018-19 Property Assessment Roll Reaches Record High after Seventh Consecutive Year of Growth
Roll Value Increases by 8% to $222.5 billion
Contact: Mark Church, Chief Elections Officer & Assessor-County Clerk-Recorder
Alternate: Terry Flinn, Special Assistant to the Assessor
(Redwood City, CA) San Mateo County Assessor Mark Church today announced the county’s Property Assessment Roll increased year-over-year by $16.5 billion, or 8.03%, to a record high of over $222.5 billion in assessed value, again setting a new milestone for the county.
“2017 marked another year of substantial roll growth for San Mateo County,” said Church. “The combined assessment roll has increased nearly 60% in the last eight years alone. This is the seventh consecutive year in which a new historical high has been set.”
“Commercial construction, major property transfers, and a continued strong residential market have all contributed to the roll’s significant increase,” Church added. “With the lowest unemployment rate in the state and continued growth of the labor force, San Mateo County’s local economy is amongst the strongest in the nation.”
San Mateo County has the lowest unemployment rate in the state for the fourth consecutive year, at 1.9%, according to the California Employment Development Department.
“Our strong job market and economic growth continue to push the demand higher for housing and commercial space,” said Church. “As has been the case for several years now, the high demand and the inventory shortage in every sector of real estate, are the driving forces behind escalating real estate values and rents throughout the county, resulting in another record-breaking assessment roll for the county.”
The 2018-19 Property Assessment Roll reflects consistent growth throughout the County. Total assessed values increased in all 20 cities and unincorporated areas, with increases ranging from 3.98% to as high as 11.4%. The County’s unincorporated areas, which include San Francisco International Airport (SFO), experienced a growth rate of 6.06%.
The top 5 cities in percentage growth are:
- East Palo Alto (+11.40%)
- Daly City (+11.33%)
- South San Francisco (+11.13%)
- Menlo Park (+11.06%)
- Brisbane (+10.78%)
The shared property tax funding base is approximately 1% of the county’s Property Assessment Roll and will thus increase to $2.22 billion. Approximately 45% of revenue is allocated to schools within the county, 25% to the County, 18% to cities, 10% to special districts, and 2% to former redevelopment agencies. “The county’s share will be 25%, or approximately $556 million, an increase of $41 million over last year,” noted Church.
The Property Assessment Roll is the assessed value of all properties as of January 1 each year, and reflects changes in ownership, new construction, value declines, and value restorations from the previous January 1. The Property Assessment Roll is composed of two sections, the Secured Roll and the Unsecured Roll. When combined, the two sections are referred to as the Combined Roll.
The Secured Roll represents nearly 95% of the total Assessment Roll and includes 221,355 commercial and residential real properties. This year, the Secured Roll increased to $211 billion, an increase of over $16 billion, or 8.2% more than 2017-18, reflecting continued economic growth in the county.
The growth of the San Mateo County Secured Roll is primarily due to the following factors:
- Increased Values in the Local Real Estate Market. Sales and changes in ownership totaled $7.2 billion, which is 45% of this year’s Secured Roll increase.
The median price of an existing single-family home in San Mateo County was $1,770,000 as of April 2018, according to the California Association of Realtors. This is the highest median home price in the state and is an increase of 18% over the previous year, topping San Francisco County for the second consecutive year.
- New Commercial Development. Major commercial projects in the county, consisting of 80,000 square feet or more, accounted for more than 1.1 million square feet of new development coming to market in fiscal year 2017- 2018. Another 18.7 million square feet are under construction, 9.4 million square feet have planning approval, and 28.8 million square feet are under review. In all, 56.9 million square feet of new construction remain to be built. Approximately 5.5 million square feet of new construction have been completed in the last three years.
Top 5 Cities for New Commercial Development
The following cities have the greatest amount of square footage of new commercial development, consisting of projects that are 80,000 square feet or more, that are either pending, approved, or under construction:
- Redwood City – 12.9 million square feet
- Menlo Park – 9.7 million square feet
- South San Francisco – 8.8 million square feet
- Brisbane – 8 million square feet
- San Mateo – 5 million square feet
- Growth in the technology and life science sectors continues to drive the demand in office, housing, hotel and retail. Completed projects include the Marriot Springhill Suites in Belmont, Serramonte Center Phase I in Daly City, Gellert Market Place in Daly City, Belle Haven affordable housing and Greystar Haven apartments in Menlo Park, One Marina Hotel in Foster City, The Cove Hotel Marriot in South San Francisco, and Bay Meadows Station 4 in San Mateo.
Office development owned and leased by Facebook was the largest driver of increased assessment in Menlo Park, accounting for over $700 Million of new construction. These and other projects and transfers helped drive a significant increase in the combined roll value in Menlo Park and East Palo Alto.
In the north-county areas, South San Francisco, Brisbane, and Daly City have all seen substantial increases due, in part, to construction of life science projects such as The Cove, and expansions by Genentech and Prologis.
- Restoration of Assessed Value: Proposition 8/Decline in Value Program. The Proposition 8/Decline in Value Program provides property tax relief to property owners when the market value of a property falls below its assessed value. The number of residential properties qualifying for the Proposition 8/Decline in Value Program has dropped significantly from 34,700 properties in FY 2011-12 to 488 properties in FY 2017-18. On the commercial side, only 53 properties remain in the program from a high of 604 properties in FY 2012-13.
Over the next few days, approximately 2,088 property owners enrolled in the program will be mailed their 2018-19 Assessed Value Notices, with about 787 being fully restored to their factored base-year (Prop 13) values.
- Annual Inflation Factor. Proposition 13, which governs property taxation in California, ties the annual inflation factor to the California Consumer Price Index (CCPI) issued by the California Industrial Relations Board and limits annual inflation increases to no more than 2%. This year an annual inflation factor of 2% was applied to the 2017-18 assessed value of all real property that did not have a change in ownership or any new construction during 2017.
There were 55 Trustee’s Deeds recorded in calendar year 2017, a 36% decrease from the 86 recorded in 2016. Notice of Defaults decreased 11% from 524 in 2016 to 465 in 2017, continuing the downward trend in defaults since the high of 5,058 in 2009.
“Foreclosure activities continued to decline, another important indicator of the strength of the current market,” said Church.
The Unsecured Roll comprises approximately 5% of the Property Assessment Roll and includes the valuations of business/personal property and possessory interests (leased government property). This year, the Unsecured Roll increased to $11.4 billion in assessed value, an increase of more than $546 million or 5.05% more than 2016-17. Most of the Unsecured Roll is personal property, which typically depreciates and is not limited to an inflationary value increase, as is real property on the Secured Roll.
PROPOSITION 13 – 40TH ANNIVERSARY
Church noted that 2018 marks the 40th anniversary of the passage of Proposition 13 in 1978. Proposition 13 changed California real property assessment from a system based on “current fair market value” to one based on “transaction value,” factored annually for inflation. It was a reaction, in part, to the perception that elderly people were losing their homes due to rapidly increasing property taxes.
“Prop 13 is still controversial after 40 years and has seen many challenges, including recent proposals to split the roll and assess commercial and residential properties differently,” said Church. “Despite the growth limitations embodied in Prop 13, it is interesting to note that this year’s roll increase of $16.5 billion is larger than the entire assessment roll of $14.8 billion in 1978 when Prop 13 was passed,” he added.