The turbulent real estate market has convinced thousands of Stanislaus County homeowners to challenge their property tax assessments.
That's overwhelmed the county assessor's staff and the Assessment Appeals Board, which by law must rule on appeals within two years.
To speed things, a less-formal process is being proposed: appointment of a hearing officer who could decide relatively small disputes, leaving the big stuff for the full three-member appeals board.
"Our hope is that a hearing officer could resolve the residential appeals much quicker," said Elizabeth King, assistant clerk to the Board of Supervisors.
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Quicker would be good, considering there's a large backlog of appeals to plow through. The Assessment Appeals Board still is trying to resolve about 40 disputes from 2007, which by law must be finished by December.
It has an additional 420 appeals from 2008 waiting for hearings, and new property assessments are being challenged every day from the 2009 tax rolls. Challenges are coming in faster than last year.
Property tax bills will be mailed in a week or two, and that's expected to trigger a flood of additional appeals.
By far the biggest year for appeals was 2007, when 1,540 property owners disputed their assessments.
Fortunately for the appeals board, however, about 95 percent of the 2007 challenges were resolved in negotiations between members of Assessor Doug Harms' staff and the property owners.
But Harms said his staff doesn't have time to do that anymore, especially since they reviewed every Stanislaus County home this year and lowered assessments for 62 percent of them.
Values take a plunge
Assessed property values in the county fell 7.7 percent to $37.3 billion this year compared with last year, according to figures released Tuesday. That was one of the largest percentage declines in California, but not as bad as Merced County, where assessed values plunged 13.4 percent. San Joaquin County assessments dropped 10.2 percent.
Statewide, assessed property values declined to $4.448 trillion, a drop of $107.2 billion, or 2.4 percent, from last year. That was California's first annual decline since it began keeping records in 1933.
County assessors used computer programs to revalue properties on a massive scale. In Stanislaus County, the value of every house was reviewed.
"If we did a second review (for those who appeal assessments), we'd just be looking at the same comparable sales data and come up with the same property value we've already determined," said Harms, explaining why he won't reconsider assessments without a formal appeal this year. "We just don't have the time to do that again."
Because of that, the number of appeal hearings is expected to soar.
As a rule of thumb, King said it takes the appeals board about one hour for every residential assessment appeal. Commercial property appeal hearings, however, can last one day or more, and there are more than 200 commercial cases waiting to be heard.
The three-member appeals board meets only one day a month. That was plenty before property values started plummeting.
Since 2005, median home sales prices have plunged more than 60 percent. Because houses are worth less, homeowners think their assessments and property taxes should be reduced.
Some of them are right, but proving that assessments should be lowered isn't as simple as it may seem.
Property tax assessments are based on a complicated formula involving limits imposed by Proposition 13 and other state initiatives. Those laws limit how much assessments can increase during boom years, but they don't limit how much assessments -- and taxes -- can fall when the real estate market goes bad.
So a house bought in 1990 for $100,000 might have been worth $250,000 in 2005, but that year its original owner would have had to pay property taxes based on an assessment of only about $131,000.
Now, that home probably is worth far less than it was four years ago. The county assessor could have lowered the assessment on that house to below $131,000, but the homeowner might not think it was lowered enough.
"If the difference is more than $50,000, I'd say go for the appeal," said Tony Alahverdi, a property and business owner who is an agent for Century 21 M&M and Associates.
Research can pay off
Getting an assessment lowered by $50,000 could save a homeowner about $500 in annual property taxes.
Alahverdi is appealing the assessment of one of his commercial properties. He said he also has helped some of his realty clients get their home assessments lowered. The appeals process can work for homeowners, he said, if they do their homework.
"The appeals board makes it kind of difficult, and they try to scare you out of going," Alahverdi said of the hearings. He suggested homeowners seek a real estate agent's help to gather evidence about home values in their neighborhood. "It would take me only about 10 minutes to help someone (find the comparable sales data they'll need)."
It takes the county's staff far longer than that to process each appeal.
"There is a huge increase in the workload," said Christine Ferraro Tallman, clerk of Stanislaus' Board of Supervisors, whose staff also serves the Assessment Appeals Board.
Ferraro said that next month she will propose that the Board of Supervisors start allowing a hearing officer to rule on residential appeals, rather than requiring the entire board to hear each case. She said that would be less expensive and far faster.
In the meantime, everyone who files an appeal is warned it might take two years to get a hearing.
Bee staff writer J.N. Sbranti can be reached at firstname.lastname@example.org or 578-2196.