Declines in Value
Proposition 13, passed by California voters in June 1978, created a new system for valuing property by establishing a base year value as of a change of ownership or new construction. Once a base year value was established, inflationary increases were limited to no more than two percent per year. There was no provision in Proposition 13 for values of property to decline below their factored base year value.
In November 1978 voters approved Proposition 8 permitting county assessors to review properties to determine if the current market value as of January 1 each year had declined below the factored base year value established by Proposition 13. As an independently elected local official, the Assessor’s job is to be fair, not to raise revenue. If the value of a piece of property has declined below its Proposition 13 factored base year value then it will be reduced. For property owners, a temporary decline in value can be good news and bad news. The good news is that tax bills go down because property taxes are based on the value of the property. The worse news (not just bad) is that the property is not worth what was paid for it.
To track declining market conditions, the certified appraisers in the Assessor’s office review sales of comparable properties and entire neighborhoods to look for transactions indicating that prices may be dropping. If a property’s market value as of January 1 is lower than the factored base year value, a decline in value is enrolled. That lower value will be reviewed each year and reduced further if necessary. When sales indicate that the market has begun to recover, the temporary, reduced value will be increased at a rate that matches the recovery in the real estate market until the factored base year value is restored. Napa County has reduced the assessed value of 2,308 properties as of January 1, 2018 in response to current market conditions. Those properties, as well as almost all single family residences including condominiums, will be reviewed again as of January 1, 2019 using sales from April 1, 2018 through March 31, 2019. Property owners will hear the results of that review in July 2019*. Any reduction in value will appear on the 2019-2020 tax bill which arrives in October 2019.
As for the future, there is no crystal ball. The cyclical nature of the wine market and the impact of regulatory changes can impact the value of vineyard or potential vineyard properties. Because Napa County is still a sought-after place to live with its diversified economy, strong environmental protections and unique quality of life, declines in value usually are not as severe or widespread as in neighboring counties or other parts of the state.
Property owners who believe their property may have suffered a decline in value should contact the Assessor’s office at 707.259.8740 beginning in March 2019 through November 15, 2019. The earlier you contact us the better.