As a result of the
”
devastating impact of the Great Recession,
”
the county assessor plans to reduce the value of Gilroy’s
properties by $132 million, for a cumulative reduction of $995
million. However, the city, which has about $5.6 billion in
property value, anticipated this decline, and administrators said
the city budget will not be radically affected by these plans.
As a result of the “devastating impact of the Great Recession,” the county assessor plans to reduce the value of Gilroy’s properties by $132 million, for a cumulative reduction of $995 million. However, the city, which has about $5.6 billion in property value, anticipated this decline, and administrators said the city budget will not be radically affected by these plans.
In total, 4,939 Gilroy properties have lost nearly $1 billion in value since they were purchased.
“The hole has gotten deeper,” said David Ginsborg, deputy to Santa Clara County Assessor Larry Stone.
Stone reported record numbers of reductions in assessed value this year, according to a statement released by his office. Though the numbers won’t be official until July 1, he expects 27,604 properties countywide to drop nearly $4 billion in value this year. In total, the assessor has reduced 118,440 properties by $21.4 billion since they were purchased, many in the midst of the housing boom. Single-family residences were affected the most, though some condominiums, multi-family residences, and commercial, industrial and retail properties were also reduced.
In Gilroy, the assessor expects to have shaved $132 million off 1,434 properties in the last year alone. But the city will not feel a hit, administrators said.
“We expected this,” said City Administrator Tom Haglund. “I anticipate that we will have projected accurately and that this will not have a deleterious effect on the city budget.”
Staff is currently in the process of analyzing the data it received from the Assessor’s Office, Haglund said.
“What this particular number means, I don’t know if we’ve had time to analyze that yet,” Haglund said. “On the one hand, the bad news is that property taxes will be down. But the silver lining is that we budgeted for that.”
Before the economic crisis, when the assessed valuation of properties in Gilroy totaled closer to $7 billion, the city took in about $10.9 million in property taxes, Haglund said. Currently, the city’s assessed valuation stands at about $5.6 billion, according to city figures. Lower assessed values mean fewer tax dollars coming into cities and school districts. However, Haglund said he could not estimate how much this would translate to in property taxes.
Morgan Hill took a 38 percent hit this year, with 1,136 properties losing $225 million. Overall, 4,159 of Morgan Hill’s properties have been reduced by a total of $823 million, since their purchase.
“There’s no question Gilroy and Morgan Hill have seen some of the largest numbers of reductions,” Ginsborg said.
Nearly 40 percent of all properties were assessed below their purchase price in Gilroy and Morgan Hill.
Only San Jose – a city of nearly one million people – Santa Clara, Sunnyvale and unincorporated county areas lost more value overall than Gilroy, county data shows.
“If there is any silver lining to this news it is that homes are more affordable now than they have been in more than a decade,” Stone wrote. “With nearly 118,000 homes valued below their purchase price, more first-time home buyers can afford to live here. That is good news for the high technology companies who will ultimately lead us out of this economic crisis. We need local companies to start hiring again, and high housing costs have always been an impediment.”
While property values in towns like Gilroy and Morgan Hill fell the fastest when the housing bubble burst, wealthier cities in northern Santa Clara County are finally feeling the sting of the slump, Ginsborg said. Gilroy experienced only a 13 percent of its cumulative reduction in value this year compared to Palo Alto, which saw 62 percent of its value reduction this past year.
According to the Stone’s report, a disproportionate number of high-end properties, especially in cities in the northern part of the county, recorded significant reductions in value.
“Until last year, the market value of higher-end properties in established neighborhoods recorded few foreclosures,” Stone wrote. “Nearly one-half of the $4 billion in additional reductions this year are properties located in basic aid school districts, which rely almost exclusively on local property taxes.”
Though concerned about the plight of cities trying to balance their budgets in already tough times, Stone said he was forced to respond to the serious decline in property values.
“The last 36 months is by far the worst economy I’ve experienced in the 45 years since I left graduate school for Wall Street,” he wrote.
