Assessing Confusion

Why are assessment notices printed in a secret, indecipherable code?

The standard explanation is that the system is designed to keep us from knowing who raises our taxes. Another theory says it's to make our prices look too high to Californians. A few guys in cammies think it's an ATF conspiracy. Maybe the Rainbows on the courthouse lawn moonlight as the assessor's encryption team.

At this moment I may be the only person in the County who has compassion for the assessor (Terry Phillips), thinks his valuations are really pretty good, admires the technological strides made by the his office, and especially admires the cheerfulness of his staff in the face of pitchforks and torches.

Send in your hate mail.

There is one, small flaw in the assessor's work. The red, white, and blue "notice of valuation" form, inherited from ancient predecessors, is the worst piece of bureaucratic gobbledygook found this side of the mortgage business. (We have only one that's worse: the "truth in lending disclosure", which is neither true nor discloses.)

If you have not already done something unspeakable with your coded notice, have a look at the front page (the back page is the one in semi-disappearing ink). The crucial lines of code are found on the right-hand side, halfway down, where it says "last year" and "this year." Slightly above that is the spot where it says that the actual value of your home increased by $3,829,300 last year.

Most owners know that their houses had a pretty good run of appreciation from 1991 to 1994, but they also know the run came to an abrupt halt in the Spring of 1994, and prices have hardly moved since. Tell me my house is worth more? Fine. But three million bucks in this last year? I don't think so.

The decryption key lies hidden in a taxation time warp. In assessor code, "last year" is not 1994, it's 1992, which was the last assessment year, only about a year after the ignition of the Great Boom. In a similar vein, "this" year is not 1995, it's 1994, which is this assessment year. Precisely, "this" year ended in June, 1994, only hours after the end of the Great Boom. The huge increase in value on our statements corresponds to the explosive two-year heart of the Boom.

If your value seems a tad high, it probably is. The assessor's appraisers quite properly use a "time value" adjustment to drag up the value of older comparable sales. Since the adjustment period ended just after the end of the rapid appreciation, values of adjusted comparables may be a little overstated. In the case of my home, about 5%.

Am I going to rush to appeal? No way. It's usually a waste of time. It's easy to win, but it doesn't save much money.

Why? Back to the notice-in-code, top right, where the assessor has typed in an enigmatic "10.50%". What 10.50%? Appreciation rate, maybe? Interest rate? Tax rate? It says "assessment rate," but rate of what?

The assessor/treasurer equation goes like this: actual value times assessment rate times mil levy equals the tax dollars you pay. Example: a $100,000 house times the 10.50% assessment rate equals $10,500, which times the mil levy (estimated at .077, or "seventy-seven mils") equals your taxes: $808.

Appeals won't save much: a $5,000 error times 10.5% equals $525 times .077 equals only an extra $40 in taxes (and only this year; any overstated values will unravel in the next valuation). Even if you win, by the time the parking gendarmes are done with you, you may come out in the hole.

It's worth taking a look at one other spot on your notice. Near the bottom right-hand corner is a worst case estimate of the dollars you will owe next Spring. If you have your old records, note that your tax burden in dollars has grown at less than half the rate at which your home has gained value.

In a normal real estate, where values rise gradually, your property tax dollars should be a little more than 1% of actual value -- maybe 30% higher than the worst case estimate shown. Why? A statutory tangle limits the pace of tax increases during and after a rapid rise in values (Amendment One, the Gallagher Amendment, the 5.5% rule, the exemption of new constructionÉ.). It will take years for tax dollars to rise to a "normal" level, and this delay is part of the reason that the school district is starved for revenue.

The least of your worries is the accuracy of your valuation. Sit at the assessor's computer. Switch on: County map on screen. Move cursor near to subject home, and click mouse: section (one square mile). Click: town. Click: subdivision. Click: five block radius. Click: all sales in the last year. Click: closest comparable sales, in brilliant green.

Slick, and accurate. No code there.