The Prop 8 Review Process

Temporary Declines in Value

We refer to the process of reviewing property as "the Prop 8 review process" because of its association with temporary declines in taxable value allowed by the passage of Proposition 8 in 1978. Below you can read about the following:

• Some background on the law that allows temporary tax relief
• Answers to some frequently asked questions about this subject
• A summary of the review process
• Three examples of properties that have undergone temporary tax relief

If you have additional questions about the process or any letter you have received from us, or if you have other questions about how property is assessed in Sonoma County, please contact us by telephone, or email, or visit or write our offices.

Background

In 1978 Californians passed Proposition 13, amending the state constitution so that the yearly taxable value of most real property in California must be the lower of either:

• the property's base year value adjusted for current inflation, or
• the property's fair market value on January 1st (the "lien date") for the applicable tax year.

The base year value is established when a property is sold, changes ownership, or undergoes new construction. If none of these has occurred since 1975, the base year value is the market value of the property as of March 1, 1975. Real property value typically increases over the years, but sometimes the fair market value of a property falls below its current adjusted base year value. Proposition 8, also passed in 1978, addresses temporary declines in value.

The law established by Proposition 8 allows the County Assessor to reduce your property taxes by enrolling a value on the Tax Roll that reflects a temporary reduction in taxable value for your property (see California's Revenue and Taxation Code, Section 51). Once reduced in this way, your property's value must be reviewed on January 1 each following year to determine whether its current market value is still less than its current adjusted base year value. When its market value increases above its adjusted base year value, the Assessor will once again enroll its adjusted base year value. Prop 8 values can change from year to year as the market fluctuates up and down, but under no circumstances does the Assessor assess your property at a value greater than it's adjusted base year value.

Frequently Asked Questions about Prop 8

Here are concise answers to a few questions we are asked by many people:

I'm protected by Proposition 13. What gives you the authority to increase my value more than 2% in one year?

The law established by Proposition 13 allows increases to your property's base year value of no more than 2% per year (an amount intended to compensate for inflation), but your property previously received a temporary reduction in value under the law established by Proposition 8. For a temporary period of time, this reduction placed your property's assessed value below its original base year value adjusted for inflation. When real estate values increase due to market conditions, the Assessor must restore the assessed values of properties such as yours to either their original base year values adjusted for inflation or to their market values. Such restorations often require increases in value in excess of 2%. These increases in value are permitted under Section 51 of the California Revenue and Taxation Code.

How can the assessed value of my property be increased after you reduced it?

The Assessor is required by law to conduct annual reviews of properties that have previously received temporary reductions in assessed value and to adjust their values as market conditions change. Selling prices of properties similar to yours have increased recently and this increase must be reflected in the assessed value of your property.

I didn't request a reduction in value based on Proposition 8. Why are you raising my taxes now?

Temporary reductions to your property's taxable value can be initiated by either you or by the Assessor. In a declining or stagnant real estate market, the Assessor may choose not to apply the annual inflation factors (which are 2% or less) to a large number of properties. When the real estate market has fully recovered, the Assessor is required by law to restore the original base year values plus the inflation factors to all of these properties.

The new assessment on my property is higher than what I could currently sell it for. How can I get it changed?

The assessed value of your property is based on an analysis of sales in your area as of the preceding January 1. It may not reflect current market values. If you have information on sales of properties similar to yours that indicates your assessment is higher than your property's market value, please contact us immediately. If you like, you can download and submit an Informal Request for Decline in Market Value Prop 8 Reassessment. Note that any comparable sales you bring to our attention must have occurred no later than 90 days after January 1st; all other sales data will be considered for the following tax year.

If I submit an Informal Request for Decline in Market Value Prop 8 Reassessment, how soon will I hear back from you?

We will respond as quickly as possible, but if you have not heard back from us by November 1, we recommend that you consider filing a formal Application for Reduced Assessment, which is due November 30. You should also call the Clerk of the Appeals Board at 707-565-2241, or visit the office of the Clerk of the Appeals Board at 575 Administration Drive, Santa Rosa, California, 95403.

The Process

Temporary reductions to your property's taxable value on the Assessment Roll can be initiated by either you or the Assessor. The process works like this:

Either you provide us with evidence that you feel justifies a reduction in your property value and request us to review it, or we initiate a review on our own. Our office constantly monitors market conditions and occasionally lowers assessed values without requests from owners.

Our appraisal staff will estimate your property's fair market value as of January 1 (the lien date) after studying applicable real estate market data. Then we compare that estimated value to the property's current adjusted Prop 13 base year value. If the estimated fair market value is greater than the adjusted Prop 13 base year value, no change is made to your property's assessed value. But if the current fair market value is less than the adjusted Prop 13 base year value, your property's assessed value is lowered to match its fair market value; this lower assessed value will be reflected in your next tax bill. In either case, you will normally be notified by mail in early July.

If you feel that we have reached our decision in error, you should contact us. If after contacting us and discussing your concerns you still feel that your property's assessed value is too high, you can file an appeal with the Assessment Appeals Board. If you wish, you can download an Application for Reduced Assessment as well as the Board of Equalization's guide to Residential Property Assessment Appeals, which may provide helpful information for completing the application form. The filing period for assessment appeals is normally from July 2 to November 30.

When your property's assessed value has been temporarily lowered due to Prop 8 conditions, it must be re-examined each year. When its market value increases above its adjusted base year value, the Assessor will once again enroll its adjusted base year value.

Examples

Here are three examples of assessments involving properties that experienced a decline in value for a temporary period of time:

Example 1: Value Reduction

This example illustrates how a property might be assessed over several years when market conditions cause its market value to fall significantly below and then rise above its adjusted base year value.

Example 2: Value Reduction with New Construction

This example illustrates how a property might be assessed over several years when new construction adds value to it even though market conditions cause its market value to fall significantly below its adjusted base year value.

Example 3: Value Reduction Because Inflation Factors Are Not Applied

This example illustrates how a property might be assessed over several years when the Assessor elects not to apply annual inflation factors to the base value established when the property is purchased.