Real Estate

County assessor's report captures past 10 years, points to return to 'normal market'

Annual report shows 2019-2020 assessment roll topped half a trillion dollars

The annual Assessor's Annual Report, recently published by the Office of Santa Clara County Assessor Larry Stone, marks a big milestone for this year: The 2019-2020 County's assessment roll totaled $516 billion — that's over half a trillion dollars, and a 6.79% increase over the previous year.

According to the report, Palo Alto's share of the assessment roll grew by 6.72% for 2019-2020 and makes up 7.62% of the total assessment roll.

An assessment roll is, as the report describes, "the official list of all property within the county assessed (for taxes) by the Assessor."

The report also includes a retrospective of the past 10 years, a bit like the greatest hits of the area's recent near-decade of major economic growth.

"Since the end of the great recession, we've had consistent large increases," Stone said in an interview.

Stone recalled that the first assessment roll that he oversaw, in July 1995, was $115 billion.

"That's the kind of growth that we've seen. I don't think that any county in the state has seen that kind of growth over the last 24 or 25 years — that's because we're Silicon Valley," Stone said.

As for how the more than half a trillion in property taxes from the 2019-2020 roll is spent, the report shows how the funds are divvied up in the county overall, with a large proportion of the funds going to public schools (44%), and community colleges receiving 7%. Overall, the remaining funds are allocated to cities (13%), special districts (6%), Redevelopment Trust Fund (12%) and the county (18%).

The amount school districts receive does vary, Stone said, due in part to how much tax revenue each city generates. The report shows that the estimated total allocated to the Palo Alto Unified School District is 46%.

According to the report, "Property sales and new construction were principal contributors to the assessment roll growth this year. Just over 60% of the $32.9 billion increase in assessments was attributable to re-assessable changes in ownership."

In Palo Alto, that amounted to $336,969,571 added assessed value due to changes in new construction, the report showed. Among the top 10 changes in ownership for 2019-2020, two Palo Alto sales made the list: office properties assessed, respectively, to Leland Stanford Jr. University, with a net assessed value of $145,100,000 and to San Francisco No. 69 LLC (Alexandria Real Estate Equities) at $136,000,000.

Countywide, businesses also gave the roll a $5.8 million boost in taxes on "business personal property," items that the report describes as machinery, equipment, computers, and fixtures.

Business is still booming, but nonetheless, as the report notes, the growth rate for business personal property is "virtually the same amount as the prior year, 3.3 percent, another indication that our local economy is beginning to cool."

Stone said that such signs do point to the economy slowing.

"I think we're just at the beginning of what we call a 'normal recession' — not a meltdown like we had in 2008," he said, but emphasized that he sees indications of much greater stability compared to the last time Silicon Valley saw skyrocketing growth, the dot-com boom — and eventual bust.

"There's a significant difference, even though the roll growth is about the same as back in the dot-com boom days," Stone said. "The difference is this: The basis of the assessment roll is real property — bricks and mortar, homes and buildings.

"(During the dot-com boom), the development was based on speculation, developers building office or industrial buildings and leasing them to startups, primarily with no earnings, so when the market went from the dot-com boom to the dot-com bust in 2002, a lot of these companies went out of business or just walked away from space that they leased."

Stone said that in the current market, large, well-established companies are doing the building and developing. "That bodes well for the future because (companies like) Apple are not going to go out of business," Stone said.

"Apple and Google used to do long-term leases, now they're buying land and building buildings, which again, is just a much more stable market," he said. In fact, the report indicates that Apple and Google alone account for 3% of this year's assessment roll.

Warehouse space is enjoying a low vacancy rate at 2%, Stone said, which is attributable to the move of distribution centers closer to urban centers, due to companies like Amazon. Stone did note the one area where numbers are consistently down is in retail.

Stone said that high housing prices remain a major concern, cautioning that lack of housing could upend our local economy if it's not addressed.

"I think the lack of affordable housing — both affordable and worker housing, there is a difference — the lack of both of those will ultimately lead to our demise if we don't seriously deal with it quickly."

He emphasized that overall, while the numbers are showing a decline in growth, it's nothing as precipitous so far as in previous downturns.

"We're beginning to see a leveling-off; we are beginning to see kind of a normal market coming back," he said, noting that for the first time in four or five years, he's seen "for lease" signs outside of apartments and even some offices.

"We're seeing some office vacancies now. The office market is clearly showing signs of over building — again nothing serious."

View the full report here.

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Comments

16 people like this
Posted by ExuberSense
a resident of Another Palo Alto neighborhood
on Dec 2, 2019 at 6:22 pm

"We're seeing some office vacancies now. The office market is clearly showing signs of over building"

We desperately need to convert offices to housing and cap office building.

With the large companies owning now, they will make life impossible for the little guys, residents, small businesses, and startups. They are the giant industrial monoculture bulldozing everything and creating significant risks for the whole region if (when) something goes wrong. Just look at Tokyo.


6 people like this
Posted by ExuberSense
a resident of Another Palo Alto neighborhood
on Dec 2, 2019 at 6:23 pm

And the rust belt.


23 people like this
Posted by Don't do anything extra
a resident of Downtown North
on Dec 2, 2019 at 10:00 pm

Why should Pausd need an expensive parcel tax on top of the very generous property taxes it already receives from Palo Alto properties? Tax revenues keep going up and up and up. Pausd enrollment is going down and down and down.


Like this comment
Posted by Patrick
a resident of Menlo Park
on Dec 3, 2019 at 12:14 am

"half a trillion in property taxes" - that is the assessed value, the taxes on that are at most 2% of that? I'd imagine otherwise we'd be able to afford a teacher per student?


10 people like this
Posted by Don't do anything extra
a resident of Downtown North
on Dec 3, 2019 at 10:11 am

Property taxes have been going up at a clip greater than 5% for a number of years. 42% over the past 5 years cumulatively. Why isn't that sufficient for the schools, when inflation has been completely subdued, with 2.1% the highest rate over the last 5 years? Why do they need another $1000 on top of what we already pay? Just because they're used to getting it, and just because they want to keep their jobs, even when they're not needed, are not good reasons to tax us extra over and above the steadily rising property taxes, especially when enrollment is declining, and projected to continue to decline --- and when PAUSD already pays the highest salaries in the state for a unified school district of its size.


7 people like this
Posted by Art Liberman
a resident of Barron Park
on Dec 4, 2019 at 4:15 pm

Art Liberman is a registered user.

The new office building in the Assessor's report that says is 'owned' by Stanford is likely the four building campus in the Research Park built by Sand Hill Property.

Sand Hill is also constructing two office buildings at 3251 Hanover. The latter is the former site of a Lockheed technology complex. It had employed 300 persons; the new buildings, leased to a financial services company, are estimated to employ 1000 persons.

Sand Hill is responsible for bringing more workers to Palo Alto and worsening the job- housing imbalance. But it appears that Sand Hill is not satisfied, and determined to build even more office buildings! They own the lease on 3300 El Camino (near Hansen Way) and the frontage of the CPI site. Sand Hill's website suggests they are planning to build yet another office building there.

Palo Alto needs housing desperately and few sites are available and none are as attractive as 3300 El Camino, with its frontage on a road with public transit. Council needs to take action NOW to rezone the 3300 El Camino parcel from Research Park (RP) zoning to one on which housing can be built.

This site is exactly the type that has been the focus of SB50's proposal, which would give the State of California the authority to override local zoning codes. If Council doesn't take action, it will signal that Palo Alto is not serious about increasing housing and will give them good reason to pass legislation that will have the effect of overriding Palo Alto's zoning codes.


8 people like this
Posted by Anonymous
a resident of Duveneck/St. Francis
on Dec 4, 2019 at 5:12 pm

Additional: Sand Hill has created controversy at Palo Alto’s Edgewood Shopping Center and in Cupertino, see: Vallco Mall redevelopment plans.
I’m concerned about the power of the huge companies here: Google and facebook. The former is the largest, most powerful landowner in Silicon Valley, no? Influential in government at all levels.
Meanwhile, Stanford, with one of the very highest endowments in the world, pays virtually no property tax. WE little homeowners pay a LOT!! I don’t wan5 more assessments for the community colleges (enrollment is way down) OR the wealthy Palo Alto SchoolDistrict (PAUSD). Enough.


6 people like this
Posted by CrescentParkAnon.
a resident of Crescent Park
on Dec 5, 2019 at 11:46 am

>> Why should Pausd need an expensive parcel tax on top of the very generous property taxes it already receives from Palo Alto properties?

Great question.

What's the difference between the special assessment and property taxes? It is that the special assessment is the same for everyone if you own a little condo, or a tiny cottage and have zero students in school or ether you own a huge mansion in the hills. It is a rip-off of most Palo Altans.


Like this comment
Posted by atotic
a resident of Old Palo Alto
6 hours ago

atotic is a registered user.

> Why should Pausd need an expensive parcel tax on top of the very generous
> property taxes it already receives from Palo Alto properties?

Because "Palo Alto pays lowest effective property tax in state" thanks to
prop 13, 0.42%.


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