Nancy Fritz and her husband spent $75,000 in 1961 buying a modest plot and building a home in Laguna Beach's Emerald Bay, an investment that has more than paid off. But although the home is now worth more than $1 million, Fritz still pays relatively low property taxes of about $4,000 a year, thanks to Proposition 13.
So Fritz and others in the exclusive community were a little displeased when their part-time neighbor ventured an opinion last week that raising property taxes might be a good way to address California's fiscal problems.
If Arnold Schwarzenegger is elected governor, the neighbor's views might carry some weight: He is Warren Buffett, the billionaire investor and financial advisor to the actor's campaign.
"I don't know what he was thinking," Fritz, 75, said Monday. "He's got billions. He doesn't have to worry about it."
Schwarzenegger's campaign hastened to distance the actor from his financial advisor's statements last week and assure voters that the candidate supports the landmark proposition that caps property tax increases. But Buffett's comments stirred up a froth in Emerald Bay, where homes recently listed at $2.3 million to $10.9 million.
More than 500 homeowners live within the gates at Emerald Bay, which opened in the 1920s as a vacation destination but is now filled with some of Orange County's wealthiest residents. Many of Emerald Bay's homeowners cruise in electric carts down winding roads to a private beach, which was dotted Monday with colorful umbrellas, vintage red lifeguard stands and dozens of youthful, bronzed bodies.
Buffett bought his first home at Emerald Bay in 1971 for less than $100,000. He's seen the value of that home skyrocket to an estimated market value of $4.5 million. Because of the Proposition 13 property tax restrictions voters approved in 1978, Buffett paid $2,265 in tax for that home on an assessed value of $217,350 last year. If he were taxed on the current value, it would jump to about $46,000 per year.
Emerald Bay resident Nancy Casebier, a real estate agent who has sold more than 200 homes in the community, said she bought her home for about $225,000 in the 1970s and it's now worth about $2.5 million.
"There are a lot of people like me, working mothers who have held onto our homes for all these years because it appreciated so much. We couldn't afford our homes again, if we were to buy them," she said. "A lot of elderly people living on fixed incomes, they'd be out on the streets."
