As Southland counties reassess home values, tax bills fall

The tumbling housing market has prompted county tax officials around Southern California to begin reducing the assessed value of many houses, resulting in lower tax bills for homeowners but less-than-expected revenue for already cash-strapped governments.

The values of more than 41,000 homes have been reassessed downward so far in Los Angeles County, resulting in an average tax saving of $660. Other counties have barely begun the reassessment process but promise to get the job done before property tax bills are mailed in October.

In Riverside County, which has been particularly hard hit by the housing slump, the assessor's office has been fielding at least 100 calls a day from people concerned about property values and wanting to know when and how theirs will be reassessed, said county Assessor Larry Ward.

"It is a huge job," said Orange County Assessor Webster J. Guillory, who, like officials in other counties, still expects growth in the overall property tax base. "We will do it with existing staff and lots of overtime paid for weekend work and 10-hour days. We don't have nearly enough staff to do this level of work."

Last year Riverside County's automated system reduced the value of about 9,000 residential properties, and 2,000 more were later reduced when homeowners asked for an additional review. On average, the values were cut about $43,000, and the homeowners received a $500 tax break.

Around the Southland, officials are automatically reevaluating homes purchased in recent years, especially at the height of the housing bubble from 2004 to 2007. Thousands of homeowners have also filed informal requests.

As of March, the average home price in Southern California was down 19% from its peak. But owners are allowed a reduction in property tax assessment only if their home value declines below what is known as "Proposition 13 limits." Those limits are determined by the assessed value at the time of purchase plus up to 2% each year after that, if home values increase.

The effect of the reassessments on county coffers could be tremendous, and next year will be only the first of at least several years affected by the housing downturn, said Los Angeles County Supervisor Zev Yaroslavsky.

"I think we are only beginning to see the impact, and I think it could be significant. I think the chickens are going to come home to roost. How many chickens is the question," he said.