San Diego County Property Hits Record Value Despite Pandemic Setbacks

Tax Assessor Reports Total Topping $627 Billion as Commercial Owners Get Breaks

By Lou Hirsh CoStar News July 8, 2021 | 10:58 AM

Total property values in San Diego County hit a record $627.25 billion in the latest annual report from the county assessor’s office, even adjusting for the county granting more than $1 billion in value reductions to small businesses and other commercial property owners hit hard by revenue losses from the coronavirus pandemic.

The tally is up $22.5 billion, or 3.72%, over last year, and it includes values for buildings along with commercial and residential land as of Jan. 1. Officials in the nation’s fifth-most populous county said the latest numbers demonstrate that Proposition 13, passed by California voters in 1978 to prevent taxes on current owners from rising inordinately with property values, “delivered on its key promises.”

“First, that taxpayers be protected from unaffordable property taxes due to skyrocketing real estate values that could cause them to lose their homes,” said San Diego County Assessor Ernest Dronenburg Jr. in a statement. “Second, it provided for the ninth year in a row a reliable and increased government funding source for key services like schools and first responders, insulating them from the current COVID-19 pandemic.”

The assessor’s office reported that 86% of homeowners received an assessment increase of just over 1% for inflation in the past year, even as home values in the region rose 10.7%. Officials also referenced recent failed efforts at the state level to remove commercial property owners from provisions of Proposition 13, including limits on tax increases during the tenure of the current owner.

“It really shows the importance of maintaining that protection for commercial properties,” said Jordan Marks, taxpayer advocate for the County Assessor’s Office.

Marks told CoStar News that the office during 2020 sent out notices and applications to 3,000 eligible commercial property owners, many of them small business operators, letting them know they could apply for breaks on tax assessments tied to issues such as equipment or spaces that went unused during pandemic business shutdowns.

The county received completed applications from between 800 and 900 commercial property owners and approved assessed value reductions totaling $1.1 billion for the fiscal year, Marks said. Officials noted an additional $250 million in assessment reductions were approved for groups including qualified homeowners, disabled veterans and nonprofit institutions providing public services.

The total tax assessments are expected to translate into more than $5.8 billion generated for services from local schools, cities and the county for the 2021-22 fiscal year. The rise in land values in particular has potential repercussions for issues including building affordable housing in the region, though it also means that property owners throughout the region are now benefiting from a yearslong trend in rising apartments rents and home prices.

“We’re already a pretty geographically constrained market with only so much available land to build on,” said Joshua Ohl, director of market analytics for CoStar Group in San Diego. “Rising residential values are driving that increase, and when looking at it based upon cities, it looks like some of San Diego’s bedroom communities are increasing the most, which makes sense because they were starting from a more affordable price point.” “But as people continue seeking out homes to build or live in further from the coast, those cities are likely poised to benefit from increased demand and further rising valuations,” Ohl said.

The city of San Diego saw total property values rise 3.4%, or $9.9 billion, topping $301 billion. But local cities showing the biggest percentage increases in total assessed property values were suburbs to the north, south and east, including Oceanside rising 4.4%, Chula Vista up 4.2%, Encinitas rising 4.8%, Imperial Beach increasing 5.4% and Lemon Grove up 6%.

Among commercial property owners, the region’s biggest taxpayer in the past year was utility provider San Diego Gas & Electric, assessed at more than $186.2 million, according to the assessor’s office. It was followed in the top five by chipmaker Qualcomm, developers Irvine Company and Kilroy Realty, and UTC Venture LLC, an affiliate of mall operator Unibail-Rodamco-Westfield.


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