Low Value Ordinance

Too Low to Assess: Properties with Less than $5,000 in Assessed Value

Where state law allows, the Assessor’s Office has regularly sought out efforts to eliminate property taxes for those businesses where the cost to assess and collect property taxes exceeds the property tax revenue generated.

In 2016 the Assessor’s Office recommended, and the Board of Supervisors passed, an ordinance permitting the Assessor’s office to automatically exclude properties with an assessed value below $5,000, eliminating the ad valorem property taxes for those properties. Fees and other non-ad valorem property taxes will remain on the tax bill.

As part of a continuous effort to seek out increased efficiencies, the Assessor’s Office conducted a formal cost study that demonstrated that the Assessor, Tax Collector and Controller’s total costs to assess and collect diminumus assessments of $5,000 or less, exceeds the $50 in property tax revenue that would have been generated from the assessment.

Typically these parcels consist of vacant property in remote locations with limited utility and marketability. In 2016, it was estimated that there were approximately 2,000 parcels that will benefit from low value ordinance. The ordinance will not apply to properties under the California Land Conservation Act (CLCA), Mills Act (historical) contracts, timber production zone designation (TPZ), non-profit golf courses, and low-value properties that are component parts of larger total property economic units.

The “too low to value” ordinance that passed in 2016 applied to real properties with $5,000 or less in assessed value, as well as business owners with machinery and equipment and businesses on government property. Combined, it was estimated that the annual cost to assess and collect taxes for these low value properties was approximately $1,895,000, which was far in excess of the projected property tax revenue of $602,000. Every employee in the Assessor’s Office use daily a cost accounting system which enabled the assessor’s office to provide the Board of Supervisors with these estimates. Additionally, the Assessor’s Office will be able to reallocate an estimated 11,000 hours towards more complicated assessments and customer service.

Attachments

Low Value Ordinance The Assessor introduced the low value/minimum assessment ordinance adopted by the Board of Supervisors which provides property tax relief to thousands of small businesses. The ordinance exempts from taxation all business property where the aggregate assessed value is less than $10,000. The ordinance is aimed at assisting taxpayers in which the cost to assess and process tax collection exceeds the total revenue generated by the tax.
Silicon Valley Business Journal 2016 Santa Clara County tax break will primarily benefit small businesses.
David K. Ginsborg

 
  • Deputy to the Assessor
  • Phone: 408-299-5588

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