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It is important for REALTORS® to learn about Propositions 13, 60 and 90 and two propositions that will be on the November ballot, Propositions 5 and 10, because they are the first person consumers go to for information about housing.
Approved by California voters in 1978, Proposition 13 caps the maximum amount of the assessed value of real property to one percent and limits property tax increases to no more than 2 percent per year as long as the property is not sold.
Propositions 60 and 90 stem from Prop 13. Prop 60 allows anyone over the age of 55 to transfer the base year value of their original residence to any replacement residence of equal or lesser value in the same county. Prop 90 extends these provisions to a replacement residence in a different county that accepts Prop 90 transfers. Homeowners must buy the replacement home within two years of selling the existing one, or vice versa.
Propositions 60/90 are incentives for senior homeowners to downsize and move into smaller, less expensive homes without being penalized with a higher property tax. The counties that accept Prop 90 transfers are Alameda, El Dorado, Los Angeles, Orange, Riverside, Santa Clara, San Bernardino, San Diego, San Mateo, Tuolumne and Ventura. El Dorado is dropping out effective November 7.
Proposition 5 is the California Association of REALTORS®’s Property Tax Fairness Initiative and would allow seniors to transfer their tax assessments from their prior home to their new home anywhere in the state and as many times as they wish. The transferred property tax benefit would apply through a proportionate formula whether or not a senior homebuyer purchases up or down in price. C.A.R. estimates the passage of Prop 5 would provide more liquidity in the market and free up 43,000 transactions.
Those opposed to Prop 5 claim it would mean a $150 million a year in lost revenue to the state budget, but according to REALTORS® this analysis does not take into account the property tax increases that might occur when the original homes are sold and assessed at a higher tax rate; nor does it take into account the economic benefits of having someone move into a new community.
Proposition 10 would repeal the Costa-Hawkins Rental Housing Act, which limits the use of rent control in California and allows landlords to increase rent prices to market rates when a tenant moves out. This proposition would allow local governments to adopt rent control ordinances and rules on how much landlords can charge tenants for renting apartments and houses. Cities will be free to impose rent control on any residential unit, including single-family homes and new construction. This proposition would lock in low rents and dissuade investors from building much needed housing in the state.
C.A.R. is supporting Prop 5 because it would be good for housing, and actively opposing Prop 10 because it would hurt housing.
On Tuesday, the San Mateo County Board of Supervisors will consider eliminating Proposition 90, an important tool which for the past 20 years has made it possible for senior citizens (as defined as over age 55 in the law) and persons with disabilities to relocate and transfer their tax basis to San Mateo County, to move closer to families, jobs and vital services. Revoking Prop. 90 would negatively impact the ability of seniors and persons with disabilities to afford housing and move into the county.
Please join SILVAR, REALTORS® and homeowners in opposing this proposal by sending the message below to the Board of Supervisors before it meets on Tuesday, February 26.
The San Mateo County Board of Supervisors will consider repealing a property tax benefit for seniors and persons with disabilities wishing to relocate to San Mateo County at their upcoming meeting on Tuesday, February 26.
Proposition 90 provides anyone over the age of 55 with relief from Proposition 13 by allowing them to move from one county to another without undergoing a change in their basic property taxes. Proposition 90 stems from Propositions 60 and 110. Under these propositions, if a seller or spouse is over age 55 or if a seller of any age is disabled when their original residence is sold, the seller may transfer the base year value of their home to a replacement primary residence of equal or lesser value within the same county, provided certain conditions are fulfilled. Proposition 90 extended this benefit to seniors and the disabled who move to counties that adopted Proposition 90 rules.
Since Proposition 90 is a “local-option” law, each county has the option of participating. If a county has adopted a Proposition 90 ordinance, it accepts transfers of property tax base assessments from other California counties. If the county that the homeowner is moving from does not have a Proposition 90 ordinance, this does not affect the eligibility of the homeowner. At present, there are only eight counties that have adopted the Prop. 90 ordinance – Santa Clara, Alameda, El Dorado, Los Angeles, Orange, San Mateo, San Diego and Ventura.
In 2011, SILVAR REALTORS® successfully fought an attempt by Santa Clara County Assessor Larry Stone to eliminate the tax benefit for seniors and the disabled in Santa Clara County. Stone wanted the supervisors to eliminate Proposition 90 as a way to increase revenue, but SILVAR REALTORS® and senior residents objected to the proposal. More than 50 members from the SILVAR and the Santa Clara County Association of REALTORS® (SCCAOR) attended the county board of supervisors in June 2011 to oppose the elimination of Prop 90. Several recounted personal experiences with seniors and disabled clients who benefited from the measure, and who otherwise would not have been able to move to the county had the proposition not been in place.
In the end, the Santa Clara County supervisors listened and decided to continue to opt in on Proposition 90. “There is value to it at the personal level. We supported it then, we should support it now,” they said. The supervisors also noted, “It doesn’t feel right to take this away from the people who could use it. In the big picture, it just doesn’t feel right.”
San Mateo County’s seniors and disabled residents will be facing this dilemma when the ordinance is considered at the board of supervisors meeting next week. A majority vote by the supervisors is needed to repeal the proposition.
On Tuesday, the Santa Clara County Board of Supervisors voted unanimously to continue to opt-in to Proposition 90. Thank you to all SILVAR members who answered SILVAR’s Call to Action and to the many SILVAR members who attended the lengthy board meeting on Tuesday afternoon and voiced their concerns directly to our supervisors.
Under Proposition 60 and 110, if a seller or spouse is over age 55 or if a seller of any age is disabled when their original residence is sold, the seller may transfer the base year value of their home to a replacement primary residence of equal or lesser value within the same county, provided certain conditions are fulfilled. Proposition 90 extended this benefit to seniors and the disabled who move to counties that adopted Proposition 90 rules.
County Assessor Larry Stone wanted the supervisors to eliminate Proposition 90 as a way to increase revenue, but SILVAR REALTORS® and members of the Santa Clara County Association of REALTORS® persuaded the county supervisors to oppose this proposal. On Tuesday, SILVAR members reminded the supervisors of the benefits of Proposition 90; many recounted personal experiences with seniors and disabled clients who benefited from the measure, and who otherwise would not have been able to move to the county had the proposition not been in place. Our members told the supervisors their clients were able to move closer to family, medical services and jobs. Otherwise, they would have been locked-in to their previous residences due to the significant property tax increase incurred in moving.
REALTORS® noted Proposition 90 is a “two-way street” because it creates opportunities for the original properties to be reassessed at a higher rate, while providing a significant benefit in improving the quality of life for homeowners. They also said seniors and the disabled from other counties “have diversified our county and enriched our quality of life.”
Stone questioned the supervisors’ hesitance in what he saw as “an obvious source of revenue” for the county, but our REALTORS® indicated the increase his office projects would be an estimated $150,000 at best, which would not be realized until 2013. They said the slight increase could not justify the intangible benefits the proposition gives seniors and persons with disabilities who wish to move to the county.
Supervisor Liz Kniss said the county made the decision to opt in Proposition 90 20 years ago and it should stay as an opted-in county.
Supervisor Ken Yeager said after listening to the real life examples presented by the REALTORS®, he felt “there is value to it (Proposition 90) at the personal level. We supported it then, we should support it now.”
While noting the assessor made a credible argument that increasing revenue was important for the county, upon hearing the many stories of people who have benefited from the proposition, Supervisor Mike Wasserman said, “It doesn’t feel right to take this away from the people who could use it. In the big picture, it just doesn’t feel right.”
Supervisor Dave Cortese indicated Proposition 90 creates a flexibility for seniors and persons with disabilities. “We should leave the flexibility for folks for now,” said Cortese.
The supervisors voted 5-0 to keep Proposition 90 in Santa Clara County.
The Call to Action was a team effort by SILVAR members and a victory for seniors and persons with disabilities who have moved to or plan to move to Santa Clara County. SILVAR thanks everyone who took part in this effort and the board of supervisors, who took into consideration the impact rescinding Proposition 90 would have on a group of people who have very little clout in the political arena.
REALTORS® in Santa Clara County oppose a move to rescind a benefit which for more than two decades has allowed seniors and the disabled from other counties to take advantage of a tax incentive to relocate to the county. Rescinding this benefit provided by Proposition 90 could hurt seniors wishing to move and buy a home in the county.
Under Proposition 60 and 110, if a seller or spouse is over age 55 or if a seller of any age is disabled when their original residence is sold, the seller may transfer the base year value of their home to a replacement primary residence of equal or lesser value within the same county, provided certain conditions are fulfilled. Prop 90 extended this benefit to seniors and the disabled who move to counties that adopted Prop 90 rules.
The Santa Clara County Assessor’s Office wants the board of supervisors to eliminate this important senior tax benefit and rescind Prop 90 transfers as a way to increase revenue. Proponents admit any revenue increase would be “slight” at best. REALTORS® say a minimal increase in revenue does not outweigh the economic benefits these transactions bring to the county.
“Given the limited number of affected parcels, it is not a business or financial decision that motivates REALTORS® to speak out on this issue. We support preserving Prop 90 for the benefits it brings to the county and for qualified seniors and the disabled,” says Gene Lentz, president of the Silicon Valley Association of REALTORS®. “The law provides an incentive for seniors to move into smaller, less expensive homes without being penalized.”
Prop 90 eases the property tax burden that otherwise could prevent seniors from moving into smaller residences, so they can be closer to children and grandchildren who reside in Santa Clara County, says Lynn Grandi-Hill, whose parents moved from San Rafael to Willow Glen in 1989.
“It was wonderful having them close by. … My children got see them more often than they would have had they stayed in San Rafael,” says Grandi-Hill. “As much as families can stay connected and together, Prop 90 is a positive thing for society in general”
Prop 90 counteracts the “lock-in effect” created by Prop 13, which slowed the housing turnover and supply across the state. “Prop 90 helps seniors wanting to live in the county. By living here they, in turn, help the county’s economy since they will buy their groceries here, shop here, buy their gas here. They are a positive economic influence,” says Mike Sibilia, president of the Santa Clara County Association of REALTORS®.
A Southern California senior who moved to Santa Clara County to be close to his children after his wife died, says Prop 90 was a major factor in his decision to buy a house here. “I considered a number of options and I can tell you Prop 90 was big factor in my decision,” he says. “People considering rescinding it are short-sighted. It was a big savings for me, but people like me who move here also spend money here, so the county benefits too. “
Rescinding Prop 90 would reduce the number of qualified buyers considering a home in the county. Seniors are more likely to move and buy a new home once they qualify for Prop 60 and 90 benefits. A California Association of REALTORS® survey indicates 52 percent of Prop 90 transactions would not have taken place if the measure was not in effect.
Silicon Valley Association of REALTORS® says ... 