News

County dropping Prop. 90 perk

By From page A1 | November 01, 2017

El Dorado County will discontinue its participation in the Proposition 90 program, which gives older homebuyers a break on their property taxes.

Prop. 90 allows homeowners older than 55 to transfer their base tax value from another county to El Dorado County when purchasing a new home here that will become their primary residence. Last year the El Dorado County Board of Supervisors voted to extend the county’s Prop. 90 participation for five years and asked Chief Administrative Office staff to come back with an annual report.

Tuesday staff presented the first report, which shows that as of this fiscal year the county’s expected lost revenue to the General Fund is a little more than $414,000 while special districts — schools, fire, etc, — take a nearly $775,000 hit. The average price of a Prop. 90 home sold in 2016 was $592,000; however, the report notes, the average assessed value was $261,844.

Prop. 90 advocates argue that these homeowners have more disposable income and contribute to sales tax revenue the county receives.

“This is an economic driver,” El Dorado County Chamber of Commerce CEO Laurel Brent-Bumb told the board. She pointed out that the staff report notes that out of 251 Prop. 90 survey respondents 192 used local contractors and businesses when making home improvements; more than half also purchased most of the materials needed from county businesses.

Steve Ferry, who worked in the county’s real estate industry, urged the supervisors to look at each Prop. 90 sale as “one more” visit to Apple Hill, trip through wine country and/or purchase at a local business.

Kim Beal, El Dorado County Association of Realtors government affairs director, also urged the supervisors to keep the program, which, she said, has helped the local real estate market. Rather than eliminate a program that helps sell homes in El Dorado County, Beal said, “We should be looking at building more homes.”

But the debate over numbers — those quantifiable (loss to the general fund and special districts) and those not (sales tax revenue gained) — pushed the majority of the board toward cutting the program.

Diamond Springs resident Richard Boylan called Prop. 90 “unjust” because only one part of the population gets a benefit. “It was never a good idea and it is not now,” he said.

Regardless of the tax break, Boylan said, people will continue to purchase homes in El Dorado County “because it’s a wonderful place to live.”

El Dorado Hills Fire Chief Dave Roberts, who could not attend Tuesday’s meeting, submitted a letter explaining the fire district’s perspective.

“As you are very aware this demographic equals higher EMS demand on your fire agencies and JPA ambulance,” Roberts wrote. “Additionally, as you also know, when these patients are transported by the ambulance the financial reimbursement from Medicare is minimal — equaling pennies on the dollar.

Roberts wrote that his biggest concern is that agencies that strictly live off property tax revenue, such as the fire districts, “are directly hurt by this program. For us that don’t benefit from sales tax, the math is simple — less property tax revenue, plus increased demand with more structures and a more ‘vulnerable’ population to protect equals totally unfair.”

Roberts also noted that in his El Dorado Hills neighborhood, many older homeowners he’s personally spoken to knew nothing about Prop. 90 when they purchased their homes (affirming it was not a factor when they decided to move) and those same neighbors do a lot of shopping in Folsom (for which El Dorado County receives no tax benefit).

District 2 Supervisor Shiva Frentzen argued that El Dorado County must create incentives that bring more businesses and more people of all ages to the county. The county already has one of the largest 55-plus populations in the state.

Other speakers also argued that catering to this demographic pushes out young families who can’t afford to buy in El Dorado County.

Concerned about the compounding financial impacts on the county and special districts, District 4 Supervisor Michael Ranalli said he had a hard time seeing the benefits, especially since some of the more rural fire districts are hanging on by a thread.

The school districts and fire districts suffer more than the county, added District 1 Supervisor John Hidahl. He proposed a phase-out approach so people eligible for Prop. 90 benefits who are in the process of buying homes don’t have the rug pulled out from under them.

Unconvinced, District 5 Supervisor Sue Novasel argued for Prop. 90, saying the board should at least let it run through the five-year period approved last year. “When you have an economic incentive you need to let it work,” she said.

Supervisors Hidahl, Frentzen, Ranalli and Brian Veerkamp voted to discontinue the county’s participation in Prop. 90 and asked staff to come back with a phase-out plan. Novasel voted against the motion.

Chief Administrative Officer Don Ashton released a statement after Tuesday’s meeting noting that staff will come back with recommendations on Nov. 7.

“Included in that recommendation will be protections for those seniors currently in the process of buying or selling their home to still participate in Prop 90. The exact length of time will be discussed with the Board on Nov. 7,” the statement reads. “Due to regulations governing the adoption of new ordinances, the earliest the new ordinance would be approved is the end of December. The new ordinance would take effect 30 days after the board’s final approval.”

Noel Stack

Leave a Comment

Discussion | 4 comments

  • R MartinezOctober 30, 2017 - 12:41 pm

    Are the folks currently using the Prop 90 benefit going to continue to have it, or will their tax basis be reset?

    Reply
  • Carla HassNovember 06, 2017 - 11:16 am

    R Martinez: If you are currently receiving the Prop 90 benefit, it will continue. Your tax basis will not be reset.

    Reply
  • JohnOctober 31, 2017 - 4:28 pm

    Chief Roberts is spot-on. As for Mr. Ferry's comments about "one more trip to Apple Hill or trip thru wine country" - I doubt those purchases amount to more than the $1.18Mil lost in county revenue.

    Reply
  • Joel MillerNovember 03, 2017 - 11:30 am

    Steve you should know that fireman stack the BOD , Highdahl and Veerkamp, Firefighter clout vs realtors it's a no brainer!

    Reply

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