News

Prop. 90 coming to an end next year

By From page A1 | November 15, 2017

Homebuyers looking to take advantage of Proposition 90 in El Dorado County have one year left to qualify.

The El Dorado County Board of Supervisors voted to end participation in the property tax swap program effective Nov. 7, 2018, giving those in the pipeline some time. This action, approved on a 4-1 vote, does not affect homeowners already getting the property tax discount.

Prop. 90 was approved by the board in 2009 as a way to revive a weak real estate market. It allows homeowners (55 and older) in another county to transfer their base property tax value to a home purchased in El Dorado County — thereby paying less in property taxes here. To qualify, the sale of the original home and the purchase of the new home must be completed within two years of each other. Prop. 90’s initial lifespan in El Dorado County was five years and in 2014 the board renewed the county’s participation for another 18 months.

Last year the board supported another five-year renewal with the caveat that the Chief Administrative Office provide an annual report — the first of which was released last month and detailed the loss in revenue to the county General Fund and special districts. On Oct. 24 the board discussed the report and after much debate voted to discontinue Prop. 90. The supervisors asked staff to come back with an exit strategy, which was the topic of discussion Tuesday.

Prior to the Nov. 7 motion — supported by Supervisors John Hidahl, Shiva Frentzen, Brian Veerkamp and Michael Ranalli — several speakers, many of them Prop. 90 beneficiaries and real estate professionals, asked the board to reconsider.

Pleasanton resident Phil Richardson said Prop. 90 was a key factor in his family choosing to live in El Dorado County. The family had planned to have three generations living here. Opting out of Prop. 90 means he and his wife might look elsewhere for a home, he said, even though their children and grandchildren have moved to El Dorado County.

Another Prop. 90 beneficiary called it “a game changer — not just for me but for others migrating from the Bay Area.”

Realtors argued that though the county loses some property tax, Prop. 90 is “revenue neutral” or “revenue positive” because those homebuyers spend their money in El Dorado County, generating sales tax revenue.

“It brings businesses here, it brings people here and it does bring families here,” said Michelle Thompson with Lyon Real Estate in El Dorado Hills.

Susan McVicar with Century 21 in Placerville urged the supervisors to “look at the big picture.”

“These new residents are creating jobs,” she said. “They are more than making up for the tax losses.”

Being able to quantify what is lost in property tax revenue but not what is gained in sales tax revenue was a sticking point for some board members. They also noted that the county takes a relatively small hit compared to the special districts, specifically fire districts and school districts, which solely rely on property tax revenue. Those entities do not receive sales tax revenue.

Conceding that the board will stick to its Oct. 24 decision, other speakers asked for more time to wind down Prop. 90, thereby allowing more people to qualify before the benefit disappears. Several speakers supported a two-year plan.

Ken Calhoon, an agent on the Divide, said the board’s action last year to renew Prop. 90 participation for five more years set retirement planning in motion for many people — some of whom aren’t ready or able to shorten their timelines.

“A longer phase-out period is required to lessen the economic impact,” Calhoon argued.

District 5 Supervisor Sue Novasel, the lone no vote in both actions to end Prop. 90 participation, proposed a two-year soft landing. Supervisor Hidahl countered with a one-year extension, which passed.

While recognizing that Prop. 90 has helped improve the area’s real estate climate, Supervisor Veerkamp said,” What also works is El Dorado County is a great place to come to. (Prop. 90) has put us in a good place but now it has run its course.”

Noel Stack

Leave a Comment

Discussion | 5 comments

  • JohnNovember 13, 2017 - 11:17 am

    Glad the "special interest" real estate people didn't get Prop 90. Enough already with the tax break. We need the revenue.

    Reply
  • Michelle Thompson Lyon Real EstateNovember 14, 2017 - 5:33 pm

    I have clients with family in Lincoln that moved here from Pleasant so they can save on their taxes and have extra money to help their parents. I have other clients that are bringing their 30 year old kids, and small children, here that would never thought to move here. In my opinion, prop 90 brought revenue here. Others agree and that is why they are opposed as they do not want growth. However, sellers like it when a Bay Area buyer brings an offer. We all have opinions I guess. That is what makes our country great!

    Reply
  • JohnNovember 16, 2017 - 1:50 pm

    Next year (after our county drops Prop 90), the counties of Alameda, Los Angeles, Orange, Riverside, Santa Clara, San Bernardino, San Diego, San Mateo and Ventura will permit Prop 90 transfers. If the logic/argument is that Bay Area folks are moving to get away from the Bay Area, then of the remaining counties which one(s) would they move to to get away from the "rat race" and also live in a nice community? Maybe San Diego or Ventura - but I'd say that's a stretch as both are in So Cal and do the majority of Bay Area folks really want to move to So Cal? Nah. I think they'll still move to Northern CA and/or El Dorado County.

    Reply
  • Joel MillerNovember 13, 2017 - 6:12 pm

    Yes the Fire Chief needs a big pay raise!

    Reply
  • Phil RichardsonNovember 15, 2017 - 5:32 pm

    I believe that ending Prop 90 will actually hurt the county from a property tax revenue standpoint. California residents who want to consider relocation and pursue a Prop 90 transfer will look to the other counties that still accept transfers. Buyers still coming to the county may consider buying less in order to hold down their cost of relocation. I say this purely from the perspective of a pending buyer hoping to accomplish a transfer before the welcome door closes.

    Reply

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