Property taxes highlight San Mateo County growth

The year-over-year $15 billion increase in assessed values elevated the local property tax roll to $206 billion with numerous cities seeing double-digit value increases. The first installment of property tax payments for fiscal year 2017-18 have trickled in over the last few months as the holidays near. Now, the Controller’s Office is in the process of compiling data on various tax rates before the revenue is distributed to cities, schools, special districts and the county.

“We’re in an environment with a good economy, the property taxes is reflective of that,” said Assistant Controller Shirley Tourel. “The high growth in values and tax revenue go hand in hand.”

While rates have been relatively consistent, the increase in property tax revenue is credited with growing values. The base tax is 1 percent, however, there are slight variations in rates related to where a property is located and what taxing entities overlap, she explained. In many cases, rates fluctuate based on the number of parcels contributing toward paying off local bonds or debt service, with higher rates in areas with fewer properties being taxed.

Throughout San Mateo County, two areas with the some of the largest property tax rates abut a region with the lowest. An area of Daly City, Colma and Pacifica pay the second highest rate of 1.1714 percent, which factors in additional rates from the Jefferson Elementary and Jefferson Union High school districts. Nearby, the county’s lowest rate of 1.0601 percent is levied in an area that includes portions of Daly City, Colma, San Bruno and Pacifica where students attend the much larger South San Francisco Unified School District, Tourel said.

The highest property tax rate on the local roll is 1.1837 percent, which covers an unincorporated north coast area where residents are served by the Cabrillo Unified School and the Montara Sanitary Sewer districts. The highest rate is paid by public utility companies like Pacific Gas and Electric, which include a state property tax outlining a total 1.7664 percent, Tourel said.

Although the Controller’s Office is still compiling data to determine which entities ultimately contributed the most in property taxes last fiscal year, she pointed to prior data from the 2015-16 roll.

The top 10 taxpayers make up 5.19 percent of the total taxes billed and PG&E marked the top of the list at $20.3 million. Genentech, the biotech giant with its corporate headquarters in South San Francisco, was billed $18.8 million in the 2015-16 fiscal year. United Airlines came in third at $17 million, followed by Foster City-based biotech Gilead Sciences at $12.3 million, Google was billed $9.2 million for its San Mateo County properties, and Oracle Corporation contributed $7.3 million, according to the Controller’s Office. Aside from secured taxes such as on buildings and land, the rates include unsecured property taxes that cover items such as airplanes and business equipment.

But while businesses contribute big bucks, cities are also seeing growth that includes residential values. Total assessed values increased 7.9 percent in fiscal year 2017-18 with growth in all 20 cities and unincorporated areas of the county. The most growth was in East Palo Alto where there was a 19.75 percent increase in assessed values. Menlo Park came in second with 10.52 percent, San Carlos saw 9.13 percent, Redwood City experienced 8.52 percent and Foster City marked 8.43 percent, according to the Assessor’s Office.

The secured roll covers 221,082 commercial and residential properties and accounts for 95 percent or $195.2 billion of the total nearly $206 billion in assessed property values. The increases have been credited in part with the lowest unemployment rate in the state, a strong job market, and demand for commercial as well as residential space, according to the Assessor’s Office.

But officials note the enhanced property tax revenue has come at a price — housing is becoming unaffordable for many.

“It’s a good news story with a lot of bad side effects. The bad side effect is that people can’t live here. We know that about 62 percent of all the people that have jobs in San Mateo County commute from out of the county,” said Don Horsley, president of the county Board of Supervisors.

Horsley noted the increased property tax revenue, as well as the county’s local sales tax, has enabled officials to allocate additional funding toward affordable housing projects. Property taxes often represent the bulk of municipalities’ budgets. The 1 percent tax base is divvied up with approximately 45 percent going toward school districts, 25 percent to the county, 18 percent to cities, 10 percent to special districts, and 2 percent to former redevelopment agencies.  

Jim Irizarry, assistant assessor-county clerk recorder, agreed the growth has been a double-edged sword as it’s fundamental to the operation of government but is having a discernible effect on housing affordability.

Further growth is predicted, as there is nearly 60 million square feet of new development expected over the next five years, Irizarry said.

“San Mateo County is one of the premier locations to do business in the world. … It’s the old adage, in real estate it’s location, location, location. And San Mateo County has perhaps one of the best locations for a business environment,” Irizarry said, noting the desirability is marked by cranes and construction crews. “Everywhere you look in the county, you see some pretty major projects going on.”

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