Local Leaders Praise High Court’s Decision Upholding Prop. 13

San Fernando Valley area business, real estate industry and homeowner leaders on Thursday applauded the U.S. Supreme Court’s decision upholding California’s Proposition 13 property tax system, but some critics warned that the decision will keep home ownership beyond the reach of many low-income people.

The initiative, which passed overwhelmingly in the Valley 14 years ago, capped property taxes at existing levels, eliminating widespread fear that people would be taxed out of their houses. But it also allows new owners to be taxed at 1% of market value and allows property taxes to rise by 2% a year for both old and new owners.

As a result of the sharp run-up in housing values since the proposition was passed, people who bought residences after 1978 are paying taxes that on average are five times higher than paid by neighbors in identical housing purchased before 1978, according to a study for the Legislature.

“Hooray for the Supreme Court,” said Santa Clarita City Councilwoman Jan Heidt, who campaigned on behalf of the initiative 14 yeas ago after her property taxes were abruptly raised fivefold to $5,000 a year.

“They’ll never be able to do that sort of thing to homeowners again.”

The court’s decision also was hailed at the San Fernando Valley Board of Realtors, the state’s largest. Jim Link, board executive vice president, said although some housing experts have concluded that Proposition 13’s taxing system deters people from moving up to larger residences because they would pay taxes at the higher level, he said he knew of no local real estate agents who agreed with that thinking.

“I have not heard anyone in our business say that they expected business to pick up if the court struck down Proposition 13,” Link said.

He said despite disparities between pre-1978 and post-1978 owners, “at least a buyer knows what his property taxes are going to be, rather than finding out two or three years down the road that they are much higher than expected.”

Rob Glushon, president of Encino Property Owners Assn., said his group had been anxiously awaiting the high court ruling, with “the vast majority of our members hoping it would be upheld. I think there will be celebrating as the word gets around.”

But he acknowledged that “a few younger people on our board think it’s unfair that they pay so much more in taxes because they bought their homes recently.”

Disappointed by the court’s decision was Pam Brown, an attorney with San Fernando Valley Neighborhood Legal Services.

She said Proposition 13 froze into the California Constitution an “unfair system under which longtime homeowners don’t pay their fair share of government services,” which she said results in insufficient money for the health and housing needs of the poor.

Also, she said, “it’s already difficult for low-income people to buy houses in this state, and this decision means that it will continue to be a struggle for anyone starting out into the housing market.”

Benjamin Resnick, a Sherman Oaks real estate attorney, also attacked the voter-approved property tax system because “I just don’t think it’s fair that the first one in doesn’t have to pay his fair share.”

He said that in response to a drop in revenue after Proposition 13 passed, local governments imposed sharply higher fees on house builders to pay for new improvements to streets, schools and parks.

“The new-housing buyer has to pay for everything,” Resnick said, “and that’s unfair and a drag on the housing market.”

MAIN STORY: A1