The city of San Francisco is projecting its property tax base will decline for the first time in more than a quarter-century.
The city controller’s office projects that the city’s commercial and residential tax base fell 0.46 percent last year, from $301.4 billion to $300 billion, according to Bloomberg. That would result in a $7.6 million loss in revenue for the fiscal year starting in July.
It would be the first such drop since 1994 to 1996, when the tax base value fell from about $57.1 billion to $56.2 billion. The worst year for growth since then was 2011 to 2012, when the tax base inched up from $157.9 billion to $158.6 billion.
A decline is rare because of a 1978 ballot measure that strictly limited property assessments. Properties are typically reassessed only in the event of a sale or redevelopment, so they remain low. That can cushion declines during down periods because market values don’t usually fall below assessed values.
Critics of that measure have repeatedly tried to overturn it and most recently failed with Proposition 15 in November.
San Francisco can largely thank tech companies for its large property tax base, but now these firms are likely contributing to last year’s tax base decline. Many tech companies have embraced remote working, and office space, now largely vacant, has become less valuable.
Residents who can work remotely took that opportunity to buy or rent outside of the notoriously expensive city, although perhaps not as many as was predicted early in the pandemic.
[Bloomberg] — Dennis Lynch