Denise McEwan and Molly Quillin-McEwan's tale of moderate woe is practically a cliché in San Diego County: They bought their Alta Vista home in 2003 for $300,000, put $100,000 into renovations and landscaping, did all the work themselves and then watched helplessly as their home's value plummeted in 2008. Now they owe more on the mortgage than the house is worth. Fortunately, the McEwans earn enough through their construction-contracting business to stay afloat, so they're in no danger of foreclosure, and they don't have any plans to move—all of which means the current value of their home has little bearing on their lives.
Except when it comes to taxes. If their house has lost value, they should be paying less in property taxes, and they think their house is worth about 70 percent of what it used to be worth.
“You drive around, you see foreclosure signs everywhere,” said Quillin-McEwan.
McEwan thinks she could save roughly $1,000 in taxes this year and in upcoming years.
That's how the couple found themselves in the County Administration Building earlier this week, surrounded by a dozen other San Diegans with the same purpose: Get those taxes lowered. Most of them waited at the counter for a few minutes, talked to a clerk and then took their application home to fill it out.
But the McEwans have been down this road already—back in August.
“They told me it would be done in December,” McEwan said. “Then it was the beginning of the year. Now they're saying May.”
The county has been swamped in applications for reassessments. In 2008, the Assessor's office saw an eight-fold increase in requests to review property values over 2007, up to 88,000 from 11,500. This year, requests are already at 16,000, up from the 6,900 they had at this time a year ago. And that's only the reviews of value, which are conducted before a tax bill is sent. If a property owner thinks they've been overcharged because their property is worth less, they can file an appeal after they receive their bill. They still pay the taxes while the appeal is pending, but they have the opportunity to get their money back later. In 2008, appeals tripled, from 13,150 to 42,000. The window for appealing taxes this year won't open until July.
In past years, reassessments would be processed within weeks, and appeals could be processed within four to six months. But even as the tide of applications rises higher, the evaluations section of the Assessor's office is shorthanded, thanks to a hiring freeze imposed by the cash-strapped county. Whereas last year 80 employees dealt with the applications, the office is down to 70 this year.
The impact of the applications is somewhat mitigated by the fact that construction is down, so the staff is spending less time on new valuations. But the arithmetic of more applications plus fewer employees equals long delays in processing. Manuel Serrano, deputy director of evaluations, tells CityBeat anyone looking for an appeal on their property taxes can expect to wait a year. State law allows the county two years, but in normal times, only the most contentious cases take that long.
Serrano also said the reviews could potentially be delayed past deadline, too, leading to yet more appeals.
“They have to be done before we close the assessment roll on June 30,” Serrano said. “If we don't get it done before June 30, then you need to file an appeal. And appeal is a far more time-intensive process.”
Complicating matters, property owners still have to pay their taxes even while appeals are pending. If they win the appeal, the county will owe them money back, plus interest, though county spokesperson Mike Workman said the money is usually paid in the form of a credit to the following year's tax bill.
The McEwans have another worry about the delay: “What if the market changes while we're waiting?” Quillen-McEwan asked.
As it happens, they're covered. The county assesses values based on sales of similar homes in the six months surrounding January of the year of the application. So the delay won't cause their assessed value to rise.
The county is covered, too. If a property value is lowered, it's only temporary. The county reviews the values every January and raises them if the market for that type of home has increased. But those sorts of activities are likely to be delayed while they try to manage the reassessment applications. That means waiting for the county to have more money.
“They should have fees for the applications, maybe $5 or something,” said Mike Perrine of Santee, while he waited for his free application.
Jeff Olson, division chief for assessment services for the county, emphasized to CityBeat that the application is free. He pointed out that there were a number of companies that offered to file the application for home owners, in exchange for a fee, but that there was no need to pay someone else to do it (and, in fact, the San Diego City Attorney's office recently prosecuted several such companies for fraud).