Silicon Valley assessed value jumps nearly 8 percent in 2004

Sharon Simonson
Published: July 5, 2005
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The taxable value of real estate and business equipment in Silicon Valley increased a respectable 7.99 percent in 2004 to a total of $240.14 billion, after three years of far more tepid growth reflecting the region's struggling economy.

Most of the increase reflects rising taxable value associated with new-home construction and property sales, said Larry Stone, Santa Clara County assessor.

"Silicon Valley's resiliency and speed of recovery is quite remarkable," Mr. Stone said in a prepared statement accompanying the release of this year's tax roll total.

Local government, especially schools and redevelopment agencies, rely on property taxes to finance their operations.

The tax roll is intended to capture the aggregate value of all real estate and business equipment on Jan. 1 of each year, in this case, Jan. 1, 2005.

Commercial real estate, while showing some recovery, still struggles, Mr. Stone said. Nearly 1,500 commercial properties whose market values have fallen below their taxable values remain on the rolls at $9 billion below their previous assessment levels.

Under state law, the assessor is required to carry properties on the roll at their market value if the market value is less than their "factored-base-year" value, or their original market value plus annual increases of 2 percent or less.

Meanwhile, Santa Clara County technology companies have begun to re-invest in their equipment after three years of making due with existing equipment or simply closing up shop.

Unlike real property, so-called business personal property is re-valued every year to establish a market value and is taxed at that market rate. In the last three years, the value of business personal property in Santa Clara County had fallen 30 percent. This year, the value rose from last year's nadir by 4.34 percent to $19.27 billion.

Despite the overall turnaround in the value of business equipment and real estate, the county still harbors pockets of weakness. The San Jose Redevelopment Agency, which relies nearly entirely on property taxes to
finance its operations and service its debt, saw a less than 1 percent increase in its taxable value -- the smallest increase of any taxing jurisdiction countywide.

On the opposite end of the spectrum were Gilroy, which saw its taxable property values rise by 13.5 percent, and the Milpitas redevelopment agency, which saw its taxable value rise by more than 14.5 percent.
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