The City of Santa Clara’s property values grew at the second highest rate of all county cities — almost 10 percent according to the Santa Clara County Office of the Assessor’s 2018-2019 report. Only Sunnyvale saw a greater increase in valuations: slightly over 11 percent. Cities receive 13 percent of every property tax dollar. School districts get 44 percent.
Property tax is Santa Clara’s largest current revenue stream and new construction is essential to keep City revenue in line with costs. The only way that revenue can grow under Proposition 13 — the 1978 property tax-capping ballot measure — is from property changing owners, new construction, and growing business personal property taxes, which are assessed annually at market value.
County Assessor Larry Stone sees a “mild economic slow down …on the horizon,” he wrote in his introduction to the report. Stone cites an office space pre-leasing decline — from 80 percent in 2016 to 48 percent in 2017 — “an indication of an oversupply in office space.”
Further, average apartment rents, which have grown by 52 percent since 2010, grew less than 3 percent in 2017.
The single family housing market, too, is likely headed for a slowdown, wrote Stone. That market “has been artificially overvalued … driven by too much money, including foreign investments, chasing too few homes.” Houses bought in the past three to five years are the “most vulnerable to a downturn.”
Santa Clara a Leader in New Construction…
Santa Clara was also a county leader in new construction in 2018, adding $812 million in new valuation. However, this is half of Sunnyvale’s $1.6 billion increase in assessed value. The County’s largest city, San José, narrowly topped Sunnyvale, with $1.7 billion in increased assessed value.
Excluding San José, in the category of increased values from property changing hands, Sunnyvale led with $2.2 billion in increased assessments, followed by Palo Alto with $1.4 billion and Santa Clara with $1.3 billion.
Three of the 10 major construction projects in the County were in Santa Clara: Valley Fair mall, NVIDIA and Santa Clara Square. Two of the County’s largest property taxpayers are also in Santa Clara: 49ers Stadium Company ($17 million) and Intel ($10 million). Nine of the County’s 25 companies with the highest business personal property value are either headquartered or have business locations in Santa Clara.
…But a Laggard in Affordable Housing
Santa Clara doesn’t make the top of the list — or even come close — when it comes to affordable apartments.
Excluding the County’s largest city, San José, and cities with no affordable apartments — Los Altos, Los Altos Hills, Monte Sereno and Saratoga — Santa Clara, with its population of 123,000, remains fourth from the bottom with 934 units.* However, that number is up by 40 from 2017’s 894 affordable units.
By contrast Palo Alto, whose population is slightly more than half Santa Clara’s, tops the list with 1,436 affordable apartments. Sunnyvale, population 149,000, comes in second with 1,419 affordable units — up by 151. Mountain View, population 79,000, is third with 1,262 units — a decline of 42 units from last year.
* Behind Santa Clara are Campbell (365 units), Cupertino (274), Los Gatos (274) and unincorporated Santa Clara County (274).
