Saturday, October 17, 2009

Oakland Ad Valorem Tax Rate Now 1.41% - Are You Kidding Me?

The headline more-or-less says it all. I've blogged on this topic before, but it's never been nearly this bad.

Last year, Oakland's Ad Valorem rate was 1.33% of the tax value of the property. This year, somehow it magically has risen to 1.41%. If anyone understands how this came to be, I'd be very interested in knowing. I was unaware the electorate had passed a bunch of large new taxes.

Just to revisit the topic for a moment, even in the liberal Bay Area, Oakland is all on its own in charging ridiculous property taxes. In Leftist Berkeley, the Ad Valorem rate is 1.26%.

That means that if you buy a house in Oakland, you're stuck paying an extra $150 per year for every $100,000 in home value per year in property taxes.

Things get even worse if you just look a little to the east. In Orinda, which has basically the best school system in the state, the Ad Valorem rate is 1.08%. That is not a misprint.

So, by living in Oakland, you get to pay an extra $330 per year per $100,000 of house value, and you get to switch from having the best schools in the state to having schools so terrible that you pretty much are forced to send your kid to private school.

In case you're going to jump all over me and point that the tax bill includes parcel taxes in addition to the Ad Valorem portion, that is true, and in Orinda you pay about $400 more in parcel taxes per year. So, if your house cost more than $120,000 or so, you're losing in Oakland.

For most home buyers, the difference is far more stark. A typical $750,000 house makes the difference a totally prohibitive $2,500 a year. Who can afford that, and for what? The privilege of living in a city which spends no money on the kind of services a reasonable homeowner would actually want?

And no, the Oakland Housing Authority doesn't count. Most homeowners I know wish they'd shut that thing down and kick everyone out.

The actual upshot of this policy is that Oakland presents a closed door to potential new homeowners. It's fine for renters and those who have owned their houses for years -- those people don't pay much anyway because of the structure of Prop 13.

My assumption is this is also the reason people are willing to vote for whatever they support that causes this rate to go up -- though, I have to say that most of the initiatives I've seen are parcel taxes, not Ad Valorem increases. As mentioned above, I'm not actually sure how that rate got so high in the first place.

This state of affairs should actually worry existing homeowners who aren't paying much. It lowers the value of real estate in the city, since prospective homeowners must adjust their bids to account for the extra thousands per year they'll be paying to the city.

Given Oakland's absurdly high rates, I wouldn't be surprised if this difference cost the average house $50,000 to $100,000 in value -- and that's before the well-documented $200,000 haircut that houses in nicer areas of the city suffer because the school district refuses to redraw boundary lines or set up a magnet school.

While I still have your attention on property taxes, let me bring another matter to your attention. I own a vacant lot in addition to my house in Oakland. Every year, the city illegally charges me the parcel tax for Measure Y on the vacant lot.

And, every year, I call and get a form sent to me which I fill out and mail to the city. The city then sends me a refund of about $90.

The city probably spends $100 every year dealing with my complaint and validating that the parcel is indeed vacant. Believe it or not, twice out of the past four years someone has actually come to verify that it's vacant. I guess they forgot?

So, last year, I asked the gentleman at City Hall if maybe they could put a notation in their computer to simply stop charging me the tax on that parcel.

"No," he said. "We don't use computers for that."

Need I say more?


  1. Every year, when the property tax bills come out... there's a surge in vacant lots going on the market.

  2. I felt like I was sucker-punched when I opened my property tax bill. This is what happens when people who do not own property (60% of Oaklanders) get to vote to tax those who do. Let's see...we're still spending MILLIONS on Kids Firstm even though there is no proof that the programs work (not that we're checking anyway). And there's the good old $2 million dollars were spending to help 400 adults learn to read. Of course, then they'll get jobs and move out of Oakland. If we got rid of Dellums' $66000 a year chauffeur, that would offset the tax increases on $200,000,000 worth of property. ENOUGH! Police, fire, parks, libraries, streets. That is the absolute minimum of what city government is supposed to provide: and in all 5 categories, Oakland gets a failing score.

  3. I was equally shocked as you when I received my tax bill this week. How can the tax rate jump like that without our knowing? There is surprisingly little media attention to this.

    Digging around, I found the answer. The city council passed a rate hike in August because they had to raise the funds to pay debt on previously approved bond measures. Property values dropped this year, so the city raised the tax rate accordingly. More details:

    The real problem underlying all this is ballot-box budgeting. Voters are not qualified to make budget appropriations - as the do willy-nilly in California - because they don't have the full picture of the impact and tradeoffs.

  4. The assessor and I are going to have a long discussion on Monday. In July, when I was estimating my taxes, it did not include an increase in the Ad Valorem rate. Why? Becauase no one never talked about an increase in this rate.

    Oakland residents were all up in arms about paying for parking until 8pm. You, MFI, you are arguing over pennies while someone is screwing you over dollars. I am livid!

  5. Just wanted to thank Tim for getting the facts to us so effectively and quickly. I'm always looking for people to contribute to this site. Let me know if you are interested.

  6. And if it jumped this much this year, just wait until next year!

    It's time to hand it to the unions who are strip-mining our wallets. Resolution: public employee pay and benefits must be commensurate with the average wages, benefits and property values of the citizens of Oakland. In 2007, the last year in which I could find income estimates by the US Census, the average Oaklander earned $47,179. Compare this with the average Oakland city employee strip-mining $7700 per month: that's $92,400, nearly DOUBLE what us peasants earn. And that doesn't include benefits!

    By the way, were you all still aware that Deborah Edgerley's nephew, William Lovan, is still an employee of our fair city? Convicted, but earning an Oakland paycheck and accruing defined-benefit pension. Disgusting.

  7. You can pin less than half of the increase on Oakland debt. The calcs for the current year show the incorrect prior year percentage. If you look at last year's calcs at

    you'll see the actual increase is .0295%. A number of factors account for the increase including the 2009 Measure DD issue, lower beginning cash, $2.6mm less Unitary Tax collections and an increase in the reserve amount from 5 to 6% (worries about delinquencies?). The voters approved $198mm in Measure DD bonds. The new debt service is for the 2009 ($64mm) issue.

    Be aware that the balance of $62mm in DD bonds will be issued a some future date and throw another couple million in debt on the property tax rolls.

    So, now who is to blame for the remainder of the increase to 1.41%?

  8. Move to San Leandro. Cheaper houses, and my ad valorem rate is 1.1%. We get better (at least average if not great) schools, lower crime, and more family friendly 'hoods, shopping etc.

  9. Thank you very much for the information and forum you provide here. This information is very disturbing to me and is seriously making me reconsider the offer my husband and I are planning to submit on an Oakland Hills home tomorrow. I figured I'd be annoyed by all the obnoxiously liberal (redundant, I know) neighbors but for some reason it didn't occur to me that the property tax policies would be so out of line with what we have here in SF (approx 1.1%). You've certainly given me a lot to think about tonight.

  10. I am confused I thought PROP 13 was created to stop officials from increasing tax rates.

    My wife and I were looking in Okaland Hills but this changes everything.

    Its quite scary that PROP 13 can be overridded by a local city council.

    Can someone please explain this?