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<br />69 <br />XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or <br />2%, there have been years in which the assessed values were adjusted by actual inflationary <br />rates, which were less than 2%. Since Article XIIIA was approved, the annual adjustment for <br />inflation has fallen below the 2% limitation in the following fiscal years: 1983–84 (1.010%); <br />1995–96 (1.194%); 1996–97 (1.115%); 1999–00 (1.853%); 2004–05 (1.867%); 2010–11 <br />(0.998%); 2011–12 (1.008%); and 2012–13 (1.02%). <br /> <br />The City is unable to predict if any adjustments to the full cash value base of real <br />property within the City, whether an increase or a reduction, will be realized in the future. <br /> Appeals of Assessed Values; Delinquencies. Reductions in the market values of <br />taxable property may cause property owners to appeal assessed values and may also be <br />associated with an increase in delinquency rates for taxes. <br /> <br />No assurance can be given that property tax appeals in the future will not significantly <br />reduce the City’s property tax revenues. There are two types of appeals of assessed values <br />that could adversely impact property tax revenues: <br /> <br />Proposition 8 Appeals. Most of the appeals that might be filed in the City would <br />be based on Section 51 of the Revenue and Taxation Code, which requires that for each <br />lien date the value of real property must be the lesser of its base year value annually <br />adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full <br />cash value, taking into account reductions in value due to damage, destruction, <br />depreciation, obsolescence, removal of property or other factors causing a decline in <br />value. <br /> <br />Under State law, property owners may apply for a reduction of their property tax <br />assessment by filing a written application, in form prescribed by the State Board of <br />Equalization, with the appropriate county board of equalization or assessment appeals <br />board. In most cases, the appeal is filed because the applicant believes that present <br />market conditions (such as residential home prices) cause the property to be worth less <br />than its current assessed value. These market–driven appeals are known as <br />Proposition 8 appeals. <br /> <br />Any reduction in the assessment ultimately granted as a Proposition 8 appeal <br />applies to the year for which application is made and during which the written application <br />was filed. These reductions are often temporary and are adjusted back to their original <br />values when market conditions improve. Once the property has regained its prior value, <br />adjusted for inflation, it once again is subject to the annual inflationary factor growth rate <br />allowed under Article XIIIA. <br /> <br />The County Assessor may also unilaterally reduce assessed values under <br />Proposition 8 and did so in fiscal years 2009–10, 2010–11 and 2011–12. <br /> <br />Base Year Appeals. A second type of assessment appeal is called a base year <br />appeal, where the property owners challenge the original (basis) value of their property. <br />Appeals for reduction in the “base year” value of an assessment, if successful, reduce <br />the assessment for the year in which the appeal is taken and prospectively thereafter. <br />The completion date of new construction or the date of change of ownership determines <br />the base year. Any base year appeal must be made within four years of the change of <br />ownership or new construction date.