CITYWIDE — The assessed value of properties in Santa Monica increased by 4.6 percent over last year, beating out Los Angeles County figures and Santa Monica officials’ own expectations.
According to a report released Monday by the Los Angeles County Assessor’s Office, commercial and residential properties in Santa Monica gained $1.121 billion in assessed value over 2011, making it the third most valuable city in Los Angeles County.
The only two cities to surpass Santa Monica, which is only 8.3 square miles in size, were Los Angeles (468.67 square miles) in first place with $419.127 billion in value and Long Beach (50 square miles) with $44.104 billion.
Santa Monica’s total value was $25.765 billion.
The assessed value references the value of all taxable properties in the county or city, which in turn determines how much property tax revenue each county produces to fund local government, specifically cities, counties, schools and special districts.
Santa Monica’s 4.6 percent gain beat out even City Hall’s expectations, which the Finance Department had pegged at 3 percent, said City Manager Rod Gould.
“The good news in assessed valuation for Santa Monica reflects the market perceiving increased value in what Santa Monica offers residents and businesses,” Gould said.
It also means more money in property taxes, which fund essential services as well as those Santa Monicans have come to expect.
Much of the increase can be credited to development and increased sales, said Gigi Decavalles-Hughes, director of the Finance Department.
Even taking into account the 2 percent general inflation increase, the impact of the sale of major properties and new construction led staff to shoot for the 3 percent figure, she said.
Residential construction and remodels — which can include residential development as well as single-family homes — accounted for 26 percent of the increase, while 23 percent came from new construction including facade improvements and tenant improvements, Decavalles-Hughes clarified Friday.
The growth — along with an increase in sales tax revenues — is a bright spot in an otherwise bleak economic picture, particularly with the loss of Santa Monica’s Redevelopment Agency, an entity that used a portion of property taxes to build affordable housing and fix blighted properties.
Eventually, property tax revenue that would have gone to the Redevelopment Agency will filter back to cities, counties and schools, but it’s unclear when that’ll happen, officials say.
While the growth is positive, others are not quite so quick to credit development with the improvement.
Santa Monica’s attractive attributes cause people to want to relocate here, which means property values go up, said City Councilmember Kevin McKeown.
“Owning property in Santa Monica is clearly a good investment, but development alone does not drive land value,” he said. “Santa Monica is desirable for great weather, clean air, highly livable neighborhoods, a vibrant business environment, creativity, innovation and excellent schools.”
Planning Commissioner Ted Winterer, a known slow-growth advocate, questioned where the counted gains were really coming from.
When a property is developed, much of the increase in the reassessed value comes because the property may not have been revalued in years, a factor that has more to do with the sale than anything built on it.
Whether the increased revenues are worth the other costs associated with development — potentially traffic or parking woes — is another story.
“So a more sophisticated analysis of the pros and cons is required,” Winterer said.
Diana Gordon, chair of Santa Monica Coalition for a Livable City, took it as a negative sign.
“If anything, they demonstrate that (Santa Monica) is absorbing more than its regional share of development, and much more than its share of actual, negative impacts — which we can see with our own eyes, but which are not captured in this type of limited monetary measure,” Gordon said.
Santa Monica’s performance makes it an outlier, but the rest of the county has benefited from an upward trend as well.
The remainder of Los Angeles County gained 2.24 percent in assessed value, but 2012’s valuation makes it the second year of growth in a row, according to the report.
The Los Angeles Metro area bumped along a bit more slowly, pulling in only 1.5 percent, said Walter Molony, economic issues media manager with the National Association of Realtors.
“There’s clearly a broad pattern,” Molony said. “National price measures are positive, and we have seen five consecutive months of prices rising against year-ago levels.”