Sonoma County property owners rush to transfer inheritance ahead of new Prop.19 rules, higher taxes

Feb. 12—Sonoma County property owners are scrambling to transfer estates to their heirs ahead of a Tuesday deadline as part of an effort to avoid higher property taxes stemming from a law voters approved last November.

Proposition 19, which removes property tax shelters for heirs, could cost farm families tens of thousands of dollars, agriculture advocates say, and the rush to avoid those daunting impacts has inundated estate planning attorneys and county assessors ahead of the looming deadline.

"It's been absolutely insane," said Santa Rosa attorney James Zakasky, who provides estate planning and other services. "The information that came out on this whole Prop. 19 thing, the ramifications were just kind of slowly brought out."

Since December, more than 6,200 property transfers have been logged by the county assessor's office, nearly doubling the number for the same period a year ago as property owners seek to stave off escalating property tax bills tied to the voter-approved law.

Under the new rules, heirs may see the property they inherit reassessed at true market value, sending property tax rates skyrocketing, especially for multi-generational landowners whose tax rates have for decades been tied to limited annual increases based on the original purchase price of the property.

Agriculture officials say the full impact of the new property transfer rule wasn't fully understood before the election, when statewide farm groups trained their focus on another tax measure, Proposition 15, which sought to exempt commercial property, including farm land, from the state's landmark Proposition 13 tax law, which caps annual increases in property tax rates.

The unexpected fallout from Prop. 19 is likely to hit many family dairy and poultry operations the hardest, ag leaders said.

"Many families maybe right now who are paying property taxes can't handle a huge swing like that," said Tawny Tesconi, executive director of the Sonoma County Farm Bureau. "It's going to be really hard for families to make it."

The far-reaching property tax measure also eases cost-prohibitive tax rules that have long dissuaded homeowners from downsizing or moving to different parts of the state and earmarks revenue savings for firefighting efforts. It aims to raise tens of millions of dollars for local schools and governments that rely on property tax revenue.

The local fiscal impact is still murky.

"We are hopeful that this proposition could provide additional funds to support local schools," Sonoma County Office of Education spokeswoman Jamie Hansen said in a statement. "However, we don't yet have enough data to know how many homeowners would be paying more or less under this new rule, and therefore how significantly it might impact school budgets."

Sonoma County Treasurer Erick Roeser said he has no way of determining the revenue impacts for local public agencies at this point.

Sonoma County officials were not able to specify how many parent-child transfers have taken place since the November election, but the number of total transfers recorded since the November election by County Assessor Deva Proto represents a massive influx compared to the same period a year ago.

Proto said her office expected to be busy as soon as Proposition 19 passed last November, but the larger community has been slower to catch on. The California Farm Bureau, which spearheaded a successful campaign to defeat Proposition 15, stayed out of the fight on Proposition 19, opting to remain neutral.

The alarm was first sounded in the agricultural community during an online meeting of the San Luis Obispo County Farm Bureau. It was attended by a wide cross-section of farmer advocates, including some from Sonoma and Napa counties.

"In hindsight, we probably would have looked at it again," said Brent Burchett, executive director for the San Luis Obispo County Farm Bureau. "There was significant discussion that happened at the state level, about whether to endorse this or not. And as soon as the election was over, I started getting a lot of questions about what Prop 19 means to our farms and ranches."

Those questions have led to action, and a rush on the Sonoma County Assessor's Office.

From Dec. 1, 2020, to Feb. 10, the Sonoma County Assessor's Office recorded 6,292 transfers, nearly double the 3,578 transfers in the same time period a year ago, according to data the office provided.

And the activity has grown more intense as the Feb. 16 deadline approaches.

In the past 10 days, there have been 1,469 property transfers, more than three times what the assessor's office documented in the same interval last year, when it listed 475.

Before the election in 2020, the assessor's office approved 1,500 parent-child transfers, Proto said.

"Ahead of the deadline, we definitely are seeing an uptick in recordings," Proto said Thursday. "They're not processed on the assessor's side for a while, so we won't know the actual numbers of how many are looking for that parent-child exclusion. Anecdotally, we are seeing a very large uptick in people trying to get in ahead of the deadline."

Tesconi, who drew a distinction between wealthy vineyard owners and meat and dairy farmers, said the measure could deal a blow to generational farming in Sonoma County. And she lamented that farmers have had little time to plan for the new law and its resulting expense.

"Bottom line, it's a little bit different to say, 'OK, I'm willingly going in, I'm buying this piece of property,' versus, 'Mom and Dad just died, and oh my goodness, what am I going to do because all of a sudden our property taxes just quadrupled,'" Tesconi said. "Other than selling the property, (people) don't have the funds to pay these property taxes."

You can reach Staff Writer Tyler Silvy at 707-526-8667 or [email protected].

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