Houses’ owners overpay taxes

County assessor over valued many subsidized homes

GILROY — Hundreds of low-income homeowners in southern Santa Clara County have been overpaying their property taxes for years, county officials conceded Wednesday, because assessors had overvalued their subsidized homes.

The problem came to light after Erin Cerdan, who helped build her own Los Arroyos home in 2002 as part of a “sweat equity” program, noticed her monthly combined mortgage and tax bill had shot up by hundreds of dollars. County officials initially explained that homes like hers that had been underwater since the recession were now resurfacing. But they later acknowledged they didn’t realize Cerdan’s home is in a subsidized program that includes a strict resale provision that prohibits the homeowner from flipping the property at market value.

“Obviously if the purchase price is lower and the sale price is restricted, then the assessment should be lower,” said Santa Clara County Assessor Larry Stone.

But neither affordable housing developer South County Housing nor the city of Gilroy notified the county of the property’s status, “so we went on to assess it at market value,” Stone said.

At first, the inflated assessment appeared to af-

fect Cerdan and about three dozen neighbors. But this week, the assessor’s office determined that 215 properties in Gilroy were overvalued, and there could be more. David Ginsborg of the assessor’s office said the problematic properties are ones that South County Housing was involved in.

“This iceberg is turning out to be deeper and bigger than we thought,” Ginsborg said, “but we will continue to look at it until we find the bottom.”

South County Housing CEO Dennis Lalor did not know why the homes were not appraised at a restricted value, adding they’ve built hundreds of houses in four counties that were correctly assessed.

“I don’t know if we will ever find out why this happened, but I do feel like they are on the road to getting it straightened out,” he said.

Gilroy Mayor Don Gage said the onus for providing the county with correct information would have fallen on either the developer or the city, and also stressed what’s important now is providing respite for the affected taxpayers.

“My deal is we need to fix the problem now, then figure out who to beat to death later,” he said.

What the total value of overcharges may come to is not known — numerous factors come into play, with the subsidies varying from $60,000 to $220,000 and the timeline going back as far as 18 years.

“It’s easy to see the total will be north of six figures,” Stone said.

However, Stone’s office only has the authority to make adjustments going back four years. Beyond that, the county Board of Supervisors would have to act to remedy the overcharges to the first faulty assessment.

That’s something Stone said he believes should be done.

“When government does something disadvantageous to taxpayers we have an obligation to make it right,” he said. “I’m a strong advocate that they receive a full refund.”

Cerdan said she and her neighbors are waiting to see if that comes to fruition, and might explore legal channels if it does not.

“I know a lot of neighbors who are struggling like me,” she said. “We built these homes with our own sweat and blood to live there until the day we die.”

Cerdan said Los Arroyos is a tight-knit working class enclave where residents look out for each other and mow each others’ lawns. She’s said she’s getting a lot of thanks and hugs from neighbors and attributed her findings to being “a stubborn Irishwoman.”

“When I see that there’s something wrong,” she said, “I just continue to keep working at it until I get it figured out.”