Proposition 13 basically makes residential development a net loss to a city because of the limitations in future tax increases regardless of how much the infrastructure costs increase. In California, the local governments HAVE to get their infrastructure paid for in advance. There are some areas of the nation where the taxes are reassessed on an annual or bi-annual basis, and on top of that their tax rates are higher. In a few areas the tax rate is almost double what it is here. Can you imagine what would happen to property values if the property tax assessment got tied directly to the current value into perpetuity? People would be unable to anticipate how much they’d have to pay in 10 years. That would put a real crimp in price growth expectations.
