The devastating Palisades Fire in January has once again brought attention to the state’s disaster preparedness and preparatory measures aimed at assisting victims when the next disaster inevitably strikes. One state legislative measure — Proposition 171 — was designed to prevent property owners of damaged properties from experiencing significant increases in property tax bills when purchasing replacement homes, but it was never adopted in Santa Barbara County as was mandated by the bill. However, the Board of Supervisors has a timely and readily available solution — they can take action to adopt it immediately.
My wife and I lost our home in the Palisades Fire, and we’ve discovered that we can’t act on our dream of returning to Santa Barbara after a long-delayed absence because we’re unable to sell what’s left of our damaged property. And, without being able to transfer our old tax bill to a replacement, our dream remains unachievable.
Proposition 171 was enacted in 1993 by statewide vote following the devastating Tunnel Fire in Oakland. It distinguishes itself from subsequent disaster-assistance measures as it permits the transfer of legacy Proposition 13 tax assessments to replacement properties — without the requirement that the damaged property be sold prior to the transfer of the old tax bill.
In major disasters characterized by widespread damage and slow recovery, market conditions can hinder sales. Those who have suffered losses are consequently impeded in their efforts to secure permanent housing.
In 2020, California voters once again voted in favor of a measure related to disaster assistance by passing Proposition 19. This measure — enacted in the aftermath of the deadliest and most destructive fire in California’s history, the Camp Fire — ostensibly expanded assistance to victims of disasters. It included provisions for transferring legacy tax assessments for seniors and the disabled, as well as closing inheritance loopholes. Proposition 19 did not require county adoption, and it is currently in full force and effect in all 58 California counties, including Santa Barbara County. However, Proposition 19 falls short in that it requires the damaged properties to be sold before the transfer of legacy tax bills can occur.
The Palisades Fire of January 7, 2025, consumed 27,000 acres, destroyed more than 6,000 structures, and severely damaged infrastructure, resulting in the devastation of civic, cultural, and commercial facilities. The fire’s aftermath has left large portions of the affected area resembling a war zone, rendering the homes uninhabitable.
As anticipated, a substantial number of properties are currently for sale, with sales occurring at significantly reduced prices, far below what would be acceptable to residents who, during years of living in the Palisades, have responsibly endeavored to build home equity. Because Prop 171 was not adopted statewide and because of Prop 19’s limitations, many face limits on where they can relocate.
Some may argue that Santa Barbara County would experience a reduction in property tax revenue if new arrivals with legacy assessments in tow were to establish residence here. The true economic implications of this scenario contradict this view, however: Unless a current county resident is displaced by a new arrival, any new tax paid by the newcomer constitutes a net increase in revenue, not a cost. Any purported property tax shortfall would be more than offset by new revenue paid by the new arrival from taxes on sales, businesses, utilities, fees, transient occupancy, and employment, as well as charitable contributions. Further, individuals with legacy property tax bills are predominantly older and less likely to be consumers of public services.
In many instances, these legacy assessments are only marginally below the full Proposition 13 levels, due to factors such as Proposition 13’s requirement for assessments to increase at a rate of 2 percent annually. Legacy assessments are certainly not the outright avoidance of property tax liability, as is sometimes erroneously suggested in the public discussion of this topic.
The group of disaster victims with the financial means and desire to relocate to Santa Barbara County would likely be small. The county would also benefit from the presence of those who have made the conscious decision to relocate, signifying a commitment to responsible residency already been demonstrated by the previous, pre-disaster, long-term tenure that resulted in the legacy tax bill in the first place. From the county’s perspective, the financial implications of the proposed adoption of Proposition 171 are limited, while the benefits are substantial for individuals who have experienced overwhelming financial losses.
Rather than presenting a fiscal concern, this topic should be viewed as a matter of fairness and equitable treatment of all Californians, regardless of their county of residence. Given the escalating frequency of natural disasters in the state, the timely adoption of Proposition 171 should be of utmost importance. Furthermore, failure to do so challenges a fundamental principle of fairness: If a disaster were to strike Santa Barbara County, county residents would have the option to transfer their tax bills to Los Angeles or Ventura Counties (two of the 14 counties statewide that have enacted the legislation to date), but not vice versa.
Robert Bridges is an Emeritus Clinical Associate Professor of Finance and Business Economics at the USC Marshall School of Business.
