Courtesy photo

San Francisco Assessor-Recorder Phil Ting

San Francisco Assessor-Recorder Phil Ting announced Wednesday that the assessed value of commercial and residential real estate in San Francisco actually grew 4 percent, to $158 billion, in the year ending June 30. That performance underscored San Francisco’s place as the healthiest real estate market in hard-hit California, where many counties are struggling with sharply reduced tax rolls.

“San Francisco is still the strongest market in the state, despite the challenging economy,” Ting said in an interview Wednesday afternoon. “Home prices have flattened and are starting to tick back up.” Commercial property remains under pressure, however.

The 4 percent gain is more remarkable in light of the across-the-board tax-assessment reduction of 0.2 percent that all property-tax payers will see in the new property-tax bills that get mailed out at the end of July. Proposition 13, passed in 1978, had capped property-tax increases at 2 percent or the gain in the consumer-price index, whichever is lower. For the first time since Prop. 13’s adoption, a CPI decline has caused the assessments for everyone in the state to be lowered.

Ting said that the increase in the citywide assessment value was largely thanks to a reduced backlog of transactions that needed to be individually evaluated by a city assessor to determine “real” market value. When most single-family homes sell, the sales price becomes the de facto market price, and the adjusted tax bill is fairly automatic.

But commercial-property sales and some residential transactions, including a surge in short sales and foreclosures, require more legwork from the tax folks. A few years ago the office had a five-year backlog of such cases, Ting said, but the backlog is now at two years or less. If an assessor determines that a property that sold as many as four years earlier has been paying sub-market value taxes, the owner is hit with a supplemental tax bill. Ting said his office collected $215 million in such additional taxes this year.

At the end of June, the closely watched S&P/Case-Shiller Home Price Index showed residential sales in the San Francisco metropolitan area, which includes the city and surrounding counties, shot up 18 percent from April 2009 to April 2010. That was the strongest performance of the 20 major U.S. markets Case-Shiller tracks, and well ahead of the composite group’s 3.8 percent increase. Los Angeles and San Diego, the other two California cities in the Case-Shiller major-market index, also posted gains.