Washed It!

More of the shine of the Golden State’s real estate market lost a bit more of its luster as the total value of California’s properties fell for the second year in a row — and for the second time since records were first kept in 1933 at the depths of the Great Depression.

The value of all types of properties fell 1.8% this year to $4.4 trillion, the California Board of Equalization reported Thursday. The total value fell 2.4% last year.

Forty-eight of California’s 58 counties saw totals fall — nine by more than 5%. Only two counties, oil-rich Kern and tourist-destination San Francisco, posted expansions of their property tax rolls of 2% or more.

The negative numbers make for more bad news for county governments. They’ve had to curtail spending on basic municipal services because falling values have resulted in lower property tax revenues.

“It’s a decline that’s outside of their control” and unlikely to reverse itself until California starts creating tens of thousands of new jobs, said Board of Equalization Vice Chairman Jerome Horton.

The contraction of the last two years contrasts with California’s historic growth in its real estate value, Horton said, with “constant increases of 5% to 15% per year” for the last 77 years.

“Those numbers tell us we have a ways to go, and we have some work to do to bring balance back in our economy,” he said.

Some experts suggest that things could get even worse before they get better.

Many homeowners purchased or refinanced residences in 2005 or 2006 and could face interest rate hikes from the variable-rate mortgages, said Tracey Seslen, a real estate professor at USC’s Marshall School of Business. Tight financial markets and underwriting standards could make it hard for them to refinance at lower rates, she said.

“With the stricter lending measures in place, removal of the home-buyer’s tax credit and with uncertainty in the economy and the jobs picture, we have a large confluence of factors that are all going to be putting downward pressure on the housing market,” she said.

Other housing specialists, though, think that the board’s data, based on Jan. 1 figures, already may be out of date.

“In many areas of California, prices have found a floor and have even recorded three or four months of guarded recovery,” said Stuart A. Gabriel, director of the Ziman Center for Real Estate at UCLA’s Anderson School of Management.

“Hopefully, we have found or are close to a bottom” of the market,” Gabriel said, “and, we’ll be able to see some recovery of prices.”

The board’s data found that Los Angeles County, which accounted for about a quarter of the value of all property statewide, lost 1.8% of its property value. The steepest drops were in the high-desert cities of Lancaster and Palmdale, local officials said.

Plummeting commercial property values also are contributing to the reduction in the size of tax rolls, Los Angeles County Assessor Robert Quon said.

The county got hit with a one-two punch of “fewer changes of ownership and less new construction,” he said.

The weak market spurred Los Angeles assessors to review about 600,000 homes and condominiums. They lowered annual property tax bills on 400,000 properties purchased between July 1, 2003, and June 30, 2009, Quon said.

By getting their properties reassessed to reduce taxes, homeowners were able to save an average of $1,800 on a single-family home and $1,500 on a condominium, according to the county.

Across Southern California, property values fell 4.4% in Riverside County, 4.3% in San Bernardino County, 1.5% in San Diego County, 0.5% in Orange County and 0.3% in Ventura County.

Inland areas lost about twice as much of their property value as coastal areas did. The state’s hardest-hit counties were in the Sacramento and Northern San Joaquin valleys and the Inland Empire, the board said.

marc.lifsher@latiimes.com
Value of California’s properties falls 1.8% to $4.4 trillion

Home prices rose in June, according to a closely watched national index released Tuesday, but many experts predict a drop in values this year with the expiration of popular federal tax credits for buyers.

Prices of previously owned single-family homes rose a modest 1% in June over May and 4.2% over June 2009, according to the Standard & Poor’s/Case-Shiller index of 20 metropolitan areas.

“While the numbers are upbeat, other more recent data on home sales and mortgages point to fewer gains ahead,” said David M. Blitzer, chairman of the index committee at S&P.

Federal tax credits of up to $8,000 drove sales during the spring as first-time buyers flooded into the real estate market, boosting sales of entry-level homes. Sales have been falling since the expiration of those credits, with sales of previously owned homes plunging 27.2% in July and sales of newly built homes falling 12.4% that month.

Those sales drops came despite record-low rates for mortgages.

Home prices in California cities continued to appreciate, the non-seasonally adjusted index showed, with Los Angeles up 0.6% from May, San Diego up 0.4% and San Francisco up 0.3%.

Las Vegas was the only city that did not post a month-over-month improvement, falling 0.6%. Phoenix and Seattle were flat.

Cities in the Midwest gained the most, with Chicago, Detroit and Minneapolis all up 2.5%.

alejandro.lazo@latimes.com
Home prices rise in June, but a drop may be looming

Construction on the long-stalled Grand Avenue hotel, condo and shopping complex may be delayed at least another two years because developers have been unable to secure financing.

The $3-billion Frank Gehry-designed Grand Avenue complex was supposed to be the centerpiece of an elaborate effort to rebuild the blocks stretching from the Walt Disney Concert Hall to City Hall. But while backers of downtown development cheer Eli Broad’s recent decision to build his new art museum on Grand Avenue and a new 16-acre park nearby, the latest delay is a reminder that the fate of the broader reimagining of the Civic Center area is still uncertain.

The project developer, Related Cos., said this week that it plans to request a two-year extension of its current February 2011 deadline to begin construction.

If the new deal is approved by city and county officials, groundbreaking would not have to start until 2013 — six years after work was first slated to begin. Bill Witte, the president of the developer’s California division, said Related may request yet another extension if the economy hasn’t improved by 2013.

“There is no chance of financing a significant project in the near term,” Witte said. “In fact, I’m not sure there’s much of a chance of financing even an insignificant project in the near term.”

Proposed in the early 2000s during the zenith of downtown’s building boom, the project’s plans call for a boutique hotel, thousands of luxury condos and acres of retail space for upscale restaurants, shops and art galleries. A 40- to 50-story Gehry-designed glass tower was to mark the spot as a cultural hub for tourists, shoppers and a new breed of wealthy downtown denizens.

Now it’s likely that Broad’s museum and the planned park — which was conceived as part of the overall development — will open before construction on Gehry’s tower begins.

The project remains popular with downtown boosters, but some concede that the plans may need to be tweaked to take into account the economic downturn.

Eric Richardson, the publisher of blogdowntown.com, praised the Grand Avenue project for “the attention that the idea brought to downtown revitalization.” But he said some residents feel that what the area really needs is more grocery stores, pharmacies and other basic amenities.

“We’ve been very slow to pull in the retail that kind of completes the picture of life downtown,” he said. “Some people are asking, ‘Does downtown really need a mega project at this point?’”

Grand Avenue, which was approved by city and county officials in February 2007, is one of the last of several proposed “mega projects” in downtown that are still alive since the real estate market crashed in 2008.

Paul Novak, the land planning deputy for L.A. County Supervisor Mike Antonovich, a longtime critic of the project, said he doesn’t think there is an appetite downtown for Grand Avenue’s upscale offerings.

“OK, you’ve got very high-end condos and a high-end hotel,” Novak said. “But the condo market is in the dumps downtown, and downtown already has a five-star hotel.”

Officials with Related said they have already secured millions of dollars in equity but have had trouble securing loans to pay the $1.1 billion required to build the first phases of the project.

During the last renegotiation of the construction deadline, Related agreed to pay a penalty of $3 million a year to push construction back. Under the new extension, which Related may ask for in the coming weeks, it must pay the joint city-county authority that controls the land an additional $1 million in penalties. The penalties would be paid once construction begins.

Witte and others say they hope the Broad museum and the new Civic Park will raise the profile of Bunker Hill and make it easier to secure loans for Grand Avenue.

Witte said Related is considering altering its plans for the project, but he would not say what changes are being considered.

Steve Needleman, who owns the Orpheum Theatre and lofts on Broadway, said Grand Avenue’s developer should consider making changes “like building office space or more modestly priced apartments.”

“I think the Grand Avenue project, by the time it gets built, will change again,” Needleman said. “You’re having to reevaluate what makes sense.”

Carol Schatz, the executive director of the downtown-based Central City Assn., also acknowledged that aspects of the development may have to be reconsidered.

“The Grand Avenue project made a great deal of sense at the time that it was approved,” Schatz said. “But things are different now.”

kate.linthicum@latimes.com
Grand Avenue project faces 2-year delay over funding

Revamping teacher evaluations with the goal of helping instructors improve has become an urgent priority in the nation’s second-largest school district, Ramon C. Cortines, superintendent of the Los Angeles Unified School District, said in an address to administrators Wednesday.

Cortines said the district will develop and adopt a “value added” method that determines teachers’ and schools’ effectiveness based on student test scores. And he told a packed Hollywood High School auditorium that he’s committed to using these ratings for at least 30% of a teacher’s evaluation. The plan would require the consent of the teachers union.

In a later interview, Cortines also said he was disappointed that California lost its bid Tuesday for $700 million in federal Race to the Top school improvement grants. L.A. Unified’s share would have been $153 million.

But the district also learned late Tuesday that it will receive $52 million in unrelated federal grants.

Overall, the veteran educator, who has led five school systems and plans to retire in 2011, used his 30-minute speech to celebrate progress at various schools, including Hollywood High, and challenge educators to do more.

Linking student test scores to individual teachers became an especially heated topic after The Times published a series of stories based on a value-added analysis of teachers and schools. The Times also plans to publish this month a database with the rankings of about 6,000 third- through fifth-grade teachers.

“It is critical that we look at multiple measures to support our employees,” Cortines said, and “how value added fits into our overall strategy.”

The district plans to publish such data about schools “once this information has been validated,” but not the scores for individuals. “Supporting all employees is about creating a culture of collaboration and trust,” he said, echoing recent comments by his deputy, John Deasy.

Cortines talked later about being part of a five-member state delegation that met with federal evaluators for the Race to the Top funding bid.

“I was grilled, no doubt, on bringing the bargaining units along” on accepting test scores as part of evaluations, he said.

The winning state applications all scored at least 440 on a scale of 500; California fell 17 points short, and union buy-in could have put it over the top. But evaluators most consistently dinged the state for an out-of-date student data system. That problem alone cost it 14 points.

Rapidly and fully funding a better data system has long been a sticking point between state Supt. of Public Instruction Jack O’Connell and Gov. Arnold Schwarzenegger, who wasn’t won over by O’Connell’s proposals to pay for such a system.

The state also consistently lost points for perceived shortcomings in developing and evaluating principals, and its plans for turning around persistently low-performing schools.

Cortines said some evaluators seemed to favor aggressive approaches, such as closing schools, that have a mixed record.

But L.A. Unified will receive another competitive federal grant, aimed at troubled schools, that was scored by state evaluators.

L.A. Unified was initially shut out because the state’s scoring system gave the district virtually no chance against smaller school systems. But the state Board of Education agreed to reconsider. This week, the board lowered some award amounts to others, and federal officials released funds previously held in reserve.

The biggest beneficiary will be five schools under the purview of L. A. Mayor Antonio Villaraigosa. His nonprofit, which runs 15 schools within L.A. Unified, qualified for more than half of the $52 million; he personally lobbied the state board on the matter.

Five other district schools will split the balance.

Cortines had wanted some of this money for Fremont High, where he’d ordered all staff to reinterview for jobs, resulting in massive turnover. Fremont, however, won’t receive money because its test scores, although very low, have improved too much to qualify.

As he concluded his address, the superintendent lost his composure as he expressed thanks to those assembled for the opportunity to work with them. He stopped, unable to continue, and the audience responded with a 45-second standing ovation.

howard.blume@latimes.com
L.A. schools chief says district will adopt ‘value added’ approach

The city of Bell gave nearly $900,000 in loans to former City Administrator Robert Rizzo, city employees and at least two council members in the last several years, according to records reviewed by The Times.

The documents show that Bell’s former assistant city manager, Angela Spaccia, received two loans of at least $100,000 each and that council members Oscar Hernandez and Luis Artiga received $20,000 loans. Rizzo, whose huge salary sparked a scandal that forced him and other city officials to step down, received two loans for $80,000 each, city officials said.

Neither Hernandez nor Artiga reported the loans on their state financial disclosure forms for 2009, which is required under state law.