Base year value is a property's assessed value at the time of the most recent reassessment event (acquisition, new construction). Serves as the starting point for Prop 13's 2% annual growth cap.
When a property changes ownership or completes new construction, its base year value resets to the current fair market value. From that point, assessed value grows at max 2% per year (factored base year value). This mechanism is how Prop 13 protects long-term owners.
LA multifamily base year values tell the story of the building's ownership history. Long-held buildings have old base years with compounded 2%-cap growth — far below current market value. Recently-acquired buildings have current-market base years and correspondingly higher property taxes.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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