Mapping the Effects of California's Prop 13

40 years ago this summer, voters in California approved Proposition 13, a law that initiated sweeping changes to the California property tax system and permanently re-shaped the dynamics of property ownership in the state. Prop 13 is known in California and beyond as the rule that protects low-income, elderly property owners from being priced out of their own neighborhoods. It also means that recent home buyers provide an outsized proportion of local taxes, often paying taxes magnitudes higher than their neighbor for almost the exact same house.

These effects are well known. But given the complexity and scale of the issue, it has been hard to visualize how extreme the disparities are—until now. New maps from Urban3’s analysis in the Golden State visualize the effects across three towns from a micro to regional level.

What’s Prop 13?

But first, what exactly is Prop 13?

200 years after Americans declared themselves free from taxation without representation, California was in the midst of its own taxpayer revolt. Creeping inflation and a population influx spurred a wave of populist sentiment centering on the American Dream of property ownership. Retired businessman Howard "Mad as Hell" Jarvis emerged as the leader of the movement, gaining enough popular support to put a referendum on the ballot to dramatically limit property taxes, despite the ensuing budget cuts to education and public services. The ballot initiative passed by a 30-point margin, and Prop 13 became law.

Prop 13 amended California’s constitution to assess property taxes at 1% of a property’s purchase price with increases limited to less than a 2% annually in assessed value. If the property is sold, its value is assessed at sale price. The rule’s reach was later expanded by Propositions 58 and 193 to exclude heirs from reassessment as well. Critically, Prop 13 treats individuals and commercial entities identically.

What’s wrong with Prop 13?

So what's the matter with prop 13? For one, it's easy to exploit. In a commercial real estate transaction, for instance, a building owned by an LLC can avoid reassessment by shifting proportional individual ownership while never technically changing hands. This freezes the tax rates in time, sometimes to pre-1976 levels. In his Revisionist History podcast series, Malcolm Gladwell discovered that, as a result, Los Angeles taxpayers subsidize the LA Country Club by $89.9 million dollars a year.

Another famous example is Disneyland, which pays five cents per square foot of land — eight times less than the average California homeowner. When longtime property owners pay far less than market value, the brunt of property taxation falls squarely on new homeowners and anyone who relocates to or within the state.

(Source: Michael Pagano, from the Urban3 archives)

Rent control is one of the few policies that most economists agree is a bad idea, since it artificially manipulates the housing market. In that vein, Prop 13-like laws are even worse, because they pass the benefits of tax policy on to long-time landlords and developers who can reap the benefits in perpetuity—and their children can, too, thanks to inheritance stipulations.

So what does this mean for the city’s coffers? When it comes to analyzing the effects of property taxation on city finances and development patterns, Urban3 Principal Joe Minicozzi is an expert. He views California as a particularly strange case, since Prop 13 and other referendum-backed propositions have scrambled the economics of land valuation and taxation beyond recognition.

"All of the policies are well intended, but they yield performance failure in the economics of cities," Minicozzi says. "If you suppress revenue streams when they are not connected to cost, there will always be a failure in the math. If a deal like Prop 13 sounds too good to be true, it probably is, because the cost of your community is not fixed. The cost of government isn’t restricted at 2% per year. Do you want your teachers to get a raise of only 2% per year? It’s shortsighted."

Minicozzi also wonders about the dangers of instant gratification. Prop 13 was beneficial when it passed because it allowed taxpayers to collectively and immediately address a perceived crisis. But the consequences for the state budget have been long-lasting. As architect and planner Andres Duany puts it, "codes spread like oil slicks"—and when accountability is dispersed to the public, constitutional amendments can spread just as fast. Soon after it passed, Prop 13-like laws started to spread across North America before the full ramifications of the policy were even realized.

Santa Rosa

Prop 13-style laws manifest themselves spatially in various ways. The following visualizations from different California cities shed light on just a few.

For instance, Prop 13 allows older Californians to stay in their homes longer—but what if empty-nesters want to downsize? Since Prop 13 discourages homeowners from moving, it increases the need to build more homes for newcomers—and to do it as quickly and cheaply as possible. Analysis in Santa Rosa shows that the majority of parcels developed since 1995 are auto-oriented developments at the town’s edges.

This map illustrates tax value per acre for each parcel in Santa Rosa. Taller spikes on the map have a higher value per acre, while smaller parcels have a lower value. Colored spikes on the map were built after 1995. Since the burden falls on these properties to generate the bulk of tax revenue for the city, Prop 13 acts as yet another factor that incentivizes and subsidizes the Suburban Experiment.


In this data visualization of Redlands, CA, height represents tax value per acre while color depicts the base tax year. Recently transacted property is much taller, while the low-lying properties colored brown contribute the least to the tax base.

Notice the stark differences in height within the same neighborhood or block. The properties depicted here are not particularly different in terms of age, style, or quality. What differs is the year in which they changed hands.


This close-up view of a residential neighborhood in Davis shows how properties directly adjoining one another can vary wildly in assessed taxable value. These houses are similar in form and size, and their market values are all roughly comparable. Unlike the previous maps, though, this map has no color-coding by base tax year, and height only represents property tax rates.

You are seeing in excruciating detail how Prop 13 allows one homeowner to pay taxes that literally tower over their next-door neighbor’s rate. Urban3 has produced over a hundred of these value per acre maps, and they have observed no place but California where these startling inequities are codified more clearly.


Jerry Brown was the Governor who first presided over Prop 13, and he is now finishing his second tenure in office after a 36-year break. He initially opposed the measure with all the political capital he could muster, but now he resignedly claims it to be "a sacred doctrine that should never be questioned."

At Strong Towns, we believe in questioning our laws if they demonstrate a misalignment between costs and services. The negative effects of Prop 13 can be mitigated incrementally to address its original intentions while closing loopholes. Here are just two measures that could address the system’s many insufficiencies over time:

  1. Remove Prop 13 protections for corporations with a Split Roll. This measure splits the tax roll by distinguishing between residential and commercial property, finally forcing established businesses to pay their fair share.

  2. Remove Prop 13 protections for vacation homes and other non-primary residences. This stays true to Jarvis’ word, preventing people from being taxed out of their homes, while restoring sensible tax assessments for a person’s second, third or fourth homes.

Let’s let Granny keep her home without subsidizing corporations, encouraging irresponsible development patterns, and abstracting land use economics even further. Furthermore, let’s not rubber-stamp policies without thinking through the long-term effects.

(All graphics courtesy of Urban3.)


California's Senate Bill 9 has sparked controversy, mainly among owners of single-family homes. But are we returning to historic forms of housing anyway, with or without state legislation?

Nov 1, 2021

SB 9 just passed in California, effectively ending single-family zoning there. The open question is, "What now?" Will anything actually change?

Sep 29, 2021

What can we learn about the housing market and corporations buying back their own stock...through anecdotal references? (As it turns out, quite a lot!)

Sep 13, 2021

Connor Nielsen is an intern with Strong Towns and the geoanalytics firm, Urban3, for the summer of 2018. He studies Economic Development and Dramatic Art at the University of North Carolina at Chapel Hill. He is passionate about storytelling and urbanism, and he seeks to unite these fields by advocating for urban design in new and compelling ways. He also enjoys acting, producing theater, hiking, and traveling.

Connor NielsenJuly 23, 2018

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  • Great analysis - one feature that you didn't mention is that adding square feet is one of the few things an existing homeowner can do to cause a re-assessment and huge increase in taxes. So you see lots of tiny old homes that should have been added on to, but they pay little in taxes, so adding some square footage could increase their tax bill 10-fold.

    Of course people do add on to their houses- they just add 'fancy porches', not technically interior space.

    Also: the solution to protect Granny is way easier and more obvious - freeze property tax increases for those 65 and older.

      • Even better: allow deferred tax payments that come due at the time of sale. We won't make you pay your high taxes while you're living there, but as soon as you sell, you pay back taxes out of all the profit you realized due to appreciation.

          • Problem with that is you are assuming ever increasing valuations. The taxes would need to be paid regardless of whether there was any "profit". You could easily have a situation where the taxes owed are considerably greater than the sales price of the house.

        • Joshua McCarty 4 years ago edited

          To be clear California is not alone in distorting tax revenue. Measure 5 in Oregon is even more severe. At least tax value floats with new transactions under prop13. In Oregon the tax value is forever frozen at its initial value and only floats with inflation. It's serious enough that they have an "Property Tax Fairy" to keep it all organized.

            • Enacting Proposition 13 was a lazy chickencrap substitute for what should be done (in California and elsewhere): Give local government the tools and incentives to lower its costs. And that involves going deep into detail on every little piece of structural inefficiency.
              I don't know about California laws, since I no longer live there. But I can provide an example from Pennsylvania, where I now live.
              A major force driving up government costs is the body of law governing construction contract enforcement and administration procedures for government customers. Like when a school district builds a school, or PennDOT builds a highway.
              Yep. Contract administration law.
              Bored yet? I thought so.
              Know any politicians who would give a crap about this? (Well, actually, I'm now working to elect one to Congress.)
              But there's a million here and a million there tucked away in those laws. And contractors and their law firms like it that way.
              Bit by bit, in my dream world, accountants, lawyers and pubic servants with uncanny attention spans would chip away at these inefficiencies. And the popularity of chickencrap measures would go down accordingly.

                • This comment was deleted.

                  • How is this analysis poor?
                    Your personal anecdote says that your neighbors are subsidizing you. You can't move without a huge tax penalty. Those are two of many drawbacks to Proposition 13. In 1978, my father foresaw those drawbacks and voted against it, despite his distaste for paying taxes.

                    • I don't see why they can't just add some kind of "maximum increase" and means testing provision to Prop 13. That seems easy enough.

                        • Property tax revenue in California has increased at a faster rate than incomes or the State budget.

                          Prescient legislation = Prop 13.

                          California is lacking fiscal responsibility, but not lacking revenue.

                          SF has a city budget of 10-11 BILLION. Austin Texas is larger in population and area, and has a budget of approx 1/3 of SF.

                            • Yes, San Francisco ought to try to be a newer city like Austin in order to reduce infrastructure repair costs, and to stop being a county so they don't have to pay for jails, courts, or hospitals. They should also reduce their real estate values so they don't have to pay city workers so much. The city/county of San Francisco definitely lacks fiscal responsibility!

                                • Really, I think you're mistaken.

                                  Austin is older city than SF.
                                  Austin also happens to be the County seat, the State Capital, and covers 6X the goeographic area, with accompanying infrastructure costs.

                                  The differences you mention are absolute peanuts, within the context of the extra Billions that SF smokes through. SF reflects off-the-charts consumption.

                                    • The median age of a building in San Francisco is 91 years (1927); in Austin, 38 years (1980). Source: Atlas of ReUrbanism Factsheets. Also, Travis County, TX has a $1 billion annual budget which must be added to Austin's if you want to compare apples and apples.

                                        • Compare away. My point stands as correct.

                                            • Not really. The Austin general fund is only 2.5X less than SF's general fund, the property tax portion 3X less, housing prices are 6X less, and Austin's population is 10% more, so if Austin was paying comparable property tax to SF, it would be 5X less or if SF was paying comparable tax to Austin, it would be 5X more.

                                              More importantly though to this particular article is that SF property tax is only 29% of their general fund, while in Austin its 40%. Add in sales tax (which SF doesn't separately classify) its 65% of Austin's budget. Property tax is only 29% of SF's budget and falling, while 'other taxes and fees', which includes sales tax, hotel tax, etc, is like 23% of their budget and rising. So in the next decade or so, SF will be a city paid mostly by sales tax and hotel and occupancy tax, not property tax.

                                              Which will shift the development goals of the city even farther, ie: more hotels and more AirB&B and whatnot, less homes for people. Los Angeles is the same way; Austin doesn't even really keep track of AirB&B.

                                              SF has a $10b budget vs Austin's $3B so that is true; but over $5b goes to things like the airport and sea port and other fixed expenses that are not really comparable to Austin - and are separately revenue generating & expending; not applicable to the city's general fund.

                                                • Your dive into minutiae is off track in many ways. The main point being that SF has an established pattern of living beyond its formidable means.

                                                  "SF property tax is only 29% of their general fund, while in Austin its 40%."

                                                  But SFs' 29% is larger than Austins 40%, and it's not even close. Get this: Two roughly comparable cities. Both left-leaning. One has its feet on earth. The other is off in some fantasy universe, baffled by its lack of fiscal foundation.

                                        • I hate to say this but these are really bad visualizations. It's not clear at all what they're trying to show.

                                          I think the concept, that tax collection is wildly unequal, is easy enough to understand without the graphics. It would probably be more useful to show two heat maps next to each other where one was like "real value per lot" and the other was like "taxable value per lot", which presumably would show that the real value was consistently high and spread out over a large area while the taxable value was a shotgun smattering of mostly low values with a few spikes.

                                            • Every tax regime has it's own set of advantages and disadvantages, incentives & disincentives creating all sorts of market distortions. Prop 13 has different distortions than other tax regimes, but it's really hard to quantify if/when one is better than another.

                                              In Wisconsin (and most places), corporate & personal state income taxes don't return to the municipalities where they were earned, but rather in a formula based mostly on where folks live. Under this regime, it's optimized to only have residential with minimal jobs & certainly no industry. Of course, what we see are the most propersous communities - in terms of income per household - are exactly that... just residential. It's the winning design under the current tax regime. However, we need jobs somewhere, but it's a losing strategy to take on all those commuters, policing, thick roads for trucks, etc. The revenues (tax off of incomes) are totally misaligned with costs (services needed to generate incomes).

                                                • One of the problems is that California has rent control, so if you just got rid of Prop 13 you've got a built in issue there. That's why Massachusetts got rid of rent control. It was holding down property values and gutting schools. But building owners had to fight their assessments every year.

                                                    • A few parts of CA have rent control. 90+% of the state does not.

                                                      • What built in issue? California has Prop 13 and rent control, which is not holding back property values so I'm not sure what vague issue that you are suggesting is. Massachusetts also does not have have problems with property values in general - its property is among the most expensive in the US, and often the most expensive in terms of rents.

                                                          • Rent control absolutely holds property values down. In Los Angeles a studio apartment in the city (an subject to RSO) might cost about $130,000 while the same apartment across the municipal boundary might cost $150,000. It's a bigger delta for small properties as your average duplex buyer wants to pick their neighbor.

                                                            I've been eying a duplex offered at $350,000. With $150,000 invested in the eviction and conversion to single family it would be worth $800,000.

                                                            That's what rent control does to property taxes.

                                                            Now, if you removed Prop 13 and kept rent control you would have properties where the assessed value rose by several thousand percent, while the rent goes up only 3% per year. That is an issue.

                                                              • I get your issue now, but I'm not sure it would work out the way you say. Removing Prop 13 would have a huge effect on existing home owners at least temporarily, so holding home prices constant in your scenario would not be correct.

                                                            • Avocado Moose 4 years ago edited

                                                              3. Replace the 2% annual assessment increases with inflation + 0%. This allows the tax to fall during times of deflation. Or give individuals the option to change it ONCE.
                                                              4. Allow people to opt-out of Prop 13 protections in exchange for a lower tax rate, perhaps 0.5% instead of 1%.