You may take your ear away from the ground.
It does not look as if there is going to be a thud anytime soon around City Hall.
Deep into the ubiquitous fiscal emergency, and without a floor in sight, Chief Financial Officer Jeff Muir says Culver City is “better off” than many other communities.
Mr. Muir’s explanation: “The Westside, I would say, is a little insulated.
“For example, we are not seeing the kind of problems Riverside is going through because we didn’t have 3,000 homes built in the last few years where people moved in.
“This is a built-out city. There is kind of a pent-up demand on the Westside as it is. So Culver City is insulated.”
But don’t become too optimistic too fast.
Mr. Muir pulled up short.
Is Culver City recession-proof? “I wouldn’t go that far,” he said. “We are seeing sales tax reductions. Our last quarterly information showed a 5 percent reduction. That is a concern because sales tax is our biggest revenue source in Culver City.
“In property tax values, we don’t expect to see a decline. But, we have seen less growth this year than we saw last year.
Shrinking Revenues
“I anticipate that we will see significantly less growth next year. I imagine we will have a couple of relatively flat years of tax growth — next year and the year after that because there is always a lag.”
Culver City has not suffered the kind of housing slump that has struck other communities, Mr. Muir said. “We have not necessarily seen home prices drop,” he said. “They have gone down a little bit, but not like they have in other places.
“What we have seen here, which is consistent with everywhere else, is fewer sales. Longer time to make sales, and fewer sales. What that does to our property taxes — When homes that are protected under Prop. 13 sell, then the value gets reassessed to the market value. That is where we have been picking up a lot of increase in property values. When we have fewer sales, we have fewer of those homes that may be protected under Prop. 13 resetting to those more current market values.”
Returning to an earlier point, “I wouldn’t go so far as to say Culver City is recession-proof,” Mr. Muir said. “But our property values are more protected than other regions of
California.”
Why a Dip Is Not Good
Turning to a question that has intrigued the 99 percent of Americans who do not comprehend economics or the present crisis, Mr. Muir spoke about why the drop in housing prices bodes ill for the country.
Besides the domino effect that would have on the economy, he said:
“And this probably is more of a personal opinion, but what we were seeing with the great leaps in home values was that people were going out and getting equity loans and spending money.
“They were buying RVs. They were buying their Harleys. Once you see a tightening in both lending in general and home values become steady or taper off, people who are on the tail end of that cannot go out and spend the way people did earlier.
“Unfortunately, we have a habit of going out and getting loans,” Mr. Muir said. “So the decrease in home values has an effect there, too.”
