Welcome to Season 2, Episode 29 of Meet the Expert® with Elliot Kallen!
In this episode, Elliot Kallen brings on Gus Kramer, an elected county assessor who has served Contra Costa County for more than 20 years. They discuss property taxes, appraisals, California propositions, and of course – what his reelection means for the people. Tune in to hear why Kramer is about people, not politics.
Meet Our Guest
Gus Kramer was elected to the Office of Assessor of Contra Costa County in 1994. He grew up in Bay Point, California, and is a graduate of the San Francisco College of Mortuary Science and the University of San Francisco. As County Assessor, Kramer has overseen improvements to streamline the operations of his office, eliminate backlogs, and achieve higher levels of public service, all while operating substantially under budget. The State Board of Equalization acknowledged his office as one of the best-managed assessors’ operations in California.
Elliot Kallen: Good morning and good afternoon, everyone. I’m Elliot Kallen and I’d like to welcome you to another episode of Meet the Expert. This is a totally different show right now because we are going to have Gus Kramer, the county tax assessor on. I don’t know if he’s Darth Vadar or he’s an angel with wings, but we’ll find out very shortly about that. He is the county tax assessor in Contra Costa County, the county where my office is located and where I live.
I’m gonna say he’s not personally responsible for our taxes going up but we’ll discuss that when we’re discussing taxes today. We’re discussing it because on June 7 there’s an election here and he’s running for office.
Obviously, we’re not going to mention any names or take any sides. But, he’s running and he’s been a county tax assessor in Contra Costa County since 1995, which is the year my youngest son was born. That’s amazing. Just amazing how long he’s been in office. Good for him.
If you want to reach us today, contact us. We’re talking about taxes for businesses, taxes for individuals, we’re talking about all of that because they affect every one of our clients.
Everyone who talks to us has money going out the door. If you have less money going out the door it’s because you’re paying higher real estate taxes. You have less money for disposable income spending to buy things and less money to spend on luxury goods. It’s a cascade of problems that could happen.
Also, if you have lower taxes or control taxes then you have more money in your pocket and you’re probably going to use it in a way other than savings. It’s not always true for everybody but that’s basically the rule of thumb with economics. Gus, welcome to our show.
Gus Kramer: Thanks for having me, Elliot. I take every opportunity I can to meet the public and educate folks as much as I can. So thank you for this opportunity.
Elliot Kallen: You’re very welcome. I know you’ve got a great personality too. We’ll get to that in a moment. I’m gonna put you on speed dial with a question that just keeps repeating itself. How do I lower my real estate tax? That’s probably on top of everyone’s mind. So, you’ve got a great background. You’ve been a deputy coroner, which is dealing with dead bodies and kind of a CSI world from the body side, maybe not the investigation side. Now you’re a county tax assessor. I don’t know if the coroner and the assessor are related to each other?
Gus Kramer: They are. I feel like my father was an old Will Rogers cowboy and he said if you always want to be employed get a job that deals with death and taxes. I took him literally and he was right.
How do property taxes and property values work in Contra Costa County?
Elliot Kallen: Let’s talk about real estate first as it relates to tax and then what do you do for a job; how you do it. You know, property values in Northern California Contra Costa County – and that’s really just talking about Contra Costa County because it really is just a replication of the rest of the country – are kind of crazy.
In the last few years, our houses basically doubled in the last seven years. Or in COVID, when market values were dropped during COVID they did the exact opposite here. There have been government moratoriums put out there with taxes.
Tell me about property values going up and new buyers buying; California’s got a tax of about one and a quarter with some bonds, but prices going through the roof. Some are becoming unaffordable to a lot of people. Tell me how that works here in Contra Costa County.
Gus Kramer: Well, you’ve hit the nail on the head and you’ve actually stolen most of my thunder. That’s exactly what’s happened. It’s that it’s become unaffordable to a segment of the population, but very affordable to others. People are bringing huge amounts of money so that the hottest market in this county is everything above $900,000 to $1,000,000 and up.
It’s a hot market. 50% of those sales or purchases are cash. If people aren’t even financing anymore, they’re just walking in and paying cash. That really drives the market up even higher. Below I $900,000 is your more blue-collar work people and they’re struggling to get loans. It was easier when interest rates were lower. But, as interest rates are pushing up between 4% and 5%, it’s making it even more unaffordable for the average working Joe and Jane here in Contra Costa County.
It’s almost like it’s going to become a two-class system. You’re going to have the working people and then we’re going to have the people who very well have a lot more resources and are going to enjoy the house they want when they want. That’s what we’re getting.
We’re getting a lot of people moving here. A huge part of these purchases since Prop 19 – we’ll get into that later – are coming from Alameda County. People hold their house for a long time. They have a lot of equity, big equity, and homes sell for more in Alameda County and Santa Clara County. They are moving to Contra Costa and pushing up the prices. It’s as simple as that.
Is there any state legislation or county assistance that works in the buyer’s favor?
Elliot Kallen: So let me ask a question along those lines in real estate tax: Let’s say I’m a blue-collar person, a normal person, and my wife and I would make $150,000 a year. We are just scratching by to get into this house that we want to move into. But, the real estate taxes are just going to be too high because we’re buying at a current market. Is there a way to go to the county or go to your office and say, “Can we have this assessed, lowered, or can something be done to get a reprieve?” Is their state legislation that will work in my favor?
Gus Kramer: There is nothing at the time. The only thing that exists, the best friend you have is Prop 13. Every time I see something coming out to modify it I hold my breath because Prop 13 is an anti-inflation proposition.
Your taxes can only go up 2% a year maximum. In some years of the last 20 years, it’s only gone up 1% or 1.3% because that’s all the inflation was, but it’s gonna go up 2% this year. That’s your inflation factor. The only other time the value can go down is if there’s a hiccup in the market like there was during the recession from 2008 through 2013.
We lowered almost 200,000 people’s properties significantly during that period, but they do come back as the market recovered. So, that’s the only relief you’re really going to get. California does not have a special exemption for senior citizens like many other states have. We do have a homeowner’s exemption of $7,000 which means that will save you 1% of that a year.
That was a big deal in 1978 but today it’s a nothing burger. It’s nothing. Myself and the assessor from Los Angeles County and about eight other counties are working with the groups on increasing the homeowners’ exemption to at least $100,000. So, you’d get a savings of about $1,000 a year on your house if you lived in it.
That’s the best I can offer, the ice coming down the tracks for homeowners for tax relief, unless there’s a huge recession again and houses go down in value. But quite frankly, I don’t see that happening in the next four or five years. There’s too much demand and there are not enough houses for the existing population in California, especially in the Bay Area. Plus, there are definitely not enough houses for the people who want to buy. There’s just too much competition.
How does Prop 13 work? How much of our taxes really go to education?
Elliot Kallen: Let me go back to Prop 13 that you just brought up, Gus, because I know that some of the powers in Sacramento want to get rid of that. In most counties, and I come from New Jersey and I lived in several counties in New Jersey, you pay taxes to the county just like we do here. Then the county uses that and doles it back out for education. But here we don’t do that.
Here it goes to the state basically for education and the state doles it back out. Then the state holds strings, ransom strings basically to every town, every city, every county that goes with the state way or you’re not going to get the money. We’re going to put you at fault.
So, what’s going on with that? I know we have that 1% tax or you have some bond, but at the end of the day it’s kind of going to education like it was designed to be, but it’s also kind of like lottery tickets. They never really worked the way it was supposed to.
Gus Kramer: Well it is now. I would say almost every community in Contra Costa County pays about 50 cents on the dollar in taxes that go to local schools. It really, truly does. The rest is carved up between the cities, the counties, and special districts. Those were all kind of established when Prop 13 passed in 1978 and haven’t changed. They haven’t changed a lot.
Most of the communities in Contra Costa have voted themselves special police districts, special Fire districts, and special sanitary Water Districts. The tax on themselves was self-imposed. But the original formula under Prop 13 is pretty close to what it was 1978, truly is.
“I want the assessor’s office, or rather, I’ve made the assessor’s office to be one of the most user-friendly offices in the county.
When you call our office, you can talk to a live person on the phone. You don’t get a phone tree that sends you off to another land.
Our people are trained to help people.
I want to speak to large groups, senior citizen groups, or real estate groups. I encourage them, either them or their clients, to please call the office if you have any questions.”
How much control does the state have over distributing property taxes versus the county?
Elliot Kallen: A former mayor of Lafayette, California – as I reside in Lafayette, California – said that she felt the city of Lafayette was being held hostage by the state to build more affordable housing or senior housing or the state would not grant them the education money that was paid for by the county citizens.
Gus Kramer: I can’t speak to that, but I’m not surprised. I don’t have the privilege of that information. But I believe that. I do. The state does that. They’re imposing this affordable housing element on all the cities. I remember Lafayette, Danville, and a few towns that were not incorporated in 1978.
Or when they were, the only way to get the people to vote for the incorporation was to say we’re going to be a no-tax city. They did that. For years they didn’t receive any property tax from the tax generator until many years later. The state recognized that there were a lot of these cities in the state they finally got some of the money, but I am not surprised that the state does that.
The state wants to be the overseer of all development in the state and they want to be the overseer of all affordable development.
There’s a project in Lafayette going on right now. It’s condominiums. They’re building 103 units or something and they have to have four units or five units that have to be low income. Then two units have to be extremely low income. Well, guess what? The low income is for Lafayette that’s about $86,000 a year. That’s what they consider low. Extremely low-income flow for Lafayette is about between $56,000 and $60,000, somewhere in there. It’s low, but it’s not as low as you’d think.
Do you collect taxes on commercial properties?
Elliot Kallen: So, you also collect taxes on commercial properties?
Gus Kramer: We appraise property. We appraise everything in the county that’s real property and we do appraise a lot of business equipment. That’s a very small portion of our staff. It’s what we do, but we don’t collect any money. They don’t trust me with the money. They’ve been off. If they gave me a couple of billion dollars I’d probably go to Barbados with it.
But, seriously, the tax collector actually collects the money. In the counties they have an elected tax collector treasurer who actually sends out the bills and collects the money. Then, they give it to the auditor-controller who tells him how to print his bills and where the money goes. We don’t ever see the money. We don’t touch it.
We just talk about values. That’s all we do in the assessor’s office.
How did you get into the public service industry?
Elliot Kallen: All right. Well, we’re talking with Gus Kramer, the Contra Costa County tax assessor. Kind of an interesting job and how does somebody want this job? Why would you want this job?
Gus Kramer: I worked for public works for 15 years and did appraisals for them. I acquired land for the county, the flood control district, and the County Highway Four. It was really a fun job and I was a real estate agent before that. I enjoyed that aspect of the work. I got into the appraisal part of it and the acquisition part.
I was at a point in my life. I was 44 years old and I decided that I would. I had already been in an elected office as the city clerk at Martinez, which was kind of a part-time job. Someone said you should run for Assessor you’d enjoy it; you’d be good working with people who have problems with their property taxes. So, I did.
How can deferred maintenance help with a property appraisal?
Elliot Kallen: You seem like an affable, friendly, competent person. But you have to run for reelection and I know you’re running against somebody. So as somebody who votes, and I vote by mail most of the time, how would I know to vote against you when you’re likable. I’m assuming you’ve been there 20-plus years. You’re fairly competent at what you do here.
Gus Kramer: Thank you. I stand on my record. I literally stand on my record. I want the assessor’s office, or rather, I’ve made the assessor’s office to be one of the most user-friendly offices in the county. When you call our office, you can talk to a live person on the phone you don’t get a phone tree that sends you off to another land. Our people are trained to help people. I want to speak to large groups, senior citizen groups, or real estate groups. I encourage them, either them or their clients, to please call the office if you have any questions. We’re not going to take the information and use it against you. We just don’t do that. We’re here to help you, not hinder you.
We get a lot of people calling the office when they’re adding on to their homes. Or they’re remodeling their kitchen and they’re worried about getting reassessed because they took out the old Formica countertop and they’re putting in, you know, quartz or granite. I tell them that when you remodel, you do like you do any other construction project. You document everything.
So, when you pull out that shower pan, that old cabinet and there’s water damage behind it, or there’s termites behind it or signs of mice or rats or something that done damage – take pictures of it. Then you have an excuse for repairing what you did, and you had to tear it out to get to it. So instead of assessing the full value of whatever it costs you to do the improvement, you have an excuse for doing it. It was maintenance. It was deferred maintenance. I want people to understand that’s an acceptable reason not to be appraised higher, that you are doing deferred maintenance.
Elliot Kallen: So, deferred maintenance is really the unknown key here, isn’t it?
Gus Kramer: If you tear out your countertop to fix some water damage from a leaky pipe or a leaky sink that’s not assessable, you’re doing repairs. We try and tell people that. It’s hard for people to grasp that because we’ve been taught all our lives, even in cartoons as kids, that the tax collector character was a bad person and they’re gonna take your money and assess everything you have. It’s quite the contrary.
I like to think that we’re here to help people and teach them how to avoid new taxes. There are a lot of people Elliott, and all due respect, there are so many people buying new houses and the houses are jumping from where they were with their old Prop 13 bases to their new value. There’s plenty of money coming in from those new sales for us to be wasting time chasing people who are fixing up their homes. That discourages them. Number one is that I don’t want to do that.
Elliot Kallen: It’s funny you mentioned the cartoons. I kind of remember the Monopoly board, I think the fourth square after the start was “pay income tax” and on the yellow cards, there was a county tax assessor card where you have to pay a tax on that too. Even as a kid, nobody wants to land on those two. Land on that square or get that card.
Gus Kramer: That’s true. It’s been hardwired into us over the years.
What’s the deal with Prop 19?
Elliot Kallen: What is Prop 19?
Gus Kramer: Prop 19 passed about a year and a half ago and it’s very interesting. It actually had been a windfall for the county. Up until it passed, you could only sell your house – if you were 55 years or older –you could sell your home in Lafayette and you’ve had your home for a long time. You have low Prop 13 baserunners. You could sell your home in Lafayette and buy a house in Antioch for a third of the price. Take your Prop 13 base with you to Antioch, Walnut Creek or Pleasantville, wherever you wanted to move. You can only do it within the county and that’s if you bought equal or down.
Now under Prop 19, you can move to any county in the state of California, take your Prop 13 base with you, and you can buy up. Let’s say you own a house in Walnut Creek, you sold it for a million dollars, and you want to buy a house in El Dorado Hills for 1.3 million. You could take your old Prop 13 base with you. The first million dollars would be your old base from Walnut Creek and then you’d pay 1% on whatever was over that. It allows you the flexibility to move anywhere and buy whatever you want and not be hamstrung, if you will, by the economics of property taxes. If you buy up you pay more. If you buy down you pay the same, so it’s kind of nice.
Elliot Kallen: You can only do that once in your lifetime?
Gus Kramer: No, you do it three times. There’s an argument now that if you’re married you can do it six times because you each do a one time. I can’t imagine somebody moving that many times after they’re 55.
The average age of a person moving under this proposition is 72. Most people move once, maybe twice. Then if they really have a medical issue, there’s a Prop 110 that nobody ever hears about. All you have to do is have your doctor sign a letter saying you need to move to a one-story house and you get to take it with you anyway, your Prop 19 base with you.
There are lots of caveats to these rules. But, Prop 19 has been a windfall for Contra Costa. We’ve had almost three times as many people move here, bringing their tax bases from Alameda mostly, Santa Clara, San Mateo, and San Francisco moving to Contra Costa. We’ve had three times as many of those as the people leaving Contra Costa to go elsewhere.
The main reason most of them give us for coming to Contra Costa, because we’ve asked these questions, is their children moved here a long time ago and they want to be closer to their children and their grandkids, naturally. We had so many applied when it first happened and we’re still having applications come in.
Should I sell my house to my own family?
Elliot Kallen: Speaking of children, Gus, if I’m living in my house for a long time and I’m getting to that age when I need to think about living somewhere else, downsizing, but I don’t want to sell my house. I’ve got some adult children that would love to buy it but they can’t afford it. You know that they’ve been priced out also. What’s the magic to selling it to my family?
Gus Kramer: You can give the house to your kid and carry back a note. You can transfer it by any legal instrument and any combination of legal instruments to your child and they can live in your home. They’re going to be under Prop 19 so they are going to have to live there. They’re going to have to put a homeowner’s exemption on it and live there to enjoy your low property tax base. Now, that means you’re going to have to subsidize or carry paper if necessary.
Elliot Kallen: If there’s a mortgage on there, do they have to get their own mortgage, or can I just continue my mortgage with them?
Gus Kramer: No. You’ll see in your mortgage there’s an acceleration clause, I’m sure. I’ve never seen one without one. That says to sell this property you have to pay off this loan. If you sell it to your child then it should be exempt by law. If you pass away, your child can take over that loan. There’s nothing the bank can do about it. But if you have a low mortgage, there’s plenty of equity in the house, and you sell it to your child – they assume your loan, so to speak.
The bank technically has to show that its equity has been compromised or is of risk in order to exercise the acceleration clause. They can’t just say oh, you’re selling this to your kid. We want you to pay off the loan and refinance. Now, if you sell to a third party, it’s not related to you. The courts have with us upheld the acceleration clause to keep people from assuming low-interest mortgages with third parties. But if it’s family, that’s pretty hard-pressed for the banks to exercise the acceleration clause.
Elliot Kallen: When I’m selling my house and I’m above age 55, I get a federal exemption of $250,000, or we get a $500,000 exemption. Can that be used more often than once?
Gus Kramer: I don’t know, but I would ask your CPA because somebody just asked me that. I think they can use it. I thought it was every two years you can do it, but someone reminded me recently they changed it to once every five years. So I would check with the CPA on that. That’s a great question.
My platform is – you know what you get. You’ll get what you have had for the last 25 years and you’ll get public service that you’ve never had before, that you’ve never seen before in this county.
What is the county assessor’s platform for reelection?
Elliot Kallen: There used to be a law that said that if I reinvested the money and wouldn’t have to pay any gains if I was over 55 or 65. That law is done and people make that mistake. Moving on, you have an election coming up. What’s the platform for reelecting you and what’s the platform for your opposition for having been elected? What is the county assessor’s platform?
Gus Kramer: Well, I’m not going to go with her platform because it’s pretty weak. She has no experience. She’s never done an appraisal in her life. So, it’s kind of interesting. It’s all very political. My platform is – you know what you get. You’ll get what you have had for the last 25 years and you’ll get public service that you’ve never had before, that you’ve never seen before in this county. In the assessor’s office, you’ll see better office hours. We opened up the office to be open more.
During COVID, we made sure we had somebody answering the phone calls and answering emails because life didn’t stop, it just got twisted a little bit. During COVID, a lot of businesses suffered there. They lost a bit and restaurants went out of business. It’s other small businesses, hair salons, stuff like that went out of business, or their business was hurt because of lack of gross receipts.
We’ve encouraged those people to let us know, show us their spreadsheet, show their bottom line, and demonstrate to us that they did significantly less business. We can give them a reduction on the small business taxes they pay on their equipment and or their property if the property income went down. They’re entitled to some relief, and it’s amazing. I thought there’d be more people applying, but there haven’t been. We’ve received maybe half the applications for those I think are eligible. But I can’t make people apply for a reduction.
Elliot Kallen: Not to count your chickens before they’re hatched here, but I’m assuming like it is across the country. Once an incumbent gets in, it’s very hard to knock them out in combat. Unless there’s some type of fraud or mismanagement or scandal or something like that. Most people check the box for incumbents. Your name has been here for a while and you’ve been a public servant now since 1980 in some form, as my math I think that’s 45 years. Now, you don’t look old enough to be doing this for 45 years.
Gus Kramer: I think I was 12 when I started, pretty much. I’ve always been in public service. I worked in the private sector for a while in the funeral business of all places. That’s how I got into the coroner’s office because the chief medical examiner recruited me to come to work for him. I did and it was an interesting job. It was a very interesting job but things happened and my interest changed. I got into real estate and here I am here now.
Can you give us details on your reelection?
Elliot Kallen: I think it’s exciting what you’re doing. So, I’m gonna remind everybody that there’s an election. It’s a statewide election, correct?
Gus Kramer: Yes, it’s a statewide election. Every county in the state will be having an election for the sheriff, the district attorney, the assessor, the tax collector, the auditor-controller, and the clerk-recorder. This is in all 58 counties. It’s all four-year terms.
Elliot Kallen: Well, good luck with that. Gus, as we wrap this up now, I really appreciate your time here. I know most people never get the opportunity to talk to a tax person, ever. So, it’s exciting. Thanks for showing your personality and not being one of many people in county government to be about as excited as a shoelace.
Gus Kramer: Well, thank you very much. That’s a high compliment and I encourage people – don’t be bashful.
Call our office if you have a question. Just call the clerk’s office. We’ll walk you through it. If they don’t have the answer for you immediately, they’ll find an answer for you. That’s our job. We work for you. Just as long as you remember that.
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If you’d like to learn more about any of these topics and how they affect your financial goals – contact me anytime.
All my best,