Assessor: Mansion that sold for $100 million worth half that | Silicon Valley mansion was never on the market, seller financed part of deal

BY ANDREA V. BRAMBILA, WEDNESDAY, JULY 11, 2012 Inman News®

Bubble image via Shutterstock.

A 25,500-square-foot Silicon Valley mansion that sold last year for $100 million is worth only half that much, according to the Santa Clara County assessor's office.

The home's new owner, Russian venture capitalist Yuri Milner, can take solace in the fact that his $600,000 annual property tax bill will also be about half of what it would have been, had the home been assessed at its sale price.

The French chateau-style estate, situated on 17 acres in Los Altos Hills, Calif., features 14 bathrooms, a ballroom, a formal dining room, a home theater, and a wine cellar. There's also an indoor pool, a library, a gym, staff quarters, a 4,600-square-foot guest house, and panoramic views of the San Francisco Bay.

Source: Google Maps

Sellers Fred and Annie Chan didn't put the property on the open market, and reportedly provided the financing for half of the sale to Milner, who heads upDigital Sky Technologies, a Moscow-based fund that's invested in Facebook, Groupon and Zynga.

To determine the mansion's value, the assessor's office used properties as far away as Los Angeles as comparables, including Aaron and Candy Spelling's 56,500-square-foot mansion, which sold in July 2011 for $85 million -- a little over half its asking price.

"This was not a typical market transaction because it was never placed on the open market, so right there, there's all sorts of additional challenges for the assessor's office," David Ginsborg, the county's deputy assessor, told Inman News.

"Our job is to figure out, if it was listed on the open market -- which this was not -- what would other buyers have been willing to pay for it? Our conclusion was there was no way anyone would have paid $100 million," Ginsborg told Forbes.

The Santa Clara County assessor's office deemed Milner's property to have a fair market value of $50.27 million. The assessment is likely to disappoint local school districts and town officials, who will receive less tax revenue than they might have been expecting, the San Jose Mercury News reported.

Nevertheless, the county will receive considerably more revenue than it did before: The three parcels that made up Milner's purchase were valued at a total of $28.5 million in 2011, meaning the current valuation is nearly double what it was before, according to the assessor's website. Recently revamped, the site allows anyone to search property records by address or parcel number.

Parcel no.	Address	2012 assessed value	2011 assessed value
175-36-046	13310 La Paloma Road	$41,942,400	$25,431,818
175-36-045	13288 La Paloma Road	$4,284,000	$1,476,571
175-36-044	13198 La Paloma Road	$5,049,000	$1,633,250
	Total assessed value:	$51,275,400	$28,541,639

Note: Total assessed value includes appraised market value plus a 2 percent inflation factor.

Source: Santa Clara County Office of the Assessor

Ginsborg emphasized that the assessor's office is bound by California laws,Propositions 8 and 13 in particular, in regards to how much a property's assessed value can change year to year.

"Every Jan. 1, we have to assess the value based on either the purchase price plus the 2 percent a year or the market value, whichever is lower," he said.

"Our job is to get it at the right value, not necessarily the highest or lowest value," he added.

Despite the lower-than-expected increase in the Milner property's assessed value, Santa Clara County reported the first solid gain in the county's overall property values since 2008.

"Economists often describe economies in curves, but Silicon Valley's economy looks more like a check mark. The real question is, will property values continue to grow up and to the right, or will (they) flatten out?" said Assessor Larry Stone in a statement.

Source: Santa Clara County Office of the Assessor

The county's assessment roll, which includes the net assessed value of all real and business personal property, grew 3.25 percent on an annual basis, to $308.8 billion. The assessed value of business personal property rose at a faster rate -- 6.48 percent to $25.6 billion -- than personal property overall. Property values are calculated as of Jan. 1, 2012.

"The growth of business property is perhaps the best indicator that businesses are once again hiring new employees, leasing office space, and making major purchases of machinery, equipment, computers and fixtures," the assessor's office said.