Photo: Trulia Image 1 of / 1 Caption Close S.F. lost almost $450 million in revenue last year thanks to Prop. 13 1 / 1 Back to Gallery

Californians saved about $12.5 billion in taxes in 2015 due to Proposition 13, according to a new study from Trulia. The study looked at how much tax payers would have owed last year if voters had not passed the 1978 tax measure which keeps a 1 percent ceiling on property taxes and a 2 percent cap on home appreciation. Furthermore, the study found that homeowners in affluent coastal cities, like San Francisco, save the most—both because of higher home appreciation and because residents in these areas tend to hold their houses for long periods of time, which brings on the most savings.

In fact, study author and Trulia economist Ralph McLaughlin told Curbed that San Franciscans saved $447 million in 2015 alone, thanks to the savings from Prop. 13. (That was the third-highest chunk of change in the state, after Los Angeles and San Diego.) McLaughlin figures that, when you take current property values in San Francisco into effect, the effective tax rate is only .6 percent, one of the lowest rates in the state.

What’s even more amazing is that the effective tax rate in some other Bay Area cities are even lower. In Palo Alto, for example, where Trulia set the median home value at $2,225,000 and nearly 11 percent of owners have been in their homes since Prop. 13 went into effect in 1979, the effective property tax rate is .42 percent—the lowest in the nation. Millbrae, which has a much lower median home value but an even higher percentage of long-time owners, is the second-lowest at .48 percent.

“Price appreciation and resident tenure go hand in hand,” McLaughlin explains in the report. “The more prices appreciate in a community, the lower effective property tax rates become, which in turn, provided incentives for existing homeowners to stay put. Cities with more new housing growth, on the other hand, will likely have higher effective tax rates because of a larger share of new residents and thus more properties recently assessed at current market value.”

Even though Prop. 13 disproportionately benefits homeowners in higher-appreciation areas and, McLaughlin argues, “reduces the long-term revenue stream that local governments rely on to fund public education, services, and infrastructure,” the economist doesn’t see the mighty tax benefit going away any time soon.

“We unfortunately don’t think these findings matter much for policy,” he sums up in the report. “Homeowners won’t likely increase what is arguably their second largest tax bill through referendum and, as a result, politicians would also be unlikely to touch the property tax third rail through legislation.”

Emily Landes is a writer and editor who is obsessed with all things real estate.