Proposition 13 caps the growth of a property's assessment at no more than 2% each year unless the market value of property falls lower. When property values decline, Proposition 8 (Decline in Value), which was passed by voters in 1978, allows the property to be temporarily assessed at the lower value. Once reduced, the assessed value and property taxes may increase by more than 2% a year as the property value rises during real estate recovery. The "recaptured" values can be adjusted upward to the annually adjusted Proposition 13 cap (blue line below).
Click on the image below to enlarge it.
In your value notice you may have received either a blue or buff colored insert.
A buff insert means that your property falls into the tan section in the graph above. The value of your property has increased but it is still below the Proposition 13 factored base year value.
A blue insert means that your property value has increased and the Proposition 13 factored base year is now your reinstated assessment.