BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 618 HEARING: 4/27/11
AUTHOR: Wolk FISCAL: Yes
VERSION: 4/25/11 TAX LEVY: No
CONSULTANT: Detwiler
WILLIAMSON ACT & PHOTOVOLTAIC SOLAR FACILITIES
Allows landowners and local officials to simultaneously
rescind Williamson Act contracts and enter easements that
allow photovoltaic solar facilities on the same land.
Background and Existing Law
Under the Williamson Act, landowners can sign contracts
with counties, agreeing to restrict the use of their
property to agriculture, open space, or compatible uses for
the next 10 years. These contracts automatically renew
each year so that the termination date is always a decade
away. In return for the landowner's agreement to not
develop the land, county officials must assess the property
based on its use, not its market value. The use-value
assessment method lowers the landowner's property tax
bills.
There are several ways to end Williamson Act contracts,
including nonrenewal, cancellation, and rescission.
The preferred method is nonrenewal in which either the
landowner or the county decides to not renew the
contract, which then runs out in nine years. After
nonrenewal, county officials increase the property's
assessed value to its market value by the end of the
contract period when the land use restrictions also
end.
County officials can cancel a Williamson Act contract
at the landowner's request, immediately ending the
contract and allowing the landowner to use the
property for another specified use. To cancel a
contract, the county supervisors must find that the
cancellation is either consistent with the Act's
purposes or in the public interest. The landowner
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must pay a cancellation fee equal to 12% of the
property's nonrestricted value. The revenues go to
the State General Fund, not to the county.
Rescission occurs when the county supervisors cancel a
Williamson Act contract, but the landowner
simultaneously puts an agricultural conservation
easement on other land of equal or greater value.
At least 33% of retail energy sales by investor owned
utilities, local publicly owned utilities, and energy
service providers must come from renewable energy resources
by December 31, 2020 (SB 2x, Simitian, 2011). To meet this
goal, utility systems and private investors need locations
to build renewable energy facilities. The California
Energy Commission tracks more than 375 renewable energy
projects, including 252 solar photovoltaic projects spread
over 21 counties. Many of these "solar PV" sites are in
counties that have Williamson Act contracts with landowners
of thousands of acres of farms, ranches, and open space.
Although the Williamson Act recognizes the construction of
electric facilities as a compatible use, opinions differ
over whether a solar PV facility qualifies as a compatible
use. To avoid lawsuits, landowners and county officials
prefer to terminate their Williamson Act contracts before
building solar PV facilities. Some county supervisors have
made the public interest findings and cancelled Williamson
Act contracts so that investors can build solar PV
facilities. Kern County, for example, cancelled its
Williamson Act contract on 6,047 acres of fallow
agricultural land for the Maricopa Sun Solar Complex, a
proposed 700-megawatt solar PV project near Taft. The
landowner will pay $755,714 in cancellation fees. Others
want to find a different method to terminate Williamson Act
contracts before they build solar PV facilities.
Proposed Law
Senate Bill 618 allows local officials and landowners to
mutually agree to rescind a Williamson Act contract on
marginally productive or physically impaired lands if they
simultaneously enter a solar-use easement that allows the
siting of photovoltaic solar facilities.
SB 618 creates a new category of property interest called a
SB 618 -- 4/25/11 -- Page 3
"solar-use easement" which restricts land use to
photovoltaic solar facilities. The easement can be either
permanent or for at least 10 years. A county or city holds
the solar-use easement, which must contain a covenant that
the landowner will not construct improvements, except for
those expressly allowed and "not incompatible" with solar
photovoltaic facilities. The bill allows the county or
city to require that a solar-use easement contain
restrictions, conditions, or covenants that are necessary
or desirable to restrict land use to photovoltaic solar
facilities. Other public agencies or entities can still
use eminent domain to acquire land that is subject to a
solar-use easement.
SB 618 contains the procedures for the county or city to
accept or approve and then record a solar-use easement.
The county or city can sue to block construction and remove
structures that violate the easement. If the county or
city fails to sue, any landowner or resident in the county
or city can sue. A court can award litigation costs,
including attorney's fees, to the prevailing plaintiff or
defendant.
A solar-use easement and covenant that runs for a term of
years automatically adds another year to the initial term
on each anniversary of its acceptance by the county or
city. SB 618 sets out a nonrenewal process which is the
only way to terminate a solar-use easement. Either the
county (or city) or the landowner can give a written notice
to the other party at least 90 days before the annual
renewal date. If the county (or city) files the notice of
nonrenewal, the landowner can protest and the county (or
city) may withdraw its notice. If either party files the
notice, the easement does not automatically renew, but
remains in effect for the remainder of its term.
Solar photovoltaic facilities that qualify as an active
solar energy system under current law would be excluded
from classification as newly constructed property for
property tax assessment purposes under the California
Constitution.
SB 618 requires the State Department of Fish and Game or
other lead agencies to expedite the review of permits for
solar photovoltaic facilities that are located on solar-use
easements.
SB 618 -- 4/25/11 -- Page 4
Under SB 618, the designation of a parcel as "marginally
productive or physically impaired" must be based on
substantial evidence and approved by the Secretary of Food
and Agriculture. The term "marginally productive or
physically impaired" means either:
Parcels consisting predominately of soil with
significantly reduced agricultural productivity
because of chemical or physical limitations. In
addition, these parcels:
o Can't have been used for agriculture for the
prior six years.
o Must be unusable for agricultural because of
topography, drainage, flooding, adverse soil
conditions, or other physical reasons.
Land that doesn't support livestock for food or
fiber with an animal carrying capacity equal to at
least one animal unit per acre.
Land can't qualify for this definition if it either :
Qualifies as Class I or II in a federal system, or
Was designated as Prime Farmland, Farmland of
Statewide Importance, or Unique Farmland in the state
system, and where the water rights were voluntarily
transferred or retired (unless the transfer or
retirement was because of soil limitations that
severely limit agricultural production).
The bill defines "degraded lands" as lands that are
marginally productive or physically impaired and have been
disturbed by plowing, bulldozing, or other mechanical
means. These lands may have diminished habitat values for
mitigation for endangered, threatened, candidate, and other
sensitive species.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . As utility systems and private
investors stretch to meet the state's target of generating
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33% of energy from renewable sources in the next decade,
they need large areas where they can build their solar
photovoltaic facilities. Ranches and farms could be good
spots, but Williamson Act contracts limit land uses to
agriculture and other open space. To nonrenew Williamson
Act contracts takes a decade before the land use limits
end. Cancelling contracts is harder, requiring local
officials to make extraordinary findings and landowners to
pay cancellation fees. SB 618 takes another approach,
adapting the existing concept of rescission. Investors get
to use less productive ag land for solar PV facilities
without converting the former farms and ranches to suburban
sprawl. Voluntary easements will restrict land use to
solar PV facilities, keeping housing and shopping centers
at bay. Landowners continue to enjoy property tax breaks
and counties continue to avoid development pressures.
2. Consequences, intended and otherwise . For nearly 50
years, the Williamson Act has been an important land use
and taxation tool for both county officials and landowners.
These voluntary contracts have cut landowners' property
tax bills and diverted developers to noncontracted land.
But covering former ranch and farm land with PV panels
isn't the same as preserving open space or conserving
agricultural soils for long-term production. The intended
consequences of SB 618 may deliver some relief to the solar
PV industry and to those who own farms with only marginally
productive dirt. But what happens in the long run? A
landowner can nonrenew the solar-use easements and a decade
later the former farmland is left littered with obsolete PV
facilities. What if future energy prices don't match costs
and the PV investor walks away from the project? The bill
allows - but doesn't require - local officials to impose
restrictions, conditions, or covenants that would make the
landowners return the property to the conditions that
existed when the Williamson Act contracts applied.
3. Drafting lapses . Negotiating compromises among
multiple parties who don't share the same interests is an
art that requires exquisite timing and drafting skills. In
preparing SB 618 for the Committee's April 27 hearing, some
of the parties' intentions didn't make it into print. To
strengthen the bill, the Committee may wish to consider the
following amendments:
Expedite all solar permits. SB 618 should amend
the Permit Streamlining Act to require lead agencies
SB 618 -- 4/25/11 -- Page 6
and responsible agencies to expedite their reviews of
the permits needed for solar PV facilities on
marginally productive, physically impaired, or
disturbed land, not just those located on solar-use
easements.
Pre-easement conditions. If the landowner
nonrenews a solar-use easement, SB 618 should require
the landowner to return the property to its
pre-easement condition.
Assured performance. SB 618 should allow local
officials to require a landowner to post a performance
bond to ensure that that money will be available to
return the property to its pre-easement condition.
Implementing regulations. SB 618 should require
state officials, perhaps the State Department of
Conservation or the Secretary of Food and Agriculture,
to adopt regulations that spell out how to reclaim
land to its pre-easement conditions.
Mitigation. SB 618 should specifically allow local
officials to require mitigation measures, including
the protection of other agricultural land and open
space, among the restrictions, conditions, or
covenants that they can impose on solar-use easements.
Support and Opposition (4/21/11)
Support : California Farm Bureau Federation.
Opposition : Unknown.