BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                          SB 618 (Wolk)
          
          Hearing Date: 05/16/2011        Amended: 05/11/2011
          Consultant: Mark McKenzie       Policy Vote: G&F 9-0
          _________________________________________________________________
          ____
          BILL SUMMARY: SB 618 would authorize a city or county and a 
          landowner to simultaneously rescind a Williamson Act contract on 
          marginally productive or physically impaired lands and enter 
          into a solar-use easement that restricts the use of land to 
          photovoltaic solar facilities.  Among other things, this bill 
          would:
                Define "marginally productive" as parcels not used for 
               agricultural purposes for the previous six years and 
               consisting predominantly of soil with significantly reduced 
               agricultural productivity due to chemical or physical 
               limitations, as specified.
                Define "physically impaired land" as land with severely 
               adverse soil conditions that are detrimental to continued 
               agricultural cultivation and production, as specified.
                Require a designation of marginally productive or 
               physically impaired to be based on substantial evidence and 
               approved by the Secretary of Food and Agriculture.
                Require the term of a solar use easement to be at least 
               ten years and specify that the contract automatically 
               renews each year unless notice of nonrenewal is given by 
               either party.  Upon nonrenewal, the solar-use easement 
               would continue for the balance of the term.  The land must 
               be restored to its original condition by the landowner if 
               he or she initiates nonrenewal of a solar-use easement.
                Require any lead or responsible agency to expedite the 
               review and issuance of any necessary permits for solar 
               photovoltaic facilities located on marginally productive, 
               physically impaired, or specified disturbed land.
                Authorize the Department of Conservation to adopt 
               regulations necessary for the implementation of the bill.
          _________________________________________________________________
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2011-12      2012-13       2013-14     Fund
           Cancellation fees      Unknown, significant loss of 
          cancellationGeneral/








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                                 fees (see staff comments)          
          Special*

          Property reassessments Likely increase in property tax 
          revenuesLocal/
                                 related to reassessments (see staff 
          comments)  General 

          DFA determinations     unknown, potentially significant costs 
          toGeneral
                                 make determinations of marginally 
          productive
                                 or physically impaired lands

          DOC regulations        one-time costs, likely exceeding 
          $200Special*
          ____________
          * Soil Conservation Fund
          _________________________________________________________________
          ____

          STAFF COMMENTS: This bill meets the criteria for referral to the 
          Suspense File. 

          Existing law, the California Land Conservation Act of 1965 
          (Williamson Act), authorizes landowners to sign ten-year 
          contracts with counties, agreeing to restrict a property's use 
          to agriculture, open space, or compatible uses.  In return for 
          the agreement to keep the land out of development, the landowner 
          benefits from reduced property tax assessments based on the 
          property's use rather than its market value.  These contracts 
          renew automatically each year, unless the contract is ended 
          through nonrenewal, cancellation, or termination.  Under 
          nonrenewal, either the landowner or the county may provide 
          notice to not renew the contract.  When the term of the contract 
          runs out after nine years, the property is reassessed at its 
          market value and land restrictions end.  County officials can 
          cancel a Williamson Act contract at a landowner's request if the 
          board of supervisors finds that cancellation is consistent with 
          the Act's purpose or in the public interest.  A contract ends 
          immediately upon cancellation and payment of cancellation fees 
          by the landowner to the state in an amount equal to 12.5% of the 
          property's unrestricted value.  A contract can be rescinded when 
          a board of supervisors cancels a Williamson Act contract and the 








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          landowner simultaneously enters into an agricultural 
          conservation easement on other land of an equal or greater 
          value.

          SB 618 would assist in efforts to meet the state's target of 
          generating 33% of energy from renewable sources in the next 
          decade by providing large parcels of land that may be better 
          suited for installation of solar photovoltaic facilities than 
          agriculture or open space, while continuing the core mission of 
          the Williamson Act by protecting prime farmland from 
          development.  This bill would provide for the rescission of a 
          Williamson Act contract on marginally productive or physically 
          impaired lands if a landowner simultaneously enters into a 
          solar-use easement that restricts the use of land to 
          photovoltaic solar facilities.  Under current law, if a 
          landowner wished to install photovoltaic solar facilities on 
          land restricted by a Williamson Act contract, the landowner must 
          request cancellation of the contract and pay any cancellation 
          fees.  For example, Kern County recently cancelled a Williamson 
          Act contract on 6,047 acres of fallow agricultural land for the 
          construction of the Maricopa Sun Solar Complex, a 700 megawatt 
          solar photovoltaic project near Taft, requiring the landowner to 
          pay $755,714 in cancellation fees.  Staff notes that 
          cancellation fees are deposited in the state General Fund, and 
          approximately $2.5 million in cancellation fees are transferred 
          to the Soil Conservation Fund to cover the Department of 
          Conservation's (DOC) costs to administer the Williamson Act.  As 
          such, the contract rescission provided by the bill would result 
          in foregone General Fund revenues because absent the bill, a 
          landowner would pay cancellation fees in order to build solar 
          photovoltaic facilities on land previously under a Williamson 
          Act contract.  The magnitude of this revenue impact is unknown 
          and would depend upon the amount of land converted from 
          Williamson Act contracts to solar-use easements that would 
          otherwise go through the cancellation process, and the 
          unrestricted value of that property.

          Existing law provides for an exclusion from the definition of 
          new construction for active solar energy systems in the 
          assessment of property for tax purposes.  SB 618 affirms that 
          the construction of solar photovoltaic facilities on land 
          subject to a solar-use easement would qualify as an active solar 
          energy system for purposes of the property tax exclusion.  When 
          the Williamson Act contract is rescinded pursuant to this bill, 








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          the property would be subject to reassessment.  The Board of 
          Equalization indicates that the assessed value of the property 
          would likely increase, but probably not to full unrestricted 
          fair market value because of the enforceable restriction on the 
          use of the property due to the solar-use easement; the use of 
          the property would be limited to the installation of solar 
          facilities and the assessor would consider the restricted use 
          when determining the value of the property.  The magnitude of 
          any property tax increase is unknown.  Any benefit accrued to 
          schools as a result of the increase in property tax revenues 
          would provide relief to the state General Fund.

          SB 618 would authorize the Department of Conservation to adopt 
          regulations to implement the bill.  Considering the level of 
          analysis related to determinations of what constitutes 
          marginally productive or physically impaired land, and the 
          detail involved in a new type of Williamson Act contract 
          rescission, it is likely that DOC would adopt these regulations. 
           DOC would likely incur costs exceeding $200,000 for legal, 
          scientific, and administrative staff to carry the regulations 
          package though the full Administrative Procedures Act process.

          The bill would also require the Secretary of Food and 
          Agriculture to approve determinations that particular parcels 
          qualify as marginally productive or physically impaired, as 
          specified.  Department staff indicates that it does not 
          currently have staff with the scientific knowledge to make some 
          of the determinations specified in the bill, such as soil and 
          chemical analysis.  The department would likely contract out for 
          these services, or enter into an interagency agreement with 
          another state agency, such as DOC, to provide staff necessary to 
          make the required determinations.  Staffing costs related to 
          this provision are unknown and would depend upon the number, 
          size, and location of parcels proposed for determination as 
          marginally productive or physically impaired.  Staff estimates 
          these costs could be in the low hundreds of thousands annually.

          Lastly, the bill would require lead agencies and responsible 
          agencies to expedite the review and issuance of any necessary 
          permits for solar photovoltaic facilities.  This provision would 
          result in unknown cost pressures on various state agencies 
          responsible for issuing permits related to the installation of 
          these facilities by prioritizing these permits over other 
          applicants.








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