BILL ANALYSIS Ó SB 618 Page 1 Date of Hearing: June 29, 2011 ASSEMBLY COMMITTEE ON AGRICULTURE Cathleen Galgiani, Chair SB 618 (Wolk) - As Amended: June 23, 2011 SENATE VOTE : 39-0 SUBJECT : Local government: solar-use easement. SUMMARY : This bill allows a city or county and a landowner to concurrently rescind a Williamson Act (Act) contract on marginally productive or physically impaired lands and enter into a solar-use easement that restricts the use of land to photovoltaic (PV) solar facilities. Specifically, this bill : 1)Makes legislative declarations and findings regarding the Act and it's importance to preserving agricultural and open space to the people of California 2)Makes legislative declarations and findings that California will require 33% of electricity to come from renewable sources by 2020 and that renewable energy, in which PV produced electricity plays an important part, will benefit California by job creation, improving local air quality and improve energy independence, along with other benefits. 3)Makes legislative declarations and findings that encouraging PV electricity production on marginally productive or physically impaired land, by expediting the termination of Act contracts without penalty, will protect the benefits of solar production and provide economic incentive for new solar power development. 4)Declares that it is the intent of the Legislature to provide an additional, but not the exclusive, method of terminating an Act contact to encourage the development of large scale solar PV facilities on marginally productive or physically impaired land. 5)Defines agriculture activities as all agriculture production and agriculture related activities, excluding livestock production. Allows for the periodic use of land for the production and use of forage, as specified. SB 618 Page 2 6)Defines marginally productive as parcels not irrigated for agricultural purposes for the previous six years, and consisting predominantly of soil with significantly limited agricultural activities due to chemical or physical limitations, as specified. 7)Defines physically impaired land as land with severely adverse soil conditions that are detrimental to continued agricultural cultivation and production, as specified. Allows the Secretary of the California Department of Food and Agriculture (CDFA) to consult with the Secretary of the California Natural Resources Agency (CNRA) and consider information from the county agriculture commissioner where the land is located 8)Requires a designation of marginally productive or physically impaired land to be based on substantial evidence and approved by the Director (Director) of the Department of Conservation (DOC) and allows the Director to consult with the Secretary of CDFA and consider information from the county agriculture commissioner where the land is located. 9)Defines city to mean any city or city and county. 10)Defines landowner to include a lessee or trustee, if the lease or trust expires at a later date than the expiration of the restriction of land use to PV solar facilities or any extension of restriction. 11)Defines solar-use easement (solar easement) as any rights or interests acquired by a city or county in perpetuity or a term of years that restricts the use of land to a solar facility, with the purpose to provide for the collection and distribution of solar energy for electricity generation, as specified. 12)Allows a city or county to enter into an agreement with a landowner for a solar easement, as specified. 13)Requires the term of a solar use easement to be at least ten years and specifies that the contract automatically renews each year unless notice of nonrenewal is given by either party. 14)Allows a city or county to require a solar easement to have any conditions, covenants or restriction (CCR) needed to SB 618 Page 3 restrict the land use to solar facilities. Allows the CCR to include, but not be limited to: a) Mitigation measures on the solar easement land. b) Mitigation measures beyond the solar easement land. c) Bonds or other securities to fund, upon ending the solar easement, the restoration of the easement land, as specified. d) Requires any CCR to be consistent with this chapter. 15)Requires for term easements that the CCRs require the landowner to post bonds or other securities to fund, upon ending the solar easement, the restoration of the easement land, as specified. 16)Requires acceptance or approval from the local governing body before a solar easement is in effect. 17)Prohibits a city or county, during the term of a solar easement, from approving any land use that is inconsistent with the easement, or issues building permits for structures that would violate the easement. 18)Requires a city or county, during the term of a solar easement, to pursue injunctions, by appropriate proceedings, against construction or development on easement land that would violate the easement and pursue a mandatory injunction to remove any structure built in violation of the easement. 19)Provides that if a county or city fails to seek an injunction or if the county or city should construct any structure or development or conduct or permit any activity in violation of the easement, a person or entity may, by appropriate proceedings, seek an injunction. 20)Requires a solar easement to be officially recorded with the county assessor, as specified. 21)Requires the parcel or parcels in a solar easement to be assessed, considering the effect upon value of restrictions to which the use of the land is subjected. SB 618 Page 4 22)Allows DOC to adopt regulation pursuant to solar easements. 23)Allows a solar easement to be ended on all or a portion of the parcel by nonrenewal, termination, or reversion of the land to its previous Act contract, as specified. 24)Requires parties who wish to not renew a solar easement on all or part of the parcel, to file a written notice 90 days prior to the annual renewal date of the easement. 25)Provides that unless written notice is served at least 90 days in advance of the renewal date, the Solar easement shall be considered renewed. 26)Allows an owner who receives a nonrenewal notice from a city or county, to make a written protest of the nonrenewal and allows the city or county, prior to the renewal date, to rescind the notice of nonrenewal. 27)Requires, upon nonrenewal, the solar easement to continue for the balance of the term. 28)Requires the land be restored to its original condition by the landowner if he or she initiates nonrenewal of a solar easement or due to termination of the solar easement. 29)Allows landowners to petition the city or county to terminate a solar easement, if all or a portion of the parcel no longer is used for the purpose of the easement. 30)Requires, prior to any action by a city or county in the termination of solar easement, the county assessor to determine current fair market value of easement land being terminated. a) Requires the county assessor to certify to the city or county the termination valuation of the easement land to determine the termination fee. b) Requires the county assessor to send a notice to the landowner and DOC indicating the current fair market value, advise the parties of their right to request all information relative to the land valuation, and advise the parties of the ability to request a formal review. Requires confidential information to be protected, as SB 618 Page 5 specified. 31)Requires, prior to approval of a solar easement termination, the city or county to determine and certify to the county auditor the amount of the termination fee due to the county treasure upon termination and requires the termination fee be 12.5% termination value of the property. 32)Allows the city or county, if it is in the public interest, to waive payment or a portion of payment, or extend payment or a portion of payment as specified, if all of the following occur: a) The termination is caused by an involuntary transfer or change in use which the land is not suitable or can be used for a greater economic return for the owner; and, b) The Secretary of CNRA approves the waiver or extension of time, as specified. 33)Requires the termination fees collected by the county treasurer be transferred to the controller and deposited in the General Fund (GF). 34)Declares the intent of the Legislature that the termination fees do not constitute taxes, but are payments that provide a private benefit, as specified. 35)Allows parties, upon mutual agreement, to rescind Act contracts on marginally productive or physically impaired land to simultaneously enter into a solar easement. 36)Specifies that ending an Act contract by entering into a solar easement is an addition to, not a replacement of, other methods of ending an Act contract. 37)Adds solar easements as an enforceable restriction that effects land valuation, that assessors are required to examine. EXISTING LAW: 1)Creates the Act, also known as the California Land Conservation Act of 1965, which authorizes cities and counties to enter into agricultural land preservation contracts with SB 618 Page 6 landowners who agree to restrict the use of their land for a minimum of 10 years in exchange for lower-assessed valuations for property tax purposes. ŬGovernment Code Section (GOV) 51200-51207] 2)Allows a landowner or a county to not renew an Act contract. The Act contract then runs out in nine years. After nonrenewal, a county will increase the property's assessed value to its market value by the end of the contract period when the land use restrictions also end. ŬGOV section 51245] 3)Allows for a cancellation of an Act contract at the request of the landowner. Cancellation immediately ends the contract and allows 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 must pay a cancellation fee equal to 12.5% of the property's nonrestricted value. The revenues go to the state GF. ŬGOV section 21250] 4)Allows for the rescission of an Act contract. Rescission occurs when the county supervisors cancel an Act contract, but the landowner simultaneously puts an agricultural conservation easement on other land of equal or greater value. ŬGOV section 51255] FISCAL EFFECT : This bill has been keyed fiscal by Legislative Counsel. COMMENTS : The Act conserves agricultural and open space land by allowing private property owners to sign voluntary contracts with counties and cities, restricting their land to agriculture, open space, and compatible uses. In return, county assessors must lower the assessed value of the contracted lands to reflect their use as agricultural or open space instead of the market value. Making sure that private property owners use their Act land appropriately is essential to maintaining the statute's constitutional integrity. Approximately 16.6 million acres are under Act contracts. At least 33% of retail energy sales in California must come from renewable energy resources by December 31, 2020. To meet this goal, utility systems and private investors need locations to build renewable energy facilities. The California Energy SB 618 Page 7 Commission is tracking 252 solar PV projects spread over 21 counties. Many of these solar PV sites are in counties that have Act contracts with landowners of thousands of acres of farms, ranches, and open space. Although the 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 Act contracts before building solar PV facilities. Some county supervisors have made the public interest findings and cancelled Act contracts so that investors can build solar PV facilities. Others want to find a different method to terminate Act contracts before building solar PV facilities. According to the author, this bill offers incentives to solar PV developers who choose to develop on lands that are less suited for agricultural use or have a lower habitat value. The bill defines "marginally productive and physically impaired lands" to be those lands which have significantly reduced agricultural value due to chemical or physical limitations and are unusable for agricultural. Supporters state that this bill will provide a significant alternative mechanism for Williamson Act lands, when designated as marginally productive or physically impaired, that cannot meet the principles of compatibility or the required findings for contract cancellation. Furthermore, supporters state this bill will accomplish the goal of ensuring that solar projects are located appropriately without undermining the Act and will ensure that solar projects are implemented in a manner that makes sense and balances multiple interests. The definition for physically impaired land includes allowing the Secretary of CDFA to be the lead reviewer of the designation. This conflicts with requiring the Director to approve the designation of marginally productive land and physically impaired land. The author's office stated that the Director is the intended person to make these determinations. The committee may wish to consider the following clarifying amendment: on page 5, lines 15-18 strike "The Secretary of Food and Agriculture may consult with the Secretary of Natural Resources Agency and consider information from the agricultural commissioner in the county where the land is located." SB 618 Page 8 The bill defines agriculture activities as production and practices associated with farming as prescribed in current law. As the definitions of marginally productive land and physically impaired land in this bill only refer to agriculture production or purposes, the committee may wish to consider a conforming amendment as follows: On page 5, lines 1, after the word "agriculture", strike the word "purposes" and insert "activities". This bill was heard in the Assembly Committee on Local Government on June 22, 2011, where it passed out on a 9-0 vote. RELATED LEGISLATION : SB 2 X1 (Simitian) Chapter 1, Statutes of 2011, increased California's renewables portfolio standard to require all retail sellers of electricity and all publicly owned utilities to procure at least 33% of electricity delivered to their retail customers from renewable resources by 2020. REGISTERED SUPPORT / OPPOSITION : Support California Farm Bureau Federation California Public Utilities Commission California Women for Agriculture Defenders of Wildlife Environmental Defense Fund Maricopa Orchards, LLC Natural Resources Defense Council Planning and Conservation League The Nature Conversancy The Trust for Public Land Union of Concerned Scientists Opposition None on file. Analysis Prepared by : Victor Francovich / AGRI. / (916) 319-2084 SB 618 Page 9