BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 668 HEARING: 5/4/11
AUTHOR: Evans FISCAL: No
VERSION: 4/25/11 TAX LEVY: No
CONSULTANT: Detwiler
WILLIAMSON ACT SUBVENTIONS
Allows counties to accept contributions to replace their
lost Williamson Act subventions.
Background and Existing Law
Landowners and local officials can cooperate to conserve
agricultural and open space land under a three-part scheme:
Voluntary contracts that restrict land use under
the Williamson Act. These contracts run for 10 years
(or 20 years in the case of the Farmland Security
Zones) and automatically renew each year for an
additional year.
Reduced property tax assessments for those
contracted lands.
State subventions to replace the foregone property
tax revenues.
About 16.6 million acres are under Williamson Act
contracts. In 2007, when 15.6 million acres were eligible
for state subventions, local officials claimed $37.7
million in direct General Fund payments. Successive budget
cuts have essentially eliminated the subventions to
counties by cutting the appropriation to $1,000.
In March 2010, the Senate Local Government Committee held
an oversight hearing on the Williamson Act. Counties,
landowners, and conservation groups urged legislators to
find other revenues to restore the state subventions to
counties. Without subventions, counties told legislators
that they were unlikely to continue participation in the
Williamson Act.
Legislators responded by creating a temporary program that
counties can use when the state government doesn't pay its
full subvention. Counties can shorten the Williamson Act
SB 668 -- 4/25/11 -- Page 2
contracts, revalue the contracted land, and receive the
increased revenues (AB 2530, Nielsen, 2010; SB 863, Senate
Budget & Fiscal Review Committee). By January 2011, eight
counties had decided to implement that approach: Kings,
Madera, Mendocino, Merced, Shasta, Stanislaus, Tulare, and
Yolo.
Other counties stopped accepting new contracts, but
continue to look for different ways to replace their
foregone property tax revenues. Other local agencies and
private conservation groups worry what will become of
farms, ranches, and open space if county officials stop
participating in the Williamson Act.
Proposed Law
Senate Bill 668 allows a city or county to accept
contributions from an open-space district, a land-trust
organization, a nonprofit entity, or a public agency for
specific land that is under a Williamson Act contract to
supplement the city or county's foregone property tax
revenues. This authority applies if the state fails to
make all or part of its subvention payments to the city or
county.
SB 668 allows the contributor to contract with the owner of
Williamson Act land, with the approval of the city or
county, to keep the property under the Williamson Act
contract in exchange for the contributor's payment to the
city or county. The bill allows the city or county to use
up to 5% of the contribution for administrative purposes.
The bill requires that a contract between the contributor
and the landowner be subject to any limitation in the
contributor's power. The contract cannot allow or require
the land's conversion into a mitigation bank site.
These provisions automatically terminate on January 1,
2016, unless the Legislature extends or repeals that date.
The contract between the contributor and the landowner
remains in effect until it terminates, for up to 10 years.
However, a contract may provide for its mutual cancellation
or renegotiation on January 1, 2016, if the state resumes
its subvention payments.
SB 668 -- 4/25/11 -- Page 3
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Counties told legislators that
the near-elimination of state subventions makes it tough
for them to remain in Williamson Act contracts. They want
a fiscal bridge to a more certain future that would allow
them to keep farms, ranches, and open space undeveloped.
While some counties are using last year's bills to increase
their property tax revenues, others are waiting for more
legislative action. SB 668 creates another fiscal bridge
by allowing counties to accept contributions from other
agencies and private groups. To protect their donations,
the contributors can insist that the landowners remain
subject to their Williamson Act contracts. By making it
harder to cancel and rescind contracts, the bill encourages
agricultural and open space conservation.
2. Strings attached . If the county government approves
the contract between the contributor and the landowner, SB
668 insists that the landowner remain subject to the
Williamson Act for up to 10 years. The bill does not
explicitly authorize the willing landowner and the willing
contributor to agree to other conditions, but implies they
can. The contract can't overstep the contributor's powers
or force the land into a mitigation bank. But what other
strings could a contributor tie to its donation? Can the
contributor demand that the landowner follow or ban
specific agricultural husbandry practices involving, for
example, the use of integrated pest management, herbicides,
or pesticides? Can the contributor demand that the
landowner grant public access to farms and fields? Can the
contributor control the landowners' choice of crops or
other agricultural products? The Committee may wish to
consider amendments that preclude contributors and
landowners from agreeing to conditions that are not
directly related to keeping the Williamson Act contracts
intact.
3. Who's got the money ? The concept behind SB 668 is
appealingly simple. A public agency or private group with
SB 668 -- 4/25/11 -- Page 4
money to spare can help a Williamson Act county until the
state subventions resume. During the Great Recession,
which of the eight open space districts is ready to hand
over some of its taxpayers' dollars to county governments?
In 2007-08, five of the eight districts got shares of
property tax revenues; three of those five also received
revenues from special taxes and benefit assessments. The
Sonoma County Agricultural Preservation and Open Space
District gets most of its revenues from a voter-approved ¢
sales tax override. With open space districts and land
trusts struggling to pay their own bills, can counties find
willing contributors?
4. Better to receive than give . SB 668 allows counties to
receive contributions from four sources: open-space
districts, land-trust organizations, nonprofit entities,
and public agencies. Private groups and land trusts can
donate to anyone who fits their criteria. But public
agencies have only the fiscal powers spelled out in their
enabling statutes. The Public Resources Code governs the
eight existing regional park and open space districts: East
Bay Regional Park District, Marin County Open Space
District, Midpeninsula Regional Open Space District,
Monterey Peninsula Regional Park District, Napa County
Regional Park and Open Space District, Riverside County
Regional Park and Open Space District, Sonoma County
Agricultural Preservation and Open Space District, and
Tri-City and County Regional Park and Open Space Group.
That law doesn't allow these districts to give their funds
to county governments. To make the bill work, the
Committee may wish to consider an amendment that
specifically allows regional park and open space districts
to spend their public funds as SB 668 invites.
5. The short and the long of it . The contributor's
contract with the landowner under SB 668 can run for as
long as 10 years, depending on what term the parties
select. There is no parallel term for the duration of the
contributor's donation to make up the county's foregone
property tax revenues. That asymmetry means the contract
could involve a one-year donation to the county but 10-year
limits on the landowner. Of course, the contributor, the
landowner, and the county must all agree. The Committee
may wish to consider an amendment that requires the
contract to run for as many years as the contributor
pledges to pay the replacement revenues. The longer the
SB 668 -- 4/25/11 -- Page 5
contributor's payments, the longer the limits on the
landowner.
6. It's about time . Contracts under SB 668 can last for
up to 10 years, but the bill's provisions last only four
years - until the January 1, 2016 sunset date. How can a
contract continue when its legal authority disappears? The
Committee may wish to consider amendments that instead
sunset the authority for contributors and landowners to
enter new contracts on January 1, 2016, but allow the law
to remain on the books
7. The 5% solution . A county can use up to 5% of a
contribution received under SB 668 for "administrative
purposes." But if the county puts the money in its general
fund (which is where Williamson Act subventions used to
go), the dollars lose their identity. Counties use their
general funds to pay for administrative costs. To avoid
confusion, the Committee may wish to consider amendments
that limit to 5% the amount of the contribution spent on
administering the contract between the contributor and the
landowner. The rest of the contribution should go to the
county's general fund.
8. Watch your language . SB 668 uses terms that are
different from existing statutory definitions. To avoid
confusion, the Committee should adopt technical amendments
that use the existing definitions for "regional park and
open space districts" and "nonprofit land trust
organizations."
Support and Opposition (4/28/11)
Support : Unknown.
Opposition : Unknown.