BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 2241 HEARING: 6/18/14
AUTHOR: Eggman FISCAL: Yes
VERSION: 5/23/14 TAX LEVY: No
CONSULTANT: Chavez
SOLAR-USE EASEMENT INCENTIVE PROGRAM
Modifies fees charged when contracting parties rescind a
Williamson Act or Farmland Security Zone contract to enter
a solar-use easement contract, and allows the county to
keep 50% of the rescission fee.
Background and Existing Law
The California Land Conservation Act of 1965, also known as
the Williamson Act (WA), allows a landowner to voluntarily
enter into an agricultural land preservation contract with
a city or county for a minimum of 10 years. In exchange
for restricting the use of their land, property owners pay
lower taxes as a result of their land's lower assessed
value. In 1998, the Legislature created an option of
establishing a Farmland Security Zone (FSZ) which offers
landowners a greater property tax reduction for a minimum
20 year contract. In 1971, the Open Space Subvention Act,
provided state subvention payments to the counties to help
offset the counties loss in property tax revenue as a
result of their participation in WA and FSZ contracts.
However, due to the recession, subvention payments were
eliminated in the 2009-2010 State Budget.
There are several ways to terminate a WA contract. In
order to rescind a contract, the parties must mutually
agree and must pay a rescission fee of 12.5% of the land's
fair market value on a WA contract and 25% of the fair
market value on a FSZ contract. The county collects the
fee and deposits the revenue in the State General Fund.
State law (SB 618, Wolk, 2011), allows a property owner and
a city or county to mutually agree to rescind the WA or FSZ
contract on marginally productive or physically impaired
land to enter a solar-use easement contract. The
Department of Conservation, in consultation with the
AB 2241 -- 5/23/14 -- Page 2
Department of Food and Agriculture, must review and approve
all solar-use easements. SB 618 encourages solar
generation to meet California's Renewable Standard goals
and provides a lower rescission fee to rescind WA or FSZ
contracts on marginally productive or physically impaired
land. The rescission fee is 6.25% of the fair market value
of the land on the WA contract and 12.5% on the FSZ
contract. The county collects the fee and deposits the
revenue in the State General Fund.
The Department of Conservation staff indicates that
landowners have entered into three solar-use easement
contracts in San Joaquin, San Luis Obispo, and Tuolumne
Counties under SB 618. Solar projects are appealing to
cities and counties; however, rescission under SB 618 has
not been widely utilized. Some landowners and local
officials want the Legislature to provide a greater
incentive for counties to rescind WA and FSZ contracts on
marginally productive or physically impaired land and enter
solar-use easement contracts.
Proposed Law
Assembly Bill 2241 increases the rescission fee for a WA
contract from 6.25% to 10% of the fair market value of the
property and decreases the rescission fee for a FSZ
contract from 12.5% to 10% of the fair market value of the
property when the parties mutually agree to rescind the
contract and enter a solar-use easement contract.
AB 2241 also allows the county to retain 50% of the
rescission fee and deposit the remaining 50% to the State
General Fund.
The bill will remain in effect until January 1, 2020,
unless a later statue deletes or extends that date.
State Revenue Impact
No estimate.
Comments
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1. Purpose of the bill . AB 2241 provides a financial
incentive to counties to facilitate solar-use easement
contracts on marginally productive or physically impaired
farmland. WA and FSZ contract rescission under SB 618 has
not been widely embraced, despite the growing interest in
large-scale solar projects. Farmland is an ideal location
for large-scale solar facilities due to the open space,
level terrain, and sunshine. Cities and counties are
cancelling WA and FSZ contracts by paying a fee (greater
than the rescission fee) to invest in solar facilities
without regard to prime farmland. According to the
Department of Conservation staff, 50% of the cancellations
each year are due to an interest in solar projects. The
purpose of SB 618 and AB 2241 is to preserve prime farmland
to ensure food production, and encourage solar projects on
only marginally productive or physically impaired land.
This bill encourages solar-use easements by changing the
rescission fee to 10% for both WA and FSZ and allowing
counties to retain 50% of the rescission fee.
2. Landowner's financial burden. The state's interest in
the Williamson Act is to preserve prime agricultural land.
SB 618 lowered the rescission fee from 12.5% to 6.25% of
the fair market value of the land on WA contracts to
encourage solar-use easements on marginally productive and
physically impaired land. This bill offers a financial
incentive for the counties by retaining 50% of the
rescission fee but increases the rescission fee from 6.25%
to 10% of the fair market value of the land on WA
contracts. Why does AB 2241 ask landowners on WA contracts
to pay more than they do under current law? If the state
has a vested interest in preserving the WA and encouraging
solar generation on only marginally productive or
physically impaired land, it should use state funds to
provide an incentive to counties, rather than decreasing
the fiscal incentive offered to landowners.
Assembly Actions
Assembly Committee on Agriculture 6-0
Assembly Committee on Local Government 9-0
Assembly Committee on Appropriations 16-0
Assembly Floor 76-0
Support and Opposition (06/10/14)
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Support : California Farm Bureau Federation; Rural County
Representatives of California.
Opposition : None received.