BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 1353 HEARING: 4/2/14
AUTHOR: Nielsen FISCAL: Yes
VERSION: 2/21/14 TAX LEVY: No
CONSULTANT: Weinberger
WILLIAMSON ACT CONTRACTS
Repeals the sunset dates in statutes that allow counties to
increase the assessed values of Williamson Act land and
divert the resulting property tax revenues.
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 uses under
the Williamson Act. These contracts run for 10 years
(or 20 years in the case of the Farmland Security
Zone) and automatically renew each year for an
additional year.
Reduced property tax assessments for those
contracted lands.
State subventions to replace the forgone property
tax revenues.
In 2007, when 15.6 million acres were eligible for state
subventions, local officials claimed $37.7 million in
direct General Fund payments. The 2008-09 State Budget
agreement reduced the state subventions by 10% and the
2009-10 State Budget essentially eliminated the subventions
by cutting the appropriation to $1,000.
When farmers, ranchers, conservation groups, and local
officials asked the Legislature to come up with a temporary
program to replace the lost state subventions, legislators
enacted AB 2530 (Nielsen, 2010), which allowed county
officials to increase the assessed values of Williamson Act
contracted land and divert the resulting property tax
revenues. After practitioners found problems with that
statute, the Legislature reenacted it, added an urgency
clause, and appropriated $10 million to partially replace
the counties' subventions (SB 863, Senate Budget & Fiscal
SB 1353 -- 2/21/14 -- Page 2
Review Committee, 2010). In March 2011, the Legislature
repealed the prior year's statute and eliminated the $10
million appropriation (SB 80, Senate Budget & Fiscal Review
Committee, 2011). Before the March 2011 repeal, eight
counties began to implement the statute that allowed county
officials to increase the assessed values of Williamson Act
contracted land and prepared to divert the resulting
property tax revenues. To allow county officials to
continue to implement the program and to allow other
counties to participate, the Legislature reenacted the
statute without any appropriation (AB 1265, Nielsen, 2011).
AB 1265 directed that if the state's open space subventions
are less than half of a county's actual foregone general
fund property tax revenue a county can implement shorter
Williamson Act contracts and increase the assessed values.
The terms of the participating county's 10-year Williamson
Act contracts must be nine years, and terms of its 20-year
Farmland Security Zone contracts must be 18 years. After
the initial year, one year must be added to these contracts
on their renewal dates, unless the contracts are nonrenewed
under existing law. If additional revenues do not occur,
two or three additional years must be added to the
contracts on their next anniversary date to restore them to
their full 10-year and 20-year terms.
In a county where the temporary program applies, an added
assessed value must be conveyed to the county auditor. The
added assessed value is equal to 10% of the difference
between the property's restricted value and its fair market
value. If a property's fair market value is lower than its
restricted value, then the added amount is zero. The
increased property tax revenue that results from this
calculation must appear on the taxpayer's annual bill.
Landowners can nonrenew their Williamson Act contracts
instead of accepting a shorter contract.
The program created by AB 1265 does not apply to:
Contracts that have been nonrenewed.
Contracts with cities.
Open space or agricultural easements.
Scenic restrictions.
Wildlife habitat contracts.
Contracts with atypical terms.
SB 1353 -- 2/21/14 -- Page 3
AB 1265's provisions automatically terminate on January 1,
2015. To allow counties to continue to use AB 1265's
provisions, Williamson Act supporters want the Legislature
to eliminate the 2015 sunset date.
Proposed Law
SB 1353 repeals the January 1, 2015 expiration dates in
statutes that allow counties to increase the assessed
values of Williamson Act land and divert the resulting
property tax revenues, making those statutes effective
indefinitely.
State Revenue Impact
No estimate.
Comment
Purpose of the bill . According to the Department of
Conservation, 11 counties have chosen to participate in the
alternative funding program enacted by AB 1265: Butte,
Kings, Lassen, Madera, Mendocino, Merced, Shasta,
Stanislaus, Sutter, Tulare, and Yolo. Land Conservation
Act contracts protect millions of acres of land within
those 11 counties. Allowing AB 1265's provisions to expire
could provoke county officials to leave the land
conservation program. If counties can't afford the
property tax breaks that landowners enjoy, they'll nonrenew
the contracts and let them wind down over the next nine (or
18) years. That'll end the nearly 50-year effort which
affects about half of California's farmland. SB 1353
leaves in place a fix that replaces enough of the lost
state subventions to discourage counties from abandoning
the program. Counties still will be allowed to shorten
contracts by 10% and keep the revenues that result from the
corresponding 10% increase in property valuations.
Landowners will continue to benefit from preferential tax
valuations. The public interest will be served by keeping
farms and ranches undeveloped and in open space. SB 1353
buys more time until improved fiscal conditions allow the
state to restore subvention payments or until public
officials, conservation groups, and landowners agree on
SB 1353 -- 2/21/14 -- Page 4
other approaches to California's open space conservation
efforts.
Support and Opposition (3/27/14)
Support : California Farm Bureau Federation; Rural County
Representatives of California; Yolo County.
Opposition : Unknown.