BILL ANALYSIS Ó
SB 1353
Page 1
SENATE THIRD READING
SB 1353 (Nielsen)
As Amended May 15, 2014
Majority vote
SENATE VOTE :35-0
LOCAL GOVERNMENT 8-0 AGRICULTURE 7-0
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|Ayes:|Achadjian, Levine, Alejo, |Ayes:|Eggman, Olsen, Dahle, |
| |Bradford, Gordon, | |Pan, Quirk, Salas, Yamada |
| |Melendez, Mullin, Rendon | | |
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APPROPRIATIONS 17-0
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|Ayes:|Gatto, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, | | |
| |Donnelly, Eggman, Gomez, | | |
| |Holden, Jones, Linder, | | |
| |Pan, Quirk, | | |
| |Ridley-Thomas, Wagner, | | |
| |Lowenthal | | |
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SUMMARY : Repeals the January 1, 2016, sunset date in the
statutes that allow counties to increase the assessed values of
Williamson Act land and divert the resulting property tax
revenues, making this authority permanent instead of temporary,
and makes conforming changes.
EXISTING LAW :
1)Authorizes, pursuant to the California Constitution, the
Legislature to promote the conservation, preservation and
continued existence of open space lands and provides that when
these lands are enforceably restricted to recreation,
enjoyment of scenic beauty, use or conservation of natural
resources, or production of food or fiber, they must be valued
for property tax purposes only on a basis that is consistent
with these restrictions and uses.
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2)Creates the Williamson Act, which authorizes cities and
counties to enter into agricultural land preservation
contracts with landowners who agree to restrict the use of
their land for a minimum of 10 years in exchange for lower
assessed property tax valuations. The Division of Land
Resource Protection in the Department of Conservation
administers the Williamson Act.
3)Allows a county, if it makes a determination that the state's
open space subventions are less than one-half of the county's
actual foregone General Fund (GF) property tax revenue, to
revise the term for new contracts, and provides the following:
a) Contracts shall be for a term of no less than nine years
for contracts currently 10 years in length or 18 years for
contracts currently 20 years in length;
b) Requires each contract to provide, except in the initial
year of determination, that on the anniversary date of the
contract or such other annual date as specified by the
contract, a year shall be added automatically to the
initial term, unless notice of nonrenewal is given;
c) Specifies that, if additional revenues do not occur, two
or three additional years must be added to the contracts on
their next anniversary date, as necessary, to restore them
to their full 10-year and 20-year terms;
d) Requires a county's actual foregone property tax revenue
to be based on the county's respective share of the general
property tax dollars as reflected in the most recent annual
report issued by the State Board of Equalization or 20%,
whichever is higher;
e) Requires, in any year in which reduced contract terms
and increased assessments are implemented, a county to
record a notice that states the affected parcel number(s)
and current owner's names, or the same information for
those parcels that are not affected;
f) Requires an addition to the assessed value to be
conveyed to the auditor, consistent with the 10% reduction
in the length of the restriction, equal to 10% of the
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difference between the valuations, as specified. The
increased amount of tax revenue that results from the
decrease in restriction shall be separately displayed on
the taxpayer's annual bill;
g) Allows a landowner to serve a notice of nonrenewal
instead of accepting a shortened contact. A landowner may
serve notice of nonrenewal at any time; however, a
landowner who withdraws that notice prior to the effective
date shall be subject to term modification and additional
assessed value, as specified;
h) Requires a county to give timely written notice to
Williamson Act landowners regarding: any initial hearing by
the county on a proposal to adopt or rescind the contract
and revaluation provisions; any final decision regarding
the adoption or rescission of contract and revaluation
provisions; and, the landowner's right to prevent contract
amendments through nonrenewal, as specified;
i) Specifies that contract modifications and increased
assessments do not apply to: contracts that have been
nonrenewed; contracts with cities; open space or
agricultural easements; scenic restrictions; wildlife
habitat contracts; and, atypical term contracts, as
specified;
j) Prohibits a county from modifying or revaluing a
contract, unless the landowner is given at least 90 days'
notice of the opportunity for nonrenewal and the landowner
fails to nonrenew, as specified. Until February 1, 2012,
the 90-day notice requirement may be reduced to 60 days if
the county adopts a procedure to allow landowners to serve
a notice of nonrenewal;
aa) States that a landowner's failure to provide notice of
nonrenewal is implied consent to the contract and
revaluation provisions for that year;
bb) Requires that the increased revenues generated by
properties that are subject to contract and revaluation
provisions be allocated exclusively to the counties in
which those properties are located; and,
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cc) Sunsets contract modification and revaluation provisions
on January 1, 2016.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Negligible immediate state GF impact because schools receive
the same amount of property tax revenues regardless of whether
counties participate in the program. Although the bill allows
for an increase in the assessed valuation of Williamson Act
properties, participating counties retain any increase in
property tax revenues.
2)In the long run, unknown potential GF impacts, either positive
or negative, to the extent that a county stays under contract
rather than non-renews, or alternatively, a county non-renews
sooner due to the shorter contract lengths allowed under this
bill. Under non-renewal, schools receive an increase in
property tax revenues when the contract expires and the
assessed valuation increases accordingly. When the school
share of property tax revenue increases, there is a
corresponding reduction in GF obligations related to the
minimum funding guarantees in Proposition 98 of 1988.
COMMENTS :
1)Background. The Williamson Act conserves agricultural and
open space land by allowing private property owners to sign
voluntary contracts with counties and cities, enforceably
restricting their land to agriculture, open space, and
compatible uses. In return, county assessors must reduce the
assessed value of the contracted lands to reflect their use as
agriculture or open space instead of assessing them at market
value. Approximately 16.6 million acres are under Williamson
Act contracts. Williamson Act contracts generally run for 10
years, but the duration is 20 years under more restrictive
Farmland Security Zones. The contracts automatically renew
each year, unless an action is taken to non-renew or cancel
the contract, as specified.
The state historically provided subvention payments from the
GF to counties for the loss of county GF resources related to
lands under Williamson Act contracts. However, when Governor
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Schwarzenegger's proposed 2003-04 Budget sought to save
approximately $39 million by ending the state subventions, the
Legislative Analyst's Office recommended a 10-year phase-out.
The first cuts came in 2008-09 when a budget trailer bill
reduced the state subventions by 10%. The Legislature's
2009-10 Budget reduced the subventions to $27.8 million.
However, Governor Schwarzenegger essentially eliminated the
subventions by cutting the appropriation to $1,000.
In response to the elimination of subventions for Williamson
Act revenue losses, the Legislature passed AB 2530 (Nielsen),
Chapter 391, Statutes of 2010, which contained an alternative
funding mechanism for the Williamson Act. AB 2530 allowed
county officials to increase the assessed values of Williamson
Act land and divert the resulting property tax revenues. In
October 2010, during budget negotiations, the Legislature
passed SB 863 (Budget and Fiscal Review Committee), Chapter
722, Statutes of 2010, which made minor changes to the
provisions of AB 2530. The budget actions in October 2010
also appropriated $10 million from the GF for Williamson Act
subventions to counties in 2010-11.
However, in March of 2011, the Legislature passed SB 80
(Budget and Fiscal Review Committee), Chapter 11, Statutes of
2011, which deleted the $10 million appropriation from the GF
for Williamson Act subventions to counties in 2010-11. SB 80
also repealed the alternative Williamson Act program that was
added by AB 2530 and modified by SB 863. 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, via AB 1265 (Nielsen),
Chapter 90, Statutes of 2011.
Under current law, as enacted by AB 1265, counties are
authorized to reduce the duration of a Williamson Act contract
by 10% and increase the assessed value by 10%, if the state's
subventions are less than half of a county's foregone property
tax revenue. Contract terms are reduced from 10-year
Williamson Act contracts to nine years, and from 20-year
Farmland Security Zone contracts to 18 years. The additional
property tax revenues are directed to the county. The
contract continues to be automatically renewed each year,
unless the contract is non-renewed or cancelled.
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The program established by AB 1265 does not apply to contracts
that have been non-renewed, contracts with cities, open space
or agricultural easements, scenic restrictions, wildlife
habitat contracts, or contracts with atypical terms. These
provisions are scheduled to sunset on January 1, 2016.
According to the Department of Conservation, 11 counties
currently participate in the program enacted by AB 1265.
2)Purpose of this bill. This bill repeals the January 1, 2016,
sunset date in the statutes that allow counties to increase
the assessed values of Williamson Act land and divert the
resulting property tax revenues, making this authority
permanent instead of temporary, and makes conforming changes.
This bill is sponsored by the California Farm Bureau
Federation.
3)Author's statement. According to the author, "Prior
legislation AB 1265 amended the Williamson Act to allow for
certain contracts, as specified, between localities and
agricultural land owners to last 9 or 18 years, instead of 10
or 20 years. AB 1265 included a 5-year sunset date for these
amended contract lengths. This bill repeals the January 1,
2016 sunset clause in that legislation."
4)Policy consideration. This bill eliminates, rather than
extends, the sunset date on counties' authority to increase
the assessed values of Williamson Act land and divert the
resulting property tax revenues. The Legislature may wish to
consider whether this authority should be made permanent. The
Legislature may also wish to consider whether it is premature
to eliminate or change the sunset, given that it does not go
into effect until January 1, 2016.
5)Arguments in support. The Rural County Representatives of
California (RCRC), in support, note, "SB 1353 would eliminate
the sunset date giving counties that opted into the program
the ability to continue this alternative funding mechanism for
the Williamson Act?The elimination of the sunset would also
provide the opportunity for other counties to participate in
the program by eliminating the uncertainty created by the
sunset. RCRC is aware of several counties that had determined
the cost/benefit of the program was not economically feasible
for a short-term fixed duration and SB 1353 would address that
concern."
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6)Arguments in opposition. None on file.
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958
FN: 0004441