BILL ANALYSIS Ó
AB 707
Page 1
Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
AB 707
(Wood) - As Amended April 6, 2015
SUBJECT: Agricultural land: Williamson Act contracts:
cancellation.
SUMMARY: Removes the ability of a land owner and the California
Department of Conservation to negotiate Williamson Act land
values for the purpose of establishing cancellation fees, if the
contracted land is in a city or county that has its own
cancellation fee.
EXISTING LAW:
1)Creates the Williamson Act (Act), also known as the California
Land Conservation Act
of 1965, 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 valuations for property
tax purposes. The Division of Land Resource Protection in the
Department of Conservation (DOC) administers the Act.
2)Provides for a 12.5% cancellation fee, based on the value of
the land, for canceling an Act contract, as specified.
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3)Allows DOC and the landowner to agree on a cancellation
valuation of the land.
4)Allows a city or county to pass an ordinance that requires an
additional cancellation fee that goes to the local
jurisdiction.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
1)Bill Summary. This bill eliminates the ability of a land
owner and DOC to negotiate Williamson Act land values for the
purpose of establishing cancellation fees, if the contracted
land is in a city or county that has its own cancellation fee.
This bill is sponsored by the County of Humboldt.
2)Author's Statement. According to the author, "Under the
Williamson Act, if a property owner wants to cancel a contract
early, they must petition the local board or council to
terminate the contract. The board/council may grant
cancellation if certain statutory findings are met. If the
localities approve the cancelation, the landowner is required
to pay a cancellation fee equal to 12.5% of the cancelation
valuation of the property to the State. Due to the
elimination of subvention payments to local jurisdictions,
some localities have passed ordinances that impose an
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additional cancelation penalty fee. The County of Humboldt is
one locality that requires a separate 12.5% cancellation fee
be paid to the County by the landowner when terminating a
Williamson Act contract.
"The County Assessor, the landowner, and the California
Department of Conservation (the Department) are charged with
coming up with an assessment of the property that is
reflective of the fair market value. The assessment
determination is then used as the base for setting the cost of
the cancellation penalty fee. Unfortunately, existing law
allows a landowner and the Department to negotiate a
cancellation penalty fee that leaves the County out of the
discussion, despite the critical knowledge that a county
representative may have about the value of the land and other
factors that should be taken into account to more precisely
determine the value of the contract's cancellation.
"AB 707 repeals the ability for a landowner and the Department
of Conservation to negotiate a cancellation penalty fee, of
the Williamson Act, without the County's input when the
contract cancellation would occur within a county with a local
cancellation assessment."
3)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
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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
General Fund to counties for the loss of county General Fund
resources related to lands under Williamson Act contracts.
However, when Governor 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.
Due to the elimination of subvention payments, some local
jurisdictions passed ordinances that impose an additional
cancellation penalty fee. If a property owner wants to cancel
an Act contract before the ten-year period, the landowner must
petition the local board or council to terminate a contract.
The board/council may grant cancellation if certain statutory
findings are met. If the local government approves the
cancellation, the landowner is required to pay to the state a
cancellation fee equal to 12.5% of the cancellation valuation
of the property, and an additional fee to the local
jurisdiction. Merced County and Humboldt County are the only
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counties to have local cancellation fees, in addition to the
state cancellation fee. Humboldt's local cancellation fee is
12.5%.
4)Humboldt County Cancellation. According to the author, this
bill is needed to address situations where a local government
has imposed an Act cancellation fee in addition to the state
Act cancellation fee. The need was demonstrated by the
following incident: On August 21, 2011, the Ambrosini Dairy
Property (Riverside Ranch) in Humboldt County requested a
cancellation of their Act contract. The cancellation was
initiated by the Western Rivers Conservancy (WRC), which
purchased the land. The request for cancellation prompted the
Humboldt County Assessor's Office to begin determining the
fair market value of the land, which is the basis of the Act
cancellation fee. The WRC requested a waiver of Humboldt
County's additional fee. Humboldt County's Act Advisory
Committee recommended to the Board of Supervisors that the
local cancellation fee not be waived.
On April 23, 2012, the DOC sent a letter to Humboldt County
informing the local jurisdiction that WRC and the DOC had
reached an agreement on a cancellation valuation, as allowed
by current law. This negotiation between the DOC and WRC took
place without Humboldt County's input. This bill addresses
this issue by allowing a city or county, if it has an
additional local cancellation fee, to be part of the
discussion of land valuation.
Humboldt County and Merced County are the only counties to
have local cancellation fees, in addition to the state
cancellation fee. Humboldt's local cancellation fee is 12.5%.
This bill would only apply to those counties, until such time
as any other local jurisdictions adopt their own cancellation
fees.
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5)Arguments in Support. The County of Humboldt, sponsor of this
bill, states, "Negotiations between (the DOC and the
landowner) can significantly reduce the cancellation fee.
(Existing law) eliminates any input from county or city
governing bodies for approval of the valuation. Significantly
reducing the cancellation fee undermines the financial penalty
for Williamson Act contract cancellations and allows a
landholder to receive a property tax benefit without any
repercussions for terminating a Williamson Act contract. This
issue has become more critical due to the loss of subvention
funding from the State and all program costs are now borne by
local jurisdictions."
6)Arguments in Opposition. None on file.
7)Double-Referral. This bill was heard by the Agriculture
Committee on April 15, 2015, where it passed with a 10-0 vote.
REGISTERED SUPPORT / OPPOSITION:
Support
County of Humboldt [SPONSOR]
AB 707
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California State Association of Counties
Opposition
None on file
Analysis Prepared by:Angela Mapp / L. GOV. / (916) 319-3958