BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 707


                                                                    Page  1





          Date of Hearing:  May 13, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          707 (Wood) - As Amended April 6, 2015


           ----------------------------------------------------------------- 
          |Policy       |Agriculture                    |Vote:|10 - 0       |
          |Committee:   |                               |     |             |
          |             |                               |     |             |
          |             |                               |     |             |
          |-------------+-------------------------------+-----+-------------|
          |             |Local Government               |     |9 - 0        |
          |             |                               |     |             |
          |             |                               |     |             |
           ----------------------------------------------------------------- 


          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill amends a provision in the Williamson Act with respect  
          to cancellation fees, removing the ability of the Department of  
          Conservation (DOC) and a land owner to agree on a cancellation  
          valuation if the contracted land is in a city, or a county that  
          includes its own cancellation fee.


          FISCAL EFFECT:








                                                                     AB 707


                                                                    Page  2







          Negligible fiscal impact to DOC.


          COMMENTS:


          1)Purpose.  In general, property owners may cancel Williamson  
            Act contracts upon approval from the local city council or  
            county board and payment of a cancellation fee of 12.5% of the  
            "cancellation value" to the state.  The cancellation value is  
            intended to reflect the fair market value of the property,  
            however, the landowner and DOC may agree on a cancellation  
            value notwithstanding any other valuation process, including  
            assessment by a county.


            According to the author, the elimination of Williamson Act  
            subvention payments from the state resulted in some local  
            jurisdictions imposing their own additional cancellation fees  
            based on cancellation value.  Yet, agreement on cancellation  
            value need not involve any input or representation from the  
            local jurisdiction.  Supporters, led by Humboldt County, argue  
            agreements over cancellation value can result in significantly  
            lower cancellation fees, potentially harming the local  
            jurisdiction's interests.  Currently, only Merced and Humboldt  
            counties have local cancellation fees.


          2)Williamson Act Contracts.  The Williamson Act permits private  
            landowners to voluntarily agree with cities and counties to  
            restrict their land use to agriculture, open space, and  
            compatible uses.  In return for preservation of open space,  
            county assessors must reduce the assessed value of the  
            contracted lands.  Approximately 16.6 million acres are under  
            Williamson Act contracts.  The state historically provided  
            subvention payments from the General Fund to counties to  
            compensate for lost county funds related to Williamson Act  








                                                                     AB 707


                                                                    Page  3





            contracts, but these subvention payments were ended during the  
            budget crises of 2008-2010.


          3)Humboldt Cancellation.  According to the author, an incident  
            involving the cancellation of a Williamson Act property in  
            Humboldt County gave rise to the present bill.  In that  
            situation, a dairy property was sold to the Western Rivers  
            Conservancy (WRC), which intended to conserve the land as a  
            critical natural habitat.  WRC requested a cancellation of the  
            Humboldt County cancellation fee, but this request was denied.  
             Subsequently, WRC and DOC agreed on a cancellation value  
            significantly below the Humboldt County Assessor's determined  
            fair market value, resulting in a significantly lower fee paid  
            to Humboldt County.  The agreed land value did not involve  
            input from the county.  This bill is intended to remedy  
            similar situations by removing the ability of DOC and the  
            landowner to agree on cancellation value if a city or county  
            has established its own cancellation fee.


          4)A Step Too Far?  The provision allowing DOC and landowners to  
            agree on cancellation value facilitates contract cancellations  
            where the fair market value does not reflect the intended use  
            of the land after cancellation, or would otherwise frustrate  
            the interests of the landowner and the state with respect to  
            ending a Williamson Act contract.


            The situation cited by the author is such a case, where the  
            dairy farm owner wished to sell to a non-profit land  
            conservancy that intended to preserve the land instead of  
            using it for commercial purposes.  In such instances, the fair  
            market value of the land, reflecting the commercial potential  
            of the land, may be too high to allow the parties to agree to  
            the sale, essentially frustrating the owner, the purchaser,  
            and the state. 










                                                                     AB 707


                                                                    Page  4





            The author's proposed solution in this bill removes the  
            ability of the landowner and DOC to agree on a lower  
            cancellation value in cases where the local jurisdiction also  
            has a cancellation fee, which may effectively prevent sales in  
            circumstances like the above example.  The author and  
            Committee may wish to consider whether this solution leaves  
            too few options for future agreements, and whether a local  
            jurisdiction's interest would be better served by being made  
            party to the agreement on the cancellation value, permitting  
            the state, local jurisdiction, and landowner to collectively  
            agree on a cancellation value when their interests align.





          Analysis Prepared by:Joel Tashjian / APPR. / (916)  
          319-2081