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