BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 707 |Hearing |6/17/15 |
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|Author: |Wood |Tax Levy: |No |
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|Version: |4/6/15 |Fiscal: |Yes |
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|Consultant|Favorini-Csorba |
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AGRICULTURAL LANDS: WILLIAMSON ACT CONTRACTS: CANCELLATION
Repeals the authority of landowners and the Department of
Conservation to agree on cancellation valuations for land
restricted by a Williamson Act contract in some cities and
counties.
Background and Existing Law
The California Land Conservation Act of 1965, also known as the
Williamson Act, is a program administered by the California
Department of Conservation (DOC) to conserve agricultural and
open space land. The Williamson Act allows private property
owners to sign voluntary contracts with counties and cities that
restrict their land to agriculture, open space, and compatible
uses for the next 10 years. Williamson Act contracts
automatically renew each year, so that the term is always 10
years in the future. In return for these voluntary contracts,
county assessors lower the value of Williamson Act contracted
lands to reflect the value of their use as agriculture, or open
space instead of their market value under Proposition 13.
Historically, the state made subvention payments to counties in
order to make up for a portion of the resulting losses in local
property tax revenue. These payments totaled about $35 million
to $40 million each year from 1994 to 2008. However, the state
stopped making subvention payments in Fiscal Year 2009-10 in
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response to budgetary pressures.
A landowner wants to develop land restricted by a Williamson Act
contract has two options. The normal way to end a Williamson
Act contract is for either the landowner or local officials to
give "notice of nonrenewal," which stops the automatic annual
renewals and allows the contract to run down over the next 10
years. Alternatively, local officials can cancel a contract at
the request of the landowner. To do so, local officials must
make findings that cancellation is in the public interest and
that cancellation is consistent with the purposes of the
Williamson Act. In addition, the landowner must pay a
cancellation fee that is equal to 12.5% of the "cancellation
valuation" of the property. Typically, the county assessor
determines the cancellation valuation, which is set at the
property's unrestricted market value. However, a landowner and
DOC can separately agree on a cancellation valuation for the
land, which takes the place of the value identified by the
county assessor. According to DOC, this process has only been
used once: in 2012 for a property in Humboldt County. Local
officials may approve or deny a cancellation once the
cancellation value is determined.
Revenues from this cancellation fee are remitted to the state.
However, the Williamson Act also allows local jurisdictions to
levy their own cancellation fees in addition to the state
cancellation fee. The local government retains revenues from
the local cancellation fee. So, some local jurisdictions
established fees in response to the loss of subvention payments
in 2009-10. Merced County and Humboldt 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% of the cancellation value of the land. Since the
cancellation value of the land can affect how much revenue the
city or county receives from their own cancellation fees, some
counties want greater say over determining the cancellation
value than is afforded by the current process.
Proposed Law
Assembly Bill 707 removes the ability of landowners and DOC to
agree on a cancellation valuation of land under a Williamson Act
contract if the city or county that is a party to the contract
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levies a separate local cancellation fee.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . AB 707 enhances local control by
ensuring that local governments that have established their own
Williamson Act cancellation fees have the opportunity to weigh
in on decisions that affect their communities and revenues.
Local governments have specific knowledge about the value of the
land under contract, the circumstances on the ground, and other
factors that should be considered when setting the cancellation
valuation of the land. However, current law can leave counties
out of this discussion. A recent example in Humboldt County
illustrates the challenges that this creates. In 2011, a dairy
property was sold to the Western Rivers Conservancy (WRC), which
intended to conserve the land as a critical natural habitat, as
part of a larger restoration project. WRC requested a waiver of
the Humboldt County cancellation fee, but this request was
denied. Subsequently, WRC and DOC agreed on a cancellation
valuation significantly below the Humboldt County Assessor's
determined fair market value, resulting in a significantly lower
cancellation fee than would have otherwise occurred.
Significantly reducing the cancellation fee undermines the
financial disincentive to terminate Williamson Act contracts and
undermines the goal of preserving open space.
2. Another way . Because determining the unrestricted fair
market value of a parcel involves making judgment calls, there
can be significant differences of opinion about the correct
cancellation valuation of the land. Allowing a landowner and
DOC to agree on a cancellation valuation provides an alternative
method for resolving disputes over what the unrestricted fair
market value of the land is. In addition, there may be a
legitimate public interest in setting a cancellation valuation
that differs from the valuation preferred by a local government.
For example, in the case of the Western River Conservancy, the
cost of a cancellation fee was a potential barrier to a project
that would continue to preserve open space, thereby furthering
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the purposes of the Williamson Act. The negotiation between DOC
and the landowner resolved that issue and allowed the
restoration project to move forward. Thus, it may not make
sense to remove the ability of DOC and landowners to set their
own cancellation values in cities or counties that levy local
cancellation fees and instead include other provisions to ensure
that an agreement between DOC and a landowner furthers the
public interest.
3. Where's the beef? The Williamson Act gives the final say
over whether to approve or deny a cancellation request to the
local government that is a party to the contract. Thus, if a
local government strongly disagrees with the cancellation
valuation agreed upon by DOC and the landowner, the local
government can deny the cancellation. This authority already
provides the local government leverage over the cancellation
valuation. Accordingly, the Committee may wish to consider
whether this legislation is necessary to ensure that local
governments are adequately involved in the process.
Assembly Actions
Assembly Agriculture Committee: 10-0
Assembly Local Government Committee: 9-0
Assembly Appropriations Committee: 17-0
Assembly Floor: 74-0
Support and
Opposition (6/11/15)
Support : County of Humboldt (sponsor). California State
Association of Counties.
Opposition : Unknown.
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