BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 707|
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THIRD READING
Bill No: AB 707
Author: Wood (D)
Amended: 4/6/15 in Assembly
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 7-0, 6/17/15
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,
Pavley
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 74-0, 5/22/15 (Consent) - See last page for
vote
SUBJECT: Agricultural land: Williamson Act contracts:
cancellation
SOURCE: County of Humboldt
DIGEST: This bill 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.
ANALYSIS:
Existing law:
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1)Creates the Williamson 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 Williamson Act.
2)Provides for a 12.5% cancellation fee, based on the value of
the land, for canceling a Williamson Act contract, as
specified.
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.
This bill prohibits landowners and DOC from agreeing on a
cancellation valuation of land under a Williamson Act contract
if the land under contract is in a county that has imposed an
additional local cancellation fee.
Background
The California Land Conservation Act of 1965, also known as the
Williamson Act, is a program administered by 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
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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 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.
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Comments
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.
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 WRC, the cost of a cancellation
fee was a potential barrier to a project that would continue to
preserve open space, thereby furthering 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
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include other provisions to ensure that an agreement between DOC
and a landowner furthers the public interest.
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified7/1/15)
County of Humboldt (source)
California State Association of Counties
Rural County Representatives of California
OPPOSITION: (Verified7/1/15)
None received
ASSEMBLY FLOOR: 74-0, 5/22/15
AYES: Achadjian, Travis Allen, Baker, Bigelow, Bloom, Bonilla,
Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,
Nazarian, Obernolte, Patterson, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Alejo, Jones, O'Donnell, Olsen, Waldron,
Weber
Prepared by:Anton Favorini-Csorba / GOV. & F. / (916) 651-4119
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