BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Patricia Wiggins, Chair
BILL NO: SB 671 HEARING: 4/15/09
AUTHOR: Runner FISCAL: Yes
VERSION: 4/2/09 CONSULTANT: Detwiler
WILLIAMSON ACT CANCELLATIONS
Background and Existing Law
Under the Williamson Act, landowners can sign contracts
with counties and cities, enforceably restricting their
land to agriculture, open space, and compatible uses for
the next 10 years. Williamson Act contracts automatically
renew each year. In return, county assessors must lower
the property's assessed valuation to reflect its use value
instead of its market value. The State Department of
Conservation monitors how counties and cities use the
Williamson Act.
The normal way to end a Williamson Act contract is
"nonrenewal," allowing the contract to run down over the
next 10 years. Alternatively, local officials can
immediately cancel a contract if the landowner proposes a
development project and the officials make extraordinary
findings. The landowner must pay a cancellation fee that
is equal to 12.5% of the property's unrestricted fair
market value. The cancellation fees go into the State Soil
Conservation Fund to help pay for the state's agricultural
land conservation programs.
The county assessor determines the property's unrestricted
fair market value. Both the Department and the landowner
may give information to the county assessor. If the
parties disagree with the assessor's cancellation
valuation, they can agree on their own cancellation
valuation, or either party can ask the assessor to conduct
a formal review. The assessor can recover the reasonable
costs of the formal review from the party that requested
the review. Counties can deduct these costs from the
landowner's cancellation fee.
The assessor notifies the parties that they have 30 days to
submit information to the assessor and the other party.
Each party has 30 days to respond. If a party responds
with new information, the other party has 20 more days to
SB 671 -- 4/2/09 -- Page 2
respond. The assessor must avoid ex parte contacts and
must report any contacts to the Department and the
landowner. The assessor has 120 days to complete the
formal review. The county assessor can either revise the
cancellation valuation or determine that the original
cancellation valuation is accurate. The assessor must
provide a brief narrative that describes the considerations
for the revision or the basis for the denial (SB 1820,
Machado, 2004 and SB 49, Machado, 2005).
Pointing to controversial Williamson Act cancellations in
Madera, Merced, and Riverside counties, county assessors
say that state law pits them against the landowner who
wants a lower cancellation valuation and the Department
that wants a higher valuation. In Madera County, both the
landowner and the Department objected to the county
assessor's cancellation valuation, but later they agreed to
a valuation that matched the assessor's number. In Merced
County, the Department asked for a formal review of the
assessor's cancellation valuation, but after long
discussions the cancellation never happened. In Riverside
County, the developer of the Mountain Vista Homes project
asked the assessor for a formal review of the cancellation
valuation. The developer sued the County, but later
dropped the suit (and the cancellation) when the real
estate market made the development infeasible. Because the
cancellation never happened, the Riverside County assessor
could not recover the costs of the formal review. The
county assessors want the Legislature to relieve them of
the duty to conduct formal reviews of Williamson Act
cancellation valuations.
Proposed Law
Senate Bill 671 repeals the requirement for county
assessors to conduct formal reviews of Williamson Act
cancellation valuations.
If either the State Department of Conservation or the
landowner believes that the county assessor's determination
of the property's current fair market valuation is not
accurate, either party can hire a fee appraiser to complete
an independent fee appraisal. The hiring party must notify
the county assessor. If neither party notifies the county
assessor of a challenge, then the assessor's cancellation
SB 671 -- 4/2/09 -- Page 3
valuation stands.
If there is a challenge, the challenging party has 30 days
to provide the independent valuation to the assessor. If
the parties cannot agree on which valuation is correct, SB
671 requires the county supervisors (or the city council)
to hire a mediator to make the final determination. The
bill makes conforming changes that refer to the independent
fee appraisal.
Comments
1. Stuck in the middle with you . Current law puts county
assessors in an unpleasant position, stuck between state
officials who want a high Williamson Act cancellation
valuation to deter cancellations and landowners who want
low cancellation valuations to maximize their investments
in development projects. As the Madera and Merced examples
show, the county assessor's procedures are merely the
battlefield for the warring parties, distracting the
assessors from their constitutional duties and diverting
staff resources from their limited budgets. SB 671 removes
the county assessors from this battlefield, allowing the
warring parties to fight each other's expectations with
private appraisals.
2. Opaque and unaccountable . The central policy question
posed by SB 671 is who should settle controversies over
Williamson Act cancellation valuations. Before the 2004
statutory reforms, county assessment appeals boards
(appointed by the county supervisors) settled those
disputes. When legislators recognized that county
officials had no fiscal incentive to push for high
cancellation valuations, they changed the procedures to
require more information and more transparency. Plus, they
placed the final decision with the county assessors ---
directly elected local officials who operate independently
of the county supervisors. In contrast, SB 671 cloaks the
appeals process in opaque obscurity by repealing the
statutory procedures and deadlines and dropping the ban on
ex parte contacts. Further, the bill turns over the final
decision to a "mediator" (really, a third-party arbitrator)
hired directly by the county supervisors, not the assessor.
There are no criteria for selecting this private
"mediator" who may have economic ties to the county
SB 671 -- 4/2/09 -- Page 4
government or even the landowner. The Committee may wish
to consider why the Legislature should repeal the 2004
reforms that improved transparency and accountability in
favor of turning over these controversies to a private
person who may have economic conflicts of interest.
3. Focus on the fiscal . The county assessors asked for SB
671 for two reasons: they want relief from the warring
parties and they've been unable to recover the costs of
settling disputes. Although current law allows the
assessors to recover their costs from the requesting party
with deductions from the 12.5% cancellation fee, in
practice the county costs can go unpaid. The Committee may
wish to consider amendments that leave the county assessor
in charge of settling disputes over cancellation
valuations, but strengthen the language that requires the
protesting party to pay the county's full costs. The
Legislature could clarify that county officials can recover
not only the assessor's review costs, but also the county
government's costs for defending the assessor's decision.
Further, the Legislature could require the requesting party
to post a deposit before the assessor begins the formal
review. Otherwise, if a cancellation fails, there is no
cancellation fee for county officials to use to pay their
costs.
4. Recognizing Solomon . If the Legislature wants to shift
the duty for settling Williamson Act cancellation valuation
disputes from the county assessor to someone appointed by
the county supervisors, then the Committee may wish to
consider these additional changes:
Recognize that the person is not a "mediator," but
an arbitrator.
Require the arbitrator to be certified as a real
estate appraiser.
Require the arbitrator to be free from economic
conflicts of interest.
Require the arbitrator to disclose all economic
interests.
Require the arbitrator to avoid all ex parte
contacts.
Require the arbitrator to provide a written
explanation for the decision.
SB 671 -- 4/2/09 -- Page 5
Support and Opposition (4/9/09)
Support : California Assessors' Association.
Opposition : Unknown.