BILL ANALYSIS
SB 671
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Date of Hearing: July 6, 2009
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Nancy Skinner, Chair
SB 671 (Runner) - As Amended: May 11, 2009
SENATE VOTE : 38-0
SUBJECT : Williamson Act: agricultural land valuation
SUMMARY : Authorizes a county assessor to require a deposit from
a landowner to cover the costs of conducting a formal review of
the fair market value of agricultural land subject to a
Williamson Act contract yet proposed for cancellation.
EXISTING LAW : Pursuant to the California Land Conservation Act
of 1965 (Williamson Act, Chapter 1443, Statutes of 1965):
1)Authorizes a landowner and a city or county to enter into a
contract to restrict the use of land to agriculture, open
space, and compatible uses for a minimum of 10 years in
exchange for preferential property tax rates, determined by
county assessors based on the land's use value instead of
market value. The Department of Conservation (DOC)
administers the Williamson Act.
2)Authorizes a local government to cancel a contract upon
request by a landowner if the local government makes certain
findings, including that the cancellation is in the public
interest. A landowner must pay a cancellation fee equal to
12.5 percent of the property's fair market value free of any
contractual restrictions. County assessors are required to
determine this value on behalf of a local government.
3)Authorizes a landowner or DOC to request a formal review of an
assessor's cancellation valuation. An assessor has 120 days
to complete this review and must either revise the valuation
or find that the original valuation is accurate.
4)Authorizes an assessor to recover reasonable costs of a formal
review from the party requesting the review. Only if DOC
requests a formal review may a city or county deduct
associated costs from the landowner's cancellation fee. A
city or county can also impose a fee to recover its reasonable
costs of administering the contract cancellation process.
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THIS BILL :
1)Authorizes an assessor to require a deposit from a landowner
as a contingency in the event that payment of a cancellation
fee does not necessarily result from the completion of a
formal review.
2)Provides that the above provision does not limit the existing
authority of a city or county to assess a fee to recover its
reasonable costs of administering the contract cancellation
process.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : According to the author, "Challenges [to land
valuations] by [landowners or developers] and the DOC create an
unfair burden on the assessor. Assessors are charged with
placing a proper valuation on property. But the current process
places the assessor in a position where one side would benefit
in seeing the value low, [a landowner or developer], and the
other side would benefit from seeing the value high, the DOC.
If there is a legal challenge, the assessor becomes enmeshed in
a legal matter that can lead to huge costs being borne by that
county, without any assurance of reimbursement of costs to the
county."
The California Assessor's Association, sponsor of this bill,
cites examples in Merced and Riverside Counties where the
assessor was unable to recover the costs a formal review because
the cancellation ultimately did not occur. In Riverside County,
a housing developer reportedly requested a formal review of a
cancellation valuation. After presumably receiving an
unfavorable review, the developer sued the county but later
dropped the suit after the recent demise of the real estate
market. Since the cancellation never occurred, the county was
unable to deduct its review costs from cancellation fees.
1)Background : Typically, Williamson Act contracts end through
"nonrenewal," where a contract essentially runs its 10 year
course. In limited circumstances, a local government can
cancel a contract in response to proposed development but the
landowner must pay a cancellation fee equal to 12.5 percent of
the property's fair market value. These fees are deposited in
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the Soil Conservation Fund for use by DOC to administer other
agricultural land conservation programs. Existing law
requires a county assessor to determine a property's fair
market value and sets forth a dispute resolution process-a
request for a formal review-if a landowner or DOC disagrees
with this valuation. Both parties can also separately agree
on a valuation.
According to DOC, since 2005, only two or three formal reviews
per year have been requested. DOC, itself, has requested
about five reviews since 2005 on the basis that it had
insufficient information to fully review a valuation. Upon
receipt of additional information, DOC subsequently dropped
its requests for a formal review.
2)An Assessor can already recover its costs from a landowner :
Assessors can, in fact, be caught in the middle of two
adversarial parties with different valuations in mind.
However, assessors are currently authorized to recover the
reasonable costs of a formal review from a landowner or
developer. The sponsor asserts that assessors are unable to
collect such costs up-front but nothing in existing law
prevents this. Moreover, section 51287 of the Government Code
authorizes a city or county to impose a fee to recover its
reasonable costs of administering the contract cancellation
process. Nothing in this section would prevent this fee to
include the costs of a formal review. Thus, with respect to a
formal review requested by a landowner, this bill appears to
be unnecessary.
If DOC requests a formal review, existing law authorizes an
assessor to deduct its costs from contract cancellation fees,
which, as indicated above, come out of DOC's budget anyway.
Of course, if a cancellation never materializes, assessors are
unable to recover their costs (they may be able to, however,
file a claim with the Controller). In this case, this bill
authorizes an assessor to require a landowner to pay a deposit
should contract cancellation never occur. In effect, a
landowner or developer would be partially subsidizing the
costs of a formal review requested by DOC. According to the
sponsor, the balance of an assessor's costs could be offset by
future cancellation fees it may receive.
It is unclear, however, whether an assessor can recover its
legal costs in the event it is sued. In the Merced County
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example cited above, the county or assessor, relying on
section 51287, required the landowner to enter into an
indemnification agreement which allowed the assessor to
recover its legal costs when sued by a third party. If a
landowner sues an assessor, however, the assessor may have to
absorb its own costs.
REGISTERED SUPPORT / OPPOSITION :
Support
California Assessors' Association
Resource Landowners Coalition
Opposition
None on file
Analysis Prepared by : Dan Chia / NAT. RES. / (916) 319-2092