BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Patricia Wiggins, Chair
BILL NO: SB 715 HEARING: 5/6/09
AUTHOR: Wolk FISCAL: No
VERSION: 5/4/09 CONSULTANT: Detwiler
[REVISED]
WILLIAMSON ACT
Existing Law
The California Constitution controls how public officials
assess property values for levying property taxes. When
land is enforceably restricted to recreation, scenic
beauty, resource conservation, or for the production of
food or fiber, the California Constitution requires that
the property's assessed value reflect the use of the land
and not its market value.
The Williamson Act conserves agricultural and open space
land under a three-part statutory scheme:
Voluntary contracts. Private property owners 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 so that the term
is always 10 years in the future.
Reduced assessments. The California Constitution allows,
and state law requires, county assessors to lower the
value of these enforceably restricted properties to
reflect the value of their use as agriculture or open
space instead of their market value under Proposition 13.
State subventions. The State General Fund pays counties
and cities about $40 million a year to make up for the
property tax revenues lost because of these lowered
assessed valuations. Also, the General Fund
automatically backfills school districts for their lost
property tax revenues.
County boards of supervisors and city councils can adopt
rules for administering Williamson Act contracts, including
rules related to compatible land uses.
Proposed Law
I. Subdivision of contracted land . The Subdivision Map
SB 715 -- 5/4/09 -- Page 2
Act requires counties and cities to deny the subdivision of
enforceably restricted land if the resulting parcels would
be too small to sustain their agricultural use, or if the
subdivision results in residential development that's not
incidental to commercial agricultural use. Parcels are
presumed to be too small if they are less than 10 acres for
prime agricultural land and 40 acres for non-prime
agricultural land. The Map Act allows local officials to
establish larger minimum parcel sizes (SB 1455, Marks &
Vuich, 1984).
County officials and others want the Legislature to make it
harder to use Williamson Act contracted land for
residential purposes. They say that the use of contracted
land for more than incidental residential uses fails to
meet the constitutional obligation to enforceably restrict
the property to agricultural, open space, and compatible
uses. They worry that a court could dismiss Williamson Act
contracts as ineffective, ending the whole scheme of
preferential valuation and lower property tax bills.
Senate Bill 715 requires city councils and county boards of
supervisors to deny the proposed subdivision of Williamson
Act contracted land unless they find that each resulting
parcel:
Is consistent with the Williamson Act contract.
Is consistent with the city or county's local
Williamson Act rules.
Is capable of sustaining commercial agricultural
use, open space use, or both.
Has an existing commercial agricultural use, an
open space use, or both, the improvements needed for
those uses, or a feasible plan for achieving any
needed improvements.
If local officials make these four findings, they can
impose reasonable and necessary restrictions on the new
residential uses or buildings to ensure compliance with the
Williamson Act contract, local rules, or the new statutory
requirements.
II. Agricultural income information . County assessors
must follow a complex "capitalization of income" formula to
determine the assessed valuation of enforceably restricted
SB 715 -- 5/4/09 -- Page 3
land. For part of the formula, county assessors need to
know the annual income to be capitalized. Landowners must
give the county (or city) the information that local
officials need to determine the land's eligibility for a
Williamson Act contract.
Yolo County officials want to be sure that Williamson Act
contracted land remains in agriculture, open space, or
compatible uses. The Yolo County Assessor sends out an
annual questionnaire that asks landowners to provide
information about their agricultural income from Williamson
Act contracted land. About half respond. Yolo County
officials want stronger statutory authority to collect
information about agricultural income from the owners of
Williamson Act contracted land.
Senate Bill 715 allows a county board of supervisors or a
city council to require the county assessor to annually
survey the owners of Williamson Act contracted land to
verify their continuous agricultural income. SB 715 gives
landowners 60 days to return the completed questionnaire.
III. Reassessment after nonrenewal . The preferred method
to end a Williamson Act contract is nonrenewal, in which
either the landowner or the county or city files a written
notice of nonrenewal. If the county or city files a notice
of nonrenewal, the landowner can protest the nonrenewal.
If either party decides not to renew, then the contract
runs out, usually over the remaining nine years. The
county assessor must revalue the land by using a six-part
formula which gradually increases the land's assessed
valuation from its use value to its market value. If the
landowner filed the notice of nonrenewal or if local
officials filed the nonrenewal notice and the landowner
didn't protest, then the revaluation starts immediately.
If the county or city nonrenewed the contract, the county
assessor continues to apply the use value and doesn't
increase the valuation until less than six years remain on
the contract.
In other words, if the landowner wants to end the contract,
the assessed value starts to rise right away. If the local
officials want to end the contract, then the landowner
keeps the benefit of the use value for three years before
the assessed value starts to rise.
SB 715 -- 5/4/09 -- Page 4
Some county officials say that landowners who violate the
Williamson Act, break the local Williamson Act rules, or
fail to comply with the provisions of their Williamson Act
contracts shouldn't enjoy the property tax breaks that
state law offers. They want to nonrenew the violators'
Williamson Act contracts and make the landowner face
immediately increasing property taxes.
Senate Bill 715 requires county assessors to start raising
the assessed valuation on Williamson Act contracted lands
immediately, if a county or city nonrenews a Williamson Act
contract "for cause." Senate Bill 715 defines "for cause"
as a landowner's documented failure to comply with the
Williamson Act, local Williamson Act rules or ordinances,
or the terms of a Williamson Act contract.
Comments
1. Constitutional integrity . The California Constitution
allows for the preferential assessment of open space lands
for property tax purposes when the land is enforceably
restricted. This is the constitutional basis for the
Williamson Act's scheme for giving landowners property tax
breaks. Some supporters of the Williamson Act fear that
the courts may overturn these preferential assessments if
they perceive that the contracts are insufficiently
restrictive. If landowners can subdivide and build houses
on contracted land and still keep their tax breaks, then a
court may bring down the whole scheme. Subdivisions and
development that displaces commercial agricultural
operations and open space uses threatens the Williamson
Act's constitutional integrity. SB 715 reacts to this fear
by putting more conditions on the subdivision of contracted
land.
2. Too nosey ? Like most other Americans, farmers and
ranchers follow the law, but they resent telling
governments too much about their private lives. The low
return rate on the Yolo County Assessor's annual
questionnaire about agricultural income may reflect some of
that resentment. Nevertheless, local officials want to
make sure that the tax breaks that come from signing
Williamson Act contracts go to land that's really used for
SB 715 -- 5/4/09 -- Page 5
agriculture, open space, or compatible uses. Legislators
need to strike a balance between the private desire for
personal privacy and the public interest in fair taxation.
Instead of creating a new mandatory survey, the Committee
may wish to consider improving the existing Williamson Act
provision that requires landowners to provide information
that local officials reasonably need to figure out the
land's eligibility for Williamson Act contracts.
3. Get them by their wallets . In some counties, local
officials struggle with Williamson Act landowners who flout
the law --- they violate the Act, they break the local
rules, they don't adhere to their contracts. Enforcing
these limits can be messy and time consuming. Even if
local officials file a notice of nonrenewal, the landowner
can protest and still enjoy the property tax breaks for
three more years. To strengthen Williamson Act
enforcement, SB 715 triggers an immediate increase in
assessed valuation if local officials file a notice of
nonrenewal for cause. Faced with the threat of immediately
higher property tax bills, recalcitrant landowners may
become more compliant. To paraphrase the late President
Lyndon Baines Johnson, "Get them by their wallets and their
hearts and minds will follow."
4. More protection . Besides the Williamson Act, state law
gives property owners other ways to voluntarily keep their
land in agricultural or open space uses, including open
space easements, agricultural conservation easements, and
conservation easements. Witnesses at the October 2001
hearing of the Assembly Select Committee on the Future of
Farming in California noted that the 1984 statutory ban on
creating small parcels applied only to land under
Williamson Act contracts, but not to land subject to
easements. Legislators responded by extending the
statutory ban to land covered by three types of easements
(AB 1997, Thomson, 2002). SB 715 only focuses on the
Williamson Act. The Committee may wish to consider an
amendment that extends the bill's protection to land
subject to enforceably restricted easements.
5. Not Humboldt . When a Humboldt County landowner started
selling parcels on a large ranch that was under a
Williamson Act contract, the County sued. The County won
on appeal in late 2008, but while the case was pending, the
SB 715 -- 5/4/09 -- Page 6
Legislature considered SB 634 (Wiggins, 2007), which would
have imposed new conditions on the subdivision and use of
Williamson Act land. Although the specific provisions in
SB 715 are different from the 2007 Wiggins bill, the
underlying policy is similar.
6. Revised analysis . The Senate Local Government
Committee released this revised bill analysis to reflect
the May 4 amendments to SB 715.
Support and Opposition (4/30/09)
Support : County of Yolo.
Opposition : California Farm Bureau Federation.