BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 715|
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THIRD READING
Bill No: SB 715
Author: Wolk (D), et al
Amended: 5/4/09
Vote: 21
SENATE LOCAL GOVERNMENT COMMITTEE : 4-0, 5/6/09
AYES: Wiggins, Cox, Kehoe, Wolk
NO VOTE RECORDED: Aanestad
SUBJECT : Agricultural land: Williamson Act
SOURCE : County of Yolo
DIGEST : This bill reforms the Williamson Act by
increasing local enforcement authority over contract
compliance, requiring proof of agricultural income for
Williamson Act contacts; and conditioning the subdivision
of land for development if the land is under contract.
ANALYSIS : 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:
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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.
This bill:
Subdivision of contracted land . The Subdivision Map 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.
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
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contracts as ineffective, ending the whole scheme of
preferential valuation and lower property tax bills.
This bill 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:
1. Is consistent with the Williamson Act contract.
2. Is consistent with the city or county's local Williamson
Act rules.
3. Is capable of sustaining commercial agricultural use,
open space use, or both.
4. 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.
Agricultural income information . County assessors must
follow a complex "capitalization of income" formula to
determine the assessed valuation of enforceably restricted
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
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Williamson Act contracted land.
This bill 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. This bill gives
landowners 60 days to return the completed questionnaire.
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.
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.
This bill 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." This bill defines "for cause" as a
landowner's documented failure to comply with the
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Williamson Act, local Williamson Act rules or ordinances,
or the terms of a Williamson Act contract.
Comments
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.
This bill adds more conditions on the subdivision of
contracted land.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 5/6/09)
County of Yolo (source)
California State Association of Counties
Regional Council of Rural Counties
AGB:do 5/8/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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