BILL ANALYSIS �
AB 2351
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ASSEMBLY THIRD READING
AB 2351 (Gordon)
As Amended April 16, 2012
Majority vote
LOCAL GOVERNMENT 7-1 APPROPRIATIONS 12-5
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|Ayes:|Smyth, Alejo, Bradford, |Ayes:|Fuentes, Blumenfield, |
| |Campos, Davis, Gordon, | |Bradford, Charles |
| |Hueso | |Calderon, Campos, Davis, |
| | | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Norby |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, |
| | | |Wagner |
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SUMMARY : Requires a landowner wishing to cancel a Williamson
Act contract to pay a refundable 5% cancellation fee.
Specifically, this bill :
1)Requires a landowner wishing to cancel any contract pursuant
to the Williamson Act to pay 5% of the total cancellation fee,
as specified, within 30 days of the county board of
supervisors' or city council's decision to grant tentative
approval of the cancellation of the contract.
2)Requires, upon the cancellation of a contract, the payment to
be applied toward the total cancellation fee, as specified.
3)Requires, upon notification that the cancellation of a
contract will not be completed, the payment to be returned to
the landowner.
4)Makes other clarifying and non-substantive changes.
EXISTING LAW :
1)Authorizes, pursuant to Article XIII, Section 8 of the
California Constitution, the Legislature to promote the
conservation, preservation and continued existence of open
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space lands and provides that when these lands are enforceably
restricted to recreation, enjoyment of scenic beauty, use or
conservation of natural resources, or production of food or
fiber, they must be valued for property tax purposes only on a
basis that is consistent with these restrictions and uses.
2)Creates the Williamson Act (the 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.
3)Requires the Division of Land Resource Protection in the
Department of Conservation to administer the Act.
4) Authorizes a landowner to petition the board or council
of a city or county to cancel a contract entered into under
the Act, and requires the landowner to pay a cancellation
fee, as specified.
5) Provides various ways to end a Williamson Act contract,
including nonrenewal, cancellation, and rescission, as
follows:
a) Nonrenewal occurs when either the landowner or the
county decides to not renew the contract, which then runs
out in nine years. After nonrenewal, the county may
increase the property's assessed value to its market value
by the end of the contract period when the land use
restrictions also end;
b) Rescission occurs when the county board votes to cancel
a Williamson Act contract, but the landowner simultaneously
puts an agricultural conservation easement on other land of
equal or greater value; and,
c) Cancellation can occur when a land owner requests that
the county cancel a Williamson Act contract, immediately
ending the contract and allowing the landowner to use the
property for another specified use. To cancel a contract,
the county supervisors must find that the cancellation is
either consistent with the Act's purposes or in the public
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interest. The landowner must pay a cancellation fee equal
to 12.5% of the property's nonrestricted value. The
revenues go to the state General Fund, not to the county.
6)Authorizes a county board of supervisors or city council to
grant tentative approval of the cancellation after the county
assessor of the county in which the land is located has
determined the current fair market value of the land as though
it were free of the contractual restriction, and the board or
council calculates the cancellation fee.
7)Sets the cancellation fee at 12.5% of the cancellation value
of the property.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, to the extent this bill results in reduced
administrative work for projects that do not proceed to
completion, there will be significant savings to the Department
of Conservation, estimated to be several hundred thousand
dollars. The cancellation fee is paid by the landowner to the
state and helps fund the Department of Conservation. However,
the actual amount of savings is dependent on the number of
cancellation requests that are processed but not consummated.
COMMENTS : The Williamson Act conserves agricultural and open
space land by allowing private property owners to sign voluntary
contracts with counties and cities that would restrict their
land to agriculture, open space, and compatible uses. In
return, county assessors must lower the assessed value of the
contracted lands to reflect their use as agricultural or open
space instead of their market value. Making sure that private
property owners use their Williamson Act land appropriately is
essential to maintaining the statute's constitutional integrity.
Although landowners enter into Williamson Act contracts with
local jurisdictions, the Department of Conservation (the
Department) oversees the contracts for the state. As of January
2009, approximately 15 million reported acres in 53 counties
were enrolled under the Williamson Act statewide. This is an
author-sponsored bill.
According to the author, "�u]nder the Act, landowners pay lower
property taxes - based on the farming or open space uses rather
than full market value - in exchange for agreeing not to develop
their lands for ten years or more. Each year the contract
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automatically extends for another year, unless one of the
parties provides notice of nonrenewal or the landowner seeks
cancellation."
Currently, when a landowner desires to cancel a Williamson Act
contract, he or she provides notification and the specified
proposed alternative use of the land to the local jurisdiction
with which they have a contract. At that point, the Department
and the local jurisdiction work on dual tracks to determine the
appropriateness of cancellation.
The county assessor must determine the fair market value of the
land as if it were free from contractual restriction. The
assessor sends the valuation to the landowner and Department for
comment. If there are no objections to the valuation, the local
jurisdiction provides notice of a hearing on the matter to
surrounding landowners. A council/board may grant a tentative
approval based on a finding that the cancellation is consistent
with the purposes of the Williamson Act and is in the public
interest.
Upon certification of a final valuation, the landowner is
assessed a 12.5% cancellation fee which is due upon completion
of the cancellation. This cancellation fee is paid to the state
and helps fund the Department's Division of Land Resource
Protection. However, if the cancellation is not completed, the
Department is not reimbursed for the work already done on a
cancellation review. According to the author, "over the five
year period ending in November 2011, there were 285 tentative
cancellations, but only 57 of those requests proceeded to a
cancellation." The average length of time between a tentative
and final cancellation is unknown.
The author contends that "this bill would require a refundable
deposit of five percent of the total estimated cancellation fee
to be paid when a tentative cancellation is approved. By
providing a deposit, the bill would likely reduce the number of
tentative cancellations and therefore unreimbursed work.
However, the deposit will not interfere with projects that are
both expected to meet the criteria for cancellation and are
likely to proceed to cancellation."
As an example, if a property owner under current law sought
tentative approval from a county board of supervisors to cancel
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a Williamson Act contract with a theoretical cancellation value
of $1 million, the cancellation fee (12.5%) would be $125,000,
due upon final cancellation. Under this measure, upon receiving
the tentative approval of cancellation from the board, the
property owner would have 30 days to tender a deposit payment
totaling 5% of that $125,000 cancellation fee, or $6,250. If
the cancellation proceeds to finalization, the property owner
would be credited for the 5% ($6,250) deposit, and need only pay
the remaining 95% ($118,750). However, if the cancellation is
not completed (i.e., the property remains under the Williamson
Act contract), then the 5% ($6,250) deposit is returned to the
property owner.
Because the property owner will either have the deposit credited
towards the cancellation or returned, this bill poses no
additional financial risk to the property owner. The
disincentive at work is simply the inconvenience of having to
tender potentially thousands of dollars to the county that will
be unavailable for use until the cancellation process is
resolved.
SB 618 (Wolk), Chapter 596, Statutes of 2011, authorizes a city
or county and a landowner to rescind a contract under the Act on
agricultural lands of limited agriculture value and enter into a
solar-use easement that restricts the use of land to
photovoltaic solar facilities. That bill was heard in the
Assembly Local Government Committee on June 22, 2011, and was
approved on a 9-0 vote.
Support arguments: According to the author, this bill "would
likely reduce the number of tentative cancellations and
therefore unreimbursed work" related to cancellations of
Williamson Act contracts.
Opposition arguments: This bill arguably deters landowners from
cancelling contracts in order to shift the use of the land to a
marginally more productive application.
Analysis Prepared by : Hank Dempsey / L. GOV. / (916) 319-3958
FN: 0003579
AB 2351
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