BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 618 (Wolk)
Hearing Date: 05/26/2011 Amended: 05/11/2011
Consultant: Mark McKenzie Policy Vote: G&F 9-0
_________________________________________________________________
____
BILL SUMMARY: SB 618 would authorize a city or county and a
landowner to simultaneously rescind a Williamson Act contract on
marginally productive or physically impaired lands and enter
into a solar-use easement that restricts the use of land to
photovoltaic solar facilities. Among other things, this bill
would:
Define "marginally productive" as parcels not used for
agricultural purposes for the previous six years and
consisting predominantly of soil with significantly reduced
agricultural productivity due to chemical or physical
limitations, as specified.
Define "physically impaired land" as land with severely
adverse soil conditions that are detrimental to continued
agricultural cultivation and production, as specified.
Require a designation of marginally productive or
physically impaired to be based on substantial evidence and
approved by the Secretary of Food and Agriculture.
Require the term of a solar use easement to be at least
ten years and specify that the contract automatically
renews each year unless notice of nonrenewal is given by
either party. Upon nonrenewal, the solar-use easement
would continue for the balance of the term. The land must
be restored to its original condition by the landowner if
he or she initiates nonrenewal of a solar-use easement.
Require any lead or responsible agency to expedite the
review and issuance of any necessary permits for solar
photovoltaic facilities located on marginally productive,
physically impaired, or specified disturbed land.
Authorize the Department of Conservation to adopt
regulations necessary for the implementation of the bill.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Cancellation fees Unknown, significant loss of
cancellationGeneral/
SB 618 (Wolk)
Page 1
fees (see staff comments)
Special*
Property reassessments Likely increase in property tax
revenuesLocal/
related to reassessments (see staff
comments) General
DFA determinations unknown, potentially significant costs
toGeneral
make determinations of marginally
productive
or physically impaired lands
DOC regulations one-time costs, likely exceeding
$200Special*
____________
* Soil Conservation Fund
_________________________________________________________________
____
STAFF COMMENTS: SUSPENSE FILE.
Existing law, the California Land Conservation Act of 1965
(Williamson Act), authorizes landowners to sign ten-year
contracts with counties, agreeing to restrict a property's use
to agriculture, open space, or compatible uses. In return for
the agreement to keep the land out of development, the landowner
benefits from reduced property tax assessments based on the
property's use rather than its market value. These contracts
renew automatically each year, unless the contract is ended
through nonrenewal, cancellation, or termination. Under
nonrenewal, either the landowner or the county may provide
notice to not renew the contract. When the term of the contract
runs out after nine years, the property is reassessed at its
market value and land restrictions end. County officials can
cancel a Williamson Act contract at a landowner's request if the
board of supervisors finds that cancellation is consistent with
the Act's purpose or in the public interest. A contract ends
immediately upon cancellation and payment of cancellation fees
by the landowner to the state in an amount equal to 12.5% of the
property's unrestricted value. A contract can be rescinded when
a board of supervisors cancels a Williamson Act contract and the
landowner simultaneously enters into an agricultural
SB 618 (Wolk)
Page 2
conservation easement on other land of an equal or greater
value.
SB 618 would assist in efforts to meet the state's target of
generating 33% of energy from renewable sources in the next
decade by providing large parcels of land that may be better
suited for installation of solar photovoltaic facilities than
agriculture or open space, while continuing the core mission of
the Williamson Act by protecting prime farmland from
development. This bill would provide for the rescission of a
Williamson Act contract on marginally productive or physically
impaired lands if a landowner simultaneously enters into a
solar-use easement that restricts the use of land to
photovoltaic solar facilities. Under current law, if a
landowner wished to install photovoltaic solar facilities on
land restricted by a Williamson Act contract, the landowner must
request cancellation of the contract and pay any cancellation
fees. For example, Kern County recently cancelled a Williamson
Act contract on 6,047 acres of fallow agricultural land for the
construction of the Maricopa Sun Solar Complex, a 700 megawatt
solar photovoltaic project near Taft, requiring the landowner to
pay $755,714 in cancellation fees. Staff notes that
cancellation fees are deposited in the state General Fund, and
approximately $2.5 million in cancellation fees are transferred
to the Soil Conservation Fund to cover the Department of
Conservation's (DOC) costs to administer the Williamson Act. As
such, the contract rescission provided by the bill would result
in foregone General Fund revenues because absent the bill, a
landowner would pay cancellation fees in order to build solar
photovoltaic facilities on land previously under a Williamson
Act contract. The magnitude of this revenue impact is unknown
and would depend upon the amount of land converted from
Williamson Act contracts to solar-use easements that would
otherwise go through the cancellation process, and the
unrestricted value of that property.
Existing law provides for an exclusion from the definition of
new construction for active solar energy systems in the
assessment of property for tax purposes. SB 618 affirms that
the construction of solar photovoltaic facilities on land
subject to a solar-use easement would qualify as an active solar
energy system for purposes of the property tax exclusion. When
the Williamson Act contract is rescinded pursuant to this bill,
the property would be subject to reassessment. The Board of
SB 618 (Wolk)
Page 3
Equalization indicates that the assessed value of the property
would likely increase, but probably not to full unrestricted
fair market value because of the enforceable restriction on the
use of the property due to the solar-use easement; the use of
the property would be limited to the installation of solar
facilities and the assessor would consider the restricted use
when determining the value of the property. The magnitude of
any property tax increase is unknown. Any benefit accrued to
schools as a result of the increase in property tax revenues
would provide relief to the state General Fund.
SB 618 would authorize the Department of Conservation to adopt
regulations to implement the bill. Considering the level of
analysis related to determinations of what constitutes
marginally productive or physically impaired land, and the
detail involved in a new type of Williamson Act contract
rescission, it is likely that DOC would adopt these regulations.
DOC would likely incur costs exceeding $200,000 for legal,
scientific, and administrative staff to carry the regulations
package though the full Administrative Procedures Act process.
The bill would also require the Secretary of Food and
Agriculture to approve determinations that particular parcels
qualify as marginally productive or physically impaired, as
specified. Department staff indicates that it does not
currently have staff with the scientific knowledge to make some
of the determinations specified in the bill, such as soil and
chemical analysis. The department would likely contract out for
these services, or enter into an interagency agreement with
another state agency, such as DOC, to provide staff necessary to
make the required determinations. Staffing costs related to
this provision are unknown and would depend upon the number,
size, and location of parcels proposed for determination as
marginally productive or physically impaired. Staff estimates
these costs could be in the low hundreds of thousands annually.
Lastly, the bill would require lead agencies and responsible
agencies to expedite the review and issuance of any necessary
permits for solar photovoltaic facilities. This provision would
result in unknown cost pressures on various state agencies
responsible for issuing permits related to the installation of
these facilities by prioritizing these permits over other
applicants.
SB 618 (Wolk)
Page 4