BILL ANALYSIS �
AB 2241
Page 1
Date of Hearing: April 9, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 2241 (Eggman) - As Introduced: February 21, 2014
Policy Committee:
AgricultureVote:6-0
Local Government Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill changes the rescission fees charged for property
subject to a Williamson Act (WA) contract or a Farmland Security
Zone (FSZ) contract if parties to the contract mutually agree to
rescind and enter into a solar-use easement. Specifically, this
bill:
1)Raises, from 6.25% to 10%, the rescission fee for exiting a WA
contract to enter into a solar-use easement.
2)Lowers, from 12.5% to 10%, the rescission fee for exiting an
FSZ contract to enter into a solar-use easement.
3)Allows counties to keep 50% of the amount of the rescission
fee for exiting a WA or FSZ contract instead of depositing
100% to the state's General Fund as is currently required.
FISCAL EFFECT
1) Fee Revenue. Unknown effect on fee revenue to the Department
of Conservation and the state General Fund. Fees generated by
WA and FSZ contract cancellations vary widely from year to
year depending on the number of cancellations and changes to
the fair market value of land subject to WA and FSZ contracts.
Between FY 1999-00 and FY 2012-13, rescission fees ranged
from a low of $106,811.51 in FY 2010-11 to a high of
$26,172,009.12 in FY 2005-06. The average annual fees
collected over the period was $7,775,458.66.
According to the Department of Conservation, the solar-use
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easement cancellation rate has thus far attracted one
applicant. The remaining WA and FSZ contract rescissions were
subject to the full rescission fees, including those intending
to engage in solar projects.
If the revised fee structure results in an increase in WA and
FSZ contract rescissions from parties who would not otherwise
have rescinded, total fee revenue would increase. If,
however, the revised fee structure results in a shift in WA
and FSZ contract rescissions from parties who would have
rescinded under the full fee structure (see comment 2 below)
to the revised solar easement structure, total fee revenue
would decrease.
For illustrative purposes only, assuming 5% of all WA land is
subject to an FSZ contract and 10% of full fee rescissions
over the above 14-year period had switched to the new solar
easement fee structure, the average annual fee revenue impact
would have been a total decrease of $183,811.85 in fees
collected, and a decrease in fees paid to the General Fund
(after accounting for 50% retained within the counties) of
$480,678.86.
2) Costs. No costs to the Department of Conservation for
administration of the changes in fee structure.
COMMENTS
1) Purpose. According to the author, "the implementation of
solar use easements has not been widely embraced. WA contract
cancellations continue on prime farmland and one county has
decided to allow utility scale solar developments as a
compatible use based solely on the county's determination of
the soil capability, regardless of its soil classification or
the WA's definition of prime farmland."
"AB 2241 proposes to change the rescission fee for solar use
easements to 10% for both WA and FSZ contracts and allows the
counties to retain half of the fee. This would provide a
significant financial incentive for counties to implement the
solar use easement program."
2) Williamson Act Rescission Generally. Current law allows
parties to a WA or FSZ contract to mutually agree to rescind
the contract, subject to a rescission fee collected by the
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county and deposited in the state General Fund.
Under the current fee structure, the county must charge the
property owner a rescission fee of 12.5% of the fair market
value of the property at the time of the rescission if the
property was under a WA contract, and 25% of the fair market
value of the property at the time of the recession if the land
was under a FSZ contract.
3) Existing Solar Easements. Current law allows parties to a WA
or FSZ contract covering marginally productive or physically
impaired agricultural land to mutually agree to rescind the
contract in order to simultaneously enter into a solar use
easement, subject to a lower rescission fee collected by the
county and deposited in the state General Fund.
Under the current fee structure, the county must charge the
property owner a rescission fee of 6.25% of the fair market
value of the property at the time of the rescission if the
property was under a WA contract, and 12.5% of the fair market
value of the property at the time of the recession if the land
was under an FSZ contract. Fees collected are deposited in
the state General Fund.
4) Staff Comment. The author may wish to consider clarifying
whether cities rescinding a WA contract should be entitled to
retain 50% of the rescission fees as counties currently do.
There are currently several cities with Williamson Act
contracts. Under the previous solar easement rescission law,
the county treasurer collected and deposited the rescission
fees. This bill would effectively leave half of those fees
with the country treasurer even in cases where a city was the
contracting party.
Analysis Prepared by : Joel Tashjian / APPR. / (916) 319-2081