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Williamson Act: Tax relief measure to preserve agriculture

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Posted: Wednesday, December 9, 2009 12:00 am

Steve Malcoun has a 34.5-acre walnut orchard east of Morada. He doesn't plan to develop the land for urban uses, and the property is too far away from housing subdivisions to be considered for development.

But Malcoun was added to the Williamson Act on Tuesday. That will reduce his property tax bill significantly, because he would be prevented for at least 10 years from taking his property out of farming and selling it to a housing or commercial developer.

Landowners are assessed for property tax purposes at a rate consistent with its actual use rather then potential market value. Their tax liability can be reduced from 20 to 75 percent in property tax liability each year.

"The intent is to value land on its actual use rather than someone's speculative use," said Bruce Blodgett, executive director of the San Joaquin Farm Bureau Federation.

Vernon Boyett, with 329 acres of cattle grazing land northeast of Clements, also wanted in on Williamson Act benefits.

Their applications, along with eight others, were approved at Tuesday's San Joaquin County Board of Supervisors meeting in Stockton.

According to the California Department of Conservation, San Joaquin County lost 9.3 acres per day to development between 2004 and 2006. Fresno County lost 18.1 acres per day during the same period, Stanislaus County lost 8.9 acres, San Diego 5.6, Kern and Merced 4.8, Kings 4.1, and Imperial 3.4.

The Department of Conservation is preparing maps for each county for 2006 through 2008, said department spokesman Don Drysdale.

With pressure coming from developers to urbanize counties throughout the state, the Williamson Act keeps selected land in agriculture. The idea is for landowners to keep their property as farmland for at least 10 years. That causes their land to be devalued. The state compensated each of the 54 participating counties for a portion of the counties' property tax revenue loss from Williamson Act properties until the current fiscal year, when Gov. Arnold Schwarzenegger vetoed all but $1,000 of the state funding.

The Board of Supervisors approved the 10 new applications on Tuesday despite being stripped of $1.7 million of state funding during the budget process this year. The approvals will reduce the county's property tax revenue by an extra $110,737.

It's a big deal in San Joaquin County because it has 542,851 acres in the Williamson Act. Its acreage in the act is 12th-largest, in the state, according to the California Department of Conservation. Kern County is largest with 1.7 million acres, followed by Fresno and Tulare counties, Drysdale said.

Although it's a more urban county, Sacramento received $525,000 in state Williamson Act funds in the 2008-2009 fiscal year.

The Williamson Act was adopted in 1965 to halt widespread urbanization of agricultural land. Under the program, property owners agree to not urbanize their land. In exchange, the county and state compensates them for their reduced property value.

That reduced property value cut the county's tax revenue by $2.6 million, but the state used to pay the county $1.7 million of that amount, Assistant County Counsel Mark Myles said.

Since Schwarzenegger eliminated all but $1,000 of the $39 million that went to counties to cover property tax revenue loss in 54 of California's 58 participating counties, San Joaquin County is faced with absorbing an extra $900,000, and another $100,000-plus.

Now that the Board of Supervisors approved the 10 applications, no new ones will be considered until at least Sept. 30 of next year. The board adopted a temporary moratorium while county officials get a better idea of whether the state will restore funding next year, and decide how to tackle the issue on a long-term basis.

Supervisor Ken Vogel and supervisors from several other San Joaquin Valley counties met with Schwarzenegger on Tuesday afternoon in an attempt to get state Williamson Act funding reinstated next year.

San Joaquin County

It's people like Boyett, the Clements-area farmer, who want the Williamson Act to succeed. He is 60 years old and faces retirement as owner of a Bay Area construction company in a few years. Without income from his construction business, Boyett said he isn't sure whether he could afford to pay the full property tax for his 400-acre cattle ranch. That's why he wants to be assessed a lower property tax rate that the Williamson Act would afford.

Williamson Act at a glance

What is it? The state's agricultural land protection program enacted in 1965 to keep land in agricultural production or open space. The property owner agrees to not sell it to a developer for at least 10 years.

How many acres in California?16.6 million of the state's 29 million acres of farm and ranch land are protected under the Williamson Act. California has 100.2 million total acres.

Can contracts be terminated? Yes, but it takes 10 years after the county or property owner files a "notice of non-renewal." If the notice isn't filed, the 10-year contract continues.

Contracts/acres in San Joaquin County: 543,663 acres, 12th in the state, and 2,549 contracts.

Contracts in Sacramento County: 1,446.

What's in it for the landowner? He or she is assessed for property tax purposes at a rate consistent with its actual use rather then potential market value. Their tax liability is reduced from 20 to 75 percent in property tax liability each year.

In Sacramento County, the Assessor's Office reported the assessed value of Williamson Act properties as $566 million in 2008. Had these properties not been in the Williamson Act, the value would have been $994 million, a difference of $428 million.

How many counties participate? 54, all except San Francisco, Yuba, Del Norte and Inyo.

Source: California Department of Conservation

Boyett thinks he pays about $2,800 per year in property tax. He guesses he'd save about 55 percent of that amount if his Williamson Act application is approved.

Les Flemmer, San Joaquin's assistant county assessor, said he couldn't give even a broad idea of how much property owners save under the Williamson Act because there are so many factors in determining one's property value. For example, a crop's worth varies from year to year, Flemmer said. Other variables include how long the landowner has owned the parcel, earning capability, and the age of trees, he said.

Boyett said he also wants his property to be added to the Williamson Act to set an example for his children and grandchildren by committing to at least 10 years of agricultural use. Boyett's children and grandchildren want to keep the cattle ranch in the family, he said.

Boyett also likes the 10-year waiting period to cancel membership in the Williamson Act.

"At least it forces some thought processes," he said. "You can't do it on a whim, that's for sure."

However, landowners can cancel their Williamson Act contract by paying a cancellation fee equal to 12.5 percent of the valuation of the property, Drysdale said. Cancellations can't be made due to an opportunity to use the property for another purpose, nor can economic factors be a sufficient reason to cancel, he said.

Sacramento County

Supervisor Don Nottoli is probably more familiar with the Williamson Act than his four board colleagues in Sacramento County. He lives on Simmerhorn Road east of Galt, is a lifelong Galt resident and represents the bulk of Sacramento County's agricultural land in his district — Galt, Herald, Wilton, Walnut Grove and Sloughhouse.

It's possible, but not likely, Nottoli said, that the Sacramento County Board of Supervisors might terminate the Williamson Act altogether. Some are worried about the act's future, since most of the county's supervisorial districts are urban.

"With the economy the way it is, everything is under the microscope," said Herald farmer Gerald Schwartz, a Sacramento County Farm Bureau board member.

"The consequences if we exit the program will be tremendous," Nottoli said, adding that he doesn't want to alarm anyone. "We have people who have been under contract for 40 years."

Although subsidizing farmers through the Williamson Act, Sacramento County benefits because it receives about $350 million in revenue from farm production, purchase of fuel, equipment, trucks and storage, Nottoli said.

Nottoli doesn't expect his board colleagues to make any decisions on Wednesday, but they could give county staff some direction on how to proceed.

Case van Steyn, a Galt-area dairy farmer and a Sacramento County Farm Bureau board member, said he doesn't want to sell the 150 acres he has under the Williamson Act, but if state funding isn't restored, he may change his mind.

It's always an option, van Steyn said, and with farmers getting little money for their milk, you have to listen to every opportunity.

"My goal is not to develop (the land)," van Steyn said. "But if the state stops paying and the county wants to raise my taxes, I'm out."

Sacramento County supervisors will conduct a workshop on the Williamson Act at 3 p.m. today in the board chambers, 700 H St., Sacramento.

Van Steyn said the Sacramento County Board of Supervisors must should support the Williamson Act even though districts other than Nottoli's have little or no agricultural land.

"We're going to look like Los Angeles in 20 years," van Steyn said.

Contact reporter Ross Farrow at rossf@lodinews.com.

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