-dollar state deficits, the program has become a target for cuts.
Now, one of the people who helped draft the original legislation is working on a life-support plan. Some ranchers, farm bureaus and county governments are also working on plans. And at least some growers are already thinking ahead to how they might cope if none of those plans save the day.
Officially known as the California Land Conservation Act of 1965, the Williamson Act now protects more than 16 million acres throughout the state. It covers about two-thirds of the agricultural land in Yolo County, more than half in San Joaquin County and about 45 percent in Solano County.
Landowners who sign Williamson Act contracts get a tax break for a promise to keep the land agricultural for 10 or 20 years, depending on the county. The contracts are automatically extended each year unless the county or landowner files to stop the renewal.
The tax break means that counties collect less money, so since 1971 the state has made up the difference. In the world of government payments, that’s called subvention.
Now Gov. Arnold Schwarzenegger has gutted the subvention budget. Instead of the $35 million to $40 million it would normally take, the governor slashed it to a mere $1,000 for the next fiscal year.
On the surface, it might seem like there’s plenty of time to come up with a solution. Even if one side decides not to renew, the previous automatic extensions mean that there’s always at least nine years left on an existing contract.
“There is indeed pressure to come up with something quickly,” says lobbyist Bill Geyer of Geyer Associates Inc. in Sacramento. “I believe that there will be counties that, if nothing happens this year, will pull the trigger on nonrenewal, and that will be hard to reverse.”
The Imperial County Board of Supervisors voted in February to stop renewing contracts.
Geyer has a special attachment to the Williamson Act. He wrote portions of it. Today, one of his jobs is serving as executive director of the Resource Landowners Coalition, and he’s crafting a plan to find new sources of money for subvention.
“I’m inclined to try to develop funding from a mix of sources,” Geyer says. As Schwarzenegger has demonstrated, a single source might not be a reliable solution. “We need to find sources that are going to be more stable or more ongoing in good times and bad.”
One big source already in place is the cancellation fee. Instead of letting a Williamson Act contract run out in nine years, a landowner can simply cancel it right away — for a fee of 12.5 percent of the land’s unrestricted value. In the boom times of fiscal 2005-06, cancellation fees generated $25 million, Geyer says, though this past year it dipped below $2 million.
Geyer and the Resource Landowners Coalition first want to make sure the cancellation fees are used primarily for subventions rather than going into the state’s general fund, though some would go to the Department of Conservation to cover the cost of administering the Williamson Act.
Next, they’d attach a fee to other types of early contract terminations, such as when a city or county acquires agricultural land through eminent domain. Geyer suggests 1 to 4 percent of the land’s unrestricted value.
“That is not enough to disrupt the transaction, but at least it’s a significant tribute, if you will, to the fact that they are getting an early termination privilege,” he says. Another program, only a few years old, terminates contracts if local government finds a material breach such as building on protected land. A 25 percent penalty on the land and its improvement goes to the state. Geyer would earmark those funds for subvention too.
“I have made just a horseback guess that we ought to be able to generate, at least in the near future, $10 million from all of those sources put together, and they have a potential to generate $20 million,” Geyer says.
Another $10 million would come from allowing counties to charge an administration fee for running the Williamson Act program. Charging $1 an acre on prime land and 50 cents an acre on nonprime land would do it.
“I’ve talked to a lot of landowners, and they basically think that is affordable,” he says.
A third $10 million could come from subvention savings. A few million might come from the state refusing to cover substandard contracts. A few million more might come from the Legislature unilaterally amending contracts unless landowners choose not to renew. The state would stop paying a subvention on any land that was opted out, and after a few years the counties could collect taxes at the higher rate.
And the state might use a sliding scale, giving full subventions to counties that rely most heavily on the Williamson Act, but only 70 percent to urban counties where protected ag land is a small part of the economic picture.
A fourth $10 million could come from a collection of sources. Some involve “compatible uses.” The Williamson Act allows agricultural land to be used for such things as solar farms, gravel mining, cell phone towers and riding trails. Geyer would tack on some kind of annual rental fee, though he acknowledges that this idea might get a lot of resistance and be hard to administer.
He’s also proposing a charge on ownership transfers that aren’t within the same family. Normally property gets a new Proposition 13 valuation when it changes hands. The way the Williamson Act works now, the new owners keep the tax breaks, so that break can be much bigger after the sale.
“We’re proposing to harvest some of that increased tax break in the first year after the ownership transfer,” Geyer says. He hasn’t suggested a percentage, but says it should be low enough so the Williamson Act breaks still look attractive.
“You don’t want property taxes to push the kinds of crops you do.”
Robert Ramming, owner, Pacific Star Gardens
And finally, Geyer suggests a mitigation fee under the California Environmental Quality Act to mitigate the cumulative effects of agricultural land conversion. By paying the fee, the landowner could avoid having to commission a full environmental impact report.
It’s important to understand that fees don’t always come out of the landowner’s pocket, Geyer adds. A cancellation fee is often paid by the developer who is buying the land. A lease on it might be paid by the gravel miner or solar panel company.
The earliest a new system could be up and running is 2011 or 2012, so Geyer also is working on some kind of interim approach that would let counties raise Williamson Act subvention money themselves for a couple of years.
That idea already has some traction in Yolo County. The Board of Supervisors voted to cover the $1.1 million subvention out of the general fund this year. But Yolo is dealing with its own $21 million budget shortfall. For 2011, they gave landowners the option to come up with their own solution, says county Agricultural Commissioner John Young. Groups working on a proposal include the Yolo County Farm Bureau, the Yolo County Landowners Association and the Yolo County Cattlemen and Wool Growers Association.
“Ultimately our county counsel has to be comfortable with what is proposed,” he says.
One option is an assessment district, where the landowners would pay a small fee back to the county. Since the county keeps only a small portion of the property tax money it collects, the landowners would have to pay only 8.6 percent of what they save in property taxes, Young says.
Another option is for voters to approve a tax increase.
“The real deadline is around June, because if it is going to be a ballot initiative, the county needs time to prepare it and get it on the November ballot,” Young says.
If the supervisors don’t see a plan they like by December, they could stop renewing contracts on the 416,519 acres covered by the Williamson Act.
Other counties are taking other approaches. The Williamson Act costs Amador county about $115,000 a year to cover 94,000 acres, and the Board of Supervisors hasn’t taken any action to change existing contracts or prevent new ones, says planning director Susan Grijalva.
Solano County has decided not to accept any new contracts on top of the 270,000 acres already under the Williamson Act.
“We would typically get about three or four requests a year,” says county planning manager Mike Yankovich. The county is picking up the $700,000 annual cost for now and will revisit it after 2011 budget requests are in.
San Joaquin County, with 543,000 acres under the Williamson Act, set a moratorium on new contracts until Sept. 30.
Officially, the Department of Conservation doesn’t anticipate a mass exodus from the Williamson Act program. Once the economy rebounds, the department is expressing hope that subvention payments will return. Other sources are doubtful.
Bob Lauchland, the San Joaquin County Farm Bureau Director and a fourth-generation grape grower, says that after meeting with legislators in Sacramento he doesn’t see where they would get enough new revenue to restore the subvention cuts. And some legislators see the Williamson Act as a subsidy to wealthy landowners.
In addition to protecting agriculture, the Williamson Act is designed to prevent leapfrog development. But if it were to wither away, cities and counties argue that they still have a backstop to development in their general plans. Solano also has a measure on the books that requires a vote of the people to change a general plan designation from agricultural to commercial or industrial.
“That adds a major hurdle,” Yankovich says. “The Williamson Act is another measure that keeps that property within ag, but it’s not the only one.”
But a general plan is only as strong as the will of a city council or board of supervisors, Lauchland says. Additional revenue from development might prove irresistible.
Casey Stone also has a wary eye on local government. Vice president of his family’s Yolo Land & Cattle Co., Stone worries that a county short on money will look to unincorporated areas that might be turned into freeway interchanges, hotels and fast-food outlets.
“It’s not going to be a rapid deal,” he says. “It’s not like you are going to have a wholesale conversion.” But over time the lack of Williamson Act protection could erode large swaths of agricultural land, he says.
Even land that stays agricultural could change without the Williamson Act, says Robert Ramming, who is on the Yolo County Farm Bureau Board and runs Pacific Star Gardens in Woodland.
“Five or six years down the road, they would see their taxes going up, and it would be by a margin that is more than they would get from farming,” he says.
More likely, growers would switch to higher-value crops first. That means less crop rotation and less chance for the ground to get a rest. Tomatoes could bring a profit of hundreds of dollars an acre. Corn or safflower might bring only tens of dollars.
“You don’t want property taxes to push the kinds of crops you do,” Ramming says.
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