Shot in the heartland - Has Arnold opened the door for urbanization of California farms?

The real Governor Arnold Schwarzenegger is back, and now he’s taking on rural California. Landowners are up in arms over a mostly overlooked provision in last week’s budget revise to terminate a 40-year-old environmental- and agricultural-preservation act, which critics say will negatively affect California’s heartland.

The governor has eliminated state funding for the Williamson Act, which leaves California’s farmland and open spaces vulnerable to urbanization. “In my own county, for example, about 65 percent of the land is protected under the Williamson Act,” Assemblywoman Lois Wolk of Davis said. “So unless we want to see more houses instead of crops, I think it’s really important that we support the Williamson Act.”

The Williamson Act of 1965, which preserves some 17 million of the state’s 29 million acres of free-range land, is now on the chopping block. Under the act, property owners who promise not to develop their land receive tax breaks from counties, which the state later refunds. The state reimbursed nearly $40 million last year and has invested over $700 million since the program’s inception. In 2006, Sacramento, Yolo, Solano, Placer, El Dorado and Amador counties received nearly $9 million from the state in exchange for safeguarding open spaces, environmental habitats and agricultural lands.

“The Williamson Act allows farmers and ranchers to put their land in a contract with the county,” explained Bill Allayaud of Sierra Club California. “They agree to keep it in farming or ranching for at least 20 years, and for that they get a tax cut.”

“The program is important from a food production, food-security standpoint,” said John Gamper, taxation and land-use expert with the California Farm Bureau Federation, “as well as for environmental habitats.”

The governor, however, no longer wants to reimburse the counties. “The state essentially is waffling on its commitment to honor these contracts,” said Casey Stone, a rancher at the Yolo Land & Cattle Co. in Woodland and district director of the Yolo County Farm Bureau.

Budgets for rural counties are stretched thin as is, and if the state kills the refund program and the nearly half-century-old act dies, “It means more pressure on farmers to develop the land,” warned Allayaud. “If [landowners are] paying higher taxes, there’s less incentive to keep their land as ranch land or farmland.”

Enter developers, whose coffers would tempt landowners to sell off their property to urban sprawl.

The Schwarzenegger administration argues that ending state support of the Williamson Act is needed to reduce California’s structural deficit. “Very little room remains for flexibility while remaining fiscally responsible,” Ed Wilson of the Department of Conservation explained.

But Gamper said that Schwarzenegger’s bean counters have it all wrong. “You’re going to wind up paying a heck of a lot more if that Williamson Act ground gets converted to residences,” he argued. According to Gamper, if 1 percent of the 16 million protected acres under the act becomes residential homes, Californians would end up paying $20 million or more annually in taxes to cover homeowner property-tax breaks.

Wolk noted that former Governor Gray Davis, whose deputy chief of staff also was Susan Kennedy, attempted to kill the Williamson Act during his tenure. “It wasn’t a good idea then. It’s a worse idea today,” Wolk said.

“I think a lot of this is political posturing by the administration,” Stone added.

Gamper agreed. “It’s part of the annual logrolling drill of the budget,” he explained, “where you need to get some things on the table that the Republican members want so that you can get the Republican votes necessary to pass the budget.”

But Wolk is optimistic: “I don’t expect this cut to stand. It’s truly penny-wise and pound-foolish.”

“It’s not even penny-wise and pound- foolish,” Gamper said. “It’s just stupid.”

http://www.consrv.ca.gov/DLRP/lca/

Williamson Act Program

The California Land Conservation Act of 1965—commonly referred to as the Williamson Act—enables local governments to enter into contracts with private landowners for the purpose of restricting specific parcels of land to agricultural or related open space use. In return, landowners receive property tax assessments which are much lower than normal because they are based upon farming and open space uses as opposed to full market value. Local governments receive an annual subvention of forgone property tax revenues from the state via the Open Space Subvention Act of 1971.

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Fact sheet (PDF)
http://www.consrv.ca.gov/DLRP/lca/pubs/WA%20fact%20sheet%2006.pdf

http://www.consrv.ca.gov/DLRP/lca/overview/history.htm

History

The California Land Conservation Act, better known as the Williamson Act, has its roots in the immediate post-World War II period. During that time California’s agricultural and open space lands began to face dramatically increasing conversion pressures from population growth, new commercial enterprises, and rising property taxes. Valuable farmland began disappearing at an alarming rate as conversion to urban uses became the only financially viable alternative for many landowners. The Williamson Act evolved, and continues to evolve, as a statewide strategic response to these pressures.

In 1965, an interim committee of the California Assembly generated Assembly Bill 2117 (authored by John Williamson). This bill proposed the use of contracts between landowners and local governments to voluntarily restrict development on parcels for a minimum of ten years. Proponents of the legislation felt that contractual restrictions on development would cause property tax assessments to begin leveling off. In practice, however, landowners, assessors, and local governments seemed unconvinced that the restrictive contracts could provide a basis for lower tax assessments. In the two years following passage of the Williamson Act, only 200,000 acres were enrolled under contract in six counties.

The program might have remained small if not for the addition of Article 28 (now part of Article 13) to the state’s Constitution. Article 13 declares the interest of the state in preserving open-space land and provides a constitutional basis for valuing property according to its actual use. The amendment had originated with groups interested in the preservation of open-space land. Agricultural interests added their support after recognizing the importance of a constitutional backing for preferential tax assessments. Article 13 allows preferential assessments for recreational, scenic, and natural resource areas as well as areas devoted to production of food and fiber.

Supporters of the Williamson Act had hoped that financial assistance from the state to local governments would be part of the program. They believed financial support would provide a tangible incentive for local governments to initiate more contracts by partially replacing property tax revenues lost on enrolled land. State funding was provided in 1971 by the Open Space Subvention Act, which created a formula for allocating payments to local governments based on acreage enrolled in the program.

In 1978, the passage of Proposition 13 changed tax assessment practices, limiting valuations to a static base year. Many assumed that this new assessment scheme would severely limit the value of the tax relief offered by the Williamson Act, and that acreage enrolled in the Program would plunge. In fact, however, Proposition 13 has had a negligible effect on Land Conservation Act participation. A study regarding the effects of Proposition 13 on the overall tax benefits of the Williamson Act found that the average tax savings realized as a result of participation in the program had dropped by only about 20 percent. The average tax savings still amounted to as much as 83 percent, depending upon how recently the property in question had changed ownership.

The Williamson Act Program has remained stable and effective as a mechanism for protecting agricultural and open space land from premature and unnecessary urban development. Participation in the program has been steady, hovering at about 16 million acres enrolled under contract statewide since the early 1980s. This number represents about one third of all privately held land in California, and about one half of all the state’s agricultural land. Every indication points to an indefinite continuation of this level of participation into the future.

Williamson Act at 40: Aging Gracefully
By John Gamper

http://www.caltax.org/member/digest/August2005/8.2005.Gamper-WilliamsonActAt40.01.htm

The California Land Conservation Act of 1965, more popularly known as the Williamson Act, looks pretty good on its 40th birthday. You might even say that it is aging gracefully. At its inception, the law saved many family farmers and ranchers from having to sell their land because they could not afford the property taxes based on what the county assessor determined to be the land’s “highest and best use.”

John Gamper is director of taxation and land use for the California Farm Bureau Federation. This article originally ran in the CFBF’s Ag Alert. The Williamson Act is named after John Williamson, who served in the state Assembly, chairing the Agriculture Committee.

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fyi.. John Williamson was a Democrat from Bakersfield.

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