Tax break for Ag land draws questions
Williamson Act Land Conservation Plan criticized in Napa report
By GARY QUACKENBUSH For the North Bay Business Journal
Napa County’s Grand Jury says a decades- old program giving property tax breaks to agriculture land owners suffers from a lax of oversight and puts the county in the role of “subsidizing a lifestyle.”
Approved in 1965, the Williamson Act (WA), also known as the California Land Conservation Act, provides tax relief incentives to owners of farmland. In exchange, the owner agrees the land will not be developed or converted for another use for at least 10 years. This bill allows for automatic annual contract renewals, unless the owner provides a non-renewal notice.
In return, that land is assessed for property tax purposes at a rate consistent with their actual use, rather then potential market value. The California Department of Conservation says the WA is estimated to save agricultural landowners from 20 percent to 75 percent in property tax liability each year, based on a county-by-county calculator to determine the value of the contract.
All counties except Del Norte, San Francisco, Inyo, and Yuba offer WA contracts. Such contracts run with the land and are binding on future property owners.
The Grand Jury’s report quotes a report on the act which states that as of Jan. 1, 2017 Napa County had 848 WA contracts covering 74,711 acres. More than 16 million of the state’s 30 million acres of farm and ranch land are currently protected by the WA. A contract under this act is a legal document that obligates the property owner, and any successors of interest, to the contract’s enforceable restrictions. Failure to meet these conditions and restrictions may be considered as a breach of contract.
The Grand Jury asserted that Napa County’s WA program does not provide any more protection from development than existing zoning (AP for Agriculture Preserve or AW for Agricultural Watershed) and the General Plan, and that Napa County’s Board of Supervisors (BOS) lacks information about the workings of this act, or its options under it, and of the total lost property tax revenue (as a result of WA incentives) to all Napa County entities that share property tax revenues.
The report further claimed that WA contract enforcement is non-existent, and that the county’s planning and assessor staffs have not informed supervisors of undersize parcels, parcels without agricultural income, and parcels whose owners do not supply assessor-requested information as required by contract and by law.
Another finding asserted that the continued use of 1969 minimum-imputed-income values may result in WA grazing parcels, those not part of Napa’s agricultural preserve (Type H), being systematically under assessed, and that the BOS has not exercised effective supervision of the WA since at least 2008.
In addition, the Grand Jury report contended that the assessor lacks adequate conflict-of-interest procedures regarding his own properties with unqualified personnel assigned to “check” any work.
The Grand Jury recommended:
■ That an independent cost-benefit analysis of the WA program be conducted by Nov. 30 with public input that would include the cost to all stakeholders in terms of property tax revenue lost.
■ That another independent study of WA should be conducted by Nov. 30 to determine if Napa County’s WA compares to similar programs in other counties in terms of best practices, and to recommend revisions including those to the minimum-imputed- income value in Type H contracts (Type H contracts are those involving agricultural land that is not zoned as part of an Agricultural Preserve. Type A contracts are specific to the Agricultural Preserve zoning district).
■ That a third independent study be done by Oct. 31 that would audit the WA program, by the auditor-controller or outside agency, to determine to what extent contract holders comply with their contracts, CLCA rules and the law.
■ That the assessor be required to revise his internal conflict-of-interest procedures by Oct. 31 so at least two assessment-qualified personnel perform all work on employee- owned properties. In an attempt to deal with some of the issues addressed in the report, David Morrison, director of the Planning, Building and Environmental Services Department of Napa County, sent an agenda letter to the county board of supervisors on May 8, along with a written WA “workshop” plan explaining the legitimacy, importance and necessity of this Act and providing an overview of how it operates within an array of policies used by the county to manage unincorporated areas for the greatest good.
Morrison said over the years, as recently as 2011, the county has periodically updated WA rules and/or contract forms to stay current with state statutes, local standards and practices.
Also the county continues to study tax assessment policies that recognize the longterm intent of agriculture zoning and the fact that agricultural land uses require a minimum of public expenditure for protection and servicing. He said the county has a goal of adding even strong agricultural land protections.
While doing a review of WA rules, the Grand Jury report recommended the supervisors explore whether to terminate or limit the WA program as provided by state law, and take steps to ensure that those property owners who receive WA tax benefits continued to be entitled to them.
According to Morrison, of the 848 parcels covered by WA as of Jan. 1, 2017, only 446 received any property tax benefit from a WA contract. The other 402 parcels were assessed at their Proposition 13 factored base year value. The total assessed value reduction for the 446 parcels receiving a benefit is $547,945,026, which translates into approximately $1 million in reduced tax revenue for the Napa County General Fund.
The Grand Jury report states that given the county’s average tax rate of approximately 1.1 percent, the cost to the county and other agencies that rely on property tax funding (such as cities and schools) represents a $6 million loss for 2017-2018. While the amount of taxes lost annually has fluctuated, in the past 10 years the report said total lost revenue is approximately $60 million, and that the county’s general fund share is over $10 million, or half of the unfunded portion of the cost of the new jail construction. This is another way of saying that the annual loss of property tax due to WA is $1 million.
In a separate, unrelated development in June, it was announced that the four-year contract for Napa County’s Agriculture Commissioner Greg Clark, that ended last December, will not be renewed. The application deadline for this position is July 15. Meanwhile, Clark remains on the job.
Determining if land is qualifies for WA status depends on the size and agricultural use of the land as determined by the Planning, Building and Environmental Services Department in cooperation with the Agriculture Commissioner. News reports in June quoted Clark as saying the “Board of Supervisors wants to head in a different direction.” BOS Vice Chair Ryan Gregory said (the board) is ready to make a change. “We’re looking for some fresh blood in that office.”
The Napa County Assessor’s role is also a major part of the process when it comes to determining the appropriate tax rate for WA contract properties and ensuring compliance with reporting requirements for income and expenses.
In addition to the June 15 report, last March a series of Grand Jury reports alleged improper conduct by County Assessor, Recorder, County Clerk and Registrar John Tuteur.
The Grand Jury recommended attempts be made to recover $20,000 for Tuteur’s alleged non-payment of property tax on his family’s ranch land leased for a cellular tower, accusations that he made sloppy or self-serving agricultural land assessment decisions, and charges of alleged misconduct and conflict of interest.
No action has been taken on the recommendations.
Commenting on the allegations, Tuteur said, “These accusations have not been shown to be accurate”.