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  Time Set   # 29.       
  
Meeting Date: 10/12/2021  
Brief Title:    Annual AB 1265 (Williamson Act) Implementation
From: Philip J. Pogledich, County Counsel
Staff Contact: Philip J. Pogledich, County Counsel, x8172

Subject
Hold a public hearing and adopt resolution regarding the continued implementation of nine-year Williamson Act contract terms pursuant to Assembly Bill 1265. (No general fund impact) (Pogledich)
Recommended Action
  1. Receive presentation on the continued implementation of Assembly Bill 1265 (AB 1265) and the extension of related changes to existing Williamson Act contracts, including the continuation of nine-year contract terms; 
     
  2. Hold a public hearing to receive comments on the continued implementation of AB 1265; 
     
  3. Adopt the attached resolution (Attachment A) continuing implementation of AB 1265, making certain related findings, and authorizing landowners to opt out of the contract changes affecting next year's property taxes by filing a notice of non-renewal; and
     
  4. Direct the Assessor, Department of Financial Services, Clerk-Recorder, County Counsel, and other County officials and departments to take all necessary steps to continue the implementation of AB 1265, including but not limited to recording a notice that states the affected parcel numbers and current owners’ names, making the appropriate modifications to assessed values, and modifying next year's tax bills to reflect the changes authorized by AB 1265.
Strategic Plan Goal(s)
Sustainable Environment
Flourishing Agriculture
Reason for Recommended Action/Background
Based on the Board's experience with AB 1265 implementation over the past several years, this office believes that the Board of Supervisors is generally familiar with the details of AB 1265 and related policy considerations. A number of points, however, are worth reiterating for consideration.

First, AB 1265 authorizes the County to reduce the term of Williamson Act contracts to nine years (from ten) and, in turn, collect ten percent of local landowners’ tax savings to partially offset the cost of the local Williamson Act program. Implementation of AB 1265 will thus result in increased County revenues of up to about $940,000 based on an estimate provided by the Assessor's office. This sum is about 40% of what the County would receive over time if it were to non-renew all Williamson Act contracts and property values returned to their unrestricted (Proposition 13) levels.

An alternative to continuing implementation of AB 1265 is for the Board of Supervisors to authorize staff to non-renew all Williamson Act contracts, effectively ending the program within the County. However, there is a significant short-term fiscal drawback to County-initiated non-renewals. Landowners can respond to County-initiated contract non-renewals by filing a “notice of protest.” Under California law, the filing of such a notice effectively blocks any tax increases for the first four years of the non-renewal period. Consequently, it is possible (and perhaps likely) that only minimal increases in revenue would be realized during that period, far less than would be achieved by continued implementation of AB 1265. Implementation of AB 1265 is thus a better short-term fiscal approach because it will sustain current County revenues from the affected properties (based on AB 1265 implementation over the past several years), versus a drop in revenue for up to four years if contracts are non-renewed.

Second, as noted, AB 1265 ensures that landowners will continue to receive 90 percent of the tax benefit of participating in the Williamson Act. This is due to the formula in AB 1265 for determining the new assessed value of Williamson Act lands. Under that formula, the change in value for a contracted property is simply 10 percent of the difference between the property taxes due based on factored base year value (or current market value, whichever is lower) and the property tax due based on the restricted (Williamson Act) value of that parcel. This means that for every dollar that a landowner currently saves, he or she will continue to save 90 cents after AB 1265 is implemented. Non-renewal, by comparison, would over time place a much higher financial burden on local landowners as assessed values gradually return to their full unrestricted amounts.

Altogether, as in past years, implementing AB 1265 presently appears to be a more prudent course of action than non-renewing all Williamson Act contracts. The key steps to implementing AB 1265 are as follows:
  • Make a determination that the state paid the County less than one-half of its foregone property tax revenues under Government Code Sections 16142 and 16142.1 (authorizing subventions) in the prior fiscal year;
  • Decide to continue implementation of AB 1265 on the next anniversary date of the Williamson Act contracts; and
  • Give landowners at least 90 days notice of the opportunity to non-renew and thereby opt out of the continuation of reduced (i.e., nine-year) contract terms.

All of these steps are addressed in the attached resolution. In addition, the general direction to various County officials and departments included in Recommended Action D, above, is intended to ensure that other ministerial requirements included in AB 1265 (e.g., the recording of affected parcel information, the preparation of revised valuations, etc.) are addressed in a manner that is timely and in full compliance with all applicable legal requirements.
Collaborations (including Board advisory groups and external partner agencies)
Agricultural Commissioner, Assessor/Clerk-Recorder

Fiscal Impact
Potential fiscal impact (see notes in explanation section below)
Fiscal Impact (Expenditure)
Total cost of recommended action:    $  
Amount budgeted for expenditure:    $   0
Additional expenditure authority needed:    $   0
On-going commitment (annual cost):    $  
Source of Funds for this Expenditure
$0
Explanation (Expenditure and/or Revenue)
Further explanation as needed:
Potential general fund revenue of approximately $940,000.
Attachments
Att. A. Resolution

<
Form Review
Inbox Reviewed By Date
Phil Pogledich Phil Pogledich 10/05/2021 08:20 AM
Joanne Vanhoosear Joanne Vanhoosear 10/05/2021 08:34 AM
Form Started By: Phil Pogledich Started On: 10/04/2021 02:35 PM
Final Approval Date: 10/05/2021

    

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