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, 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 nonrenewal 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 Williamson Act 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 Williamson Act 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 Williamson Act 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 Williamson Act. 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.
In a list of findings, the grand jury asserted that Napa County’s Williamson Act 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 the Napa County Board of Supervisors 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 Williamson Act incentives) to all Napa County entities that share property tax revenues.
The report further claimed that Williamson Act contract enforcement is non-existent, and that the county’s planning and assessor staffs have not informed the 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 Williamson Act grazing parcels, those not part of Napa’s agricultural preserve (Type H), being systematically under assessed, and that the Board of Supervisors has not exercised effective supervision of the Williamson Act 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 Williamson Act 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 Williamson Act should be conducted by Nov. 30 to determine if Napa County’s handling of the Williamson Act 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 Williamson Act 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 Williamson Act “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, the county has periodically updated Williamson Act rules and/or contract forms to stay current with State statutes, local standards and practices. He provided several examples of updates made in 2001, 2005, 2006 and 2008. Recent Board of Supervisors reviews of Williamson Act have occurred in 2010 and 2011.
Also the county continues to study tax assessment policies that recognize the long-term 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 Williamson Act rules, the grand jury Report recommended the supervisors explore whether to terminate or limit the Williamson Act program as provided by state law, and take steps to ensure that those property owners who receive Williamson Act tax benefits continued to be entitled to them.
According to Morrison, of the 848 parcels covered by Williamson Act as of January 1, 2017, only 446 received any property tax benefit from a Williamson Act 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 claims 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 Williamson Act is only $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.
This position is critical to the Williamson Act process when it comes to determining whether or not a parcel is eligible for a contract and associated Williamson Act preservation status. Such 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's Office.
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.”
Helping to promote and provide regulatory oversight for farming is stated on the agricultural commissioner’s web site and in the job description.
The Napa County assessor’s role is also a major part of the process when it comes to determining the appropriate tax rate for Williamson Act 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.”
Acting on a request by Tuteur, Napa Superior Court Judge Mark Boessenecker ordered the release of witness testimony to the grand jury. Judge Boessenecker also granted Tuteur’s motion to release other non-testimonial evidence. The grand jury appealed that order to the court of appeals.
“We have submitted my objections (to the Grand Jury accusation) to California Attorney General Xavier Becerra. He is handling the case after Napa County District Attorney Allison Haley recused herself,” said Tuteur. “After reviewing my objections, they will respond to my attorney and then I will appear before Judge Boessenecker on Aug. 9 and present my answer to the accusations.”
Tuteur said Napa County’s Board of Supervisors is not going to torpedo the CLCA. He observed that, “The county has the most stringent land use regulations in place – with a lot of sticks and with CLCA offering the only carrot. The Board considers the $1 million loss in General Fund annual revenue to be a good investment. Meanwhile, a Planning Department committee is preparing a report on overall compliance with Williamson Act requirements."
Brad Wagenknecht, District 1 supervisor and chair of the Napa County Board of Supervisors, said, “We can always do better. The grand jury gives us an opportunity to learn and respond to issues. Through this process, citizens come together to present worthwhile information, but some allegations don’t hit the mark. We try to take issues raised seriously when providing our responses.”
While the grand jury has the right to make recommendations for the supervisors' consideration, it cannot mandate that any or all of its proposed remedies or actions be implemented.
Supervisor Wagenknecht said the Williamson Act has been a big piece of Napa County’s heritage for over 50 years, and the board would be hard pressed to do anything that would harm it. He believes the supervisors are in favor of keeping it in place. Their formal response to the grand jury’s June 15 report will come at an Aug. 14 hearing.
Michelle Benvenuto, executive director of the Winegrowers of Napa County, said her members would not be happy with the loss of the Williamson Act.
“Some people believe that every problem in Napa County can be blamed on the wine industry and some want to focus on the Williamson Act," Benvenuto said. "The good news is that the Napa Board of Supervisors has been very supportive of this land conservation program over the years.”
July 18, 2018
North Bay Business Journal
By Gary Quackenbush
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