Local farmers and property owners who have benefited from
reduced property taxes through the state’s Williamson Act will no
longer be able to take advantage of this incentive to keep their
land safe from high impact development, at least for the next
year.
Local farmers and property owners who have benefited from reduced property taxes through the state’s Williamson Act will no longer be able to take advantage of this incentive to keep their land safe from high impact development, at least for the next year.
When the 2009-10 state budget landed on his desk last week, Gov. Arnold Schwarzenegger penciled in a near-elimination of the $37 million program that reimburses counties for revenue lost through the Williamson Act.
In Santa Clara County, that’s a loss of about $295,000 in state assistance. The county is unlikely to pick up that tab and continue the program on its own, and that could mean even more hard times for agricultural property owners who participate in the Act.
“Their taxes will go up, which will bury them,” Supervisor Don Gage said. “If a farmer is already in business and is barely hanging on, you’re going to break them (if their property taxes go up). Now they’re all going to try to dump their land.”
Gage is certain the county won’t cover the cost of the program on its own because it is “broke,” and staff is in the process of determining what else the county will have to cut after the state approved its $85 billion budget last week.
Passed in 1965, the Williamson Act encourages agriculture and open space by giving tax breaks to landowners who remain in farming and sign 10-year contracts to do so.
The state government then reimburses county governments for the lost property tax revenue. It protects about 16 million acres from development statewide, at a cost of about $37 million annually.
About 3,100 parcels totaling about 347,000 acres in Santa Clara County are currently in the Williamson Act, according to county Department of Planning and Development Program Manager Dana Peak. Most of those acres are in South County, she said.
As of 2007, 19 of California’s 58 counties had more acreage in the Williamson Act than Santa Clara. And three counties alone in the San Joaquin Valley – Fresno, Tulare, and Kern – have more than 4 million acres in the Act, according to the state Department of Conservation.
The total value of Williamson Act properties in Santa Clara County is about $407.6 million, with most of the properties located in unincorporated areas.
Although the majority of the county’s agricultural and undeveloped land is in South County, a surprising number of the parcels are smaller lots in North County, David Ginsborg of the Tax Assessor’s office noted.
Determining how the loss of state revenues under the Williamson Act will affect the county and property taxes will be complicated since properties are under 10-year contracts to be in the program. County staff are currently in the process of figuring out how to respond to the elimination of the Williamson Act.
For properties currently under Williamson Act contracts, however, it is unlikely that the county will reassess their values higher before the contract expires as a way to make up for the lost revenue.
“A contract is a contract, and it’s enforceable by law,” said Ginsborg, who also noted that the loss of the state funds does not release property owners from contractual terms that limit construction or development on their properties.
It is also difficult to determine how much Williamson Act property owners’ taxes might go up, as the tax rate is based on the value of a property, which is based on its use and other factors.
Tim Chiala of George Chiala Farms in Morgan Hill said he uses the Williamson Act for some of his property. He said the Act’s elimination would likely affect his company through leased land that is in the program.
“(The Williamson Act) helps us with land we lease,” Chiala said. “I assume our lease rates will go up and make us not farm as many acres.”
Chiala currently farms about 600 acres of land he owns and leases in Santa Clara County, he said.
Uesugi Farms, another large-scale agriculture production operation in South County, doesn’t use the Williamson Act because the company needs flexibility to develop property in response to market and production needs. The Williamson Act limits an owner’s ability to build processing or storage facilities, barns, or other structures, said Pete Aiello of Uesugi Farms, which uses about 1,000 county acres for agriculture.
“We’re a growing company, and we’re growing pretty aggressively,” Aiello said. “You never know what’s going to happen next year, let alone 10 years from now.”
However, smaller farms have benefited from the Williamson Act the last four decades, noted Aiello, a Santa Clara County Farm Bureau board member.
“No doubt, it’s a benefit (for the smaller farmers) and it will negatively impact them,” he said.
WHY YOU SHOULD CARE
The state’s Williamson Act keeps property taxes down for farmers and other owners who don’t plan on selling or developing their rural land in the near future. If farmers’ taxes go up, the cost of food could rise. Plus, if owners no longer have this incentive to keep their land in open space, it may end up in the hands of high-density developers.
Williamson Act, by the numbers
Property acreage and value in the Williamson Act
Santa Clara County
Parcels: 3,100
Acreage: 347,000
Value*: $407.6 million
Morgan Hill
Parcels: 12
Acreage: NA
Value: $2.6 million
Gilroy
Parcels: 14
Acreage: NA
Value: $4 million
Unincorporated
Parcels: 2,956
Acreage: NA
Value: $366.7 million
*All values excluded improvements
Sources: Santa Clara County Assessor’s Office, Santa Clara County Planning and Development Office
