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128 San Mateo County landowners must farm natural land or pay higher taxes

By Paul Jones | 21 Mar 2011

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For decades, many owners of open land in California saved money under a state law called the Williamson Act in return for protecting their acres from development.  Now some property owners in San Mateo, and others in the state, may face higher taxes for doing exactly that.

Gil Gossett has tended to his land since he bought the former flower nursery site in the hills above Half Moon Bay in 1974. He raised a small number of cattle, pigs and horses for a few years, then replaced them with an apple-tree orchard he tends to this day.

Half Moon Bay resident Gil Gossett's owns undeveloped land and received a tax break for decades under California's Williamson Act. But stricter interpretation of the law may required him to farm his land or pay higher taxes. (Photo: Paul Jones)

He let an upland portion of his holdings grow wild, with ferns, grasses, trees and even some flowers left over from its nursery days. When a nearby dump, Browning-Ferris Industries, tried to expand into the valley near his land years ago, he fought back and prevented it, protecting a creek running through his property that served as habitat for steelhead trout.

“The fish population pretty much disappeared for a while,” Gossett said. “We finally got BFI’s progress to stop, things began to clear up, and now we’re beginning to get some fish back.”

But Gossett’s desire to preserve the natural mystique of his property may cost him – literally. For decades, Gossett’s land has been taxed at a lower than normal rate under the provisions of the Williamson Act, which the state enacted in 1965 to protect agricultural and open-space land from development. Now the county is saying the wild land on Gossett’s property violates conditions of the act because it is not being used for “commercially viable” agriculture (The county says Gossett’s Apple orchard is too small to qualify).

As a result, San Mateo County is looking at ending Gossett’s Williamson Act contract unless he increases his agricultural use of the land. That could force Gossett, now retired, to make a difficult choice: either lose his contract and see his property taxes nearly double or reluctantly bulldoze and farm the land he spent years returning to nature.

“I can also go up with my bulldozer and clear an area and plant more, if they want more agriculture,” Gossett said. But, “we like it the way it is. I like to have the area for the wildlife.”

Stricter law interpretation angers landowners

Gossett is one of many San Mateo County landowners facing the unenviable possibility that just living on his land is about to get more expensive. The county is looking at non-renewing Williamson Act contracts for some 128 privately owned parcels, including many currently incorporating small-scale agriculture and wildland areas like Gossett’s. The non-renewal process takes nine years, over which the county could gradually increase owners’ property taxes. County staff say the 128 parcels are out of compliance with the Williamson Act. But others say it’s possible the state’s ongoing budget crisis has caused Sacramento to put pressure on counties to tighten their interpretation of the law’s vague language. And the state itself may stop funding the act, which would threaten open space and cause problems for agricultural businesses across California.

The Williamson Act grants landowners property tax reductions as high as 75 percent off what they would otherwise pay for their land on an annual basis. The state passed it in 1965 in response to increasingly high property value assessments during a development boom in California. At the time, the state taxed based property tax on how much the land would be worth if fully developed, putting agricultural and open-space landowners at a severe disadvantage.

The Williamson Act was the state’s response to concerns that too much of California would become overdeveloped. Owners of undeveloped land could have lower taxes if they agreed to restrictions on how they used their property to guarantee they wouldn’t cheat the system.

Counties formed contracts with landowners, who applied in waves. In 1971, the state devised a program to begin back-filling county coffers with revenues they had lost because of the reduced property taxes.

But in 2007, the Schwarzenegger administration’s zeal to cut “wasteful” spending resulted in a multi-county audit of Williamson Act contracts that counties had created with landowners over the years. State government officials instructed San Mateo County to begin a nine-year process of non-renewal for a number of properties state auditors said weren’t in compliance, and the county’s staff identified 128 properties they plan not to renew. Property owners can appeal the non-renewal process, either demonstrating that they do have significant farming operations, or implementing such operations before the non-renewal process ends.

To to embark on the non-renewal process, county staff struggled to develop an understanding of what “compliance” even meant, San Mateo planner Dave Holbrook said. The Williamson Act’s language didn’t specify uses clearly; it focused mainly on agricultural land with some reference to open space, habitat and wildland preservation. State auditors informed county staff that lands with too little agriculture shouldn’t have their contracts renewed, Holbrook said. Staff settled on defining compliance around “commercially viable” agriculture, partly because other agencies and organizations in the state were using that definition.

“I went to a seminar over in Solano County and heard all day various counties that had been subjected to the audit or knew it was coming, and the theme was: If they don’t have agriculture, don’t renew them,” Holbrook said.

But when the San Mateo Board of Supervisors was set to vote Feb. 15 to begin the non-renewal process for the 128 parcels roughly four years after the initial push by the state, angry property owners claimed the commercial agricultural requirements weren’t part of their original Williamson Act agreements with the county.

“If you look to the second page of the legislation, you’ll find that it is not limited to commercial agriculture,” said Roger Owen. “Qualifying uses include wildlife habitat, groundwater recharge, open space.”

And when questioned by supervisors, County Planning Department Interim Deputy Director Steve Monowitz acknowledged the county didn’t yet have a clear definition of commercially viable agriculture.

“Is there some dollar amount, or bushels of carrots?” asked Third District Supervisor Don Horsley.

“At this point in time, we do not have a standard,” Monowitz said.

Supervisors put off the vote, asking staff to come up with specific parameters for measuring the level of farming necessary for land to qualify. But the temporary reprieve means little to landowners like Terry Gossett (no relation to Gil Gossett), who said he’d always understood the maintenance of natural habitat on his property as an appropriate use under the Williamson Act.

“We could all bring in farm-labor housing with sheds and all, and then we would be a compatible use according to this document,” he said. “That’s not something I thought I was trying to do.”

The interpretation that the act requires commercial agriculture isn’t necessarily consistent with the spirit of the law, said Michael Endicott, a lobbyist for the Sierra Club.

“Really making sure what’s called Williamson Act compatible uses does have open space, habitat connectivity, is a very valuable piece,” he said.

The act appears to give some support to that contention. The law says:  “Land devoted to recreational use or land within a scenic highway corridor, a wildlife habitat area, a saltpond, a managed wetland area, or a submerged area may be included within an agricultural preserve” and “The city or county within which it is situated may contract with the owner for the purpose of restricting the land to recreational or open space use.”

State may be targeting law to save money

David Kline with the California Taxpayers’ Association didn’t comment specifically on San Mateo’s situation, but he said when governments are dealing with strapped budgets, it’s sometimes true that laws are interpreted broadly solely for the purpose of increasing revenue.

“Whenever the government is facing a budget problem, there is some concern that efforts to get new revenue may be a little overzealous,” Kline said.

San Mateo County has lost revenues because of the Williamson Act. After the 2007 audits, the Schwarzenegger administration cut funding for the law drastically in the 2009-2010 fiscal year, depriving counties such as San Mateo of backfill for property taxes they weren’t collecting from Williamson Act properties.

However, Terry Gossett said the act only reduced property tax revenue in San Mateo by $57,909 in the 2008-2009 fiscal year (roughly the same amount the county lost in the 2009-2010 fiscal year when the state slashed funding for the backfilling of county coffers). He said he believed the lost tax revenue was too small an amount to explain the county’s push to refuse renewals to certain property owners.

Holbrook said the county was simply acting in accordance with the state’s orders.

“The state made it quite clear the county should initiate a non-renewal program,” he said.

But even if the county’s actions aren’t motivated by budget pressures, the state’s are. Former Governor Schwarzenegger cut funding for the law two years in a row, according to Endicott. Now, newly elected Governor Jerry Brown has proposed that the state permanently stop funding the act. If the state legislature agrees, cash-strapped counties would lose Williamson Act property tax revenues. That puts the future of the law at risk, Endicott said.

He added that the death of the Williamson Act would be a blow to the environment.

“We can’t afford to buy up all the open space that we really need to preserve animals and their habitat as development pressure continues to increase,” Endicott said. The end of the Williamson Act would threaten an “arrow” in the quiver of those who wish to to protect California land from sprawl, he said.

But despite Sacramento’s push to stop funding the law, Endicott said it was possible the act could be spared, due to the unusual convergence of interests supporting it, including farmers and environmentalists, as well as Democratic and Republican elected officials from agricultural regions of the state. All of them have reasons to support the legislation.

“If the California Farm Bureau, if the environmentalists, if the legislators all still see this program has some value, there is a chance of saving it,” Endicott said.

Landowners may fight for their Williamson Act contracts

As for San Mateo’s property owners, Holbrook noted that even without the Williamson Act, runaway development was out of the question. Strict land-use rules and geographical challenges would deter much commercial development on properties there, he said. But there are risks nonetheless. Gossett noted the stream running through his property was still recovering from the nearby dump’s effort to expand near his property years ago. He said he believed some of the landowners in Half Moon Bay would have to consider some form of development on their land because they couldn’t afford the tax increase. And he reiterated that if faced with losing his Williamson Act contract, he might be forced to clear portions of his land that have returned to natural habitat.

But Gossett said that before he revved up his bulldozer, he and some other landowners wouldn’t rule out taking the matter to court to argue that their preservation of natural habitat qualified as compliance with the act, in hopes a judge will agree and force the county to renew their contracts.

“If necessary,” he said, “a number of us have already said we’ll take them to court.”

The San Mateo County Board of Supervisors will next discuss this issue at its April 12 meeting.

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