The Land Conservation Act (Williamson Act), allows certain agricultural properties to be valued at a lower tax rate.
The California Land Conservation Act of 1965 - referred to as the Williamson Act - enables local governments to enter into contracts with private landowners for the purpose of restricting specific parcels of land to agricultural or related open space use. In return, landowners receive property tax assessments, which are much lower than normal because they are based upon farming and open space uses as opposed to full market value.
The Williamson Act is a means to restrict the uses of agricultural and open space lands to farming and ranching uses during the length of the contract period. The Williamson Act Program was also envisioned as a way for local governments to integrate the protection of open space and agricultural resources into their overall strategies for planning urban growth patterns. The minimum term for contracts is ten years or 20 years. However, since the contract term automatically renews on each anniversary date of the contract, the actual term is essentially indefinite.
A Farmland Security Zone contract is a 20 year contract that has similar restrictions as a Williamson Act contract. In recognition of the longer term, Farmland Security Zone contracts offer landowners greater property tax reduction. Land restricted by a Farmland Security Zone contract is valued for property assessment purposes at 65% of its Williamson Act valuation or 65% of its Proposition 13 valuation, whichever is lower. Like a Williamson Act contract, Farmland Security Zone contracts renew annually.
A landowner interested in enrolling land in a contract should contact the Planning Department to obtain information and instructions.
To end a contract, a "notice of nonrenewal" is filed with Planning to start the 9-year nonrenewal period. During the nonrenewal process, the annual tax assessment gradually increases. At the end of the 9-year nonrenewal period (19 years for land in a Farmland Security Zone), the contract is terminated.
A taxpayer may request an immediate cancellation only in extreme and stringent situations, or where the public interest is no longer best served by continuing the contractual restrictions. The landowner may petition the Board of Supervisors or the appropriate City Council for Williamson Act contract cancellation. A notice of non-renewal must also be filed when the cancellation request is made. There is a cancellation fee of 12.5% of the unrestricted, current fair market value of the property in the Williamson Act or 25% if in a Farmland Security Zone.
In Ventura County, an Agricultural Preserve (AGP) is an area devoted to plant and animal production for commercial purposes, and for other compatible uses. The boundaries of the Preserve will be designated by resolution of the Board of Supervisors. Preserves will be regulated by rules and restrictions designated in the resolution so that the land within the Preserve is maintained in an agricultural or compatible use.
Agricultural preserves are intended to:
When the contract has been both ratified and recorded, the property will be assessed under the Williamson Act effective on the first lien date (January 1) following the recording. Unfortunately, if the contract is ratified before the lien date but not recorded until after the lien date, the restricted value will not take effect until the subsequent lien date.
For example: Let’s say the contract is ratified in November 2005, but not recorded until January 25, 2006. In that case, the restricted value could not be enrolled until January 1 of 2007, and would first affect a tax bill only on July 1, 2007, some 17 months after the recording!
Yes! For application forms, fee schedules and instructions, contact:
Ventura County Planning Division
800 S. Victoria Avenue
Ventura, CA 93003-1270
Public Information Counter and Cashier Hours
7:30 am - 4:30 pm, Monday – Friday
Yes. Failure to meet the conditions of the agreement may be considered a breach of contract. The County may seek legal remedies or the agreement may not be renewed.
Yes. Provisions of the contract are binding on all transferees of the owner and the County, except cities that protest the execution of the contracts within one of the city's boundaries.
As specified in the Land Conservation Act, the property owner having land under contract is restricted to using the property for agriculture or for purposes compatible with agriculture.
The closer the LCA parcel is to an urban or other developing area, the greater the chance of financial loss should the taxpayer wish to sell. This is due to the nine-year period of nonrenewal before the property becomes unencumbered by the contract.
The rules of each Agricultural Preserve will specify the uses that will be permitted under that specific contract. Generally, any commercial agricultural use will be permitted within an Agricultural Preserve. For more specific information regarding allowable uses contact the County Planning Division.
It is an Act passed by the California Legislature in 1965 to preserve agricultural and other open space lands. It was originally drafted to slow the loss of prime agricultural land, regardless of soil quality. In addition, it now provides protection for wild life habitats, marshlands, salt flats and certain scenic highways.
The Act authorized local governments and property owners to commit land to specified uses of ten years or more under a binding contract. Once committed, the land is to be valued as open space land pursuant to open space valuation laws (Revenue & Taxation Code Sections 421, et seq.) enacted pursuant to the Open Space Amendment of the California Constitution.
Land Conservation Contract is the legal document that contractually obligates the property owner (and his or her successors of interest) to the enforceable restrictions provided in the Act. Only land, which has been put into an Agricultural Preserve by resolution of the Board of Supervisors, is eligible for a contract.
In Ventura County, contracts will provide for a term of ten (10) years, with an automatic,annual renewal process beginning at the end of the first ten (10) years. The automatic renewal process adds an additional year on each subsequent anniversary date of the contract, unless a notice of non-renewal is filed.
Open Space (Wildlife Habitat) Contracts, also known as OS/LCA Contracts, are formed to help preserve wildlife habitat areas. The eligibility requirements for land entering into OS/LCA Contracts are different from the requirements for Agricultural Contracts (LCA Contract and FSZA/LCA Contract). Please contact the Planning Division of the Resource Management Agency for the qualification criteria and requirements.
Land subject to an Open Space (Wildlife Habitat) Contract may qualify for a lower taxable value if the affected portion of the contract property receives a more restricted use than prior conditions allowed. It is assessed each year after three values are considered, with the lowest being enrolled. They are:
It is important to note that the portion of acreage subject to the OS/LCA Contract may have a relative assessed value different from the portion of acreage in the parcel that is not subject to the OS/LCA Contract. For example, the Assessor may have already established an assessment of land along a creek bed subject to flooding has less value or no value compared to usable pastureland. This could result in little benefit under a OS/LCA contract.
Numerous factors are considered. It is not possible to estimate in advance the exact tax benefits, if any that may result from subjecting land to an OS/LCA Contract. As indicated in the example above, the relative assessed value of the acreage subject to the contract may be less than adjoining acreage in the parcel; the result may be a minimal reduction in assessed value.
Land use will be limited and controlled by the rules of the Agricultural Preserve adopted by resolution of the Board of Supervisors. The rules will prescribe the commercial agricultural and other compatible uses (if any) permitted. In addition, the property is subject to the regulations of the Zoning Ordinance. It is important to note that all limitations, rules and regulations are fully in effect throughout the non-renewal period.
The basis for assessing LCA property is established by existing state laws. The LCA contract applies to the land. For taxation purposes trees are considered land. If there is a change of ownership, it has no affect on the legal status of the LCA contract.
Annually, three values are calculated for properties restricted under the LCA.
The lowest of the three values is enrolled.
When a reappraisable transfer occurs, a new base year value is established on the property. The land value is then discounted by 10% for non-prime property, by 30% for prime property within a three-mile radius of a city with a population over 25,000, or by 25% for all other prime properties. Every year (unless a change of ownership occurs) this discounted base year value is increased or factored by two percent, if the consumer price index increases two percent or more.
If the discounted factored base year value is the lowest of the three values and is enrolled, the property owner with prime land will receive a 25 – 30% tax advantage for having his land under contract.
The restricted value is based on capitalized earnings. Capitalization is a method of appraising a money income stream into an estimate of value.
California tax law allows two methods of capitalization: One method is by capitalization of rent when there is sufficient data to determine economic rent. The second method is the capitalization of owner-operator income. Farmers report yearly income on the Agriculture Preserve Questionnaire, a document held in confidence by the Assessor.
In calculating the restricted value, the Assessor uses net income. Net income is gross income (weighted over a four- or five-year period) less cultural costs and cash overhead costs. These costs are obtained directly from the landowner as well as from field surveys of agricultural services, water districts, and industry resources.
The net income of the property is divided by the capitalization rate. The capitalization rate has three components: a rate component for trees in orchards, the tax rate, and a combination of an interest component and a risk rate.
The rate component for trees in orchards is determined by the Assessor, and is used to allow for the long-term return on orchards or vineyards that are being valued. The Board of Supervisors sets the tax rate. The interest rate component is prescribed by tax law and computed by the State Board of Equalization (SBE). The SBE establishes the rate as of September 1 each year. It is based on the yield rate of long-term U.S. Government bonds as published by the Federal Reserve Board. Fluctuations in this interest component can cause substantial value fluctuations as in the following example.
|SBE –Interest Rate
This example deals only with fluctuations of the interest rate component. The risk rate is established by the Assessor within limits set by the SBE and reflects risks associated with the particular land and crops being valued.
This is the unrestricted market value of a property as of January 1, of each assessment year.
No. In Ventura County, all non-living improvements are excluded under the contract and therefore subject to, and valued under, the provisions of Article XIIIA of the California Constitution (i.e., Proposition13).
Encumbrance holders of all recorded mortgages and deeds of trust must consent to the property owner's participation in the program.
Property owner(s) may file a request to form an Agricultural Preserve with the Ventura County Planning Division. The request will be considered in light of the established criteria and the County General Plan. If, after a public hearing on the application, the Preserve is established by the Board of Supervisors, the property owner will be offered a Land Conservation Contract.
Yes. The Assessor will require that the owner file an income/expense questionnaire for the land in question. The questionnaires are typically mailed to all owners of Williamson Act Properties on an annual basis.
In the case of a breach of contract, the County may seek a court injunction to enforce the terms of the contract. Where the breach of the contract is a violation of land use restrictions, normal zoning enforcement provisions will also apply.
There are two methods of terminating the LCA contract: nonrenewal and cancellation.
Nonrenewal – Notice of nonrenewal may be submitted to the Planning Division of the Resource Management Agency by the landowner. The County of Ventura may also initiate a Notice of Nonrenewal. Nonrenewal is accomplished over a nine-year period during which the taxes escalate at a fluctuating rate until the tenth year when taxes will then be based on the full unrestricted factored base year value. The taxpayer must continue to complete and file the Agriculture Preserve Questionnaire with the Assessor’s Office each year during the nonrenewal period.
If there is a reappraisable transfer of ownership during the nonrenewal period, the value will be affected.
Cancellation – LCA contract cancellation requires the approval of the Board of Supervisors, who allow a cancellation only on an extremely rare basis. If allowed, the fee for cancellation is approximately 30.5% of the current market value.