Mercury News
October 1, 2005

Tax break may be ended in county
Rule considered subsidy for housing developments

By John Woolfolk

More than 1,000 rural Santa Clara County property owners are about to lose a tax break they enjoyed for years under a farmland preservation act that state auditors said is being abused and amounted to a subsidy for housing subdivisions.

County officials next week will consider new rules for contracts under the 1965 Williamson California Land Conservation Act that lets local governments give tax breaks to property owners who preserve agricultural land.

Some 2,800 of the 3,145 county Williamson Act properties are in the unincorporated areas affected by the county crackdown. Public meetings to discuss the changes are planned Monday and Tuesday evening in Morgan Hill and San Jose, and Wednesday afternoon before a county board of supervisors land use committee. The board of supervisors will consider proposed changes Nov. 1.

Among the changes will be gradual termination of contracts for parcels smaller than 10 acres of prime agricultural land, or 40 acres for non-prime property. Prime land is high-quality soil suitable for irrigated crops, while non-prime is defined as typically used for grazing or dry-land grain crops like barley, rye, oats, and wheat.

County officials have identified 279 prime land Williamson Act parcels below the 10-acre minimum, and 893 non-prime properties under 40 acres. Many of the undersized properties have been developed as residential home sites and have no commercial agricultural use.

“That's a significant number,” said Don Drysdale, spokesman for the California Department of Conservation, which oversees the Williamson Act, adding that the state is satisfied county officials are taking appropriate measures.

County officials propose to begin a ``non-renewal'' process next year that will gradually terminate Williamson Act contracts with ineligible properties over a 10-year period. Officials hope to have non-renewals finalized by the end of 2006, gradually decreasing the tax break over nine years. Contracts on these parcels and the accompanying development restrictions would end Dec. 31, 2015.

Those losing their Williamson Act contracts may not necessarily see a big property tax increase, said county Assessor Larry Stone. Those who have owned their property for decades and have not substantially improved it also could see little if any change in their tax bill, he said.

“If they owned their property for a long, long time, there's little or no impact,” Stone said. “If they acquired it more recently, there can be a significant impact.”

Stone's office surveyed 268 Williamson Act properties likely to lose their contracts and found that 22 percent would have ``virtually no financial impact.'' Almost the same number, 21 percent, would see assessed values rise by up to $10,000 in the first year of non-renewal, amounting to an additional tax of about $100.

An additional 22 percent would see assessed values jump by up to $50,000, which would add up to $600 to their tax bill, Stone said. About 28 percent would see assessed values rise by up to $200,000 with a tax bite up to $2,400. And 7 percent would see assessed values rise more than $200,000, which would add more than $2,400 to their tax bill.

The proposed rule changes only affect unincorporated county property, not land under contract with local cities.

Brian Schmidt of the Committee for Green Foothills said the proposed new rules are a compromise.

“We were hoping for stronger development restrictions, particularly on house size, so that a 10-acre lot doesn't have a giant mansion on it,” Schmidt said.

Page last updated September 13, 2010.