The Tale of Jane and John – A Land Use Parable
Jane Forthright just inherited a vacant, 39-acre parcel in Santa Clara County. This parcel has had a Williamson Act contract attached to it for years, which gave a tax break in return for requiring agricultural use and prohibiting development that is incompatible with agriculture. In fact, no cattle have grazed the land for years and all the neighboring parcels have converted to residential use.
Jane receives a letter from Santa Clara County telling her that they’re “non-renewing” her Williamson Act contract because the land isn’t being ranched, meaning the development restrictions will last 9 more years, and then be lifted. Jane has no objection, realizing that she didn’t want to try and bring cattle there. What Jane would like to do is put a house on the land, but she doesn’t want to wait 9 years.
Jane talks to the County, and they tell her she may be able to cancel her contract immediately, instead of waiting to develop. She qualifies, but must pay 12.5% of the land’s fair market value to cancel the contract. Jane decides it’s worth it to her, and goes ahead.
So that’s Jane’s story. Now John Sneaky’s story begins the same way, but ends differently. He is in the exact same situation as Jane Forthright, and he wants to build a house, but he wants to evade the 12.5% cancellation fee. What to do?
John realizes he can switch his Williamson Act contract to an Open Space Easement. The County tells him that during the 9 year transition period, the Open Space Easement is required to be at least as restrictive as the Williamson Act. For some reason, though, the County lifts the development restriction requiring agricultural use as a condition for receiving building permits. The County thinks that other restrictions in the Open Space Easement make it as restrictive as the Williamson Act.
John Sneaky thinks differently – the County regulations allow him to choose the least-restrictive version of the Open Space Easement. This means he can only develop two of his 39 acres, but that’s fine – it’s plenty of space for the monster mansion he plans to inflict on the land. There are a few other requirements, but they don’t meaningfully restrict his ability to develop the land. John Sneaky is happy.
At the end of the tale, Jane Forthright and John Sneaky are in the same position. John’s nearly-meaningless Open Space Easement places no significant restriction in his ability to develop, so he pays the same taxes as Jane. There’s only one difference – Jane had to go through the cancellation process required by state law and the California Department of Conservation, and she had to pay the 12.5% cancellation fee. John used a ruse to evade cancellation, a loophole in the County regulations that (it turns out) the County was warned it should close, but didn’t.
John Sneaky is happy. Should the rest of us, who pay all our taxes, be happy?
Footnotes (did you know that parables have footnotes?): Per some helpful constructive criticism, we note that cancellation involves additional criteria and processes beyond that mentioned in the parable. Also, this parable discusses the County’s proposed policy; it has not yet been finalized.