A worker at the Fowler Packing Co. places bags of oranges into boxes to be sent to stores. Photo by David Castellon
Written by Edward Smith
A bill that has split families on its merits since 1978 has the potential to do the same for agriculture should a proposition pass this year.
Proposition 15 is the latest iteration of a split roll initiative designed to undo Proposition 13, California’s iconic tax law that assesses property at its purchase price rather than market value.
On one side, proponents of split role see the estimated $6.5 billion to $11.5 billion in additional tax revenue as a much-needed boost to schools and local governments from major corporations that haven’t paid their “fair share.”
On the other side, business and property owners feel Prop. 13 is the only protection keeping their businesses and operations afloat in one of the most tax-burdened states in the union.
Caught in the wake are thousands of farmers who fear the definition of what is “commercial property” might wrap up legacy farms, their barns, processing plants and even the trees and vineyards in the ground into the imbroglio.
Prop. 15 was specifically written to exempt agricultural land from being assessed at market rate, says Evan Wiig, director of communications for the Community Alliance with Family Farmers, a nonprofit that advocates for sustainable food and farming systems.
The proposition specifically exempts land zoned as agriculture from reassessment. Any commercial property assessed at less than $3 million would also be exempt from market rate taxation.
The question of whether to endorse the bill was a contentious one at the Davis-based organization.
Many of the farmers and farmworkers they represent live in rural areas where public services education for children are lacking.
Numerous studies have ranked California in the bottom tier of states when it comes to education funding. Also lacking are other public services for families.
“We’re going into what is very likely a recession. We’re in economic straits here, and our local governments, public services and schools are really going to be struggling right now,” Wiig said. “Now more than ever, I think it’s important we invest in those public services.”
While the proposition exempts properties zoned for commercial agriculture, the definition of what qualifies as real property is very much in the air. Many assessors still have not received guidance. A large number of packinghouses and processing facilities in Tulare County are zoned as commercial and industrial properties, said Roland Hill, Tulare County assessor. Under the rules, they would have to be reassessed.
“You’ve got an ag-based user that happens to have a packinghouse, cold storage or whatever on property that’s not agriculturally zoned,” Hill said. “There are questions.”
The way that Kings County Assessor Kristine Lee reads Prop 15 is that real property does refer to the land only and not fixtures or improvements — meaning that orchards and vineyards would have to be reassessed in addition to physical structures.
Hill said the Tulare County Assessor’s Office would exempt orchards and vineyards because they are not strictly commercial industrial properties.
“But that might not be universally held with all 58 assessors,” said Hill.
The original Prop 13 spent more than two years in court before judges sorted out the particulars, Hill added.
‘Everything but the dirt?’
Wiig says the Community Alliance with Family Farmers received assurances from the proposition’s authors that the intent was not to view permanent plantings as commercial property.
“It’s really hard for us to imagine that any tax assessor would look at orchards, apple trees, a milking barn, irrigation and determine — ‘that looks like commercial real property, that needs to be reassessed,’” Wiig said.
Others are not so sure.
“Essentially, everything but the dirt itself will be taxed under Prop 15. Barns, irrigation systems, solar panels, and even trees and vines are considered when assessing market value,” said Ryan Jacobsen, president of the Fresno County Farm Bureau.
In 2017, 65,129 ranch and farm operations in California owed $1.13 billion in property taxes, averaging $17,299 per farm, according to the U.S. Department of Agriculture’s Ag Census. California farmers paid the highest average taxes in the nation that year.
Jacobsen said those taxes would only increase if ag properties were assessed, especially for operations reliant on physical facilities such as dairies and wineries.
Wiig says that with the $3 million lower limit for exemptions, most farms the Community Alliance with Family Farmers represents would not be impacted.
Grow or die
Some feel a hard number like $3 million goes against the fact that farmers have had to grow significantly in order to stay afloat.
Donny Rollin owns Rollin Valley Farms in Riverdale. Federal and state fees to operate his dairy total $900 a year per acre.
“The farms have gotten bigger and bigger all the time, but there’s a reason they’ve gotten bigger,” said Rollin. “A guy can’t milk 200 cows and make a living.”
The addition of a market rate assessment wouldn’t be the only new cost.
Under the Sustainable Groundwater Management Act, property taxes paid to the Groundwater Sustainability Agency to manage water delivery have increased 25% for Rollin.
Not an easy choice
Wiig says coming to the decision to endorse Prop. 15 was not an easy one. They recognized that for the processors farmers rely on to distribute their product, prices would definitely increase to make up for additional taxes they would pay. But they felt increased access to public services for their representatives was enough to make the decision.
As an organization for farmers, they’ve received flak from their colleagues for supporting the proposition.
Other farming organizations feel the proposition would make it more difficult to operate in an industry already beset by high operating costs.
“The number of regulations added to us in the last decade has made it extraordinarily difficult for small- and medium-sized operations to stay viable,” said Jacobsen. “Add this on top of all the other challenges, such as sustainable groundwater management act, labor issues — it’s just another dagger to the future of these farms.”