Tulare County supervisors voted in July to once again take on new applications for the Williamson Act, which gives farmers a break on their property taxes. Photo contributed.
Written by Edward Smith
A vote in July by the Tulare County Board of Supervisors makes farmland in the South Valley eligible once again for a 1965 law meant to preserve farmland.
After 11 years of entering no new contracts for the Williamson Act, the Board voted 5-0 to open up applications for growers wanting to change the way their land is assessed. In exchange for a guarantee by growers that farmland would not be developed, county officials agree to assess land based on the value of the crops produced, rather than the land’s market value.
“[Farming is] one of those occupations where you have very little control, but it’s nice to know if our expenses can be controlled on the tax front, it gives us a little better control over the year,” said John Guthrie, family partner with Guthrie Ranch in Porterville.
Following the 2008 housing crisis, California officials were looking for ways to cut expenditures, said Pete Vander Poel, District Two Supervisor for Tulare County. But rather than removing the decades-old act from law using the Legislature, the amount reimbursed to counties was reduced to “something trivial to where it would have to stay on the state’s books, but they wouldn’t have to necessarily send reimbursements to the county, “ said Vander Poel.
Imperial County went so far as to end renewals of Williamson act parcels, according to Roland Hill, tax assessor with Tulare County.
With reimbursements totaling sometimes no more than $1,000 to be distributed throughout the entire state, counties stopped taking new contracts for farmland. For growers, this means that as land values grew, so did tax liabilities. Prop 13 did keep tax liability on property values near their purchase price, but once land changed hands, it would then be reassessed.
Property taxes can be significant for growers. For Guthrie, they are typically the third highest line item on his budget.
Simplistically put, taxes on land under the Williamson Act are figured by averaging crop values against expenses over a five-year period. This means that factors affecting how profitable a grower is will reflect how much that grower owes to the government. The Williamson Act reduced tax liabilities by 50% on average, according to Tim Kochendarfer, assistant assessor with Tulare County.
Bad crop years, bad water years and even supply problems during crises like the coronavirus will show up down the road in the land value average.
In Tulare County, 14,000 parcels of land have existing Williamson Act contracts, said Hill. That number has largely stayed the same since they were last issued in 2009, but some did expire since then. The moratorium on new contracts left about 6,000 eligible parcels across the county.
“Over the last 11 years, there have been a number of property owners that have wanted to get into the preserve, but have not been able to,” said Hill.
In Fresno County, 1.7 million acres of farmland is under Williamson Act — about 70%, according to Paul Dictos, Fresno County assessor. In 2021, the Prop 13 value of that land totals $10 billion. Under the Williamson Act, that land will be assessed at $6 billion, saving growers — or costing the county — $44 million in tax liabilities.
Some property buyers had even purchased farmland under the impression it had Williamson Act contracts on it, said Vander Poel.
For Tulare County, the cost of adding new land under the Williamson Act will be negligible, said Hill.
Only 17% of the County’s tax roll relates to ag parcels.
“In an apocalyptic approach to it, if every single parcel in the County that was eligible applied, we’d only be looking at a 1.6% loss in revenues to the County,” said Kochendarfer.
A 2012 law, AB 1265, added an extra tax to growers with land under the Williamson Act. Revenue from that tax brought in as much or even more than what the state was reimbursing to counties.
Assessors have been making sure they’re prepared to process any applications so that growers can reap the windfall of the tax break by next year’s filing time.
A number of growers have been petitioning Tulare County supervisors to reinstate the Act, so Kochendarfer does anticipate some land will be reassessed by next year.