State budget deal eliminates $2 million in North Bay payments

NORTH BAY - One of the ramifications of the $16.6 billion in cuts to the newly adopted state budget is the loss of about $2 million in annual reimbursements the six North Bay counties have received for accepting much lower taxes on agricultural land protected under conservation contacts.

Farming and wine trade groups are concerned that the loss of those subvention payments under the 1965 California Land Conservation Act, commonly called the Williamson Act, will convince cash-strapped counties and cities to start the 10-year statutory phaseout of the contracts to boost revenue at a time when many local dairies and ranchers can ill-afford a dramatic increase on tax payments.

"It has been an important sort of tool to sustain farms and ranches," said Sonoma County Farm Bureau Executive Director Lex McCorvey. "It's been under threat of being slashed for the last two or three years, and under the current economic conditions it was cut."

The California Farm Bureau Federation, the San Francisco-based Wine Institute and other trade groups have formed a coalition to petition for reinstatement of the payments.

More than 1.2 million acres in Marin, Napa, Sonoma, Solano, Mendocino and Lake counties are under contract, according to state figures.

North Bay counties contacted by the Business Journal said their planning departments, which administer the contracts, were meeting with county attorneys and administrators to consider options to bring to their boards of supervisors.

Since 1969, Napa County has participated in the Williamson Act and currently has 70,618 acres of vineyards and ranchlands under contract this fiscal year, according to Assessor-Recorder-Clerk John Tuteur. He estimates the county in fiscal 2009 will forego $1 million in property taxes from its 20 percent share because the assessed value of 53,100 of the contracted acres are eligible for Williamson Act valuation reductions totaling $538.4 million.

"For almost 40 years the Napa County Board of Supervisors has felt that the tax revenue loss from the Williamson Act is comparable to an insurance premium that is paid to ward off the much greater revenue impacts if the agricultural lands receiving the assessment benefits from being under Williamson contract were developed into housing or other non-ag uses," Mr. Tuteur said.

The $27 million cut in state budget appropriations for Williamson Act subvention payments was part of Gov. Schwarzenegger's $489 million in line-item vetoes when he signed the budget package July 28.

Claims for subvention payments is based on $5 per acre of "prime," or intensely productive, agricultural land and $1 an acre for "nonprime" land. Property owners with at least 10 acres of prime land or 40 nonprime acres can enter Williamson Act contracts with local governments that offer property-tax relief in exchange for constraints on how much can be built on the property.

Some North Coast vintners have encountered challenges with permitting authorities over to what extent planned agritourism-related facilities are allowed under the Williamson Act and the 10-year timeframe to phase out those conditions when leaving the program.

2008 Williamson Act subvention payments to North Bay counties

Sonoma: $394,360

Napa: $79,867

Marin: $99,220

Mendocino: $562,787

Lake: $68,800

Solano: $642,030

Total: $1.85 million

Note: In fiscal 2008 subvention payments were 90 percent of the claimed amount. Source: California Department of Finance