The California Williamson Act, also known as the California Land Conservation Act of 1965, is a program designed to preserve agricultural and open-space lands by offering landowners tax relief in exchange for a long-term commitment to keep their land in agricultural or related uses. Under the Williamson Act, property owners can enter into contracts with local governments to restrict their land use to farming, ranching, or open space for a minimum of 10 years, renewable annually.
In return, the land is assessed based on its agricultural value rather than its market value, which typically results in a lower property tax.
Purpose:
The primary goals of the Williamson Act are to: 1) Protect agricultural land from urban sprawl and development; 2) Support farmers and ranchers by reducing their tax burden, allowing them to maintain viable agricultural operations; and 3) Conserve open spaces and natural resources that benefit wildlife and the environment.
The Act has been a significant tool in preserving farmland and maintaining California’s agricultural productivity, especially in areas where urban development pressures are high. However, local governments can exit the program through a process known as “non-renewal,” where restrictions gradually phase out over a nine-year period.
Valuation:
Appraisal of properties under the Williamson Act involves a special method of assessment designed to offer property tax relief to landowners who commit to keeping their land in agricultural or open-space use.
1. Agricultural Use Valuation (Restricted Value)
The main feature of the Williamson Act is that properties are appraised based on their agricultural use value rather than their market value. This results in lower property tax assessments for participating landowners.
- Agricultural Income-Based Approach: Instead of appraising the land at its full market value (which would reflect potential uses such as development), the property is valued based on the income it can generate from agricultural or open-space activities. This method often uses data such as crop yields, rent from leasing the land for grazing, or other income related to its restricted use.
- Capitalization Rate: The income from the land is divided by a capitalization rate (a figure that reflects the risk and expected return of the land use) to determine the assessed value. This rate is often set by the county assessor and may vary by region.
2. Comparing with Market Value
Although the property is primarily assessed based on agricultural income, county assessors also determine the fair market value of the land for comparison purposes. However, under the Williamson Act, the lower of the two values—either the agricultural use value or the market value—is used to set the property tax.
3. Monitoring and Adjustment
- Annual Adjustments: Williamson Act properties are reassessed annually based on changing agricultural income, commodity prices, and other factors related to the land’s agricultural productivity.
- Rollback Taxes: If a property owner exits the Williamson Act (through cancellation or non-renewal), the property may be subject to additional taxes. This process, known as “rollback taxes,” requires the owner to pay back the difference between the reduced taxes paid under the Williamson Act and what would have been paid based on the market value.
4. Non-Renewal or Cancellation
When a Williamson Act contract is not renewed, the property begins a 9-year phase-out period (or a 10-year period under the Farmland Security Zone, a stricter version of the Act). During this time, property taxes gradually increase, and the land is eventually assessed at full market value once the contract expires.
Note:
In short, properties under the Williamson Act benefit from lower tax assessments, which are based on agricultural or open-space income rather than potential development value. This incentivizes landowners to maintain their land for farming, grazing, or conservation purposes.
Please see our other related articles
Assessment Appeals
Homestead Exemption
Land Trust
Subdivision Map Act
Disclaimer: Every situation is different and particular facts may vary thereby changing or altering a possible course of action or conclusion. The information contained herein is intended to be general in nature as laws vary between federal, state, counties, and municipalities and therefore may not apply to any given matter. This information is not intended to be legal advice or relied upon as a legal opinion, course of action, accounting, tax, or other professional services. You should consult the proper legal or professional advisor knowledgeable in the area that pertains to your particular situation.