California

California Property Tax:

California has two avenues to obtain agricultural tax benefits: The Urban Agriculture Incentive Zones Act (Assembly Bill 551) and the Williamson Act.

The Urban Agricultural Incentive Zones Act allows city governments to designate areas within their boundaries as “urban agriculture incentive zones.”  In these areas, landowners who sign a contract to commit their land to agricultural use for at least five years will get a reduction in their property taxes. Specifically, their parcel’s property tax assessment will be based on the agricultural value of the land rather than the market-rate value of the land.

– Urban agriculture incentive zones can only be established in areas that:

• Fall within a US Census designated urban area of 250,000 people or more.

• Have not been covered by Williamson Act contracts within the preceding three years

– To be eligible, individual parcels must be:

• At least 0.1 acre in size and no larger than 3 acres

• Completely dedicated toward commercial or noncommercial agricultural use

• Free of any dwellings and only have physical structures that support the agricultural use of the site

– Each year the assessment basis of land under contract will be based on the average per acre value of irrigated cropland in California as reported by the US Department of Agriculture’s National Agricultural Statistics Service.  In 2012, this was $12,000 per acre.

– If a landowner breaks the five-year contract, they are obligated to pay back the tax benefit that they received.

The law enables cities and counties to take action, but it does not create any urban agriculture incentive zones itself.  Instead, cities and counties must go through the process of passing ordinances creating zones within their jurisdictions. Once those are established, landowners can begin signing contracts with the cities and then begin to see the property-tax benefit.

Read the text of the Urban Agriculture Incentive Zones Act (AB 551)

The Williamson Act is also known as the Land Conservation Act. 53 of California’s 58 counties have opted to participate.  Private landowners voluntarily restrict their land to agricultural and compatible open space uses under minimum 10-year rolling term contracts with local governments.  In return, restricted parcels are assessed for property tax purposes at a rate consistent with their actual use, rather than potential market value.

Only land located within an agricultural preserve is eligible to participate.  An agricultural preserve defines the boundary of an area within which a city or county is willing to enter into contracts with landowners.  The boundary is designated by resolution of the board of supervisors or city council.

The rules of each agricultural preserve specify the uses allowed.  Generally, any commercial agricultural use will be permitted within an agricultural preserve.

Landowners interested in enrolling land in a contract should contact their local planning department for application forms and instructions.

Read about the Williamson Act Here