by Jon Welner
California's rural landscapes are some of the most productive farmlands in the world. However, some of the qualities that make these lands suitable for farming--sunshine and wide open spaces--also make them attractive for another kind of "farming": solar and wind farms. In recent years, the conflict between farming and renewable energy production has grown more pronounced in California. Central to this conflict is the California Land Conservation Act of 1965, generally known as the Williamson Act (Gov't Code §§ 51200-51297.4).
The Williamson Act
Purpose. The purpose of the Williamson Act is "the discouragement of premature and unnecessary conversion of agricultural land to urban uses." It achieves this goal by allowing cities and counties to establish agricultural preserves. Within these preserves, landowners can voluntarily enter into contracts with the city or county restricting their land to agricultural use.
Contracts. In exchange for signing these contracts, landowners receive significantly reduced property valuations for property tax. Instead of being assessed at full value, the land is assessed based on its restricted use. Landowners who want their valuations further reduced can sign up for Farmland Security Zone (FSZ) contracts, which impose greater restrictions in exchange for an additional 35% reduction in valuation.
The contracts limit use of the land to agricultural and "compatible" uses. Each city or county adopts its own rules on what uses are compatible, subject to the following minimum requirements:
• A compatible use must satisfy three criteria: (1) it must "not significantly compromise the long-term productive agricultural capability" of any land under contract; (2) it must "not significantly displace or impair current or reasonably foreseeable agricultural operations" on any land under contract, unless it is for a related activity such as processing or shipping; and (3) it must "not result in the significant removal of adjacent contracted land."
• For nonprime farmland, a city or county may allow uses that do not satisfy the first two criteria, so long as: (1) there are conditions that "make the use consistent" with the first two criteria "to the greatest extent possible"; (2) the city or county has considered both "the productive capability" of the land and "the extent to which the use may displace or impair agricultural operations"; (3) the use is consistent with the purposes of the chapter; and (4) the use does not include a residential subdivision.
Enforcement. Material breach of a contract can result in: (1) an order to eliminate the condition causing the material breach; or (2) termination of the contract and a penalty of 25% of the fair market value of the portion of the property affected by the breach, plus 25% of the value of any improvements causing the breach.
Exiting the program is difficult
Once land is under contract, it is difficult to exit the program.
Non-Renewal. Williamson Act contracts generally have a minimum initial term of ten years. (FSZ contracts generally have minimum initial term of 20 years.) Each year the term is automatically extended by another year, unless the landowner or the city or county submits a notice of nonrenewal. Landowners who decide not to renew their contracts must wait until the contract expires--i.e., nine years or more--before the land is released.
Cancellation. Landowners can also petition the city or county to "cancel" the contracts without waiting for them to expire. However, cancellation can only be approved if the city or county makes one of the following findings:
• The cancellation is consistent with the purposes of the Act, which means: (1) it is for land on which a notice of nonrenewal has been served; (2) it is "not likely to result in the removal of adjacent lands from agricultural use"; (3) it is for a use that is consistent with the general plan; (4) it will "not result in discontiguous patterns of urban development; and (5) there is no "proximate noncontracted land" that could be used, or if such land exists, development of the land proposed for cancellation would result in "more contiguous development" than development of the "proximate noncontracted land."
• The cancellation is in the public interest, which means: (1) "other public concerns substantially outweigh the objectives" of the Act; and (2) there is no "proximate noncontracted land" that could be used, or if such land exists, development of the land proposed for cancellation would result in "more contiguous development" than development of the "proximate noncontracted land."
The fee for cancellation of 12.5% of the land's fair market value. (The criteria for canceling a FSZ contract are more stringent, and the fee is double.)
Rescission for solar use easement. Recent legislation has made it possible to rescind Williamson Act contracts on "marginally productive or physically impaired land" to allow for solar development. Upon mutual agreement of the landowner and the city or county, and approval by the Department of Conservation, the contract is replaced by a solar easement with a minimum initial term of 10 years. The rescission fee is 6.25% of fair market value. (The fee is double for FSZ contracts.) A solar use easement may be extinguished only by nonrenewal, a petition for termination approved by the city or county, or by returning the land to a Williamson Act contract. When the easement is removed, the land must be restored to its pre-easement condition.
Other options. Landowners can sometimes exit the program under special circumstances. For example, condemnation of the property (or acquisition in lieu of eminent domain) renders the contract null and void. And in some cases, a contract can be "swapped" in exchange for a conservation easement on equivalent or better land.
The growing conflict between Williamson Act and solar and wind development
In the last year, the tension between renewable power developers and Williamson Act advocates has been intensifying. Driven by recent legislation requiring California utilities to achieve 33% renewable power by 2020, solar and wind companies are aggressively looking for sites where they can build utility-scale power generation facilities, and have increasingly turned their sights onto agricultural lands.
To build solar or wind facilities on a site covered by a Williamson Act contract, a landowner has the following options:
• Design the facility to be "compatible" with agricultural use, as defined by the statute and contract;
• Submit a notice of nonrenewal and wait for the term of the contract to expire;
• Petition for cancellation of the contract; or
• Seek to convert the contract to a solar use easement, pursuant to recent legislation.
However, each of these options poses significant challenges:
• Compatible use: the criteria are stringent, and it can be difficult to convince a city or county that a power facility is compatible with agricultural use.
• Nonrenewal: it takes at least nine years--and sometimes up to 20 years--for the contracts to expire.
• Cancellation: the criteria for cancellation are stringent, and the fees are substantial.
• Solar use easement: the program only applies to "marginally productive or physically impaired land."
Finally, even if a landowner convinces the city or county to cancel a contract or find that a proposed use is compatible, the decision can be challenged in the courts. A recent highly-watched case involves the California Farm Bureau, which filed a lawsuit late last year in Fresno Superior Court challenging the County's decision to cancel certain Williamson Act contracts to allow for solar development.
Some ways to address the conflict
Resolving the growing tension between renewable development and the Williamson Act will not be easy. But there are a number of important steps that can be taken to reduce friction and enable renewable energy companies to achieve their goals more quickly:
• Develop strong relationships with the responsible cities and counties, the Department of Conservation, and the advocates of farmland preservation, including the State and county Farm Bureaus;
• Work with cities and counties to ensure that solar and wind development are included on their lists of compatible uses, subject to reasonable conditions;
• Design projects to comply with the criteria for compatible uses set forth in the statute and contracts, to the extent possible;
• Ensure that petitions for cancellation specifically address the criteria set forth in the statute and contracts; and
• Explore additional legislative solutions to help achieve the proper balance between two critical goals of the State of California: preserving farmland and expanding production of renewable energy.