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9-16-12
Fresno Bee
Watchdog Report: Valley farmers may lose tax break
Fresno County ponders Williamson Act change…Kurtis Alexander
http://www.fresnobee.com/2012/09/16/v-print/2994242/watchdog-report-valley-farmers.html
A handful of prominent Valley families stand to lose big if tax breaks under the state's 47-year-old farm preservation program are scaled back.
The Williamson Act, which cuts property taxes for landowners who agree to keep their land in agriculture, is on the chopping block in Fresno County.
Some county leaders believe they no longer can afford to offer the tax benefit, at least not all of it, because it comes at the expense of public services.
Last year, about 14,000 county parcels benefitted from the Williamson Act, worth nearly $23 million, more than in any other California county.
But, according to a Bee review of county property tax records, half of the total tax breaks given out under the program went to roughly 250 big landowners. About a dozen enjoyed tax reductions greater than $100,000. By comparison, the majority of landholders in the program saw reductions well under $1,000.
Any changes to the Williamson Act, which are being mulled by the Board of Supervisors this month, will have the greatest impact on these big property owners.
Many of them -- owners of the San Joaquin Valley's most productive orchards, vineyards and dairies -- argue that their farms can't weather an additional tax burden. Others beg to differ.
"The small family farmers might need a tax break. They're the ones struggling to make ends meet. But for the big ones, this (program) doesn't make a difference," said Supervisor Henry Perea, a critic of the Williamson Act and among those leading the charge to roll it back. "The Williamson Act has just taken a handful of very wealthy people and made them richer."
$250,000 in breaks
According to the review of property tax records, the biggest beneficiaries of the Williamson Act include the Fresno-area Britz family.
The family and its partners received at least $250,000 in tax reductions last year. Exactly how much the family and its partners saved is hard to know because their properties are listed under different names, and they declined several requests to comment.
The Britz family runs a number of farm-related businesses. It's perhaps best known for the production of fertilizer.
Batth Farm's Kanwarjit Batth of Caruthers, farmer Paul Singh of Caruthers, a San Jose trust under the name James Rose and the family-run Maddox Dairy of Riverdale also rank among the biggest recipients of county tax breaks under the Williamson Act.
Growers Gerawan Farming Inc. of Fresno, Terra Linda Farms of Riverdale and Terranova Ranch Inc. of Helm were near the top of the list as well.
"I know there's a lot of pressure on the city and the county. We all want good services," said Don Cameron, general manager of Terranova Ranch. "But none of us like to see taxes increase. Every added expense for us does make a difference."
The California Farm Bureau Federation praises participation in the Williamson Act by large landholders as well as small ones.
The program ensures adequate food supplies and provides an economic anchor for local communities, said John Gamper, the federation's director of taxation and land use.
"You can say it's a tax benefit, but there is something given in return," Gamper said. "Having these large landowners put thousands of acres under (conservation) contract is a huge benefit for the county by protecting agriculture."
The Williamson Act, formally called the California Land Conservation Act, was passed in 1965 to help keep development off productive farmland.
Under the program, counties and landholders voluntarily enter into contracts in which the landowner commits to preserving property and the county adjusts the owner's tax bill. (The value of the Williamson Act property, for tax purposes, is computed by determining the land's farming income potential, not its market value, and generally results in a lower tax.)
Some not farming
Not all of those receiving a Williamson Act tax reduction, however, are serving agricultural interests -- at least not directly.
Fresno County Assessor Paul Dictos, who would like to see more discretion in determining who benefits from the program, says some landowners are not developing their land because they want the tax advantage, not because they're farming.
"Although it's legal, isn't it a bit unethical?" he said.
Landowners enrolled in the Williamson Act include housing developers, oil companies and mining operators. Los Angeles-based Baillo Development Inc., for example, received a $94,000 annual tax break last year. That was a 97% reduction over what the company would have paid if it wasn't in the Williamson Act.
The reduction was one of Fresno County's biggest in terms of percentages.
Energy giant Chevron USA, which enrolled a dozen county properties in the Williamson Act last year, enjoyed $20,000 worth of tax breaks.
Calmat Co., a Los Angeles-based sand and gravel company that has mined along the San Joaquin and Kings rivers, received at least $30,000 worth of breaks.
Local politicians also have been recipients of Williamson Act tax reductions, including Supervisor Debbie Poochigian. Poochigian has agricultural property as well as a stake in a family farming partnership, her financial statements show. How much she individually benefits from tax breaks is not listed in public documents.
Poochigian said she will recuse herself from upcoming board discussions on the Williamson Act because of her possible conflict of interest -- unless she is given the OK from the California Fair Political Practices Commission, the state's political watchdog. She has filed a query with the agency, she said.
Last year, Poochigian participated in the county's Williamson Act discussions. She was on the winning end of a 3-2 verdict in September to leave in place the agricultural tax breaks.
"I probably could participate," she said, when asked about her change of mind. But "out of an abundance of caution, I'm waiting for an official opinion."
Poochigian is a supporter of the Williamson Act and does not want to see it watered down. She says the program allows farmers to overcome sometimes tight profit margins and helps local businesses succeed.
Fresno County, which is a powerhouse for grapes, almonds, tomatoes and many other crops, is the top agricultural county in California.
"I'm not interested in raising any tax on people," Poochigian said. "For the No. 1 ag county to penalize its farmers, I don't believe it's fair."
Reduction proposed
The proposal that the Board of Supervisors is currently considering is whether to cut Williamson Act tax breaks by 10% -- in exchange for reducing, by 10%, the length of time landowners must preserve their property.
Currently, landowners and the county enter into 10- or 20-year conservation agreements.
The state legislation that permits counties to reduce contract terms, Assembly Bill 1265, comes in the wake of the state's decision not to put money into the program. Until three years ago, counties were at least partially reimbursed by the state for property tax dollars lost to the Williamson Act.
Now, tax breaks simply mean less money in county coffers. The Fresno County government's $258 million discretionary budget has foregone close to $4 million annually since the reimbursement dried up.
Local cities and special districts also lose out under the Williamson Act. These agencies get a slice of the county's property tax collections, which are obviously reduced with tax breaks.
Under AB 1265, counties are allowed to keep the additional money that would be collected under the new contracts instead of sharing it with other agencies. That additional revenue, the county estimates, would cover about half of what it loses in tax breaks.
Supervisor Susan Anderson supports the new law. She and Perea unsuccessfully pushed to implement its terms last year.
"When the state had a policy that reimbursed counties, you could justify the Williamson Act," Anderson said. "How can you justify it now? We're reducing services because people are in the Williamson Act and that's just unfair."
Over the past three years, because of the downturn in the economy, Fresno County has cut sheriff's patrols, closed jail floors, delayed road maintenance and stopped taking care of parks, among other reductions.
To save money, at least eight other counties have embraced the terms of AB 1265. Tulare County, the state's second-largest agricultural producer after Fresno County, is one of them.
Fresno County supervisors are scheduled to discuss the issue at Tuesday's board meeting.
"Yeah, it would be an additional expense," said Steve Maddox, a family partner in Fresno County's Maddox Dairy. But "I can sympathize with what the board is dealing with. ... At least they're not arbitrarily dropping the program without offering a trade-off."