williamson act

How to Qualify for Williamson Act Tax Benefits

williamson act benefitsWhat is the Williamson Act?

The California Land Conservation Act of 1965 is commonly referred to as the Williamson Act. The Act enables Napa and Sonoma Counties to enter into contracts with private landowners for the purpose of restricting specific parcels to agricultural use. The primary intent of the program is to preserve agricultural land by providing tax benefits to landowners and therefore preventing premature and unnecessary development. Napa and Sonoma Counties vary in the specifics. Click here for Sonoma County Williamson Act FAQs.

Napa County Rules and Regulations:

Summary of Properties that Qualify

To qualify for a Williamson Act Contract a parcel must be zoned Agriculture Preserve (AP) or Agricultural Watershed (AW); be a minimum of size of 10 acres for prime agricultural land; or be a minimum size of 40 acres and less suited to intensive agricultural production; and contain a bona fide agricultural use (see Williamson Act Rules: Type A, Type C and Type H). Type A and C contracts are specific to AP zoning which is mostly on the valley floor. Type H is specific to AW zoning which is typically hillside.

Surprisingly, Napa County also offers a contract for parcels between 5 and 10 acres provided that at least 75% of the parcel is in commercial agricultural use; the agricultural use is commercially viable and constitutes a longstanding community resource; and the agricultural use demonstrates a unique commitment to sustainable farming practices and contributes to the diversity of crops raised in Napa County (i.e. agriculture use other than wine grapes) along with other specific conditions.

Applicants must show agricultural income from their property in the past five years or the potential for income based on plans to begin agricultural development as determined by Napa County’s Agricultural Commissioner.

To date, other than the County, only the City of St. Helena has offered contracts to landowners. The cities of St. Helena and American Canyon have signed contracts on lands they own.

Tax Benefits of the Williamson Act

In return for voluntarily restricting their land, landowners receive property tax assessments which are the lower of their factored Proposition 13 base year value or the restricted value based upon farming and open space uses (as opposed to full market value). The Assessor’s Office does a rather complex calculation to establish the new assessed value of the property for Williamson Act purposes. Please click here for an explanation of the calculation.

Someone who buys a vineyard today would see a Williamson Act assessed value on their vineyard of about 50% relative to the assessed value based on the sale price. The older the vineyard, the lower the Williamson Act assessed value. Apparently the age of the vineyard affects the time frame used for the discounted cash flow analysis. That means that the benefit to properties with older vines may be even greater than 50%.

For information regarding potential tax benefits of contracting a parcel under the Williamson Act that you already own or are planning to buy, please contact the County Assessor, John Tuteur, directly at (707) 253-4459/[email protected]. My understanding is that a prospective buyer, as part of their due diligence, can ask the County Assessor’s Office for an estimate of the benefits of putting the property in the Williamson Act. The cost of an estimate is in the range of $75 to $250 depending on the number of vineyard blocks on the parcel.

Deadlines for Applying for a Williamson Act Contract

Applications to enroll a parcel into the program are accepted annually in September and the first week of October. Qualifying parcels are recorded on December 31st. Napa County’s current contract review fee is $1,670.93.

Duration and Cancellation of Williamson Act Contracts

Agricultural contracts are for 10 years and automatically renew each year for another term unless either the landowner or the County cancel them by filing a Notice of Non-Renewal. If this Notice is filed and recorded, the annual tax assessment gradually increases over 9 years at which time the contract is terminated. It should be noted that if you want to take your property out of the Williamson Act, you need to plan well in advance.

If you would like further information on the tax benefits of Sonoma County or Napa County’s Williamson Act, conservation easements through the Land Trust or how to reduce real estate taxes by subtracting the value of your vineyard appellation from the appraised value of your property, please call or email me. I will introduce you to the key people who can advise you on the many tax benefits available to wine country property owners. I work on extremely complex wine country acquisitions and sales and am constantly learning from land use attorneys and tax specialists that my clients engage.

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