REVENUE AND TAXATION
CODE
SECTION 421-430.5
421. For the purposes of this article:
(a) "Agricultural preserve" means an agricultural preserve created
pursuant to the California Land Conservation Act of 1965 (Williamson
Act) (Chapter 7 (commencing with Section 51200) of Part 1 of
Division 1 of Title 5 of the Government Code).
(b) "Contract" means a contract executed pursuant to the
California Land Conservation Act.
(c) "Agreement" means an agreement executed pursuant to the
California Land Conservation Act prior to the 61st day following the
final adjournment of the 1969 Regular Session of the Legislature and
that, taken as a whole, provides restrictions, terms and conditions
that are substantially similar or more restrictive than those
required by statute for a contract.
(d) "Scenic restriction" means any interest or right in real
property acquired by a city or county pursuant to Chapter 12
(commencing with Section 6950) of Division 7 of Title 1 of the
Government Code, where the deed or other instrument granting such
right or interest imposes restrictions that, through limitation of
their future use, will effectively preserve for public use and
enjoyment, the character of open spaces and areas as defined in
Section 6954 of the Government Code.
A scenic restriction shall be for an initial term of 10 years or
more, and shall provide for either of the following:
(1) A method whereby the term may be extended by mutual agreement
of the parties.
(2) That the initial term shall be subject to annual automatic
one-year extensions as provided for contracts in Sections 51244,
51244.5, and 51246 of the Government Code, unless notice of
nonrenewal is given as provided in Section 51245 of the Government
Code.
A scenic restriction may not be terminated prior to the expiration
of the initial term, and any extension thereof, except as provided
for cancellation of contracts in Sections 51281, 51282, 51283 and
51283.3 of the Government Code, and subject to the provisions therein
for payment of the cancellation fee.
(e) "Open-space easement" means an open-space easement granted to
a county or city pursuant to Chapter 6.5 (commencing with Section
51050) of Part 1 of Division 1 of Title 5 of the Government Code if
the easement is acquired prior to January 1, 1975, or an open-space
easement granted to a county, city, or nonprofit organization
pursuant to Chapter 6.6 (commencing with Section 51070) of Part 1 of
Division 1 of Title 5 of the Government Code if the easement is
acquired after January 1, 1975, or an open-space easement granted to
a regional park district, regional park and open-space district, or
regional open-space district under Article 3 (commencing with Section
5500) of Chapter 3 of Division 5 of the Public Resources Code.
(f) "Wildlife habitat contract" means any contract or amended
contract or covenant involving, except as provided in Section 423.8,
150 acres or more of land entered into by a landowner with any agency
or political subdivision of the federal or state government limiting
the use of lands for a period of 10 or more years by the landowner
to habitat for native or migratory wildlife and native pasture. These
lands shall, by contract, be eligible to receive water for waterfowl
or waterfowl management purposes from the federal government.
(g) "Open-space land" means any of the following:
(1) Land within an agricultural preserve and subject to a contract
or an agreement.
(2) Land subject to a scenic restriction.
(3) Land subject to an open-space easement.
(4) Land that has been restricted by a political subdivision or an
entity of the state or federal government, acting within the scope
of its regulatory or other legal authority, for the benefit of
wildlife, endangered species, or their habitats.
(h) "Typical rotation period" means a period of years during which
different crops are grown as part of a plant cultural program.
Typical rotation period does not mean the rotation period of timber.
(i) "Wildlife" means waterfowl of every kind and any other
undomesticated mammal, fish, or bird, or any reptile, amphibian,
insect, or plant.
(j) "Endangered species" means any species or subcategory thereof,
as defined in the California Endangered Species Act (Chapter 1.5
(commencing with Section 2050) of Division 3 of the Fish and Game
Code) or the federal Endangered Species Act (16 U.S.C. Sec. 1531 et
seq.), that has been classified and protected as an endangered,
threatened, rare, or candidate species by any entity of the state or
federal government.
421.5. For purposes of this article, the following terms have the
following meaning:
(a) "Agricultural conservation easement" shall have the same
meaning as defined in Section 10211 of the Public Resources Code.
(b) "Open-space land" includes land subject to an agricultural
conservation easement.
422. For the purposes of this article and within the meaning of
Section 8 of Article XIII of the Constitution, open-space land is
"enforceably restricted" if it is subject to any of the following:
(a) A contract;
(b) An agreement;
(c) A scenic restriction entered into prior to January 1, 1975;
(d) An open-space easement; or
(e) A wildlife habitat contract.
For the purposes of this article no restriction upon the use of
land other than those enumerated in this section shall be considered
to be an enforceable restriction.
422.5. For the purposes of this article, open-space land is
"enforceably restricted" within the meaning of Section 8 of Article
XIII of the California Constitution if it is subject to an
agricultural conservation easement.
423. Except as provided in Sections 423.7 and 423.8, when valuing
enforceably restricted open-space land, other than land used for the
production of timber for commercial purposes, the county assessor
shall not consider sales data on lands, whether or not enforceably
restricted, but shall value these lands by the capitalization of
income method in the following manner:
(a) The annual income to be capitalized shall be determined as
follows:
(1) Where sufficient rental information is available the income
shall be the fair rent which can be imputed to the land being valued
based upon rent actually received for the land by the owner and upon
typical rentals received in the area for similar land in similar use,
where the owner pays the property tax. Any cash rent or its
equivalent considered in determining the fair rent of the land shall
be the amount for which comparable lands have been rented, determined
by average rents paid to owners as evidenced by typical land leases
in the area, giving recognition to the terms and conditions of the
leases and the uses permitted within the leases and within the
enforceable restrictions imposed.
(2) Where sufficient rental information is not available, the
income shall be that which the land being valued reasonably can be
expected to yield under prudent management and subject to applicable
provisions under which the land is enforceably restricted. There
shall be a rebuttable presumption that "prudent management" does not
include use of the land for a recreational use, as defined in
subdivision (n) of Section 51201 of the Government Code, unless the
land is actually devoted to that use.
(3) Notwithstanding any other provision herein, if the parties to
an instrument which enforceably restricts the land stipulate therein
an amount which constitutes the minimum annual income per acre to be
capitalized, then the income to be capitalized shall not be less than
the amount so stipulated.
For the purposes of this section, income shall be determined in
accordance with rules and regulations issued by the board and with
this section and shall be the difference between revenue and
expenditures. Revenue shall be the amount of money or money's worth,
including any cash rent or its equivalent, which the land can be
expected to yield to an owner-operator annually on the average from
any use of the land permitted under the terms by which the land is
enforceably restricted, including, but not limited to, that from the
production of salt and from typical crops grown in the area during a
typical rotation period, as evidenced by historic cropping patterns
and agricultural commodities grown. When the land is planted to
fruit-bearing or nut-bearing trees, vines, bushes, or perennial
plants, the revenue shall not be less than the land would be expected
to yield to an owner-operator from other typical crops grown in the
area during a typical rotation period, as evidenced by historic
cropping patterns and agricultural commodities grown. Proceeds from
the sale of the land being valued shall not be included in the
revenue from the land.
Expenditures shall be any outlay or average annual allocation of
money or money's worth that has been charged against the revenue
received during the period used in computing that revenue. Those
expenditures to be charged against revenue shall be only those that
are ordinary and necessary in the production and maintenance of the
revenue for that period. Expenditures shall not include depletion
charges, debt retirement, interest on funds invested in the land,
interest on funds invested in trees and vines valued as land as
provided by Section 429, property taxes, corporation income taxes, or
corporation franchise taxes based on income. When the income used is
from operating the land being valued or from operating comparable
land, amounts shall be excluded from the income to provide a fair
return on capital investment in operating assets other than the land,
to amortize depreciable property, and to fairly compensate the
owner-operator for his operating and managing services.
(b) The capitalization rate to be used in valuing land pursuant to
this article shall not be derived from sales data and shall be the
sum of the following components:
(1) An interest component, to be determined by the board and
announced no later than October 1 of the year preceding the
assessment year, which is the arithmetic mean, rounded to the nearest
1/4 percent, of the yield rate for long-term United States
government bonds, as most recently published by the Federal Reserve
Board as of September 1, and the corresponding yield rates for those
bonds, as most recently published by the Federal Reserve Board as of
each September 1 immediately prior to each of the four immediately
preceding assessment years.
(2) A risk component that shall be a percentage determined on the
basis of the location and characteristics of the land, the crops to
be grown thereon and the provisions of any lease or rental agreement
to which the land is subject.
(3) A component for property taxes that shall be a percentage
equal to the estimated total tax rate applicable to the land for the
assessment year times the assessment ratio. The estimated total tax
rate shall be the cumulative rates used to compute the state's
reimbursement of local governments for revenues lost on account of
homeowners' property tax exemptions in the tax rate area in which the
enforceably restricted land is situated.
(4) A component for amortization of any investment in perennials
over their estimated economic life when the total income from land
and perennials other than timber exceeds the yield from other typical
crops grown in the area.
(c) The value of the land shall be the quotient for the income
determined as provided in subdivision (a) divided by the
capitalization rate determined as provided in subdivision (b).
(d) Unless a party to an instrument which creates an enforceable
restriction expressly prohibits such a valuation, the valuation
resulting from the capitalization of income method described in this
section shall not exceed the lesser of either the valuation that
would have resulted by calculation under Section 110, or the
valuation that would have resulted by calculation under Section
110.1, as though the property was not subject to an enforceable
restriction in the base year.
In determining the 1975 base year value under Article XIII A of
the California Constitution for any parcel for comparison, the county
may charge a contractholder a fee limited to the reasonable costs of
the determination not to exceed twenty dollars ($20) per parcel.
(e) If the parties to an instrument that creates an enforceable
restriction expressly so provide therein, the assessor shall assess
those improvements that contribute to the income of land in the
manner provided herein. As used in this subdivision "improvements
which contribute to the income of the land" shall include, but are
not limited to, wells, pumps, pipelines, fences, and structures which
are necessary or convenient to the use of the land within the
enforceable restrictions imposed.
423.3. Any city or county may allow land subject to an enforceable
restriction under the Williamson Act or a migratory waterfowl habitat
contract to be assessed in accordance with one or more of the
following:
(a) Land specified in subdivision (a) of Section 16142 of the
Government Code shall be assessed at the value determined as provided
in Section 423, but not to exceed a uniformly applied percentage of
its base year value pursuant to Section 110.1, adjusted to reflect
the percentage change in the cost of living not to exceed 2 percent
per year. In no event shall that percentage be less than 70 percent.
(b) Prime commercial rangeland shall be assessed at the value
determined as provided in Section 423, but not to exceed a uniformly
applied percentage of its base year value pursuant to Section 110.1,
adjusted to reflect the percentage change in the cost of living not
to exceed 2 percent per year. In no event shall that percentage be
less than 80 percent.
For purposes of this subdivision, "prime commercial rangeland"
means rangeland which meets all of the following physical-chemical
parameters:
(1) Soil depth of 12 inches or more.
(2) Soil texture of fine sandy loam to clay.
(3) Soil permeability of rapid to slow.
(4) Soil with at least 2.5 inches of available water holding
capacity in profile.
(5) A slope of less than 30 percent.
(6) A climate with 80 or more frost-free days per year.
(7) Ten inches or more average annual precipitation.
(8) When managed at potential, the land generally requires less
than 17 acres to support one animal unit per year.
Property owners of land specified in this subdivision, shall
demonstrate that their land falls within the above definition when
requested by the city or county.
(c) Land specified in subdivision (b) of Section 16142 of the
Government Code shall be assessed at the value determined as provided
in Section 423, but not to exceed a uniformly applied percentage of
its base year value pursuant to Section 110.1, adjusted to reflect
the percentage change in the cost of living not to exceed 2 percent
per year. In no event shall that percentage be less than 90 percent.
(d) Waterfowl habitat shall be assessed at the value determined as
provided in Section 423.7 but not to exceed a uniformly applied
percentage of its base year value pursuant to Section 110.1, adjusted
to reflect the percentage change in the cost of living not to exceed
2 percent per year. In no event shall that percentage be less than
90 percent.
423.4. Land subject to a farmland security zone contract specified
in Section 51296.1 of the Government Code shall be valued for
assessment purposes at 65 percent of the value under Section 423 or
65 percent of the value under Section 110.1, whichever is lower.
423.5. When valuing open-space land which is enforceably restricted
and used for the production of timber for commercial purposes, the
county assessor shall not consider sales data on lands, whether or
not enforceably restricted, but shall determine the value of such
timberland to be the present worth of the income which the future
harvest of timber crops from the land and the income from other
allowed compatible uses can reasonably be expected to yield under
prudent management. The value of timberland pursuant to this section
shall be determined in accordance with rules and regulations issued
by the board. In determining the value of timberland pursuant to this
section, the board and the county assessor shall use the
capitalization rate derived pursuant to subdivision (b) of Section
423. The ratio prescribed in Section 401 shall be applied to the
value of the land determined in accordance with this section to
obtain its assessed value.
For the purposes of this section, the income of each acre of land
shall be presumed to be no less than two dollars ($2), and the
present worth of this income shall not be reduced by the value of any
exempt timber on the land.
There shall be a rebuttable presumption that "prudent management"
does not include use of the land for recreational use, as defined in
subdivision (n) of Section 51201 of the Government Code, unless the
land is actually devoted to such use.
423.7. (a) When valuing open-space land subject to a wildlife
habitat contract, as defined in subdivision (f) of Section 421, the
board, for purposes of surveys required by Section 15640 of the
Government Code, and all assessors shall value that land by using the
average current per-acre value based on recent sales including the
sale of an undivided interest therein, of lands subject to a wildlife
habitat contract within the same county. Whenever ownership of
open-space land is held by a corporation and the principal underlying
asset of that corporation is represented by those lands, the price
received for each bona fide sale of shares of stock in those
corporations or certificates of membership in nonprofit corporations
shall be treated as a sale of open-space land by the assessor in
determining average value for open-space lands within the meaning of
this section.
(b) In the valuation of open-space land subject to a wildlife
habitat contract as defined in subdivision (f) of Section 421,
irrespective of the number of parcels represented by a single
ownership, the assessor shall use sales of less than 150 acres in
determining the average value of those lands only if the sale is of
an undivided interest of land subject to a wildlife habitat contract
as defined in subdivision (f) of Section 421. The assessor shall not
use any other sale of less than 150 acres of land.
(c) In the event of sales of corporate stock or membership, as
referred to in subdivision (a), the assessor shall determine the
average per-acre sales price and multiply such sales price by the
number of acres held under the single ownership from which the land
was sold, in order to determine the current total value of the single
ownership.
(d) The assessor shall then determine the average current per-acre
value of that land subject to a wildlife habitat contract, as
defined in subdivision (f) of Section 421, by adding the current
value of all those lands including corporate sales as set forth in
subdivision (c), of which there has been a recent sale, and then
dividing the total current value by the total number of acres of all
that land of which there has been a recent sale.
(e) Whenever less than 10 years remain to the expiration of a
wildlife habitat contract, the value of land determined under
subdivision (a) shall be modified pursuant to this subdivision. If
the full cash value of that land as determined under Section 110.1 is
greater than the value determined under subdivision (a) of this
section, a pro rata share of the amount of that difference shall be
added in annual equal installments to the value determined pursuant
to subdivision (a) over the remaining term of the wildlife habitat
contract.
(f) Owners of open-space land subject to a wildlife habitat
contract which has been used exclusively for habitat by native or
migratory wildlife, recreation, and native pasture shall report the
sale of that land, or an interest therein, to the county assessor
within 30 days of the sale.
(g) In the event that a wildlife habitat contract is canceled upon
the application of an owner of the land covered by the contract, a
penalty equal to 6 percent of the full cash value of the land as
determined under Section 110.1 on the lien date next following
cancellation shall be imposed. The penalty shall become delinquent on
the December 10 next following that lien date and shall be treated
in all respects as a delinquent penalty imposed under Section 2617 or
2704. This subdivision shall not apply when a wildlife habitat
contract is canceled without the consent of an owner of the land
affected.
(h) The provisions of Section 426 shall not apply to any lands
valued for assessment purposes pursuant to the provisions of this
section.
(i) The assessor shall not value any land under a single ownership
under this section unless the owners of that land have provided the
assessor with a schedule of sales of that land that have occurred
during the previous four years.
(j) If there are no prior sales within the county of open-space
land subject to a wildlife contract and used exclusively for habitat
by native or migratory wildlife, recreation, and native pasture, the
assessor shall value the land pursuant to Section 110.1.
(k) Unless a party to an instrument which creates an enforceable
restriction expressly prohibits that valuation, the valuation
resulting from the method described in this section shall not exceed
the valuation that would have resulted by calculation under Section
110.1, as though the property was not subject to an enforceable
restriction in the base year.
423.8. (a) Notwithstanding the acreage requirement specified in
subdivision (f) of Section 421, both of the following apply with
respect to enrollment in a wildlife habitat contract:
(1) Any open-space land that has been restricted as wildlife or
endangered species habitat by a political subdivision of the state or
entity of state government shall, upon the request of the owner of
that land, be enrolled in a wildlife habitat contract with the
political subdivision of the state or entity of state government that
has so restricted the subject open-space land.
(2) Any open-space land that has been restricted as wildlife or
endangered species habitat by an agency of the federal government
shall, upon the request of the landowner, be enrolled in a wildlife
habitat contract with the city or county having jurisdiction over the
restricted open-space land.
For any open-space land eligible for valuation under Section
422.5, 423, 423.3, 423.5, 426, or 435, that has also been enrolled in
a wildlife habitat contract pursuant to this section, the
controlling value of the land shall, except as otherwise provided in
the following sentence, be the lower of the values determined for
that land pursuant to those sections or Section 402.1. Other lands
enrolled in a wildlife habitat contract pursuant to this section
shall be assessed at the value determined as provided in Section
402.1.
(b) In no event shall this section or Section 421 be construed to
authorize a political subdivision or any entity of the state or
federal government to restrict the otherwise lawful use of property
by designating all or part of that property as wildlife habitat or
endangered species habitat without the consent of the owner of that
property.
(c) It is the intent of the Legislature in adding this section to
establish a nonexclusive alternative method of recognizing, for
purposes of property taxation, the existence of certain governmental
restrictions on the use of property. Neither this section nor Section
402.1 shall be construed or applied to require the existence of a
wildlife habitat contract, as described in this section, as a
necessary condition for recognizing the effect upon the taxable value
of property of any enforceable restriction that is recognized under
Section 422, 422.5, or 402.1 and is legally established by statute,
regulation, or any action or classification by a governmental entity,
for the benefit of wildlife, endangered species, or their habitats.
423.9. Land which is zoned as timberland production pursuant to
Chapter 6.7 (commencing with Section 51100) of Part 1 of Division 1
of Title 5 of the Government Code and which is not under an
open-space contract pursuant to Section 51240 of the Government Code
shall be valued pursuant to Section 435.
424. Parties to existing agreements and scenic easement deeds may
modify such agreements and deeds to the requirements of Section 422.
426. (a) Notwithstanding any provision of Section 423 to the
contrary, if either the county, city, or nonprofit organization or
the owner of land subject to contract, agreement, scenic restriction,
or open-space easement has served notice of nonrenewal as provided
in Section 51091, 51245, or 51296.9 of the Government Code, and the
county assessors shall, unless the parties shall have subsequently
rescinded the contract pursuant to Section 51254 or 51255 of the
Government Code, value the land as provided in this section.
(b) If the owner of land serves notice of nonrenewal or the
county, city, or nonprofit organization serves notice of nonrenewal
and the owner fails to protest as provided in Section 51091, 51245,
or 51296.9 of the Government Code, subdivision (c) shall apply
immediately. If the county, city, or nonprofit organization serves
notice of nonrenewal and the owner does protest as provided in
Section 51091, 51245, or 51296 of the Government Code, subdivision
(c) shall apply when less than six years remain until the termination
of the period for which the land is enforceably restricted.
(c) Where any of the conditions in subdivision (b) apply, the
board or assessor in each year until the termination of the period
for which the land is enforceably restricted shall do all of the
following:
(1) Determine the value of the land pursuant to Section 110.1. If
the land is not subject to Section 110.1 when the restriction
expires, the value shall be determined pursuant to Section 110 as if
it were free of contractual restriction. If the land will be subject
to a use for which this code provides a special restricted
assessment, the value shall be determined as if it were subject to
the new restriction.
(2) Determine the value of the land by capitalization of income as
provided in Section 423 and without regard to the existence of any
of the conditions in subdivision (b).
(3) Subtract the value determined in paragraph (2) of subdivision
(c) by capitalization of income from the full value determined in
paragraph (1).
(4) Using the rate announced by the board pursuant to paragraph
(1) of subdivision (b) of Section 423, discount the amount obtained
in paragraph (3) for the number of years remaining until the
termination of the contract, agreement, scenic restriction, or
open-space easement.
(5) Determine the value of the land by adding the value determined
by capitalization of income as provided in paragraph (2) and the
value obtained in paragraph (4).
(6) Apply the ratio prescribed in Section 401 to the value of the
land determined in paragraph (5) to obtain its assessed value.
427. Nothing in this article shall prevent the board or the
assessor, in valuing open-space land for assessment purposes from
taking into consideration the existence of any mines, minerals and
quarries in or upon the land being valued, including, but not limited
to oil, gas, and other hydrocarbon substances.
428. The provisions of this article shall not apply to any
residence, including any agricultural laborer housing facility as
provided for in Sections 51220, 51231, 51238, and 51282.3 of the
Government Code, on the land being valued or to an area of reasonable
size used as a site for such a residence.
429. Notwithstanding the provisions of Section 105(b) of this code,
in valuing land enforceably restricted pursuant to this article,
fruit-bearing or nut-bearing trees and vines on the land and not
exempt from taxation shall be valued as land. Any income shall
include that which can be expected to be derived from such trees and
vines and no other value shall be given such trees and vines for the
purpose of assessment.
430. There shall be a rebuttable presumption that the present use
of open-space land which is enforceably restricted and devoted to
agricultural use is its highest and best agricultural use.
430.5. No land shall be valued pursuant to this article unless an
enforceable restriction meeting the requirements of Section 422 is
signed, accepted, and recorded on or before the lien date for the
fiscal year to which the valuation would apply. To provide counties
and cities with time to meet the requirement of this section, the
land that is to be subject to a contract shall have been included in
a proposal to establish an agricultural preserve submitted to the
planning commission or planning department, or the matter of
accepting an open-space easement or scenic restriction shall have
been referred to that commission or department on or before October
15 preceding the lien date to which the contract, easement or
restriction is to apply.