What AB 1492 Means to You
Since its passage, the Department of Conservation has responded to numerous questions, concerns and rumors on the effects of AB 1492. Popular among these were that the Williamson Act was abolished; the contract cancellation penalty fee was doubled; and that structures, including residences exceeding 2500 sq. ft. on Williamson Act land were forbidden. The first two interpretations are false and the third misleading.
A Little Background……
The intent behind AB 1492 is to address the most egregious violations of the Williamson Act by penalizing those who engage in contract violations. The Department has seen evidence throughout the State that landowners and local governments have permitted uses on enforceably restricted lands that are not related to the underlying agricultural or open space use of the land and are therefore an incompatible use. These incompatible uses include housing subdivisions, strip malls, commercial warehouses and driving ranges. More often than not, these violations are the result of poor record keeping and statutory misinterpretations.
Prior to passage of AB 1492, only two processes were available to local governments to remedy breaches of Williamson Act contracts. Government Code § 51251 allows a local government or landowner to bring any action to enforce any contract, including but not limited to, enforcement by specific performance or injunction. However, due to the complexities and cost of litigation, local governments are understandably reluctant to take this approach.
The process most frequently invoked by local governments has been immediate contract cancellation pursuant to GC § 51282. To invoke this method of contract termination, a local government is required to make specific statutory findings and the landowner is required to pay a cancellation penalty equal to 12 ½% of the fair market value of the land upon which the contract will be cancelled.
AB 1492 provides an enhanced remedy for a material breach of contract. Beginning with Section 51250, AB 1492 defines a material breach on land subject to a Williamson Act contract as a commercial, industrial or residential building(s), exceeding 2,500 square feet that is not permissible under the Williamson Act or contract, local uniform rules/ordinances. AB 1492 only applies to structure(s) that have been permitted and constructed after January 1, 2004.
AB 1492 does not place new restrictions on existing uses currently allowed under the Williamson Act, existing contracts or local uniform rules/ordinances.
“It is the responsibility of the board to evaluate at the proper time whether any particular activity on any specific parcel constitutes a violation or threatened violation of the act. The test to be applied is whether the construction of a single-family residence or any other subdivision improvements is incidental to the production of agricultural commodities for commercial purposes on the particular parcel.”(62 Op. Atty Gen. Cal 233 (1979))
The root of the problem that AB 1492 attempts to address appears to be planted in the subdivision of Williamson Act contracted parcels. Creation of multiple smaller parcels from larger parcels is usually the first step in the eventual sale to individual property owners for residential development, and the sale of integral parcels can impair the ability of a rancher or farmer to continue to graze or farm on remaining agricultural parcels, or create conflicts with new nonagricultural uses that may ensue.
For subdivision of Williamson Act contracted land, a local government must have a substantive basis for approving the application and map, it must do so on the basis of a specific and affirmative determination that EACH OF THE RESULTING parcels is large enough to sustain their agricultural uses to which it is restricted, and that the subdivision will not result in residential development of the resulting parcels except where residential use will be incidental to the COMMERCIAL AGRICULTURAL use of the land.
The Department is aware that local governments have approved subdivision and improvements on contracted lands that violate the Williamson Act, although the State Attorney General has twice opinioned that the Williamson Act prohibits the subdivision of contracted lands for the purpose of residential development. (62 Op. Cal. Att’y Gen. 233 (1979), 54 Op. Cal. Att’y Gen. 90 (1971). We have commented on numerous proposals for subdivisions, reminding counties of the Attorney General opinions and that the proposals would violate the Williamson Act.
SB 985 (Chapter 1081, Statutes of 1999) amended section 6674.4 of the Subdivision Map Act to require the legislative body of a local government to deny approval of a tentative map or parcel map if it finds the subdivision of Williamson Act contracted land will result in residential development not incidental to the commercial agricultural use of the land. Additionally, in Section 15 of SB 985 the legislature adopted 3 Attorney General Opinions (92-708 (December 2, 1992) 79-309 (May 11, 1979) and 70-229(May 25, 1971) as law. The opinions express the requirement that parcels under the Williamson Act be kept large enough to sustain their agricultural use and that subdivision for the primary purpose of residential development violates the Act, regardless of parcel size.*
While the Williamson Act does not prohibit subdivision of lands under contract, it does prohibit the conversion of contracted lands to uses other than exclusive agriculture and uses deemed compatible to agriculture.
Under AB 1492, local governments are the primary means of enforcement. The local government determines whether a material breach of a valid contract exists and notifies the landowner and Department of its determination. The Department may also inform the local government of a material breach. If a material breach is found, the landowner has the following options: (1) the landowner may eliminate the conditions that resulted in the breach; or (2) request a public hearing to present evidence disputing the local governments determination. After the public hearing, if the local government’s determination is upheld, the landowner will be ordered to eliminate the conditions that resulted in the material breach within 60 days or assessed a monetary penalty for that portion of the contract made incompatible by the material breach.
The penalty is a maximum 25 percent of the unrestricted fair market value of the land and 25 percent of the value of any incompatible building and related improvements on the land.
A local government may allow a lesser monetary penalty to be negotiated. Negotiating a lesser penalty involves the local government, the department and the landowner and could result in the monetary penalty being reduced to no less than 12½ percent of the unrestricted fair market value of the land and related improvements.
The monetary penalty assessed is secured by a lien payable to the county treasurer. Simple interest of 10 percent per year will be assessed against any unpaid penalty after 60 days. Upon full payment of the lien, the local government will record a termination of contract by breach for the affected portion of land.
Administration of AB 1492 is the responsibility of local governments and local governments are allowed to deduct and keep their administration costs for AB 1492 enforcement from any penalty amount received. Failure of a local government to make a determination of breach of contract or complete the breach of contract process in a timely manner as specified in statute may result in the Department taking the lead on enforcement.
AB 1492 does not apply to any building constructed or permitted prior to January 1, 2004. Additionally, a building that becomes a breach of contract due to a change in law or ordinance is not subject to AB 1492. State owned buildings are also exempt.
Included in AB 1492 is a provision for a landowner’s statement acknowledging that the breach provisions may apply if a local governments action to terminate a contract is rescinded, a court permanently voids the termination or for any other reason the land continues to be subject to the contract. The landowner’s statement must be submitted within 30 days of contract termination or if the contract was terminated before January 1, 2004, prior to the approval of a building permit for construction of a commercial, industrial or residential building. In submitting the statement, the landowner acknowledges that the breach of contract provisions may apply though the land conservation contract was terminated in good faith and that any enhanced cancellation fee penalties greater than 12 1/2 % will not be imposed.
The landowner’s statement requires the landowner’s notarized signature signed under penalty of perjury in a form acceptable to the Department and must be filed with the County recorder.
Yes, AB 1492 is a complex piece of legislation presenting numerous administrative challenges. Prior to enactment of AB 1492, the Department provided copies of the legislation and brief summary to County Planning Directors and Assessors. To assist local governments with implementation of AB 1492, the Department has recently conducted four workshops on the new legislation and other processes to terminate a Williamson Act contract, to which all counties have been invited. A fourth workshop has been scheduled. Our staff is available to answer your questions regarding the Williamson Act and AB 1492.