Napa County is granting millions of dollars in tax breaks to preserve wine country farmland that already appears safe from being paved over, according to the 2017-18 grand jury.
The new grand jury report is subtitled “Subsidizing a Lifestyle.” Williamson Act tax breaks designed to preserve farms are concentrated in the hands of the wealthy and corporations that buy Napa County vineyard land, the watchdog group said.
Napa County agencies lost a total of about $6 million of property tax money in 2017-18 to the Williamson Act, the grand jury estimated. Meanwhile, it said, Napa County zoning laws and general plan policies already protect farmland from being developed.
For example, Measure P requires voters to approve agricultural general plan designation changes.
“Is this lost revenue a give-away to the very people paying inflated land values, at the expense of the county, the schools and the cities that share in the property tax revenue?” the report asked.
That’s only a start of grand jury’s criticisms. The watchdog group said in a new report that the Board of Supervisors lacks adequate information about the Williamson Act program it oversees and that county enforcement of program rules is non-existent.
The county should review the local Williamson Act program and explore whether to terminate or limit it, the grand jury recommended.
County supervisors had a more upbeat—though not uncritical—view of the Williamson Act during their own, unrelated discussion of the program on May 8. County officials depicted a program that is well-run and yields benefits.
“I see what we’re doing here as one more layer of ag protection at a relatively low cost to this county,” Supervisor Ryan Gregory said at one point. “For me, this still makes sense.”
Still, supervisors had questions about the Williamson Act and are to continue their discussion in August. Now the Board of Supervisors will also have to respond to the grand jury report within 90 days of the report’s release last Tuesday.
California passed the Williamson Act in 1965. It sought to ease financial challenges for farmers who wanted to keep farming, but had to pay property taxes based on their land’s speculative development value fueled by nearby, fast-growing cities.
The Williamson Act allows counties to enter into contracts with farmers. Farmers pledge to keep farming the land for at least 10 years. In return, they have the option of being taxed at the agricultural value of the land rather than the market value or value under Proposition 13.
Today in Napa County, 848 parcels covering 74,711 acres – about 116 square miles – have Williamson Act contracts, a county report said. But only 446 parcels receive any of the property tax benefits due to farming dynamics in world-famous wine country.
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Consider a person who bought a Napa Valley vineyard years ago. The land’s property tax can rise no more than 2 percent annually under California’s Proposition 13. The Proposition 13 value of this land is likely less than the agricultural value, given the high price of Napa County grapes.
Most of the people receiving the Williamson Act benefits own grazing land, county Assessor John Tuteur told the Board of Supervisors during its May 8 Williamson Act discussion.
“But there are some vineyards that have been recently purchased and signed Williamson Act contracts and are enjoying the Williamson Act restricted values,” Tuteur added.
That’s because land when sold has its Proposition 13 base reset at the market rate and Napa County land prices for vineyards are high. The grand jury seized on this fact in its report.
“In other words, the Williamson Act tax benefit is concentrated in the hands of those most able to afford market rate tax assessment – the wealthy and corporations as they buy up Napa County agricultural land,” the grand jury report said.
The county’s general fund loses about $1 million annually to the Williamson Act, Tuteur told supervisors. That’s .5 percent of the $195 million general fund.
But, the grand jury report said, $1 million annually over 10 years comes to $10 million. If the county had invested the money at 2.5 percent interest, it would have $11.23 million, which could have lowered the $20 million loan it plans to take out for a new jail.
Plus, the Board of Supervisors must consider the other agencies that also lose money to Williamson Act property tax breaks, the grand jury report said. The breaks cost the Napa Valley Unified School District about $2 million annually, it said.
“These funds would go a long way to closing the deficit in NVUSD’s budget instead of having to close schools,” the grand jury report said.
The grand jury also questioned how the county administers the Williamson Act program. Planning and Assessor officials have failed to inform the Board of Supervisors about undersized parcels, parcels without farming income and parcels with owners who don’t submit information required by law, it said.
At least some of the background material for the grand jury report on the Williamson Act came from interviews with Assessor’s Office employees in connection with a grand jury probe of Tuteur. The grand jury has accused Tuteur of willful or corrupt misconduct and called for his removal from office.
Transcripts of these grand jury interviews have been made public by Napa County Superior Court in connection with the Tuteur case. In them, one Assessor’s Office employee calls the county Williamson Act program “welfare for the rich.”
The grand jury gave only one commendation in its Williamson Act report, to the county employees who came forward and assisted with the investigation.