Bill Would Raise Fees for Developing Croplands

The Assembly approved legislation Thursday that would make it more costly for a major Orange County landowner to develop property now in an agricultural preserve.

Under the bill, landowners canceling agricultural preserves after Jan. 1 would be subject to fees based on the property’s full market value, rather than the previously used assessed valuation for farm land, which runs below its full value.

The state Board of Equalization had based fees on assessed valuation, but an opinion by the state attorney general took issue with the practice.

The Santa Margarita Co.--whose chairman, Richard J. O’Neill, once headed the state Democratic Party--stands to lose thousands of dollars, because Orange County officials have so far refused to accept as final the firm’s April payment of $418,000 in preserve cancellation fees.

In July, the Santa Margarita Co. hired lobbyists to seek changes in the bill that would exempt its 800-acre parcel in Talega Valley, near San Clemente. The lobbyists are former Democratic senator George Zenovich of Fresno and Paul Priolo, a former Republican assemblyman from Pacific Palisades.

While the lobbyists got the bill’s author, Sen. Rose Ann Vuich (D-Dinuba), to amendment the measure so that it bars reassessing fees after they have been paid, Vuich’s staff members said this did not address the question of whether Orange County should consider fees already paid by the Santa Margarita Co. as payment in full.

During floor debate on the bill Thursday, O’Neill was mentioned indirectly, but not by name.

In supporting the bill, Assemblyman Byron D. Sher (D-Palo Alto) implied that Orange County lawmakers opposing it might be trying to protect “a large landowner in Orange County.”

Assemblyman Ross Johnson (R-La Habra), a leading opponent of the measure, then pointed out that the landowner was the “former chairman of the Democratic State Central Committee” and asked Democrats whether they knew of any reason why he, a Republican, would be opposed to the bill “on anything other than principle.”

Orange County’s all-GOP delegation split against the bill, 5 to 3. Voting in favor were Doris Allen of Westminster, Nolan Frizzelle of Huntington Beach and Robert C. Frazee of Carlsbad. Voting against the bill were Johnson, Dennis Brown of Signal Hill, Gil Ferguson of Newport Beach, John Lewis of Orange and Richard Longshore of Santa Ana.

The measure was sent to the Senate for concurrence on amendments.

O’Neill was philosophical about Thursday’s vote, saying: “They’re changing the rules of the game in the middle. . . . But if that’s the way it is, so be it.”

He said he guessed that the higher cancellation fees could amount to “$700,000 or $800,000.”

County officials have refused to accept the Santa Margarita Co.’s payment because it was made more than a year after the initial application to cancel the preserve status was filed, and also because the fees were paid before the planning process had been completed.

Other than saying the firm’s payments are being held in an interest-bearing account pending a decision by the Board of Supervisors, county officials have declined comment on the issue. They have also declined to estimate how much additional income Vuich’s bill might generate.

Vuich’s bill changes the state’s Williamson Act, under which landowners are given property tax breaks in exchange for leaving their land in an agriculture preserve for 10 years. Landowners who want to develop their property before the 10 years are up must pay a fee to recoup the government’s lost property tax revenue.

The program was created in 1965 to help farmers avoid tax increases based on the “highest and best use” of their land, instead of a value based on continued farming. About half of the state’s farmland is under Williamson Act contract.

Vuich’s bill is intended to clear up a dispute over whether the penalty for early cancellation of the contracts should be based on market value instead of assessed value, subject to the 2% annual increases allowed under Proposition 13.