Table of Contents. Page. Protecting Open Space: Conservation Easements and Other Open Space Strategies Appendices. A. Bibliography...

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1 Table of Contents Page Protecting Open Space: Conservation Easements and Other Open Space Strategies... 2 Appendices A. Bibliography... A-1 2. Open Space Conservation Easement (City of Agoura Hills)..B-1 3. Agricultural Conservation Easement (Department of Conservation)...C-1 4. Farmland Mitigation Ordinance (City of Davis)...D-1

2 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" Protecting Open Space: Conservation Easements and Other Open Space Strategies Kelly A. Casillas City Attorneys Continuing Education Program February 2002 CACE Program 2002 Page 1

3 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" Protecting Open Space: Conservation Easements and Other Open Space Strategies Kelly A. Casillas 5. INTRODUCTION The recession and subsequent economic growth in California during the 1990s had a dramatic impact on open space preservation in this state. The past decade wrought unprecedented population growth and urban sprawl in California, particularly as the economy boomed in the latter part of the decade. From 1990 to 2000, California grew by over 4 million people, a population increase of almost 14 percent. 1 Demographers project that California will grow by an additional 31 percent, or nearly 11 million people, by the year 2020, with the number of Californians reaching 60 million, double the current population, by Open space is an integral part of California. It provides for our water, our air, our economic well-being, habitat preservation, and our food source. Population growth, and in particular, urban sprawl, puts ever-increasing demands on our water supply, decreases our air quality, increases our exposure to fire and flood hazards, threatens our tourist economy, and limits our recreational opportunities. Open space also provides crucial habitat for animal and plant life in a state that is home to nearly 300 endangered species. 1 California Department of Finance, California Census Comparison Tables ( 2000). 2 Growth Within Bounds: Report of the Commission on Local Governance for the 21 st Century, State of California ( 2000). CACE Program 2002 Page 2

4 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" While not always identified as such, farmland represents a significant and important aspect of open space in California. California remains the nation s number one food and agricultural producer. In 1999, the Department of Food and Agriculture reported that agriculture in this state accounts for nearly 1 in every 10 jobs, and over $100 billion dollars of the state s economy. 3 Furthermore, farmland, like open space, also contributes to flood control, air quality, water quality, and wildlife habitat. 4 In California, the agricultural landscape is an integral part of our social and environmental psyche as a people, a culture, and a way of life. The importance of open space in California is recognized in the state Constitution (Art. XIII, Section 8), state statutes (Civil Code section 815; Government Code sections 6951, 51071, 51220, and 65561; Public Resources Code section 10201), and the courts (Gisler v. County of Madera (1974) 38 Cal.App.3d 303, 307). However, quantitative reports underscore the increasing loss of California s open spaces. In 1997, the American Farmland Trust reported that California contains two of the top twenty most threatened agricultural regions in the nation, the Central Valley and the central coastal valleys. 5 In 2001, the Department of Conservation reported that farmland conversion in California from increased by 25 percent over the previous two year reporting period, and ranked three of California s top agriculture-producing counties in its list of the ten most rapidly urbanizing counties in the state. 6 In fact, nearly 43,000 acres of agricultural land an area about the size of the city of Modesto was urbanized in California between 1996 and < 4 Nelson, Arthur C., Preserving Prime Farmland in the Face of Urbanization: Lessons From Oregon, in Journal of the American Planning Association, Vol. 58, No. 4, at 467 ( 1992). 5 American Farmland Trust, Farming on the Edge ( 1997). 6 California Department of Conservation, Farmland Mapping and Monitoring Program, California Farmland Conversion Report, ( 2000). 7 Department of Conservation Grant Helps Protect 180 Acres of Salinas Valley Farmland, California Department of Conservation press release, May 16, CACE Program 2002 Page 3

5 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" Clearly, California s disappearing open space and agricultural lands are more endangered than they were just a decade ago. Given this data, local governments in California are reassessing their open space and agricultural protection strategies. This report reviews preservation policies and models for preserving open space and agricultural lands in California including a brief description of how each works, the major benefits and drawbacks, and citations to relevant statutes and cases to assist local governments in successfully protecting open space lands in their jurisdictions. 6. CONSERVATION EASEMENTS Conservation easements can be a very successful method of preserving open space. Because land is a fully marketable commodity, landowners may separate rights to the land and convey them to different buyers in the marketplace. 8 A conservation easement is defined by the Civil Code as any limitation in a deed, will, or other instrument in the form of an easement, restriction, covenant, or condition, which is or has been executed by or on behalf of the owner of the land subject to such easement and is binding upon successive owners of such land. (Civil Code ) While commonly transferred interests in land include water, mineral, and timber rights, conservation easements protect open space lands by retiring the development rights of the land in return for fair market value compensation to the landowner. 9 To establish an open space conservation easement, a landowner voluntarily conveys the right to develop a parcel to a local or state government or non-profit organization. 10 In return, 8 Wright, John B., Conservation Easements: An Analysis of Donated Development Rights, in Journal of the American Planning Association, Vol. 59, No. 4, at 487 ( 1993). 9 Wright, supra, at Examples of active private non-profit land trust organizations which accept conservation easements are the Nature Conservancy, the Trust for Public Land, and the American Farmland Trust. For a comprehensive list of over 150 land trusts operating in California, visit the Land Trust Alliance website at < CACE Program 2002 Page 4

6 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" the landowner receives compensation for the development restrictions consequently placed on the land, while still retaining ownership of the land. The value of development rights are determined by subtracting the value of the land for open space or agricultural use from the current fair market value of the land. 11 Conservation easements can also be obtained by donation or exaction. Once the development rights of a parcel have been conveyed to the local entity or non-profit, the land is permanently restricted to open space, even if the ownership of the land later changes. However, the landowner retains title to the property, and can still restrict public access, use the land as collateral for a loan, or maintain existing agricultural operations, in conformance with the language of the easement. Liability for maintenance and any onsite injuries remains with the landowner. If the property is subject to an existing mortgage, the mortgage holder must agree to subordinate the mortgage to the easement. 12 Each conservation easement must be carefully drafted to reflect the particular needs of the landowner and restrictions desired by the local agency, and the landowner should be encouraged to seek legal and financial advice prior to drafting the language of the easement. Once finalized, the easement is recorded with the county clerk-recorder as an enforceable restriction on the property, and the local entity should, and in some cases must, periodically monitor the property for compliance with the agreement. 11 Daniels, Thomas L., The Purchase of Development Rights: Preserving Agricultural Land and Open Space, in Journal of the American Planning Association, Vol. 57, No. 4, at 421 ( 1991). 12 Wright, supra, at 489. CACE Program 2002 Page 5

7 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" Conservation easements arranged between private landowners and public agencies in California are governed by three statutes: Civil Code sections , Government Code sections et seq., and Public Resources Code sections et seq.. The Civil Code statute regulates conservation easements acquired in perpetuity for the purpose of retain[ing] land predominantly in its natural, scenic, historical, agricultural, forested, or open-space condition. The statute requires that open space easements be granted in perpetuity, and allows such easements to be accepted by the state; any city, county, or district authorized to acquire and hold title to real property; or any non-profit organization which has as its primary purpose the preservation, protection, or enhancement of land in its natural, scenic, historical, agricultural, forested, or open-space condition or use. 13 (Civ. Code 815.3(a).) Furthermore, the Civil Code allows local entities which hold such conservation easements to prohibit or restrain [a]ctual or threatened injury to or impairment of a conservation easement or actual or threatened violation of its terms, by injunctive relief, and allows for recovery of money damages, including restoration costs, damages for any loss of scenic, aesthetic, or environmental value to the property, and litigation costs, including reasonable attorney's fees. (Civ. Code ) While the Civil Code does not identify funding for the acquisition of conservation easements, land acquisition funding is available by application through various state agencies such as the Resources Agency. Government Code sections et seq. allow cities and counties which have adopted an open space element in conformance with Government Code section to accept... a grant of an open-space easement on privately owned lands lying within the county or city. 14 (Gov t. Code 51078(e), ) Unlike the Civil Code, sections et seq. allow the 13 Cities and counties are authorized to acquire real property outright for the purposes of open space preservation under Government Code sections 6950 et seq., and are eligible for funding to maintain such property to protect against fire and flood hazards under Government Code sections et seq. 14 Government Code sections et seq. require every city and county to prepare, adopt and submit to the Secretary of the Resources Agency a local open-space plan for the comprehensive and long-range preservation and conservation of open-space land within its jurisdiction. ( Gov t. Code ) Section provides that the open space element of the general plan is the entity s open space plan. CACE Program 2002 Page 6

8 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" easement to be either in perpetuity or for a term of not less than ten years, renewable annually. In this way, the statute provides differential assessment provisions for open space lands. 15 However, Government Code section specifically empowers local jurisdictions with the authority to acquire open space easements in perpetuity which are in conformance with the entity s general plan. The statute allows cities to seek injunction against any activity which would violate the easement and grants a mandatory injunction to remove structures erected in violation of the easement. 16 (Gov t. Code 51086(a).) The Government Code also provides for litigation costs, including attorney s fees. However, unlike the Civil Code, the Government Code allows abandonment of open space easements created pursuant to its provisions. (Gov t. Code ) 15 The Williamson Act, Government Code sections et seq., provides similar provisions for the temporary restriction of development on agricultural lands. The Williamson Act provisions, and the temporary restriction provisions of Government Code sections et seq., are described in detail later in this paper. 16 In the event the city does not initiate proceedings to enjoin a violation of the easement, Government Code section 51086( a) provides that any resident of the jurisdiction may seek such an injunction. CACE Program 2002 Page 7

9 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" Public Resources Code sections et seq. specifically governs permanent agricultural conservation easements. Known as the Farmland Conservancy Program Act of 1995, the statute provides funding from the state budget for cities, counties, resource conservation districts, and some regional park or open space districts and non-governmental agencies to acquire agricultural conservation easements on agricultural lands throughout the state, as well as temporarily purchase agricultural lands under immediate development pressure, restore lands already under conservation easements, and develop agricultural land conservation planning and policy projects. (Pub. Res. Code 10230, 10239, ) The Act allows landowners to apply to cancel the conservation easement on their land after twenty-five years. (Pub. Res. Code ) The program has over $25 million in funding for acquisitions over the next few years. For the fiscal year, the state budget allocates $6.5 million for agricultural easement grants, including $5 million in Proposition 12 bond funds (passed by California voters in March 2000) and $1.5 million in non-bond funds. 17 Additional funding comes from donations, gifts, federal grants or loans, or other sources. If passed, Proposition 40, on the March 2002 ballot, will provide $75 million dollars for the purchase of agricultural conservation easements. In addition to being compensated for the fair market value of the development rights to their land, landowners who voluntarily place a conservation easement on their property can receive various income, property, and estate tax benefits. Both the Civil Code and the Government Code provide that open space easements on land constitute enforceable restrictions within the meaning of the state Constitution, Article XIII, Section 8, and Revenue and Taxation Code sections 421 et seq., which provide assessment of restricted parcels in a manner which acknowledges the decrease in the value of land under a conservation easement, resulting in a reduction in property taxes. The Federal Taxpayers Relief Act of 1997 allows beneficiaries to exclude from a taxable estate 40 percent of the value of land subject to qualifying conservation easements. If a landowner donates a qualifying conservation easement on their property, federal tax laws allow a deduction for a charitable donation of appreciated property, up to 30 percent of the taxpayer's adjusted gross income. 17 < As explained by the Department of Conservation, the process of applying for bond funds is the same as applying for general funds. The website provides bond fund applications. CACE Program 2002 Page 8

10 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" While conservation easements can ensure the permanent protection of open space, the technique has drawbacks. First and foremost, acquisition costs for such programs can be extraordinarily high, and many local jurisdictions lack sufficient funding to purchase development rights. Conservation easement programs are also voluntary, so participation is entirely dependent upon the desire of landowners to convey conservation easements on their property. Conservation easements are also usually piecemeal acquisitions, creating isolated islands of preserved land whose promise of perpetual open space can induce development on surrounding properties. 18 Given these drawbacks, the granting of conservation easements as an exaction is becoming more popular. For instance, at Palo Comado Ranch in the City of Agoura Hills, the developer dedicated a conservation easement to 63 acres of a significant piece of open space at the gateway of the Santa Monica Mountains in exchange for cluster zoning for a limited number of planned residences. From the city's point of view, such a dedication or gift is better than purchase, since it does not cost the entity money. Thus, it gives the city the benefits of ownership with few, if any, of the liabilities. From the developer's point of view, if a "gift" is made before the processing of the entitlements starts (preferably in a prior tax year), a tax deduction may be available. Furthermore, the developer can use the enticement of protected open space as a marketing tool for adjacent development, increasing the value of the homes built. 7. TRANSFER OF DEVELOPMENT RIGHTS 18 Daniels, supra, at 424. CACE Program 2002 Page 9

11 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" In a transfer of development rights (TDR) program, the development rights of property are sold and bought within the private sector, within guidelines set by the local jurisdiction. 19 The development rights to a parcel are severed from the lot designated for protection (sending or donor site) and transferred to a parcel in an area where development is permitted (receiving site). The local jurisdiction delineates open space or agricultural lands targeted for preservation as sending sites, and also identifies those areas within the jurisdiction designated for infill or smart growth development. The owners of designated sending site properties have three choices: develop their property in conformance with applicable zoning restrictions; deed-restrict their properties against future development by conservation easement; or sell the development rights on the real estate market. 18 To induce participation in a TDR program, jurisdictions may down-zone the sending sites to open space or large-lot agricultural zoning, but increase the density of zoning for the development rights of the property for use on other lands. 19 In this way, a landowner choosing to develop his property would be allowed very little development, whereas a landowner choosing to sell the development rights of his property would be allowed higher density development elsewhere Banach, Melissa and Canavan, Denis, Montgomery County, Maryland: A Transfer of Development Rights Success Story, in Plowing the Urban Fringe: An Assessment of Alternative Approaches to Farmland Preservation, Hiemstra, Hal and Bushwick, Nancy, eds., at 118 ( 1989). 18 Pruetz, Rick, Saved By Development: Preserving Environmental Areas, Farmland and Historic Landmarks with Transfer of Development Rights, at 3 ( 1997). 19 Id. 20 Id. CACE Program 2002 Page 10

12 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" TDRs allow the governing jurisdiction to guide development and preserve threatened open space and agricultural lands while avoiding the costs associated with acquisition of land or purchase of conservation easements. However, TDRs programs have many drawbacks. While TDR programs can be processed by planning staff as part of their regular planning processing responsibilities through the continued use of zoning and general plan land use designations, 21 such programs can be administratively burdensome. Furthermore, like conservation easements, TDRs are voluntary programs, and participation in most established TDR programs, including those in California, have been extremely low. 22 TDR programs are also subject to legal challenges on all fronts, since landowners of both donor and receiving sites can object to the zoning restrictions and density changes encouraged by TDR programs. TDR programs have been the subject of more than one inverse condemnation case. (See Penn Central Transp. Co. et al. v. City of New York (1978) 438 U.S. 104; Suitum v. Tahoe Regional Planning Agency (1997) 520 U.S. 725; American Savings & Loan Assn. v. County of Marin (9 th Circ. 1991) 653 F.2d 364; Aptos Seascape Corp. v. County of Santa Cruz (1982) 138 Cal.App.3d 484.) None of these cases undermine the ability of local jurisdictions to establish or administer TDR programs. Rather, the courts have indicated that the availability of transfer of development credits may preclude a finding that a taking has occurred, but that a landowner is not necessarily required to participate in such a program to establish that a takings claim is ripe for adjudication. 8. MITIGATION ORDINANCES Some California jurisdictions have enacted mitigation ordinances, which require developers to permanently protect open space in exchange for permission to convert other land to 21 Banach, supra, at San Luis Obispo, San Mateo, Monterey, and Marin counties, as well as the cities of Redlands, Dixon, and Vacaville have each established TDR programs intended to preserve open space, coastal, or agricultural lands within those jurisdiction. As of 1997, San Luis Obispo s program had been more successful at preserving a particular wildlife habitat area, while only one landowner had participated in Marin County s TDR program and only two in San Mateo County s. ( Pruetz, supra, at 232, 278, ) CACE Program 2002 Page 11

13 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" urban uses. 23 Under such an ordinance, which combines conservation easements with a transfer of development rights program, developers place a conservation easement on open space in another part of the jurisdiction, although the ordinance may specify that mitigation may also be satisfied by paying a fee. While many regulatory open space protection techniques restrict the property rights of landowners, mitigation ordinances make developers directly responsible for protecting open space. 23 The City of Davis requires developers to mitigate farmland conversion on a one-to-one replacement ratio, which can be met through the dedication of agriculture conservation easements or the payment of a mitigation fee equal to or greater than the value of a previous farmland conservation transaction in the area, plus the estimated cost of legal, appraisal, and other costs, including staff time, to acquire property for agricultural mitigation. See City of Davis Zoning Ordinance, section 40A , Appendix D. CACE Program 2002 Page 12

14 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" In California, these ordinances have been upheld against inverse condemnation challenges. 24 While both the Civil Code (section 815.3(b)) and the Public Resources Code (section 10243) prohibit local governmental entities from conditioning the issuance of an entitlement for use on the granting of a conservation easement, the courts have pointed out that such provisions do not divest local governments of their authority to exact such easements under other statutes, such as the Subdivision Map Act. However, such ordinances must be carefully drafted to meet constitutional nexus requirements. 9. DIFFERENTIAL TAX ASSESSMENT PROGRAMS In California, differential assessment programs provide tax relief in exchange for requiring continued use of land for open space or agricultural purposes. 25 The underlying goal of tax relief programs is to counteract the rising property value of open space and agricultural land for urban development by providing the landowner with a discounted property tax assessment, allowing the landowner to afford to keep the land undeveloped in the face of speculative development land values. 24 See San Mateo County Coastal Landowner s Association v. County of San Mateo, 38 Cal.App.4th 523 ( 1995) ( holding that enactment of coastal plan requiring the dedication of an agricultural conservation easement as a condition of approval to develop land for non-agricultural purposes did not violate due process or amount to a taking of private property without just compensation). 25 Atash, Farhad, Urban Growth and Farmland Preservation: An Assessment of Alternative Programs, in Sustaining Agriculture Near Cities, Lockeretz, ed., at 200 ( 1987). CACE Program 2002 Page 13

15 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" The Land Conservation (Williamson) Act, Government Code sections et seq., governs differential assessment of agricultural lands in California, while Government Code section provides similar provisions for differential assessment of open space lands. 26 Passed in response to the rapid loss of farmland during the post-world War II era, the Williamson Act uses restrictive agreements to provide preferential assessment to farmers who in return agree to impose minimum ten-year development restrictions on their lands. 27 When the Act was passed, its radical approach to assessment appeared to be unconstitutional, since until that time agricultural land in the state was required to be assessed according to its potential development value. 28 In 1966, however, California voters passed Proposition 3, which amended the state constitution to specifically allow for differential assessment of enforceably restricted lands, indicating their support for preserving agricultural lands and other open space. (Cal. Const., Art. XIII, 8.) The provisions of Sections et seq., which specifically identify that lands subject to the grant of an open-space easement executed and accepted in accordance with this chapter shall be deemed to be enforceably restricted within the meaning of Section 8 of Article XIII of the Constitution of the State of California, were added to the Government Code in (Gov t. Code ) The Williamson Act is a voluntary program for all participants. The Act does not require local governments to participate in the program interested counties and cities must instead volunteer to participate. As of 1999, 47 counties and 15 cities in California participated in the 26 Another statewide restrictive agreement program has been in place in Wisconsin since Under Wisconsin s Farmland Preservation Program, property tax relief is provided to farmers in exchange for restrictions that keep their land in agricultural use for a specified period of time. Unlike California s Williamson Act, however, the Wisconsin statute provides tax relief in the form of income tax credits, which are allocated through a state formula that weighs household income against property tax burden, shifting the public costs of the program from the local to the state level. See Emelock, Sharon L., Wisconsin: Managing Growth and Limiting Taxes, in Plowing the Urban Fringe, supra, at History> 28 See Dorich v. Johnson ( 1980) 110 Cal.App.3d 487, 493. CACE Program 2002 Page 14

16 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" program. 29 To be eligible for participation under the Williamson Act, agricultural land within a participating jurisdiction must first be part of an agriculture preserve, a cluster of contiguous agricultural parcels designated by the local jurisdiction for program eligibility. (Gov t. Code ) To determine eligibility for inclusion in an agricultural preserve, the land s value for agricultural use is assessed according to a predetermined ranking system. For example, prime farmlands are automatically eligible, while other farmlands have to undergo stricter scrutiny to prove the land s importance and priority for preservation. 30 Agricultural preserves must consist of at least 100 acres; however, in order to meet this requirement, two or more parcels may be combined if they are contiguous or if they are in common ownership. 31 (Gov t. Code ) 29 Will, Dale, The Land Conservation Act at the 32 Year Mark: Enforcement, Reform, and Innovation, 9 San Joaquin Agric. L. Rev. 1, 3 ( 1999). 30 Abrams, Kathleen Shea, California: A Multi-Level Approach of Districting, Planning, Permitting, and Easement Acquisition, in Plowing the Urban Fringe, supra, at 25 ( 1989). Prime and non-prime refers to categories of farmland classified by the U.S. Department of Agriculture ( and in California, by the Department of Conservation) according to soil quality and irrigation status. Prime farmland is of the highest quality for agricultural purposes, but tends to occupy many of the same areas slated for residential or commercial development. In fact, it has been estimated that over one-half of the prime farmland [in the United States] is in, or very near a metropolitan area. DeHaven-Smith, Lance, et al., Farmland Protection: Issues and Techniques, in Plowing the Urban Fringe, supra, at 1. For a detailed description of the farmland classification categories, go to < categories.htm>. 31 Government Code section does allow for the establishment of agricultural preserves smaller than 100 acres, if necessary due to the unique characteristics of the agricultural enterprises in the area, and only if consistent with the jurisdiction s general plan. CACE Program 2002 Page 15

17 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" Once a jurisdiction has implemented the program and designated agricultural preserves, landowners of agricultural and open space lands located within those preserves may apply to contract directly with their local government under the Act. Each jurisdiction determines specific eligibility requirements such as minimum parcel size and farm income, subject to the minimum contract requirements set out by the Act. (Gov t. Code ) Land that is subject to a Williamson Act contract is restricted to farm and farm-compatible uses, and in return the land is assessed by its farm production income, as opposed to the speculative value of the land for non-farm uses, in accordance with the provisions of Revenue and Taxation Code sections 421 et seq. 32 The contract runs for a period of ten years, and is automatically renewed annually unless termination is sought by either party to the agreement (the landowner or the local jurisdiction). (Gov t. Code ) However, Government Code section provides for the creation of Farmland Security Zones (FSZs), special agricultural preserves which permit landowners to receive an greater reduction in their property taxes in return for longer 20-year restriction agreements. Williamson Act contracts can be terminated in four ways: non-renewal, cancellation, eminent domain, and municipal annexation. Similarly, open space easements under a term of years pursuant to Government Code sections et seq. allow such agreements to be terminated by nonrenewal, abandonment, or eminent domain. The usefulness of differential assessment programs as a tool for preserving open space and agricultural lands depends upon the use and abuse of these termination methods. Non-renewal is the primary, and statutorily, preferred way to terminate a differential assessment contract. Either of the parties (the landowner or the local jurisdiction) can give notification of the termination before the annual renewal date, and the ten-year period begins to run from that date. Over the following ten years, the land remains restricted to open space or farm uses only, while the taxes on the property are gradually raised to reflect current fair market value. (Rev. & Tax. Code 426.) Public acquisition (through eminent domain) of land under a differential assessment contract terminates the development restrictions on the land with no cancellation fees, but Health & 32 However, Williamson Act contracts do not restrict the local entity s ability to change land use and zoning designations on the property. See Delucchi v. County of Santa Cruz ( 1986) 179 Cal.App.3d 814. CACE Program 2002 Page 16

18 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" Safety Code section prohibits the inclusion of enforceably restricted open space and agricultural lands within any redevelopment area. As to municipal annexation of contracted lands, the Williamson Act originally contained a provision which allowed cities to protest the filing of a Williamson Act contract on any county lands located within one mile of the city s boundary. Such a protest would later allow the city to annex the property and avoid succeeding to the contract restrictions. However, the Legislature repealed this provision in 1991 with the passage of AB 2764, grandfathering in protests made before that date. In 1998, the Legislature shifted responsibility for determining protest validity and consistency to local LAFCOs, which must now address the annexation of Williamson Act contracted lands in evaluating and approving annexation proposals. (Gov t. Code , ) Under the special FSZ provisions of the Williamson Act, contracted land is off-limits to city annexation, eminent domain efforts, or school district acquisitions. (Gov t. Code ) Cancellation of a Williamson Act contract or abandonment of an open space easement makes the contract void immediately. Consequently, cancellation is difficult to obtain. The Williamson Act requires the landowner to pay a penalty fee equal to 12½ percent of the full market value of the property and reimburse the local jurisdiction for back taxes discounted under the contract. (Gov t. Code 51283(b).) Government Code section 51093(b) requires the landowner to pay a penalty fee equal to 50 percent of the abandonment value of the property, which is calculated as one quarter of the full cash value of the land if it were not subject to a use restriction. If cancellation or abandonment is approved, the land can be immediately developed with urban uses. Because the cancellation provisions of these statutes can undermine their open space and agricultural preservation goals, their use has been the subject of legal battles. In Sierra Club v. City of Hayward (1981) 28 Cal.3d 840, the California Supreme Court rejected cancellation of a Williamson Act contract on a hillside, oak woodland, grazing property that had been processed to facilitate approval of a residential development project on the site. The Court emphasized the limited scope of this termination method, holding that the cancellation provisions were intended only for extraordinary situations in which the ordinary nonrenewal and expiration procedures would pose insurmountable obstacles to the accomplishment of pressing public needs. (Sierra Club, supra, 28 Cal.3d at 855; see also Honey Springs Homeowner s Assn. v. Board of Supervisors (1984) 157 Cal.App.3d 1122.) Nevertheless, many jurisdictions continue to use this termination method to avoid CACE Program 2002 Page 17

19 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" the continuing development restrictions inherent in the nonrenewal process. When Stanislaus County cancelled a Williamson Act contract on 5,000 acres of grazing land in conjunction with the approval of an extensive residential and commercial development, the Department of Conservation sued the county assessor for calculating the landowner s cancellation fee on the basis of the property s value for agricultural use. (People ex rel. Department of Conservation v. Triplett (1996) 48 Cal.App.4th 233.) After the appellate court remanded the case, the parties settled, resulting in the dedication of 3,500 acres of grazing land in an agricultural conservation easement to the state. This settlement agreement subsequently became the model for a new Williamson Act provision passed by the Legislature in (Gov t. Code ) The provision authorizes cancellation of Williamson Act contracts in return for the dedication of agricultural conservation easements either elsewhere on the property or within the same governmental jurisdiction, the value of which must be equal to or greater than the cancellation fee otherwise to be imposed on the landowner. In essence, this provision is a transfer of development rights program within the Williamson Act, using the statutory framework of Public Resources Code sections et seq. This is the sole provision of the Williamson Act to guarantee the permanent preservation of agricultural land. Despite amending legislation intended to strengthen the Williamson Act s ability to ensure the preservation of agricultural lands in the state, there remain serious drawbacks, particularly fiscal ones, to California s differential assessment programs. Since the local governmental agency is the one providing the tax break to participants in either of the programs, that agency absorbs any resulting loss in property tax revenues. This potential to lose tax revenues was initially a substantial disincentive for local governments, particularly counties, to participate in the Williamson Act program. In order to offset this hesitancy, the state instituted a subvention payment program in which the local jurisdiction is reimbursed a portion of the property tax revenue lost due to enforceably restricted prime agricultural lands and open space lands of statewide importance. (Gov t. Code et seq..) Under the subvention program, the Department of Conservation certifies subvention applications from participating local governments and forwards a report to the State Controller, who distributes payments to cities and counties from a sum appropriated each fiscal year in the state budget. 33 While these subvention payments are a substantial expenditure for the 33 Will, supra, at 2, n.3. CACE Program 2002 Page 18

20 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" state, the payment makes up only a partial reimbursement of local tax revenues lost through differential assessment, particularly if a jurisdiction enrolls high-risk, urban fringe farmland in the program. 34 Furthermore, enrollment in a differential assessment contract many times does not provide a landowner with sufficient tax savings to persuade him or her to forego the profit to be had from selling the land for development. 35 Differential assessment programs still remain one of the weaker tools for protecting open space and farmland. The Williamson Act has historically been utilized primarily by farmers not located on the critical urban fringe, where it is most important to protect farmland. Instead, it is more popular with farmers in rural areas far from urban development; farmers unlikely to convert their lands to urban uses in the near future, anyway. 36 These farmers, under no development pressure or urban fringe conflicts, nonetheless benefit considerably from the tax benefits of the Williamson Act. Landowners on the urban edge, on the other hand, are hesitant to tie up their land in a conservation agreement when urban development looms close to their lands. The tax benefits of differential assessment programs are minimal to these landowners, who balance them against the value of their land for non-agricultural development. 10. RIGHT-TO-FARM LAWS An open space conservation strategy that is specifically aimed at preserving agriculture on the urban fringe is the so-called right-to-farm law. Farmers on the urban fringe are subject to various urban spillover effects, ranging from mere inconvenience to litigation and 34 The state has paid roughly $35 million annually in subvention payments to local jurisdictions since See Will, supra, at Council on Environmental Quality, Untaxing Open Space: An Evaluation of the Effectiveness of Differential Assessment of Farms and Open-Space, prepared by the Regional Science Research Institute, at 76 ( 1976). 36 Atash, supra, at 41. See also California Department of Conservation, Land in the Balance: The Williamson Act - Costs, Benefits and Options ( Executive Summary), at 13 ( 1989). CACE Program 2002 Page 19

21 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" restrictive ordinances. Right-to-farm laws attempt to respond to efforts by proximate urban dwellers to restrict normal farming practices, thereby supporting and encouraging commercial agricultural operations with the aim of retaining farmers in the agricultural business. Right-to-farm laws go to the heart of the urban/agriculture conflict. Many suburban landowners are not familiar with normal agricultural operations. They purchase homes in urban fringe areas with the desire to live a rural life, free from the noise, traffic, and other complaints of urban life. To them, rural means a quiet atmosphere, clean air, and open space. To the farmer, rural means odd working hours with noisy farm machinery, pesticide use, animal waste and odors, and various other practices that are essential to the productivity of the farm. 37 When these incompatible uses abut one another, major conflicts can result. Many times, suburban residents file private nuisance lawsuits against the farmer, claiming the farm operations unreasonably interfere with the use and enjoyment of their land. 38 (See Carter v. Johnson (1962) 209 Cal.App.2d 589 (denying a private nuisance claim against odors, noise, and insects brought by neighbors of a horse farm).) Others lobby the local jurisdiction to pass ordinances limiting certain farm operations, such as work hours or pesticide use, within a certain distance of residential areas. 39 These actions put increased economic strain on farmers, increasing the likelihood that the land will be sold for nonagricultural development. Right-to-farm laws have been passed by many jurisdictions as a protection for farmers against these types of restrictions. Most right-to-farm laws consist of a statement in the local jurisdiction s general plan or zoning ordinance, expressing agriculture s importance to the area and the government s commitment to preserving it. These statements include a disclaimer that neither farming nor any of the activities associated with it are considered a nuisance, and that such activities 37 California Department of Conservation, The Impacts of Farmland Conversion in California, at 4-1 to 4-3 ( 1991). 38 Lapping, Mark B. and Leutwiler, Nels R., Agriculture in Conflict: Right-to-Farm Laws and the Peri-Urban Milieu for Farming, in Sustaining Agriculture Near Cities, Lockeretz, ed., at 211 ( 1987). 39 Lisansky, Judith and Clark, George, Farmer-Nonfarmer Conflicts in the Urban Fringe: Will Right-To-Farm Help?, in Sustaining Agriculture Near Cities, supra, at 219. CACE Program 2002 Page 20

22 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" are unconditionally permitted at any time. 40 As of 1996, 39 counties and 48 cities in California had developed some form of a right-to-farm ordinance, creating a legal presumption that on-going, standard farming practices are not a nuisance to adjoining residences. 41 Furthermore, state law identifies activities considered standard for, or consistent with, typical farming operations. (Civ. Code , ) 40 Lapping, supra, at Governor's Office of Planning and Research, California Planner's Book of Lists ( 1997). CACE Program 2002 Page 21

23 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" While these laws provide protection against costly litigation and restrictive ordinances, they have a minimal effect on the preservation of agricultural lands. One study found that three-quarters of all farmers who had been involved in land use conflicts indicated they had never gotten involved in the legal system. 42 Instead, they relied mostly on third party mediation to resolve the problem. Even more importantly, the study found that farmers did not even consider nuisance suits or municipal ordinances the most pressing problem on the urban fringe. Rather, 82 percent of the farmers surveyed felt that trespassing and vandalism was a problem for them, compared to 55 percent for nuisance complaints and 40 percent for restrictive municipal ordinances. In this respect, right-to-farm laws clearly fail to address many of the urban fringe pressures that influence farmers to sell their lands for development. 11. BALLOT BOX PLANNING In response to the continuing loss of open space in their communities, voters have begun to turn to the ballot to achieve their preservation objectives. Growth restriction and open space funding measures, a new development in the area of open space preservation in California, have been enacted in several California communities. Versions of the so-called Save Open Space and Agricultural Resources (SOAR) initiatives, which limit growth in open space and agricultural zones within a jurisdiction, have been passed into law in Ventura County, Napa County, and the City of Agoura Hills. These initiatives establish limit lines for urban development, and require voter approval to amend any open space or agricultural zone to zoning which would allow urban development. The California Supreme Court upheld Napa County s SOAR initiative in (DeVita v. County of Napa (1995) 9 Cal.4th 763.) The SOAR initiatives are drafted to exempt schools, parks, or public facilities from the voter approval requirement, and remain in place for a specified period of time (both Napa and Ventura County s initiatives are valid for 30 years). In 2000, the City of Monrovia in Los Angeles County passed two innovative open space protection and acquisition funding ballot measures. One measure redesignated hundreds of 42 Lisansky, supra, at 223. CACE Program 2002 Page 22

24 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" acres in the city s hillside areas as wilderness preserve, with a change in designation or development permitted only upon a vote of the people. The second measure imposed a special parcel tax to fund the acquisition of privately-held, hillside, open-space properties. Using funds from the parcel tax in conjunction with matching state and federal funding, the City had already acquired nearly 400 of the 600 acres designated for preservation by Given the relatively recent establishment of these regulations, little information is yet available on their preservation effects. However, it is interesting to note that voter initiatives rely on a traditionally criticized method of land use planning, ballot-box zoning, in order to accomplish long-term open space preservation goals. 43 In other contexts, such voter-driven land use decisions have been criticized as a short-term, short-sighted approach to planning. 44 Because Napa and Ventura counties, as well as the cities of Agoura Hills and Monrovia, lie adjacent to major California metropolises, evaluation of the success of these measures should be forthcoming. 12. ZONING Of all the strategies used nationally, and in California, to preserve open space and farmland, zoning is the most common. Above all, zoning is inexpensive and easy to administer, and, in California, open space planning is mandated by state law. (Gov t. Code 65850(a), ) Zoning is a very simple land use tool with which to protect open space from urban development, particularly in the short term. The preservation of farmland in large tracts contributes to maintaining the agricultural infrastructure, and therefore viability, of a farm community (packaging plants, farm equipment dealers, farm supply stores, etc.), while large tracts of open space zoning preserves viable habitat and wildlife movement corridors. Open space zoning is administered through the zoning ordinance of a local jurisdiction, as required by state law. (Gov t. Code 65850(a), ) Each county and general 43 Fulton, William, Guide to California Planning, at ( 1999). 44 Fulton, supra. CACE Program 2002 Page 23

25 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" law city must develop an open space zoning ordinance, which must be in compliance with the jurisdiction s open space element of the general plan Unless specifically indicated, the zoning requirements of Government Code sections et seq. do not apply to charter cities. Gov t. Code However, many charter cities have adopted ordinances which require the jurisdiction s zoning to be consistent with the general plan. Governor's Office of Planning and Research, California Planner's Book of Lists ( 1990). CACE Program 2002 Page 24

26 "Protecting Open Space: Conservation Easements and Other Open Space Strategies" Zoning is inexpensive, mandatory, and politically and legally feasible. However, zoning to protect open space resources tends to be most feasible further from the urban fringe, where development pressures have yet to build, and open space and agricultural operations exist in large tracts of land uninterrupted by urban uses. Once ownership begins to change and development appears on the horizon, restrictive zoning loses ground politically, legally, and economically. 46 The major drawback to zoning is its mutability. Zoning is subject to political changes, either in political leaders or community attitudes. On a more immediate basis, zoning is simply subject to change whenever a landowner files an application to rezone the property. 47 While exclusive zoning, which prohibits all residential and commercial development, has a greater potential to protect open space, its strict nature makes it politically and, in some cases, legally infeasible. 48 In order to strengthen the role and effectiveness of zoning in preserving open space and agricultural lands, alternative zoning concepts have been developed. 46 Coughlin, Robert E., Formulating and Evaluating Agricultural Zoning Programs, in Journal of the American Planning Association, Vol. 57, No. 2, at 184, 189 ( 1991). 47 Incremental rezoning decisions are frequently short-sighted determinations that result in scattered, unplanned development, cumulatively undermining the viability of open space or agricultural zoning in a jurisdiction. See Last, Donald G., Incremental Land-Use Decision Making Displayed By County Zoning Committees, in Journal of Soil and Water Conservation, Vol. 50, No. 1, at 24 ( 1995). 48 Such zoning has been upheld by the courts, however. See Gisler v. County of Madera, supra, 38 Cal.App.3d 303 ( rejecting an inverse condemnation challenge to an exclusive zoning ordinance that prohibited the sale of parcels less than 18 acres in size, despite an underlying subdivision delineating parcels of 2½ acres). CACE Program 2002 Page 25