California Land Conservation Act Recommendation Examples

The published assessment practices survey report may include recommendations for improvement to the Assessor's procedures and practices. Below are examples of recommendations for the CLCA survey topic.

Annually compute the restricted values for CLCA properties in accordance with section 423.

The basic appraisal method applicable to the valuation of open-space land subject to an enforceable restriction is the statutorily prescribed income approach in section 423. Subdivisions (a), (b), and (c) of section 423 prescribe the method of valuation. Section 423(d) provides that the taxable value on the lien date may not exceed the lowest of: (1) the current restricted value (determined via the prescribed income method for open-space properties), (2) the current fair market value calculated pursuant to section 110, or (3) the factored base year value, as if unrestricted, calculated pursuant to section 110.1.

By not annually calculating the restricted value for the restricted portion of CLCA properties, the assessor cannot make the three-way comparison that is necessary to correctly assess such property pursuant to section 423. This practice may lead to incorrect assessments of CLCA properties.

Correctly value CLCA properties subject to terminating restrictions in accordance with section 426.

Section 426 contains specific directives concerning the valuation procedure applicable to land subject to a terminating restriction. Such land shall be valued annually by:

  1. Determining the full cash value of the land according to section 110.1 (factored base year value), or, if the land will not be subject to article XIII A upon the expiration of the contract, according to section 110 or other special restricted assessment provided for in the law;
  2. Determining the restricted value of the land by the capitalization of income method specified for open-space land as provided in section 423;
  3. Subtracting the restricted value in step 2 from the value determined in step 1;
  4. Discounting the difference between the restricted value and the value determined in step 1 for the number of years remaining until the termination of the enforceable restriction at the interest rate announced by the State Board of Equalization by September 1 pursuant to subdivision (b)(1) of section 423; and
  5. Adding this discounted value to the restricted value determined in step 2.

The correct discount rate is the interest component announced by the BOE; the discount rate does not include the other components in the open-space capitalization rate. The discounting period is the number of years remaining until the termination of the enforceable restriction.

The assessor's current practice of not using the most recent interest component is contrary to statute and may result in incorrect assessments for CLCA properties in the nonrenewal process.

Assess all trees and vines located on CLCA property.

Section 429 provides that in valuing land enforceably restricted, fruit-bearing or nut-bearing trees and vines on the land that are not exempt from taxation shall be valued as land. The value of trees and vines on land subject to open-space restrictions shall be established by capitalizing the net income attributable to them.

The assessor's practice allows restricted living improvements to escape assessment.