Developer Tries to Keep Fees Down at Preserve : O’Neill Firm Uses Prominent Lobbyists in a Bid to Protect Itself From Higher Cancellation Costs

SACRAMENTO —  Former Orange County Democratic Party Chairman Richard O’Neill’s development company has hired two prominent Sacramento lobbyists in an attempt to ensure that it will not have to pay higher fees to build on 800 acres near San Clemente.

O’Neill’s Santa Margarita Co. could lose thousands of dollars if a bill changing the fees for taking agricultural land out from under the protection of the Williamson Act becomes law in its current form.

Under the Williamson Act, landowners are given property tax breaks in exchange for agreeing not to take acreage out of agricultural use for 10 years. Landowners who want to build on their property before the end of the 10 years must pay penalties, in the form of fees, based on the value of the property.

The bill changing those fees, introduced by Sen. Rose Ann Vuich (D-Dinuba), is based on a legal opinion issued last year by Atty. Gen. John Van de Kamp. It has the support of several environmental groups and the Deukmejian Administration.

The Williamson Act, also known as the California Land Conservation Act, was established in the mid-1960s when a rapid rise in land values was driving up property taxes and putting a financial squeeze on farmers, particularly in areas on the fringe of urban development. The idea was to assess taxes to farmers based upon the income-producing value of their property rather than the “highest and best use” value that had been the rule.

About half of the state’s farmland now is under Williamson Act protection.

‘Full Cash Value’ Dispute

Under current law, the cancellation fee is 12.5% of the land’s “full cash value.” But the definition of that term has been in dispute.

After the passage of Proposition 13 in 1978, the state Board of Equalization ruled that Williamson Act cancellation fees should be based on the so-called Proposition 13 value of the land, which by law can increase no more than 2% a year as long as the land does not change hands.

However, Van de Kamp issued an opinion last year saying the “full cash value” that the Williamson Act mentions actually means the current fair market value of the land. Such a change could mean a significant increase in the cancellation fees, because the market value of farmland near urban areas is usually far higher than its assessed value under Proposition 13.

Vuich’s bill would adopt Van de Kamp’s interpretation of “full cash value.”

The Santa Margarita Co. first applied in 1982 to remove 800 acres in the Talega Valley near San Clemente from the protection of the Williamson Act, county officials said. The Board of Supervisors, which under state law must review such applications, issued tentative approval.

Although Williamson Act fees are normally paid at the end of the planning process after all other permits are granted, Santa Margarita paid its $418,000 fee in April, before final action on the proposed development was taken by the Board of Supervisors. The company has yet to obtain the zoning changes it will need to build on the land, said Mike Ruane of the county’s Environmental Management Agency.

Now, the Santa Margarita Co. is concerned that its land might be covered by Vuich’s bill because its approval from the county is not final.

Deputy County Counsel John Griset said the company’s fee is in an interest-bearing account while the county decides whether to accept it. Griset said his office will probably recommend that the issue be decided by the Board of Supervisors.

The company, which declined to comment on the issue, apparently is concerned that it could be forced to pay a much higher fee if the amount already paid is returned.

That has prompted Santa Margarita to retain George Zenovich, a former Democratic senator from Fresno, and Paul Priolo, a former Republican assemblyman from Pacific Palisades, to lobby for changes in Vuich’s bill.

Santa Margarita Co.’s chairman, O’Neill, is a longtime Democratic Party activist and fund raiser and former chairman of the party’s state central committee.

Think They Have Problems

“As it now reads, unamended, they (Santa Margarita officials) think they might have some problems,” Zenovich said. “They might be stuck for the additional money.”

Zenovich said he did not know how much money might be at stake but characterized the amount as “substantial.”

Vuich, who is considered a strong supporter of the Williamson Act, said that when Zenovich and Priolo approacher her, she was already amending her measure to emphasize that it would not be retroactive. She said she would follow through with that amendment but accept no others.

The amendment, which Vuich said she would fold into her bill when the Legislature returns in August from its summer recess, states that the new method for calculating fees will not apply to anyone who has already paid their fee when the bill goes into effect on Jan. 1.

“No additional assessment of any cancellation fee shall be levied, and no refund . . . shall be made in connection with any cancellation fee which was paid prior to the effective date of this act,” the amendment reads.

Vuich said she believes that the provision should satisfy the company’s concerns. She said she told the firm’s lobbyists that she will not further amend the bill, which has been approved by the Senate but not by the Assembly.

“I just felt I wasn’t ready to delve into accepting amendments, even though I can see what their problem is,” Vuich said.