Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2013
 

Revenue and Taxation Code

Property Taxation

Part 2. Assessment

Chapter 3. Assessment Generally

Article 1. General Requirements

Section 402.1

402.1. Land use restrictions. (a) In the assessment of land, the assessor shall consider the effect upon value of any enforceable restrictions to which the use of the land may be subjected. These restrictions shall include, but are not limited to, all of the following:

(1) Zoning.

(2) Recorded contracts with governmental agencies other than those provided in Sections 422 and 422.5.

(3) Permit authority of, and permits issued by, governmental agencies exercising land use powers concurrently with local governments, including the California Coastal Commission and regional coastal commissions, the San Francisco Bay Conservation and Development Commission, and the Tahoe Regional Planning Agency.

(4) Development controls of a local government in accordance with any local coastal program certified pursuant to Division 20 (commencing with Section 30000) of the Public Resources Code.

(5) Development controls of a local government in accordance with a local protection program, or any component thereof, certified pursuant to Division 19 (commencing with Section 29000) of the Public Resources Code.

(6) Environmental constraints applied to the use of land pursuant to provisions of statutes.

(7) Hazardous waste land use restriction pursuant to Section 25240 of the Health and Safety Code.

(8) A recorded conservation, trail, or scenic easement, as described in Section 815.1 of the Civil Code, that is granted in favor of a public agency, or in favor of a nonprofit corporation organized pursuant to Section 501(c)(3) of the Internal Revenue Code that 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.

(9) A solar-use easement pursuant to Chapter 6.9 (commencing with Section 51190) of Part 1 of Division 1 of Title 5 of the Government Code.

(b) There is a rebuttable presumption that restrictions will not be removed or substantially modified in the predictable future and that they will substantially equate the value of the land to the value attributable to the legally permissible use or uses.

(c) Grounds for rebutting the presumption may include, but are not necessarily limited to, the past history of like use restrictions in the jurisdiction in question and the similarity of sales prices for restricted and unrestricted land. The possible expiration of a restriction at a time certain shall not be conclusive evidence of the future removal or modification of the restriction unless there is no opportunity or likelihood of the continuation or renewal of the restriction, or unless a necessary party to the restriction has indicated an intent to permit its expiration at that time.

(d) In assessing land with respect to which the presumption is unrebutted, the assessor shall not consider sales of otherwise comparable land not similarly restricted as to use as indicative of value of land under restriction, unless the restrictions have a demonstrably minimal effect upon value.

(e) In assessing land under an enforceable use restriction wherein the presumption of no predictable removal or substantial modification of the restriction has been rebutted, but where the restriction nevertheless retains some future life and has some effect on present value, the assessor may consider, in addition to all other legally permissible information, representative sales of comparable lands that are not under restriction but upon which natural limitations have substantially the same effect as restrictions.

(f) For the purposes of this section the following definitions apply:

(1) "Comparable lands" are lands that are similar to the land being valued in respect to legally permissible uses and physical attributes.

(2) "Representative sales information" is information from sales of a sufficient number of comparable lands to give an accurate indication of the full cash value of the land being valued.

(g) It is hereby declared that the purpose and intent of the Legislature in enacting this section is to provide for a method of determining whether a sufficient amount of representative sales information is available for land under use restriction in order to ensure the accurate assessment of that land. It is also hereby declared that the further purpose and intent of the Legislature in enacting this section and Section 1630 is to avoid an assessment policy which, in the absence of special circumstances, considers uses for land that legally are not available to the owner and not contemplated by government, and that these sections are necessary to implement the public policy of encouraging and maintaining effective land use planning. Nothing in this statute shall be construed as requiring the assessment of any land at a value less than as required by Section 401 or as prohibiting the use of representative comparable sales information on land under similar restrictions when this information is available.

History.—Added by Stats. 1966, p. 658 (First Extra Session), in effect October 6, 1966. Stats. 1974, Ch. 857, p. 1823, in effect January 1, 1975, substituted the second sentence of the first paragraph for the former second sentence; established the former third sentence of the first paragraph as the second paragraph; added the sixth paragraph; and deleted "local" after "contemplated by" in the second sentence of the seventh paragraph. Stats. 1976, Ch. 1330, p. 6009, in effect January 1, 1977, added subsection (d) and relettered the former subsection (d) as subsection (e) in the second sentence of the first paragraph. Stats. 1977, Ch. 1155, in effect January 1, 1978 capitalized "Coastal" and "Commission" and removed the "s" from "Commissions", and added "and regional coastal commissions" in subdivision (c). Also added subdivision (e) and substituted "constraints" for "contraints" in subdivision (f). Substituted "with respect to which" for "where" in the fourth paragraph and added "which are" after "comparable land" in the fifth paragraph. Stats. 1989, Ch. 906, in effect January 1, 1990, added subdivision letters (a), (b), (c), (d), (e), (f) and (g); substituted "these" for "such" and added "all of the following" after "are not limited to", in the second sentence of, and substituted paragraph numerals (1), (2), (3), (4), (5) and (6) for former letters (a), (b), (c), (d), (e) and (f) in subdivision (a); substituted "Zoning." for "zoning;" in paragraph (1) of subdivision (a); substituted "Recorded" for "recorded " and replaced semi-colon with a period in paragraph (2) of subdivision (a); substituted "Permit" for "permit" and replaced semicolon with a period in paragraph (3) of subdivision (a); substituted "Development" for "development" and replaced semi-colon with a period in paragraphs (4) and (5) of subdivision (a); deleted "and" before "(6)" in paragraph (5) of subdivision (a); substituted "Environmental" for "environmental" in paragraph (6) of subdivision (a); added paragraph (7) to subdivision (a); added "the following definitions apply" after "section" in subdivision (f); renumbered former paragraphs (a) and (b) as (1) and (2) in subdivision (f); deleted "of the Revenue and Taxation Code" after "Section 1630", deleted "of this code" after "Section 401", and substituted "this" for "such" in subdivision (g). Stats. 1993, Ch. 1002, in effect January 1, 1994, added a comma after "limited to" in the second sentence of subdivision (a); substituted "(1)", "(2)", "(3)", "(4)", "(5)", "(6)" and "(7)" for "1.", "2.", "3.", "4.", "5.", "6.", and "7." in, and added paragraph (8) to, subdivision (a); substituted "lands that" for "land which" in subdivision (e), substituted "that" for "which" in paragraph (1) of subdivision (f); and substituted "that" for "such" after "assessment of" in the first sentence and substituted "that" for "which" after "land" in the second sentence of subdivision (g). Stats. 2002, Ch. 616 (SB 1864), in effect January 1, 2003, substituted "These" for "Those" before "restrictions shall include" and substituted "limited to," for "limited, to" after "but are not" in the first sentence of subdivision (a), and substituted "Sections 422 and 422.5" for "Section 422" after "those provided in" in the first sentence of paragraph (2) therein. Stats. 2011, Ch. 596 (SB 618), in effect January 1. 2012, added paragraph (9) to subdivision (a).

Note.—Section 2 of Stats. 1974, Ch. 857, p. 1825, provided that it is the intent of the Legislature in amending the section to clarify the status of recently enacted legislation with respect to the section and not to make a substantive change therein.

Construction.—The effect of the rebuttable presumption is to place upon the assessor the burden of proving the impermanence of the zoning restriction. To overcome the presumption the assessor must show by a preponderance of the evidence that the restriction will be lifted in the predictable future. Meyers v. Alameda County, 70 Cal.App.3d 799. For property zoned for agricultural use, in order to rebut the presumption, the assessor was required to show that the agricultural use restriction on the land would be lifted in the predictable future, and such did not occur where the property owner had asked the city to designate the property as agricultural preserve under the Williamson Act, he manifested no intent to have his property rezoned from agricultural use, and his property was entitled to agricultural preserve status. Borel v. Contra Costa County, 220 Cal.App.3d 521. In determining the fair market value of property, an assessor is only required to consider governmentally imposed land restrictions. The legislative purpose of this section is to allow an assessor to consider restrictions necessary to implement the public policy of encouraging and maintaining effective land use planning. Thus, the assessor properly refused to consider deed restrictions placed on a parcel of land when determining the value of the property where such restrictions were for the benefit of the seller, involved no public policy regarding land use planning, and in no way benefited the public. Carlson v. Assessment Appeals Board No. 1, 167 Cal.App.3d 1004. Rate protection provisions in a cable television franchise agreement are enforceable restrictions within the meaning of this section, which expressly states that its listed restrictions are not exclusive. CAT Partnership v. Santa Cruz County, 63 Cal.App.4th 1071.

The existence of a specific governmental enforcement order is not a prerequisite to a taxpayer's showing that land is subject to restrictions imposed by government that affect its value. Restrictions can be "imposed by government" by any of the methods mentioned in this section. The intent of the section is to consider what limitations apply to the property, whether or not such limitations produced immediate enforcement. Thus, regardless of whether the performance of cleanup projects ultimately benefits the surface landowner, annual environmental remediation costs incurred by the holder of an oil and gas lease in the property must be considered as necessary operation expenses because they are required by law. Dominguez Energy, L.P. v. Los Angeles County, 56 Cal.App.4th 839.