Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

Property Tax Annotations

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Annotation 610.0120

610.0120 Wetland Mitigation Banks. "Wetland mitigation banking" is a mandatory program administered by the Department of Fish and Game to mitigate any unavoidable impacts of development, by either purchasing existing wetlands nearby and preserving them into perpetuity or by creating new wetlands and similarly preserving them. Government agencies and/or private entrepreneurs may place an approved amount of wetland acreage into "banks" and assign a corresponding number of "credits" to each bank on a per-acre-of-wetland basis. One or more "credits" are then purchased by landowners in the area who, in order to obtain development permits, insure no net loss of wetlands is caused by their projects.

The creation of new wetlands in a wetland mitigation bank site is considered new construction under Revenue and Taxation Code section 70(a)(2) and Property Tax Rule 463(b)(2) as an alteration of land which constitutes a major rehabilitation or which converts the property to a different use. However, the sale of wetlands credits is not a reappraisable event, since the credits do not represent the transfer of a present interest in the wetland mitigation bank site real property but are comparable to offsite improvements adding value to the land.

On any lien date, the taxable value of a wetland mitigation bank should be the lower of (1) its adjusted base year value, including any value added for new construction completed in creating the wetland bank, or (2) its current market value, taking into account the restrictions on use and the eventual depletion of revenues from the sale of credits. Once all credits are sold, the owner's fee interest in the wetlands acreage would continue to be assessed. C 5/4/2000.