County of Humboldt v. McKee

• Decision Date: 15 August 2008
• Docket Number: No. A117325.,A117325.
• Citation: 165 Cal.App.4th 1476,82 Cal. Rptr. 3rd 38
• Court: California Court of Appeals Court of Appeals
• Parties: COUNTY OF HUMBOLDT, Plaintiff, Cross-defendant and Appellant, v. ROBERT C. McKEE et al., Defendants, Cross-complainants and Respondents; LINDA HILL, as Assessor, etc., Cross-defendant and Appellant.

165 Cal.App.4th 1476

82 Cal. Rptr. 3d 38

COUNTY OF HUMBOLDT, Plaintiff, Cross-defendant and Appellant, v. ROBERT C. McKEE et al., Defendants, Cross-complainants and Respondents LINDA HILL, as Assessor, etc., Cross-defendant and Appellant.

No. A117325.

Court of Appeals of California, First District, Division Five.

August 15, 2008.

Morgan Miller Blair, Christian M. Carrigan, Kevin R. Brodehl, Todd A. Williams, Bryan W. Wenter; Wendy B. Chaitin, Interim County Counsel, Richard D. Hendry, Deputy County Counsel and Deputy District Attorney, for Plaintiff, Cross-defendant and Appellant and for Cross-defendant and Appellant.

Edmund G. Brown, Jr., Attorney General, Mary E. Hackenbracht, Assistant Attorney General, Richard M. Thalhammer and Ellyn S. Levinson, Deputy Attorneys General, for California Department of Conservation as Amicus Curiae on behalf of Plaintiff, Cross-defendant and Appellant and for Cross-defendant and Appellant.

Jennifer B. Henning for California State Association of Counties as Amicus Curiae on behalf of Plaintiff, Cross-defendant and Appellant and for Cross-defendant and Appellant.

Christian C. Schuering and Jack L. Rice for California Farm Bureau Federation and Sierra Club as Amicus Curiae on behalf of Plaintiff, Cross-defendant and Appellant and for Cross-defendant and Appellant.

Allen Matkins Leck Gamble Mallory & Natsis, James L. Meeder, Michael P. Durkee and David H. Blackwell for Defendants, Cross-complainants and Respondents.

OPINION

SIMONS, Acting P. J.

In 1965, the Legislature confronted two troubling trends in California: the loss of agricultural land to development and the haphazard growth of suburbia, requiring the "extension of municipal services to remote residential enclaves, and interfer[ing] with agricultural activities." (Sierra Club v. City of Hayward (1981) 28 Cal.3d 840, 850 [171 Cal.Rptr. 619, 623 P.2d 180] (Sierra Club), superseded by statute on other grounds as stated in Friends of East Willits Valley v. County of Mendocino (2002) 101 Cal.App.4th 191, 204-205 .) "The Legislature perceived as one cause of these problems the self-fulfilling prophecy of the property tax system: taxing land on the basis of its market value compels the owner to put the land to the use for which it is valued by the market." (Sierra Club, at p. 850.) In response, it enacted the Williamson Act (Gov. Code, § 51200 et seq.),¹ which employs a two-step strategy to conserve agricultural lands. The local government first establishes and regulates agricultural preserves, and then executes land conservation contracts with landowners. (§§ 51230-51239, 51240-51257.) These contracts limit the land to agricultural and compatible uses for their duration and may also include terms and conditions more restrictive than those required by the Williamson Act. (§§ 51240, 51243, subd. (a).) In return for accepting restrictions on the land, the landowner is "guaranteed a relatively stable tax base, founded on the value of the land for open space use only and unaffected by its development potential." (Sierra Club, at p. 851.) The hallmark of this statutory scheme is its reliance on voluntary agreements between the government and the landowner, where the landowner chooses, on an annual basis, to accept certain limits on his or her use of the land in return for an explicit property tax reduction.

In 1977, plaintiff County of Humboldt (County) and Arthur Tooby made, and entered into a Williamson Act contract, which covered a "Class B" agricultural preserve consisting of approximately 12,580 acres. Among other things, this contract set a minimum parcel size of 160 acres for subsequent divisions of the land, consistent with the agricultural preserve guidelines then in effect. One year later, through Resolution No. 78-64, the County Board of Supervisors (the Board) revised those guidelines, increasing the minimum parcel size for divisions to 600 acres (the 1978 Guidelines). In 2000, defendants Buck Mountain Ranch Limited Partnership (BMR), Robert C. McKee and Valery McKee,² purchased this acreage, and then divided and sold much of the land. Though each parcel sold was larger than 160 acres, some were less than 600 acres.

In 2002, County sued McKee and others for violation of the Williamson Act, violation of the Subdivision Map Act (§ 66410 et seq.), breach of contract, nuisance, and violation of the Unfair Competition Act (Bus. & Prof. Code, § 17200 et seq.). BMR filed a cross-complaint against County and the County Assessor (Assessor), alleging Assessor continued to assess property taxes to BMR for parcels transferred to third party purchasers. The trial court ruled in favor of McKee. It relied upon the contract clauses of the state and federal Constitutions (U.S. Const., art. I, § 10; Cal. Const., art. I, § 9) to conclude that the 1978 Guidelines could not be applied constitutionally to a Williamson Act contract executed in 1977. We disagree and reverse. Subsequent to the adoption of the 1978 Guidelines, the parties voluntarily renewed their contract numerous times, and the new contract created with each renewal incorporated the 1978 Guidelines.

BACKGROUND

The Tooby Guidelines

On February 1, 1977, the Board adopted resolution No. 77-19, which established approximately 12,580 acres of the 13,700-acre Tooby Ranch as a Class B agricultural preserve (Tooby Preserve). On February 15, 1977, the Board rescinded resolution No. 77-19 and replaced it with resolution No. 77-30 (the Tooby Guidelines), which contained a corrected legal description of the Tooby Preserve.³ The Tooby Guidelines provided in part: "WHEREAS, the land to be included within the agricultural preserve is, and will continue to be, used for the purposes of producing agricultural commodities for commercial purposes and uses compatible with agriculture; and [¶] WHEREAS, this Board is authorized by statute to determine according to uniform rules what constitutes a compatible use of land within each preserve; [¶] NOW, THEREFORE, BE IT RESOLVED as follows: [¶] 1. The hereinafter described real property located in the County of Humboldt is hereby designated and established as an agricultural preserve within the meaning of and pursuant to the [Williamson Act], including amendments thereto, and shall be known as and may be referred to as: [¶] Agricultural Preserve No. 77-19." (Original underscoring.)

The Tooby Guidelines listed compatible uses permitted on the Tooby Preserve. The guidelines further provided that "The land described herein shall not be divided if, as a practical matter, it would result in the reduction of land devoted to the production of agricultural commodities for commercial purposes. This section shall not prohibit a division of land if the parcels created thereby are of such size, shape and other physical characteristics that they are capable of producing agricultural commodities and if as a practical matter the amount of land devoted to agricultural uses will not be reduced. All divisions of land shall comply with all applicable local ordinances and State laws."

The Tooby Contract

On February 1, 1977, the same day the Board established the Tooby Preserve, Arthur Tooby entered into a Williamson Act contract with County (Tooby Contract).⁴ The Tooby Contract restricted the Tooby Preserve to agricultural and compatible uses.

The Tooby Contract stated, in relevant part, "WHEREAS, OWNER warrants that he owns certain land particularly described hereinafter, which is presently devoted to agricultural and compatible uses; and [¶] WHEREAS, said land is located in an agricultural preserve heretofore established by COUNTY by Resolution No. 77-19, and [¶] WHEREAS, both OWNER and COUNTY desire to establish binding restrictions which will limit the use of said land to agricultural and compatible uses: [¶] NOW, THEREFORE, the parties agree as follows: [¶] 1. This contract is made and entered into pursuant to the [the Williamson Act] and is subject to all the provisions of said Act as it now exists. [¶] ... [¶] 3. During the term of this contract or any extension thereof, the land described herein shall not be used for any purpose other than agricultural uses, as defined by said Act, or those `compatible uses' as set forth in Resolution No. 77-19. [¶] 4. This contract shall be effective on the date first written above, hereinafter the anniversary date, and shall remain in effect and shall be for an initial term of ten (10) years. On the first anniversary date and on each succeeding anniversary date, one year shall automatically be added to the unexpired term unless notice of non-renewal is given as provided by law. [¶] 5. This contract shall run with the land described herein and shall be binding upon, and inure to the benefit of, all successors in interest of the OWNER. [¶] 6. Land subject to this contract may not be divided into parcels of less than 160 acres except for purposes of rental or lease for agricultural and compatible uses provided no additional dwellings shall be constructed or placed upon such divided parcels."

The 1973 and 1978 Guidelines

Resolution No. 73-163 (1973 Guidelines), adopted by the Board on December 18, 1973, was in effect at the time the Tooby Contract was executed. The 1973 Guidelines set forth the regulations governing agricultural preserves, and provided in part, "Land within a Class A preserve and under contract may not be divided into parcels less than 20 acres. Land within a Class B preserve and under contract may not be divided into parcels of less than 160 acres."

On March 28, 1978, the year after the Tooby Preserve was established and the Tooby Contract was executed, the Board adopted the 1978 Guidelines. The 1978 Guidelines set forth revised regulations governing agricultural preserves, and stated in part, "Land within a Class B preserve and under contract shall not be divided into parcels smaller than 600 acres. Land within a Class A or C preserve and under contract shall not be divided into parcels...