Fresno County audit finds questionable Williamson Act properties

What do a gun club near Kerman, an abandoned asbestos mine north of Coalinga and a landscape company outside Clovis have in common?

They’ve all enjoyed tax breaks designed for farmers — even though they’re not farms.

This is just the tip of the iceberg, according to a new Fresno County audit that suggests there are hundreds of nonagricultural sites receiving agricultural tax benefits.

The upshot is that the county, cities and schools are potentially missing out on millions of dollars of tax revenue.

A Bee story this year reported a handful of questionable tax reductions under the Williamson Act, a 47-year-old state program that allows counties to cut property taxes for farmers as a way of encouraging farmland preservation.

The beneficiaries include an oil company and housing developer both getting tens of thousands of dollars in tax breaks annually. Debbie Poochigian, who sits on the county Board of Supervisors that oversees the tax program, also gets a tax break.

The audit suggests that unwarranted tax benefits are not limited to a few property owners slipping through the system’s cracks.

The audit alleges chronic problems in how Fresno County computes taxes under the Williamson Act, from assessing parcels inconsistently to bad record-keeping, resulting in widespread errors.

About 5% of the audited properties, those receiving the agricultural tax breaks, aren’t likely in agriculture. More than 20% of the properties are assessed a tax that is based on old and potentially incorrect information, the audit finds.

County Assessor Paul Dictos took office two years ago and immediately pledged to address the issue, starting with a complete accounting of the problem. He commissioned the audit by an independent contractor.

Still, Dictos said he was surprised by the extent of the flaws revealed in his audit, calling the findings an embarrassment to the county.

“We had no idea that Fresno County’s tax-incentive dollars were funding these kinds of property owners,” Dictos said.

Fixing the problems, Dictos said, could generate a minimum of $2 million of additional tax revenue a year for public programs, and likely more.

Making changes

Dictos said he plans to begin updating county procedures for assessing farmland, a start to tackling the issues identified in the audit.

This is a lot easier said than done. His effort almost certainly will require support — and cash –from a county Board of Supervisors that has been skeptical of his previous attempts to reform Williamson Act tax benefits.

Not only has Dictos tried to crack down on nonfarm properties that get farm tax cuts, he has reduced tax breaks for farmers who allegedly weren’t paying their required share of taxes under the Williamson Act.

The majority of county supervisors have been critical of Dictos raising taxes on farmers.

Supervisor Phil Larson, who represents the county’s rural west side, agrees that the audit’s findings should be addressed. But he said the county needs to proceed cautiously to make sure benefits are eliminated only for people who don’t deserve them — not for farmers.

“The assessor has already raised taxes on these property owners,” Larson said.

Dictos said that updating his procedures and restoring the integrity of the Williamson Act will require, among other things, a costly new computer system for his office.

The system would replace a mostly paper-file database that he said is a big reason for the current problems.

Supervisor Henry Perea, who has been among the board minority supporting Williamson Act tax reforms, said he would try to accommodate Dictos.

“If he can make the argument that he’ll bring in revenue, we absolutely should staff him up and purchase the equipment he needs,” Perea said. “I think Paul’s right: There’s a lot of money that we’re leaving on the table.”

Agricultural tax breaks in Fresno County are worth as much as $30 million annually, depending on the year, more than in any other county. It’s money that would otherwise flow to county government, cities, special districts and schools.

Fresno County government alone forfeits about $4 million annually. The county’s discretionary budget is roughly $258 million.

Perea has proposed scaling back Williamson Act tax benefits to better fund local services. But the majority of the board has not been receptive to this idea. They say the tax incentives are vital for protecting farmland.

System debated

Property enrolled in the Williamson Act, per state law, is taxed according to its agricultural value, not its fair-market value. This is what accounts for the lower tax bills.

The 43-page audit, done at a cost of about $8,000, takes issue with how the Fresno County Assessor’s Office computes this reduction.

Independent contractor Joseph Preston of Apple Valley in Southern California sampled some of the 14,000 county parcels receiving agricultural tax breaks and concluded that information on farm property is housed in 11 different files and that much of it is conflicting, making it hard to know what the tax assessments should be.

His report says that one in five properties hasn’t been adequately reviewed in more than a decade, meaning many tax reductions are based on outdated information.

The report also suggests that county assessors sometimes weigh factors — how much a fruit tree is worth, for instance — differently, making for inconsistent billing.

A response to the findings by county appraisers, contained in the audit, says the issues are overstated. The response acknowledges old methods of record-keeping, but says employees know how to navigate the files. Appraisers stand by most of the tax calculations.

Still, 5% of the properties included in the audit were determined by Dictos to have no business being in the Williamson Act. As a condition of the Williamson Act, landowners are required to keep their land in agriculture, and some have not.

Officials with the county Public Works and Planning Department, which is responsible for enrolling property in the Williamson Act and reviewing it, said staffing levels don’t permit regular monitoring of the properties.

According to the audit, a farm that was turned into a landscape business at Chestnut and Alluvial avenues outside Clovis is getting Williamson Act benefits, saving close to $4,000 in taxes some years.

An abandoned asbestos mine on 340 acres west of Interstate 5 is receiving an annual Williamson Act tax break of about $1,400. The property was once used for grazing but that appears to have ceased decades ago.

Fresno Trap and Skeet, also known as the Fresno County Gun Club, is eligible for Williamson Act benefits as well, though it hasn’t received a tax break — due to a change in property value — in several years.

Planning officials say they’re reviewing properties alleged to be out of compliance with the Williamson Act.

The owners of the gun club and the landscape business already have been notified that their land will be removed from the benefit rolls.

By Kurtis Alexander