County of Kings v. Luther

Filed 4/25/07 County of Kings v. Luther CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Fresno County. Rosendo Pea, Judge.

Peter D. Moock, Kings County Counsel, Jeanette Cauble and Denis A. Eymil, Deputy County Counsel, for Plaintiff and Appellant.

Bill Lockyer, Attorney General, Tom Greene, Chief Assistant Attorney General, Mary E. Hackenbracht, Assistant Attorney General, and Linda Berg, Deputy Attorney General, for Defendants and Respondents.

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INTRODUCTION

The California Land Conservation Act of 1965 (Gov. Code,^[1] 51200 et seq.), also known as the Williamson Act (hereafter Williamson Act), authorizes local governments to establish agricultural preserves, consisting of lands devoted to agricultural and other compatible uses. Once a preserve is established, the local government may enter into renewable contracts with owners of agricultural land to restrict the use of the land for at least 10 years, in exchange for favorable statutory property tax assessment standards. (Sierra Club v. City of Hayward (1981) 28 Cal.3d 840, 851-852 (Sierra Club), superseded on other grounds by statute as recognized by Friends of East Willits Valley v. County of Mendocino (2002) 101 Cal.App.4th 191, 204-205.) As a result, however, the local government loses substantial property tax revenue. In 1971, the Open-Space Subvention Act ( 16140-16146) was enacted to provide replacement revenues to the local government lost by reason of the reduced property taxes assessed on property subject to a Williamson Act contract.

The local government has the statutory authority to cancel a Williamson Act contract upon the landowners petition. Upon cancellation, the county assessor must determine the cancellation value of the property, defined as the current fair market value of the land as though it were free of the contractual restriction, and the landowner must pay a cancellation fee of 12 percent of that fair market value. ( 51283, subds. (a) & (b).)^[2]

In the instant case, the Santa Rosa Rancheria Tachi Tribe (the Tribe) requested cancellation of a Williamson Act contract on a 20-acre parcel it owned in Kings County. The property was adjacent to the Tribes gaming facilities. The Tribe objected to the county assessors determination under section 51283 that the propertys fair market value was $724,000 and the cancellation fee was $90,500. The Kings County Board of Supervisors (the Board) granted the Tribes request for cancellation of the Williamson Act contract, and agreed with the Tribe that the propertys fair market value was $88,000 and the cancellation fee was $11,000. Upon learning of the reduction, the California Department of Conservation (the Department) requested all relevant documents and reviewed the Boards action. As a result, the Department decided the County of Kings (the County) violated the cancellation provisions of the Williamson Act when it reduced the propertys cancellation value from the assessors initial determination, and withheld $79,500 in subvention funds from the County, representing the difference between the two cancellation fees for the Tribes parcel. The Department advised the County it could pursue administrative review of the Departments action.

The County declined to pursue any administrative remedies and instead filed the instant petition for writ of mandate against the Department (Code Civ. Proc.,  1085), to compel the Department to pay the withheld subvention funds. The trial court denied the petition and found the Department had jurisdiction to withhold subvention funds and the County was obliged to exhaust its administrative remedies to challenge the Departments action. We will affirm.

STATEMENT OF THE CASE

On May 21, 2003, appellant, the County, filed a petition for writ of mandate in the Superior Court of Fresno County^[3]against respondents the Director of the California Department of Conservation, the California Department of Conservation (the Department), the Resources Agency of the State of California, the Secretary of the Resources Agency (the Secretary), and the Controller of the State of the California.^[4] The petition was supported by an administrative record of documentary exhibits. On or about July 24, 2003, the Department filed an answer to the petition.

On April 7, 2005, the Department filed a motion to expand the administrative record to include additional exhibits. On April 13, 2005, the Department filed an amended answer.

On April 18, 2005, the County filed opposition to the Departments motion to expand the administrative record. On April 22, 2005, the Department filed a reply to the opposition. On May 13, 2005, the Department lodged the administrative record with the trial court. On May 17, 2005, the court granted the Departments motion to expand the administrative record.

On May 26, 2005, the County filed points and authorities in support of the petition. On June 23, 2005, the Department filed points and authorities in opposition to the petition. On June 30, 2005, the County filed a reply to the opposition.

On July 8, 2005, the court conducted a hearing and denied the Countys petition. On August 3, 2005, the court filed an order denying the petition. On August 11, 2005, the notice of entry of order was filed.

On August 17, 2005, the County filed a timely notice of appeal.

On December 21, 2005, this court granted the Countys request for judicial notice. On March 14, 2006, this court granted the Departments request to lodge the administrative record. On April 12, 2006, this court granted the Departments request for judicial notice.

FACTUAL AND PROCEDURAL HISTORY

On December 16, 1985, Norman and Josephine Green entered Land Conservation Contract No. 1915 (contract No. 1915) with the County, in which several properties they owned in Kings County would be devoted to agricultural purposes pursuant to the terms of the Williamson Act, and the contract only could be cancelled subject to the proceedings and penalties set forth in the Williamson Act. One of the properties within the terms of the contract was identified as APN 024-160-04, consisting of approximately 19.09 acres. This property is the subject of the instant action.

In 1994, the Santa Rosa Rancheria Tachi Tribe (the Tribe) purchased the subject property for $80,000 (20 acres x $4,000 per acre). In 1998, the Williamson Act contract on the property was renewed until 2008. The property was located on the corner of Jersey and 17th Avenues in Kings County, adjacent to the Santa Rosa Rancheria and the Tribes gaming operations.

On November 22, 1999, Clarence Atwell, Jr., the Tribes chairman, sent a letter to William Zumwalt, the Countys planning director, and requested to cancel the Williamson Act contract on the 20-acre parcel identified as APN 024-160-004. Mr. Atwell stated the parcel was bounded on two sides by tribal trust land, on the third side by an easement for access to the Tribes gaming center, and it was at one time held in fee by a tribal member. The tribe initially acquired the land to provide continuity in tribal land use patterns but now intends to develop it for additional overflow parking and possible community infrastructures such as a fire station.

On November 23, 1999, the Tribe filed a petition for cancellation of contract No. 1915.

The Tribe thus wanted to add the parcel to federal trust status, and requested cancellation of the Williamson Act contract because the Bureau of Indian Affairs required removal of all restrictions before tribal property could be placed in trust. (See, e.g., Friends of East Willits Valley v. County of Mendocino, supra, 101 Cal.App.4th at pp. 198-201.) At the time of the Tribes petition, the parcel was vacant and designated for general agricultural purposes.

The County Assessors Report

On March 6, 2000, George Misner, the Countys assessor, prepared a report for the Countys planning department as to the cancellation of the Williamson Act contract on the Tribes parcel. The assessors report stated that prior to the cancellation of a Williamson Act contract, section 51283 required the assessor to determine the current fair market value of the land as though it were free of the contractual restriction. (Bolding and underscoring in original.)

It is the opinion of the appraiser the subject site is in a transitional stage. The highest and best use, and the most probable usage of the subject site that is physically possible, supported by surrounding usages and legally permissible would be commercial use. Example would be Hotel, Parking Lot, or other use compatable to the existing casino. (Italics added.)

The assessors report examined sales prices for four comparable parcels, taken from transitional sales on the fringe of city limits. These comparable sales occurred from 1995 to 1997, and ranged from $35,000 per acre for a 21-acre parcel, to $44,000 per acre for a 56-acre parcel. The assessors report gave the most weight to a 34-acre parcel, which was sold at $31,000 an acre in 1995, because it was an agricultural-use property in a transitional phase.

The assessors report concluded the Tribes parcel had a reconciled value of $32,000 per acre, the value of the parcel was $584,000 (18.25 acres x $32,000 per acre), plus $140,000 in improvement value for asphalt, curbs, lights, and landscape, for a total fair market value of $724,000.

On May 1, 2000, Steven Sopp of the Countys planning agency sent a memo to Mr. Misner, and acknowledged receipt of his report. Mr. Sopp noted the Williamson Act required a cancellation fee of 12 percent of the propertys value and, based on an assessed value of $724,000, the cancellation fee on the Tribes property would be $90,500. Mr. Sopp asked for confirmation whether this was the final assessment determination.

On May 19, 2000, Patricia Gatz of the California State Department of Conservation (the Department) sent a letter to Mr. Sopp about the cancellation of the Tribes contract. Ms. Gatz reminded Mr. Sopp that cancellation of a contract under the Williamson Act required the Board to make appropriate findings that cancellation was consistent with the purposes of the act or in the public interest. This letter did not address the valuation of the Tribes parcel or the cancellation fee.

The Tribes Protest

On May 22, 2000, Tom Moshier, the Tribes development director, sent a letter to Mr. Misner and acknowledged receipt of the assessors report on the fair market value of the Tribes parcel, but declared the Tribes objections to the assessors determination that the propertys fair market value was $724,000, based on $32,000 per acre, because it was clearly an exaggeration of the fair market value of the parcel.

Fair market value is defined, as the price the property would bring if freely offered on the open market with both a willing buyer and willing seller. Santa Rosa Rancheria has been offered several parcels over the past year in the immediate area at prices in the range of $3000 to $7000 an acre. The Tribe has refused to negotiate with those owners. If the subject property were offered for sale at a price of $725,000, the Tribe would refuse. Without the Tribe as a willing buyer a determination of fair market value would not apply under the above definition. Clearly the Tribe would be able to utilize the subject parcel to its highest and best use.

Mr. Moshier suggested the parcels fair market value should be compared with the Tribes purchase of another property in the area in October 1998, consisting of 760 acres which it purchased for $1,447.35 per acre,^[5]an amount which was substantially higher than other sales in the area. The Tribe paid a higher price for this property as it was needed for future potential housing. Most of the comparable sales at the time the Tribe purchased this parcel were in the $800 to $1100 an acre range.

Mr. Moshier explained the Tribes purchase of 760 acres in 1998 was a more realistic comparable property to the subject property because (1) the 760-acre parcel was located in direct proximity to the subject property and (2) the most recent comparable on Mr. Misners list was from July 1997, whereas the assessment should be based on a comparable sales which occurred closer in time. Mr. Moshier also challenged the assessors transitional description of the subject property:

A transitional stage would be when a parcel is going from one type of zoning ... to another type of zoning ... as you stated in your evaluation. The change of zoning would allow for the change in applications for the parcel. This change in applications creates the additional increase in value.

There are no provisions in the Countys current general plan for commercial zoning in this section of the county. I have confirmed this fact with Bill Zumwalt [the Countys planning director]. Therefore an adjustment for commercial usage is not justified. No attempt to rezone the parcel for commercial use has been attempted.

The assessment on this parcel must be based upon a transition from an agricultural zoning subject to the Williamson Act to an Agricultural zoning not in the Williamson Act. Valuation of the land as commercial land once it is placed into Trust would not fall under the Countys jurisdiction.

The County has a fiduciary duty to appraise this property on a fair market value basis. The current appraisal is excessive and goes against the spirit of the relationship between the Santa Rosa Rancheria and Kings County. (Italics added.)

The Tribe requested reassessment of the subject property at a fair market value of $28,947 (20 acres x $1,447.37 per acre) plus $140,000 for improvements, for a total of approximately $170,000, which would be more in line and would possibly be acceptable.

On May 29, 2000, the California Department of Transportation (Caltrans), sent a letter to Mr. Sopp about the requested cancellation of the contract on the Tribes property. Caltrans noted the Tribe currently had a project under construction, which consisted of a 105,600 square foot building for a casino, offices, dining, and multi-purpose space. Caltrans was aware of the Tribes plans to build a parking lot, fire station, and community center on the subject property, and listed the various street improvements which would be necessary.

The Countys Reply

On June 1, 2000, the County replied to the Tribes objections to the assessors valuation of the subject property. The County pointed out that the Tribe failed to consider one of the fundamental precepts of the appraisal process, which is that the property must be valued at its highest and best use.

In this case, the highest and best use is very clearly the Rancherias intended use of the property in conjunction with its commercial development. That is the only reason we are going through this processto allow the change of use proposed by the Rancheria.

To argue that this is not a transitional property, merely because the County has no zoning or general plan provisions allowing such commercial uses in the future is circular reasoning. It would make no sense for the County to have such provisions. The property is currently under a Williamson Act contract which prevents any such use for at least ten years. If the cancellation of the contract is approved, the property is intended to be annexed to the trust lands of the Rancheria, and County zoning and general plan provisions would be inapplicable to the parcel. ... [I]f the cancellation is approved and the property transferred into trust, both the Williamson Act restrictions and the zoning and general plan limitations would become inapplicable. Under such circumstances, the Rancheria would then be free to develop the property commercially, which is exactly what it intends to do. The Assessor may not lawfully ignore this reality.

Given the Tribes clearly stated intention to use the property for commercial purposes, and the assessors statutory duty to determine the propertys value as if it were free of contractual restriction, there was little doubt the assessor correctly determined the propertys cancellation value at its highest and best use, and the assessor would not reconsider the valuation. The County advised the Tribe that it could appeal the assessors determination to the Board, pursuant to Revenue and Taxation Code section 1604.

The Planning Departments Recommendation

On or about June 6, 2000, Bill Zumwalt and Steven Sopp of the Countys planning department submitted a memo to the Board, and recommended approval of the Tribes petition to cancel the Williamson Act contract. The memo noted that the Tribe would have to pay a penalty to the State of California equal to 12 percent of the assessed value of the parcel as though the land was not restricted by a Land Conservation Contrast. In 1999-2000, the property taxes on this parcel were $2,518.40.

The Countys planning department recommended approval of the Tribes request for cancellation because it was in the public interest for the Tribe to put the parcel into trust, several surrounding parcels were already in the trust, and those parcels were developed with houses, community facilities, and the Palace bingo operation. The subject property was contiguous to the existing development.

The Tribe intends to construct public facilities such as a fire station and a community center. They also intend to construct a parking lot for their Palace bingo operation. Tribal land is not subject to County control. The tribe has its own Tribal Council and they control land use decisions for land in trust. However, the Tribe cannot place this parcel into trust until the [Williamson Act] contract is cancelled.

The planning departments memo did not address the propertys fair market value, but attached the assessors report, that the propertys fair market value was $724,000. The planning departments memo also attached a proposed resolution for the Boards approval, which tentatively granted the Tribes petition to cancel the Williamson Act contract, found the cancellation fee was $90,500, and the Tribe had to pay that fee to the county treasurer within one year before the final certificate of cancellation could be recorded.

The Boards June 6, 2000 Hearing

On June 6, 2000, the Tribe filed an application with the Board to reduce the assessors determination of the propertys fair market value from $724,000 to $220,000 ($80,000 for the land and $140,000 for the improvements).

Also on June 6, 2000, the Board conducted a public hearing to consider the Tribes petition to cancel the Williamson Act contract. According to the hearings minutes, the supervisors questioned the assessors valuation of the property, and whether the assessment was based on commercial developments, whereas the comparable sales were from residential developments. The county counsel replied the evidence supported the assessors valuation. An assistant county counsel explained the Tribe wanted to appeal the valuation, and such an appeal had to be heard at another hearing. The Board delayed any final decision until it considered the Tribes appeal of the propertys valuation and cancellation penalty.

The Tribes Further Protest

On June 8, 2000, the Tribes attorney filed a further protest with the Board as to the assessors determination that the propertys fair market value was $724,000. The Tribe disputed the valuation, regardless of whether it was based on fair market value or highest and best use.

The Tribe agrees that the land is transitional property and that its use will change (assuming arguendo, that the Board of Supervisors cancels the Williamson Act Contract) from agricultural to commercial. Using Highest and Best Use, however, the property is grossly over-valued. The [accessors] appraisal of March 6, 2000, used subject comparables taken from transitional sales on the fringe of the Hanford City Limits. The most weight in reconciliation was given to comparable No. 2 out of four parcels, being located just west of the Hanford Mall. This is not a realistic comparable, as this disregards the fact that there is little economic commercial value in [the subject property] to any prospective purchaser except the Tribe, because the Tribe may then convey the property to be held in trust by the United States for the Tribe.

The Tribe acknowledged that under the usual circumstances, the subject property would be within the Countys general plan for commercial zoning, but there were no provisions for commercial zoning in that area, and the Tribes property was not subject to County zoning ordinances.

The point is that no prospective purchaser other than the Tribe could obtain commercial property in this section of the county. Therefore, a more realistic valuation would value the land based on comparable sales of agricultural land in the area adjacent or nearby to the subject parcel; or, at the least, would find a medium between the valuation at its agricultural versus commercial value.

The Tribe again urged the County to consider the suggested comparable value of $1,447.37 per acre, based on the Tribes purchase of 760 acres in October 1998. The Tribe expressed its desire to negotiate and settle the matter as soon as possible.

On June 13, 2000, the Tribe amended its application to cancel the Williamson Act contract, and declared the propertys fair market value was $88,000 and the 12 percent cancellation fee was $11,000.

The Boards June 27, 2000 Hearing

On June 27, 2000, the Board, sitting as the Countys Board of Equalization, conducted a public hearing on the Tribes appeal of the assessors determination of the propertys cancellation value and fee. The Tribes lawyer concurred with the assessors appraisal method of using the propertys highest and best value, and agreed the subject property was in transition from agricultural to commercial use. However, he challenged the assessors comparable properties and argued the subject property provided the best comparable consideration. The Tribes lawyer noted the Tribe purchased the property for $4,000 per acre in 1994, which was more than the $960 per acre the property would have been sold at, if it were not in transition. He requested amendment of the propertys assessment to $80,000 (20 acres x $4,000 per acre), with an adjustment factor of 10 percent for rising land values, for a total value of $88,000, such that the 12 percent cancellation fee would be $11,000.

Mr. Misner, the assessor, testified the original assessment was $724,000, and included $140,000 in improvements. According to the minutes of the meeting:

Mr. Misner testified that the issue of improvements had been in question all along and that the Department of Conservation would not clarify as to how the issue of improvements should be handled. The amount for improvements has been left in the figure as to not compromise the value without formal direction from the Board.

Mr. Misner stated that the other reason the property was assessed at such a high value was because the only notable case on this was a suit by the Department of Conservation against the Assessor. The Government Code speaks of the Assessor setting this value, which is outside of the normal procedure taken to assign values by selecting some transitional comparables around Hanford to determine the value of 724,000.

The Board discussed the location of the comparable properties, whether the properties were in transition, if city services were accessible, and the factors driving sales prices of transitional properties. The Tribes lawyer stressed the Tribe purchased the subject property at a premium in 1994, well above market prices.

Creig Marcus, the Tribal administrator, asked the Board to consider the public use of the land, the property was ancestral tribal land, and the land did not have a value to the Tribe if it was not in trust. Dore Beitz of the California Indian Land Office explained it was very difficult to place land in trust, most tribes had to wait 10 years to put their land in trust, a tribe had to show the land was free and clear of encumbrances, and the Williamson Act contract was considered an encumbrance.

Supervisor Taylor was concerned about valuing the property too low and the ramifications of such an action. Supervisor Rachford stated there was a compelling argument that the Tribes property should be valued at $88,000 because it was not in trust, and the assessors comparable comparisons were not accurate. Supervisor Neves requested amendment of the assessment to reflect the propertys value at $88,000, with zero improvements. The Board voted four to zero (with one member absent) to accept the propertys value at $88,000 for purposes of cancelling the Williamson Act contract, and directed the county counsel to write a decision.

The Boards Findings

On July 11, 2000, Bill Zumwalt of the Countys planning department submitted an amended report and recommendation as to the tentative cancellation of the Williamson Act contract on the Tribes property, based on the Boards decision at the hearing to accept the reduced fair market value of $88,000. The amended report stated that after the Tribes appeal, the propertys fair market value would be set at $88,000 and the 12 percent cancellation fee would be $11,000.

Also on July 11, 2000, the Board, sitting as the Countys Board of Equalization, issued its ruling as to the Tribes appeal of the propertys fair market value. The ruling acknowledged that the Board was required to determine the propertys current fair market value, there was a presumption the assessor properly performed his duty and assessed the property fairly, but the Tribe had overcome this presumption based on the evidence presented to the Board. The assessor may choose the most appropriate method of value, and the assessor herein had used the comparable sales approach and determined the property was transitional. The Board relied upon the Tribes evidence that it purchased comparable property for $80,000 in 1994, plus a 10 percent inflation factor, to reach a fair market value of $88,000.

The Assessors overall approach to value is unreasonably high, given the propertys location, prospective use and market activity. [The Tribes] value based on the purchase price and a reasonable inflation factor more accurately reflects the current fair market value of this property. The existing improvements should not be included in the valuation determination.

The Board granted the Tribes appeal, found the Tribe had overcome the evidentiary presumption in favor of the assessors valuation, and also found there was substantial evidence submitted at the hearing to support the Tribes opinion that the propertys fair market value was $88,000.

The Board also filed a resolution which granted the Tribes petition to cancel the contract and to reconsider the assessors valuation. In the resolution, the Board found cancellation of the contract was in the public interest so the Tribe could place the property in trust; several surrounding parcels were already in trust and contained the Santa Rosa Rancheria, and were already developed with houses, community facilities, and the Palace bingo operation; the subject property was contiguous to that development; and surrounding parcels that were not in trust could not be developed because they were subject to Williamson Act contracts. The Tribe intended to construct public facilities such as a fire station, senior center, and a parking lot for the Tribes bingo operation.

Once the site is in Trust, Kings County will no longer have land use authority over the parcel. Thus any use of the land after it is placed into Trust is outside the jurisdiction of Kings County and no land use approvals will be required from the County. The only finding the Board can make is that the future use of the site will be outside of the Countys land use jurisdiction after it is placed in Trust. Whatever use the land is put to after it goes into Trust is not within the land use jurisdiction or land use authority of the County.

The Boards resolution also addressed the Tribes challenge of the assessors valuation:

Based upon the cancellation valuation of the property determined by the County Board of Supervisors under Government Code Section 51203 and the evidence in the record, this Board determines and certifies to the County Auditor that the cancellation value of the parcel is $88,000 and the cancellation fee is $11,000.

The resolution stated that five supervisors voted yes, without any votes in opposition.

On July 19, 2000, the County filed the certificate of the tentative cancellation of the Williamson Act contract with the Tribe. A certificate of cancellation would be issued upon payment of the $11,000 cancellation fee. Thereafter, the Board filed a notice of tentative cancellation.

The Departments Objections

On August 9, 2000, the Department sent a letter to the Countys planning department and inquired about the Boards reduction of the fair market value and cancellation penalty on the Tribes property. The Department noted the large discrepancy between the assessors initial determination and the Boards decision, and requested all documentation relating to the reduction in the fair market value and cancellation fee.

On August 14, 2000, Mr. Zumwalt, the Countys planning director, advised the Board about the Departments inquiry into the reduction of the fair market value and cancellation penalty for the Tribes property, and that the planning department was forwarding all relevant documents to the Department. Mr. Zumwalt noted the Tribe had already paid the cancellation fee to the County.

On August 21, 2000, Steven Sopp of the Countys planning agency, sent the requested documents to the Department, as to the Boards cancellation of the Williamson Act contract on the Tribes property and the Tribes appeal of the assessors determination of the propertys fair market value and cancellation fee. Mr. Sopp noted the County had notified the Department twice by phone about the Boards hearing on the matter.

On October 2, 2000, the certificate of cancellation of the Tribes Williamson Act contract was recorded in Kings County.

On October 5, 2000, Mr. Sopp sent a check for $11,000 to the State Controller, as payment of the cancellation fee of the Tribes Williamson Act contract No. 1915, APN 024-160-004, based on the propertys assessed value of $88,000.

On May 16, 2001, Dennis OBryant, manager of the Williamson Act program for the Department, sent a letter to Mr. Misner, the Countys assessor, that the Department was reviewing the Boards reduction of the fair market value and cancellation penalty on the Tribes property. Mr. OBryant noted that in March 2000, the assessor determined the propertys cancellation value was $724,000 and the cancellation fee was $90,500, but the Board reduced the propertys value to $88,000 and the cancellation fee to $11,000.

Since the date the cancellation fee was reduced, the Tribe has revised its alternative use to exclude the commercial development. What would be the difference in the cancellation value and cancellation fee you established in March 2000 if the commercial use had not been included in the proposed alternative use?

Comparables from transitional sales on the fringe of city limits were used for the March 6, 2000 cancellation value computation. We would like to obtain information on the location of these comparable sales, and any other information or data that was used to establish the cancellation value and cancellation fee.

Mr. OBryant requested all documents the County relied upon to reduce the propertys cancellation value and fee.

On May 23, 2001, the County sent the requested documents to the Department.

As to your question related to the value of the property if the commercial use had not been included in the proposed alternative use, the Assessor does not really understand the question. In addition, the Assessors office does not intend to engage in speculative appraisal at this point. The basis for the Assessors original determination of value was presented to the Board, as was the basis for the [Tribes] position on the issue of value.

On June 1, 2001, the Department advised the County that it had reviewed the initial information about the Boards reduction of the propertys fair market value and cancellation fee, but it needed additional information to continue the review, including a copy of the original Williamson Act contract, the Countys rules and ordinances, the date the Tribe purchased the property, a map of the area which identified the locations of the Tribes casino and the property, the date the casino was built, and the status of the Tribes application to place the property in trust.

On June 7, 2001, the Countys planning department sent the requested information to the Department, but noted:

[I]t appears the Department ... is trying to get the County to do most of the research for your action against us. Why would we do that?

The planning department did not know when the Tribe purchased the subject land, when it built the casino, or the status of its request to place the subject property in trust.

The Departments Notice of Violation

On October 31, 2002, the County filed an application as to the Open-Space Subvention Act, requesting a total of $2,975,816.34 in subvention payments from the State of California.

As of February 28, 2003, the Department filed a report as to payments to be made to counties from the Open-Space Subvention Act, for the fiscal year of July 1, 2002 to June 30, 2003. The Department determined the County would receive subvention payments of $2,896,314. The report stated the Department had withheld $79,500 because the County violated section 51283 when it cancelled the Tribes Williamson Act contract.^[6]

On March 27, 2003, Erik Vink, the Departments assistant director, sent a notice of a Williamson Act violation to the Board, based on the Boards reduction of the propertys fair market value and the cancellation fee of over 88 percent of the Assessors calculation. This fee payment has been received by the State.

The Department has determined, based on the documentation provided by the County, that the reduction of the cancellation fee by the Board of Supervisors constitutes a violation of Government Code section 51283, which requires the cancellation valuation of the land, for the purpose of determining the cancellation fee, be based upon the current fair market value of the land as though it were free of the contractual restriction. Therefore, pursuant to Government Code section 16146 and Title 14, California Code of Regulations section 14119, the Department is withholding subventions in the amount of $79,500 for the fiscal year 2002-2003. This amount represents the discrepancy between the Assessors valuation and the Boards valuation ($90,550 - $11,000) in violation of section 51283 of the Government Code. Accordingly, the Department will certify to the State Controller $2,896,314 for payment to Kings County and suspend payment of $79,500 for violation of Government Code section 51283. (Bolding in original.)

Mr. Vink advised the County that it had the right to appeal, pursuant to California Code of Regulations, title 14, section 14120, by requesting an informal hearing with the Department, and the failure to request such a hearing within 60 days would constitute a waiver of the right to a hearing.

The Countys Objections

On April 1, 2003, the County advised the Department that withholding subvention funds was unauthorized and in violation of law.

We know of no authority that would allow the Department of Conservation to determine the amount of the Williamson Act cancellation fee under Government Code section 51283. That obligation is placed initially upon the county assessor under Section 51283 and, if appealed under Section 51203, upon the county board of equalization or assessment appeals board. There are no provisions in the Williamson Act for review and determination of the amount of the cancellation fee by the State Department of Conservation. If the State is unhappy with the assessors or the boards determination of the amount of the fee, it may timely seek an appropriate judicial remedy [of administrative mandamus], but it may not unilaterally and without statutory authority make a fee determination of its own.

The County rejected the Departments reliance on the regulatory scheme as not supportive of its argument, and argued there was no statutory authority for the Department to determine the amount of the cancellation fee.

The County requested the Department withdraw from its intent to withhold subvention funds, or it would consider appropriate legal remedies, which may or may not include a request for an informal hearing with the Department under 14 CCR section 14120.

On April 15, 2003, the Department advised the County that it was reviewing the Countys objections to withholding subvention funds.

On April 17, 2003, the County advised the Department that the failure to certify the appropriate amount of subvention funds constituted a violation of the Williamson Act and the Open-Space Subvention Act, and the Board was going to consider legal action to enforce the Countys rights.

The Departments Decision

On April 23, 2003, the Department advised the County that it had denied the Countys objections to withholding subvention funds. The Department had the statutory authority to enforce the provisions of the Williamson Act, including the assessors statutory duty to determine a propertys fair market value and cancellation fee. The Department stated the assessor properly complied with the Williamson Acts statutory requirements and calculated the propertys cancellation fee based on the current fair market value of the land free of the contractual restriction, as required by section 51283.

However, the County Boards action to dramatically reduce that fee in the absence of substantive supporting factual evidence diminished the effect and dissuasive purpose of the cancellation fee, and thereby diminished the enforceability of the restrictions upon which the constitutional basis for preferential tax treatment of Williamson Act contract holders relies.

The Department believes the action taken by the County Board in reducing the cancellation fee in reliance on a purely speculative value other than the unrestricted fair market value of the property constitutes a violation of the Williamson Act. In reducing the cancellation fee, the County Board could not consider any assessment-based factors other than those relating to the current unrestricted fair market value, since the Legislature has made clear that cancellation fees are penalties, not taxes. If, as the Department believes, the County Board undertook the reduction in the cancellation fee on any basis other than the current unrestricted fair market value of the property, the County assumed liability for any reduction in the fee determined to result from the improper valuation, since that reduction would, in effect, constitute a gift of public funds otherwise payable to the States general fund, and also result in an over-claim of subventions in a subsequent application for subventions by the County. Violations of the Williamson Act by a county receiving open space subventions may result in a determination of ineligibility for open space subventions pursuant to Government Code section 16146.

The Department acknowledged that the Tribe could appeal the assessors valuation to the Board, but the Department had not been a party to the original contract and had separate and distinct avenues to enforce the statutory and regulatory provisions of the Williamson and Open-Space Subvention Acts, through sections 16144 and 16146.

The County has not demonstrated to the Departments satisfaction that it followed the requirements of section 51283. If the County can provide sufficient evidence in support of its reduction of the fee, in accordance with section 51283, the Department will certify the suspended amount of subventions to the Controllers Office for payment. However, without such factual basis for the reduction in the cancellation valuation and resulting fee, the Department has determined that the County violated the Williamson Act and will suspend payment of $79,500 in subventions for fiscal year 2002-2003.

On May 15, 2003, the county counsel advised the Departments legal office that the Board had authorized filing a petition of writ of mandate to challenge the Departments jurisdiction to withhold subvention funds.

Thereafter, the County and the Department agreed to stay the informal hearing process and toll the 60-day filing period pending the outcome of the Countys jurisdictional challenge. Thus, the County preserved its ability to proceed with administrative remedies if the petition was denied.

The Administrative Petition

The instant action began on May 21, 2003, when the County filed a petition for writ of mandate against the Department. The County alleged it had made a timely request to the state for subvention funds for the 2002-2003 fiscal year, the Department improperly withheld $79,500 from the subvention payment because of the dispute over the cancellation fee for the Tribes property; the Departments action was unlawful, unauthorized, and in excess of its statutory jurisdiction; and the Department was limited to the legal remedy of filing a petition for writ of mandate to challenge the Boards reduction of the propertys fair market value and cancellation fee, rather than unilaterally withholding subvention payments for the disputed sum. The County sought a peremptory writ of mandate to compel the Department to pay the balance of the subvention funds due to the County. In support of the petition, the County filed an administrative record which contained only a few of the documents discussed ante.

On or about July 24, 2003, the Department filed an answer to the petition, and admitted it withheld subvention payments to the County but asserted that such an action was authorized pursuant to the statutory scheme for enforcement of the Williamson Act and the Open-Space Subvention Act.

The Administrative Record

On April 7, 2005, the Department filed a motion to complete the administrative record to include additional exhibits which the County had not filed. The Departments proposed exhibits contained the documents already submitted by the County, plus additional documents which set forth the history of the case, as set forth ante. The Department argued these exhibits were necessary to fully explain the dispute over the Boards cancellation of the Williamson Act contract on the Tribes property, the County improperly submitted only part of the administrative record, and the court should consider the entire administrative record when considering the Countys petition.

On April 13, 2005, the Department filed an amended answer and substituted various parties as interim officers of the Department.

On April 18, 2005, the County filed opposition to the Departments motion to complete the administrative record, and argued the Departments proposed exhibits were not pertinent to the disputed issue of whether the Department could withhold subvention payments from the County. On April 22, 2005, the Department filed a reply to the opposition, and again argued the County was trying to resolve the matter on a limited record, and the court was obliged to review the entirety of the administrative record. On May 13, 2005, the Department lodged the administrative record with the court.

On April 29, 2005, the court conducted a hearing as to the Departments motion to expand the administrative record. On May 17, 2005, the court granted the Departments motion to expand the administrative record, but the order was without prejudice to any parties right to object to any documents within the expanded administrative record. On June 16, 2005, the notice of entry of courts order was filed. For purposes of the instant case, neither party raised any objections to the contents of the administrative record discussed herein.

Further Points and Authorities

On May 26, 2005, the County filed points and authorities in support of the petition, and argued the Tribe was entitled to appeal the assessors valuation of the property to the Board, and the Board was statutorily authorized to consider and grant the Tribes appeal. The County argued the Department could challenge the Boards determination through a petition for writ of mandate, but the Department lacked jurisdiction to substitute its own judgment for the Boards determination of the propertys fair market value, and the Department lacked any statutory authority to unilaterally withhold subvention funds. The County further argued it was not required to challenge the Departments action through administrative remedies, as provided in the statutory scheme, and an administrative hearing would be futile since the Department had already reached a decision on the valuation and cancellation fee issues.

On June 23, 2005, the Department filed points and authorities in opposition to the petition, and argued it was vested with statutory and regulatory authority to withhold subvention funds once it determined the County violated the Williamson Act. The Department further argued the County was obliged to challenge the subvention payments through administrative remedies, and exhaustion of such remedies would not be futile. The Department noted that in 1999, it withheld subvention funds to the County in an unrelated case, the County utilized the administrative review process, and the parties reached a settlement agreeable to both sides.

On June 30, 2005, the County filed a reply to the Departments opposition, and again argued that the statutory scheme did not vest the Department with authority to withhold subvention payments in response to an alleged violation of the Williamson Act. In the alternative, the County argued that even if the Department had such authority, it abused its discretion because it unilaterally withheld the subvention payments without notice and a hearing, and it waited three years to withhold the money.

The Courts Hearing on the Petition

On July 8, 2005, the court conducted a hearing on the Countys petition. The court asked the parties to focus on whether the County should be required to exhaust its administrative remedies. The County argued exhaustion would be futile and the Department lacked any jurisdiction to make any administrative rulings. The County asserted the Departments only remedy was to file a petition for writ of mandate to challenge the Boards decision, instead of unilaterally withholding subvention funds without a noticed hearing.

The Department argued there was no evidence that administrative review would be futile, and pointed out the County had utilized the same type of administrative review in 1999, when it challenged the Departments calculation of subvention funds in an unrelated situation and received a favorable ruling. The Department argued that it had jurisdiction over the matter, it was statutorily authorized to review any violations of the Williamson Act, and that authorization included the ability to withhold subvention payments if it found such a violation. The Department asserted the Countys arguments about the underlying dispute over the cancellation fee were appropriate for an administrative hearing.

The County argued the Department lacked the competence to determine whether it had jurisdiction to review subvention payments, and the court needed to determine whether the Department even had the authority to conduct an administrative hearing on the issue.

The court denied the Countys petition and found as a matter of law that section 16146^[7]vested the Department with the power to review a local governments determinations of property value and cancellation fees to verify compliance with the Williamson Act, there were administrative remedies available to challenge the Departments review, and the County had failed to exhaust its administrative remedies.

On August 3, 2007, the court filed the order denying the petition. On August 11, 2005, the notice of entry of order was filed.

Appellate Issues

On August 17, 2005, the County filed a timely notice of appeal. The County contends the trial court should have granted the petition for writ of mandate and compelled the Department to pay the withheld subvention funds; the Department lacked jurisdiction to withhold funds; the Department improperly made a unilateral determination that the County violated the Williamson Act; the Department was limited to filing a petition for writ of mandate to challenge the Countys determination of valuation; and the County was not obliged to exhaust administrative remedies since the Department lacked jurisdiction to withhold subvention funds and any administrative hearing would be futile because the Department had already indicated its position on the issue.

On December 21, 2005, this court granted the Countys request for judicial notice of documents regarding amendments to the regulations used to enforce the Williamson and Open-Space Subvention Acts. On April 12, 2006, this court granted the Departments request for judicial notice of documents which allegedly contradicted the Countys documents.

We will review the standard of review for a petition for writ of mandate, the provisions of the Williamson and Open-Space Subvention Acts, whether the Department had jurisdiction to withhold subvention funds, and whether the County was required to exhaust its administrative remedies.

DISCUSSION

I.

PETITION FOR WRIT OF MANDATE

The instant action involves the trial courts denial of the Countys petition for writ of mandate pursuant to Code of Civil Procedure section 1085. A writ of mandate may be issued by any court ... to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station .... (Code Civ. Proc.,  1085, subd. (a).) To obtain relief, the petitioner must show (1) A clear, present and usually ministerial duty on the part of the respondent ...; and (2) a clear, present and beneficial right in the petitioner to the performance of that duty .... [Citation.] (Santa Clara County Counsel Attys. Assn. v. Woodside (1994) 7 Cal.4th 525, 539-540, overruled by statute on other grounds as recognized in Coachella Valley Mosquito & Vector Control Dist. v. California Public Employment Relations Bd. (2005) 35 Cal.4th 1072, 1077 (Coachella Valley).) The petitioner bears the burden of proof. (California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1153-1154; see also Branciforte Heights, LLC v. City of Santa Cruz (2006) 138 Cal.App.4th 914, 934.)

It is well settled that, although a ministerial act by definition does not involve discretion, its performance may be contingent on the existence of certain facts. (Lazan v. County of Riverside (2006) 140 Cal.App.4th 453, 460.) A ministerial act is an act that a public officer is required to perform in a prescribed manner in obedience to the mandate of legal authority and without regard to his own judgment or opinion concerning such acts propriety or impropriety, when a given state of facts exists. [Citation.] (Kavanaugh v. West Sonoma County Union High School Dist. (2003) 29 Cal.4th 911, 916 (Kavanaugh).) Where a statute requires an officer to do a prescribed act upon a prescribed contingency, his functions are ministerial. Where a statute or ordinance clearly defines the specific duties or course of conduct that a governing body must take, that course of conduct becomes mandatory and eliminates any element of discretion. [Citation.] (Rodriguez v. Solis (1991) 1 Cal.App.4th 495, 504-505; Lazan v. County of Riverside, supra, 140 Cal.App.4th at p. 460.)

The availability of writ relief to compel a public agency to perform an act prescribed by law has long been recognized. (Santa Clara County Counsel Attys. Assn. v. Woodside, supra, 7 Cal.4th at p. 539.) Whether a public agency has a clear, present and ministerial duty to perform the disputed act depends upon the meaning of the relevant statutory scheme. (Kavanaugh, supra, 29 Cal.4th at p. 916.) Ordinarily, a trial courts findings and judgment on a petition for writ of mandate are upheld if supported by substantial evidence. When the facts are undisputed, however, the trial courts construction of a statute is purely a question of law and is subject to de novo review on appeal. (Unnamed Physician v. Board of Trustees (2001) 93 Cal.App.4th 607, 618-619; Kavanaugh, supra, 29 Cal.4th at p. 916.)

The principles governing the proper construction of a statute are well established ... [citation]: Courts must ascertain legislative intent so as to effectuate a laws purpose. [Citations.] In the construction of a statute ... the office of the judge is simply to ascertain and declare what is ... contained therein, not to insert what has been omitted, or to omit what has been inserted; ... [Citation.] Legislative intent will be determined so far as possible from the language of statutes, read as a whole, and if the words are reasonably free from ambiguity and uncertainty, the courts will look no further to ascertain its meaning. [Citation.] The court should take into account matters such as context, the object in view, the evils to be remedied, the history of the times and of legislation upon the same subject, public policy, and contemporaneous construction. [Citations.] Moreover, the various parts of a statutory enactment must be harmonized by considering the particular clause or section in the context of the statutory framework as a whole. [Citations.] (California Teachers Assn. v. Governing Bd. of Golden Valley Unified School Dist. (2002) 98 Cal.App.4th 369, 375-376.)

With these provisions in mind, we turn to the parties contentions about the Williamson Act.

II.

THE WILLIAMSON ACT

The underlying dispute in this case is whether the Board violated the cancellation provisions of the Williamson Act when it agreed with the Tribes proposed valuation of the subject property. However, the contested issue before this court is whether the Department had the statutory authority to withhold subvention funds from the County based on its determination that the Williamson Act had been violated. The County argues the Department lacked jurisdiction to make such a determination, it was legally obliged to make the subvention payments requested by the County, and the trial court should have granted the petition for writ of mandate to compel the Department to make all subvention payments. The Department asserts it