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County assessor advises growers how to cut taxes

Paul Franson | Posted: Friday, July 15, 2011 12:00 am | (0) Comments
At the recent Vineyard Economics Symposium, Napa County assessor, recorder and county clerk John Tuteur did something you might not expect from most assessors: He gave the assembled vineyard owners hints to cut their property taxes.
It turns out that’s not unusual for Tuteur, a civic-minded former county supervisor who has placed part of his family’s 1,200-acre ranch in the Land Trust and granted easements for public trails.
To start with, Tuteur remarked that though residential and commercial property has taken a big hit in the current market, pure vineyard land in Napa Valley has hardly budged. 
“Things are still holding pretty firm with vineyard values as long as they are not ‘estate vineyards,’ which are really fancy home sites,” he said. “Those parcels have declined in value if they were purchased, say, from 2004 through 2009.” .
He’s also seen the sales prices of developed wineries taking hits, but that was before the recent, and probably exceptional, sale of 
40-acre Sloan Vineyard and Winery to a Chinese company for $40 million.
Most of his talk was devoted to suggestions about cutting property taxes.
“Be cautious about shifting family property into a corporation,” he said. “Avoid legal entities as much as possible to save a lot.”
He mentioned a vineyard owner who formed a corporation in 1997. When the husband died and gave stock to his kids, that triggered a reassessment, adding $1 million in value.
He also discussed the Williamson Act, which lowers property tax to owners of farmland and open-space land in exchange for a 10-year agreement that the land will not be developed or otherwise converted to another use.
The act has been under pressure from the Brown administration, but it still stands. It’s a local option and has strong support locally, but some major counties like Imperial have terminated it to raise property tax collections.
“Napa is very committed to it,” he said. “We lose $370,000 each year because of it, but we consider it a good insurance policy against development of the valley floor.”
As of Jan. 1, 2010, Tuteur said 778 separate parcels totaling 70,724 acres have Williamson Act contracts. Those owners received a total reduction in value of $510 million, but only 426 parcels got the reduction since the others had a higher value based on their agricultural income so were assessed based on their Proposition 13 base value.
He also mentioned that Land Trust conservations can be an important tool for managing property taxes as well as protecting land from future growth by reducing potential value. If base values are already low, however, they may not have much property tax implications, just good stewardship.
Tuteur also explained how vineyards are valued for property tax assessment. He says vineyards account for $1.5 billion of the county’s $27 billion assessment. 
They, like all property, are constrained by Proposition 13, so they have base year values, and are reassessed on changes in ownership or new construction — including planting or replanting. 
The value includes the land itself, the vines and non-living improvements like stakes, trellises, irrigation systems and frost protection.
Vines here have a typical life of 25 to 30 years, and if replanted, are removed from the tax rolls for three years until they start producing. The vines and structures are then reassessed. 
This tax year, starting July 1, vines planted in 2007 will be valued at $27,500 per acre.
He reminded owners to report changes. If they don’t, they may receive an unpleasant surprise when the county finds out, and they will be charged for nontaxable vines and improvements during the fallow period. Still, he says 60 to 65 percent of vineyard owners don’t report the changes when they occur.
He also noted that Napa County values sprinklers frost protection as real property structures and orchard heaters and wind machines as fixtures. That means sprinklers are subject to Proposition 13 increases, while wind machines are depreciated over time.
More details are available at
Tuteur welcomes calls to 253-4459 or email to to explain these complex issues. 

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