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BACKGROUND Under state law (the Williamson Act, Government Code, Section 51200 et seq.) a city or county may establish agricultural preserves and enumerate those land uses which are compatible or permitted on such lands. The city or county may also by contract limit the use of agricultural lands within these areas in exchange for a reduction in property tax assessments while the property is subject to the contract. Contracts have an initial term of 10 years and are automatically renewed unless a notice of nonrenewal is given. If certain findings are made by the public agency in whose jurisdiction the property lies, and if the property owner pays a cancellation fee, a Williamson Act contract can be summarily cancelled. Where, however, a property owner wishes to rescind a Williamson Act contract but then immediately reencumber most of that property and other property such that there is no net decrease in encumbered property, the public agency in whose jurisdiction the property lies is authorized by statute to accomplish that task, provided such action is taken to facilitate a lot line adjustment. In the 1970's, Lonestar Industries and the Estate of Ernest Ferrario encumbered their adjoining properties in what is now part of the Vineyard Avenue Corridor Specific Plan area with Williamson Act contracts. In the early 1990's the City annexed what was the Lonestar property but this property remained subject to the Williamson Act contract. Later, Centex Homes purchased the Lonestar property and a portion of the Ferrario property (about 3.22 acres--which remained in the unincorporated area of the County) and processed through the City a PUD development plan covering both properties. At Centex's request, the City cancelled the Williamson Act contract on what was the Lonestar property and Centex paid the applicable cancellation fee. Centex then filed a final map for 30 lots (Tract 7385), none of which was encumbered by the Williamson Act contract. Immediately to the east of Lot 30, however, was the former Ferrario property, i.e., the 3.22-Acre Lot, still in the unincorporated area of Alameda County and still subject to a Williamson Act contract. Centex later sold Lot 30 and the 3.22-Acre Lot to the Theobalds. Recently, the City annexed the 3.22-Acre Lot. The Theobalds, when they purchased Lot 30 and the 3.22 Acre Lot, had the understanding that they could construct a garage mainly on Lot 30 but a portion of which would extend into the 3.22 Acre Lot. As they were processing their plans through the City, they learned otherwise. That is, technically a garage for residential purposes is not permitted under the Williamson Act. Due to this misunderstanding, the Theobalds have requested that the Williamson Act contract on the 3.22-Acre Lot be rescinded and, in exchange, the Theobalds would enter into a revised contract encumbering similar acreage, i.e., 0.1 acre on Lot 30 and 3.12 acres of the 3.22-Acre Lot, such that the total area subject to the Williamson Act contract would remain the same. The Theobalds would also process a lot line adjustment that would reflect this new alignment, as required by the Williamson Act and the Subdivision Map Act. See attached map. That lot line adjustment has been approved by staff and its recording is now just waiting Council action on this item. Page 2 of 4