On September 27, 2017, California Governor Jerry Brown signed an extension of the Urban Agricultural Incentive Zones Act. Rather than sunsetting on January 1, 2019, the Act now extends until January 1, 2029.

The Act, originally authored by Assemblymember Phil Ting and enrolled in 2013 as Government Code Section 51042, permits certain local governments to voluntarily enter into contracts with property owners who commit to using their property for agricultural use in exchange for property tax breaks.

To be eligible, the property must be located in an Urban Agricultural Incentive Zone identified by the local government, the property must comprise 0.1 to 3.0 acres, and the initial contract term must be at least five years. Further, dwellings are prohibited on the property and the property may not have been subject to a Williamson Act contract within the previous three years.

If a property becomes subject to an Urban Agricultural Incentive Zone contract, then the property will be assessed in accordance with California Revenue & Taxation Code Section 422.7, which provides that the land will be valued at a rate that is based on the average per-acre value of irrigated cropland in California. This can provide substantial tax savings to an owner of a vacant developable lot in an urban area such as San Francisco or Los Angeles, where the lot could otherwise potentially be assessed at the fair market value prevailing in those markets.

Urban Agricultural Incentive Zone contracts share some characteristics with Williamson Act contracts and Timber Production Zone contracts, but can be a shorter term and serve slightly different policy goals. Rather than protecting prime farm and timberland from suburban expansion, Urban Agricultural Incentive Zone contracts are aimed primarily at providing urban farmers with access to land and urban denizens with access to recreational, community-building, and educational opportunities, while combatting the urban blight caused by vacant lots.

All three types of contracts are interim solutions for land preservation, with limited terms of years and renewals subject to further governmental approval. One alternative to these temporary measures is to place a perpetual conservation easement on the property, instead. A conservation easement can permanently restrict the property to agricultural use, reduce the assessed property value, and generate federal income and estate tax savings. These benefits are further described here.