09/23/2019

New water rules hurting ag land prices

The law requiring these plans, the Sustainable Groundwater Management Act (SGMA), already is having a big effect on prices for agricultural land, particularly in the areas from Madera County down to Kern county, where some of the most severe over drafting in the state commonly occurs.

“In anticipation of the SIGMA rules, prices are already being impacted,” said Michael Schuil, a real estate broker with Visalia-based Schuil & Associates, which specializes in sales of agricultural land across California and 10 other states.

In fact, the changes began about the time Gov. Jerry Brown signed into law in September 2014 the three pieces of legislation that make up SGMA, he said. The rules were developed as California was undergoing the worst drought in its recorded history.

The price for some ag land keeps inching lower as the deadline to submit the first SGMA plans approach, Schuil said.

“Right now, we‘re seeing people not buying properties because they aren’t sure what’s going to happen,” Schuil said.

Still, there are some farms for sale, but “white lands” — those with wells but without regular, reliable access to additional surface water — have become tougher sells in light of the upcoming SGMA rules, Schuil said.

For example, he said, white land that might have sold for $20,000 an acre two or three years ago might now go for just $14,000-$15,000 now. In comparison, farmland within the Fresno Irrigation District, considered a highly reliable local water source, might fetch $28,000 an acre.

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