Michael Jackson's Neverland Ranch had rides, a zoo, and a house. But part of it also sat in a program meant to protect farmland. According to an Associated Press report published by CBS News on September 9, 2003, officials found that Jackson was getting a property tax break he wasn't entitled to.
How the farmland program works
California's Williamson Act is an agreement between landowners and local governments. The California Department of Conservation says the law allows local governments to enter into contracts with private landowners. These contracts limit certain parcels of land to agricultural or related open space uses. The AP report says the law aims to preserve open space by giving ranchers and farmers tax breaks for undeveloped land. Basically, the owner agrees to keep the land in farming or open use and, in return, the owner pays less tax. The report also notes that only the property owner can cancel a contract. In practice, that means the owner asks and the county board decides, which is why the request had to come from Jackson.
What officials found at Neverland
The AP report described Neverland as a 2,600-acre ranch, while later coverage, including reports on its 2020 sale, puts it at about 2,700 acres. For 2002-03, Neverland’s assessed value under the agricultural preserve contract was about $12 million. The inspection found that Jackson was getting an undeserved property tax break. His house, amusement park, and zoo were part of the program.
{{/usCountry}}The AP report described Neverland as a 2,600-acre ranch, while later coverage, including reports on its 2020 sale, puts it at about 2,700 acres. For 2002-03, Neverland’s assessed value under the agricultural preserve contract was about $12 million. The inspection found that Jackson was getting an undeserved property tax break. His house, amusement park, and zoo were part of the program.
{{/usCountry}}Deep Dive
How does California’s Williamson Act lower property taxes on farmland?
Why did officials say Neverland Ranch did not qualify for its farmland tax break?
How can keeping private land undeveloped help protect wildlife?
Five months after that inspection, county officials seemed willing to accept Jackson’s offer to remove his house, amusement park, and zoo from the farmland program. The Board of Supervisors was expected to approve his request to cancel the contract during a closed session on Tuesday, the report said. The story did not say whether the board voted.
That offer wasn’t the end of the story. County officials were also contemplating punitive action with encouragement from the state. Supervisor Naomi Schwartz said the county's goal had been to keep as much of the property in agriculture as possible. She also said there were some unpermitted uses and officials needed to take a very close look at them. Allen Whitman, Jackson's business manager, would not comment.
What it meant for his taxes
It was not going to be an instant change. The report said the tax exemption for Jackson would gradually shrink over the next nine years on developed parts of the ranch. He would owe the county about $123,000 in taxes that year. That is 1 percent of the assessed value of the property.
Chris Lyon, a division manager at the County Clerk-Recorder-Assessor's Office, explained the difference the contract made. Without the agricultural contract, he said Neverland’s assessed value would be $5 million to $6 million higher. That would put Jackson’s taxes at around $200,000 per year.
What readers can learn from this case
It's easy to read this as celebrity news and scroll along, but the lesson is simple. Tax breaks come with conditions, and local officials can check to see if those conditions are being met. In this case, an inspection is what revealed the problem, according to the AP report. The story also implies that the program is concerned with land use. The break is aimed at undeveloped land, not a house, an amusement park, or a zoo.
There is also a practical lesson for young readers who follow money and the law. A deal that lowers your bill often comes with rules, and it helps to read them early. Neverland shows what can happen when a property's real use does not match the terms of the deal.