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<br /> August 2, 2004 <br /> <br /> The Honorable Aaron Chung and Committee Members <br /> Page 2 <br /> <br /> What has been done in the interim period <br /> When this bill was deferred in February of 2003, the Council wanted more feedback from <br /> farmers and ranchers. Meetings were subsequently held with fanners in Waimea and South <br /> Kona in March of 2003. At those meetings, several valid concerns were brought forward by <br /> the farmers in attendance. As a result of these discussions, attached is a proposed Draft 3 to <br /> address the issues that were raised. <br /> Changes in proposed Draft 3 <br /> To receive the maximum agricultural benefit under this bill as originally proposed, <br /> farmers/ranchers must dedicate their land to agriculture for ten years. This would create a <br /> greater tax liability for persons who lease the land they farm or ranch when their lease term is <br /> less than ten years because they cannot participate in the dedication program. Draft 3 <br /> modifies the dedication period to allow farmers/ranchers who lease their land to <br /> dedicate it for the period of their lease if that period is at least five years. This is in <br /> response to concems of coffee farmers in Kona who are only able to lease their land on a <br /> short-term basis. <br /> For farmers/ranchers who do not choose to dedicate their land, Draft 3 proposes the value of <br /> their property will be set at twice the dedicated productivity values rather than at the <br /> increasing percentage of market value (up to 75% of market) that was originally proposed. <br /> This will address the plight of older farmers in Waimea and South Kona who are not <br /> comfortable dedicating for ten years and whose properties have appreciated considerably in <br /> value. <br /> Original Bill No. 49 provisions maintained <br /> Some major policy changes proposed in the original bill that are unchanged in Draft 3 include: <br /> Definitions Bill No. 49 includes additional definitions that will remove confusion and allow <br /> easier enforcement of the rules to insure benefits are awarded appropriately. This includes the <br /> requirement that afarmer/rancher must have $2,000 gross income or be following recognized <br /> agricultural practices to receive the maximum benefits, and the additional requirement that <br /> agricultural use must be on agricultural-zoned land to receive non-dedicated benefits. <br /> Dedication requirements Property must be in commercial agricultural use to receive <br /> dedication benefits. <br /> Breach of dedication Tax rollback for breach of dedication or breach ofnon-dedicated <br /> agricultural use will be reduced. Sale of dedicated land will cause a breach unless the buyer <br /> assumes the dedication in writing. Also establishes certain exceptions to the breach rules for <br /> dedication; currently there are no exceptions. <br /> <br />