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B- 3-U4; 2BAM; 18085283463 ,8085283463 n 2i q 1 i A Honorable Aaron S.Y. Chung, Chair, and Members Finance Committee ~ August 3, 2004 Page 2 p lure, and fast and slow rotation forestry would be 10 acres, as currently provided by le. • iminates the 20-yeaz dedication period with assessment at 50 percent of productivity v ue, although the ] 0-year dedication period remains. • educes the rollback tax look-back period for breach of agricultural use to 2 years plus c ent year, scaled up to 5 years for dedicated lands, depending on how long the d 'cation has been in effect [if less than 8 years]. The period of breach reduced from 12 t 6 consecutive months, unless non-use is part of an approved farm plan. • lows breach exceptions for natural disasters, land no longer usable, and death or d sability. • Pfovides for breach of dedication upon sale of the property, unless the buyer expressly assumes the dedication; assumption will no longer be automatic. Draft 2 differs from Draft 1 in that: • Lands under 20-year dedication would automatically become subject to the conditions and provisions of commercial agricultural use dedication, rather than upon petition to continue the dedication. • T~e homesite portion of dedicated lands would be assessed at the mazket value of c mpazable homesites, rather than at the value of acomparably-sized homesite. We s':az I the cencems of others that Bi1149 will be anti-agricultural in effect and will amount to ' a propert tax increase for small farmers. This effect will make itself felt primarily through the ~ change assessment basis from productivity value to mazket value. New or developing farms ~ would qualify for dedication until they meet the $2,000 commercial threshold for produces 'ty assessment, and until then they will be taxed at mazket value. Farm lessees would also be sensed and taxed at market value if they aze unable to dedicate their land. We aze concern that there may be few if any mazket value comparables for small farm lots. Finally, homesit on agricultural lots would apparently be taxed on market value at the $9.85 agricul al rate rather than at the $5.55 residential rate. ~ We resp tfully suggest that the Hawaii County Council review and consider the implementation of Ordinance 02-39 in the City and County of Honolulu before acting on Bill 49. Ordinance 02-39 has created serious problems for farmers and agricultural landowners because the assessed value of agricultural lands on Oahu is now detemuned at "fair market value," generally, based on conveyances of properties zoned for agriculture which reflect not actual agricultu>al use, but rather other restricted and atypical uses (e.g., antenna or utility sites and ~ "gentlemptr farmer estates") permitted under the AG-1 and AG-2 zoning districts. This flaw has i enoneou~ly inflated the value of agricultural lands on Oahu to approximately $40,000 per acre. I i i i