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HomeMy WebLinkAboutREP FC 051 2023/05/02 2022-2024 REPORT OF THE COMMITTEE ON FINANCE DATE: May 2, 2023 Re: Comm. No. 218/Bill No. 44 PLACE: Council Chambers Kailua-Kona, Hawai`i TIME: 2:40 p.m. Council Chair and Members Hawai`i County Council Hilo, Hawai`i 96720 Your Committee on Finance, to which was referred Bill No. 44, reports as follows: Bill No. 44, transmitted by Committee Member Kimball and Committee Member Galimba, via Communication No. 218 dated April 4, 2023, amends Chapter 19, Articles 1 and 7, of the Hawai`i County Code 1983 (2016 Edition, as amended), relating to Community Food Sustainability Use Assessments and Nondedicated Agriculture Use Assessments. This bill seeks to implement recommendations of the Real Property Tax Review Working Group and Agricultural Committee's September 2019 Final Report and the 2021 Annual Report of the Real Property Tax Board of Review by: establishing a sunset date for the definition of"Nondedicated agricultural use assessment"; adding a new definition for "Community food sustainability use"; establishing a sunset date for Section 19-57 of the Hawai`i County Code; and establishing a new section titled "Community food sustainability use assessment". This bill was previously heard and postponed on April 18, 2023. Finance Committee Meeting of April 18, 2023 Committee Member and co-introducer Heather Kimball provided background on this matter and expressed the intent of the proposed measure citing that she wanted to give a pathway to individuals who are legitimately involved in commercial agriculture and to individuals who provide food and produce to food programs by incentivizmg their contributions to community with a tax benefit. Ms. Kimball invited Committee Member and co-introducer Michelle Galimba to provide more background on this measure, to which Ms. Galimba discussed the proposed repeals in detail and what they hope to accomplish with those suggested amendments. Committee Member Holeka Goro Inaba commented that he understood this bill's intent and how it benefits those in community food sustainability. However, he was still determining whether this includes members who currently provide to the community independently rather than directly to a nonprofit, further stating concerns that the nonprofit contribution qualifier may not be a proper qualifier for this benefit. FC Report No. 51 FC-51 Page 2 May 2,2023 Committee Member Cindy Evans asked Ms. Kimball if individuals participating in community food sustainability with a long-term property lease can qualify for this proposed tax benefit. She confirmed that this benefit is intended for property owners only. Ms. Evans then asked for clarification on page 3, Section (c)(4), specifically the involvement of the Finance Director. Ms. Kimball stated that if the assessor discovers that, over the last cycle, the applicant has not fulfilled the community food sustainability guidelines, then it would be at the discretion of the Finance Director to re-evaluate this applicant. Ms. Evans proposed adding a sunset date to this bill; Ms. Kimball stated that it is mechanically possible but did not feel it was appropriate for this bill. Ms. Evans acknowledged Ms. Kimball's concerns and asked Committee Member Susan L.K. Lee Loy for her opinion. Ms. Lee Loy thanked Ms. Evans for inviting her into the conversation. Ms. Lee Loy acknowledged the dates and deadlines in this measure and how updating those dates will be critical to the success of this bill and agreed with Ms. Evan that sunset dates can help. Ms. Lee Loy looked to Finance Director Deanna Sako to confirm when this program would take effect, which Ms. Sako said in the fiscal year 2026. Committee Chair Matt Kaneali`i-Kleinfelder asked Assistant Real Property Tax Administrator Keita Jo if the applicants for this program can also participate in the Homeowners Exemption Program, to which Mr. Jo answered that applicants would not be eligible to participate in both. Mr. Kaneali`i-Kleinfelder requested that Mr. Jo provide a visual presentation of the benefits of this bill. Ms. Evans commented on Mr. Kaneali`i-KI einfelder's request and agreed that she would be interested in seeing a presentation as well. Ms. Evans suggested that this matter be postponed to the May 2, 2023, Finance Committee. Ms. Kimball moved to postpone the bill to the next Finance Committee meeting on May 2, 2023, and was seconded by Committee Member Jenn Kagiwada. Finance Committee Meeting of May 2, 2023 Ms. Kimball provided background on this measure and reiterated the purpose of this bill. Ms. Kimball invited Real Property Tax Administrator Lisa Miura and Mr. Jo to share their presentation that Mr. Kaneali`i-Kleinfelder requested at the previous Finance Committee dated April 18, 2023. Mr. Jo presented, citing the difference between Commercial Agricultural Use Dedication and Non-dedicated Agricultural Use. Slides provided details on different tax benefits relating to agricultural use and application timelines. Ms. Miura suggested that due to the amount of information in the first set of slides Mr. Jo should pause and ask the committee for questions or comments. Mr. Inaba commented on the Non-dedicated Ag program application deadline and asked for confirmation of the program end date. Mr. Jo confirmed that the program benefits would end on July 1, 2028. Ms. Lee Loy asked for clarification on applying for the benefits and if the department will accept applications for these programs after the stated deadline, which Ms. Miura said they would not, stating FC Report No. 51 FC-51 Page 3 May 2,2023 that applicants would no longer be eligible to apply for the Non-dedicated Ag Use program after Sept 1, 2024 but would be able to apply for the Community Food Sustainability Use program. Per Ms. Evans' question, Mr. Jo explained how the department obtains an Agricultural Use Value Assessment. Giving the example of a coffee farm on 20 acres of land, the assessor would look at the net income of a product, like coffee, and divide that product's net income amount by the number of acres; that total will give you the price per acre and essentially give you an assessment on how much the land could produce in income. Ms. Kagiwada asked Mr. Jo if the Long-Term Dedicated program was like the proposed Scenario C in his presentation regarding Agricultural Use Benefit, to which Mr. Jo explained the difference between the two and the benefits and disadvantages of the proposed scenario and of the existing Long-Term Dedicated program. Mr. Kaneali`i-Kleinfelder thanked Mr. Jo and Ms. Miura for this presentation and appreciated the work put into it for the public, adding that these definitions and scenarios can be difficult to understand while just discussing it but seeing it visual helps himself as well as the public in understanding how these benefits work. Mr. Jo continued his presentation by explaining the difference between Homeowner Exemption and Homeowner Tax Class, expressing clearly that those two are not the same, further explaining that you can receive a Homeowners Exemption based on your age and whether this is your primary residence. In contrast, the Homeowner Tax Class includes a three percent cap on the assessed value and the Homeowners Tax Rate of$6.15 per $1,000 net taxable value. Mr. Kaneali`i-Kleinfelder went through Agricultural Use Benefit Scenarios E to H, stating that after reviewing these scenarios, it seems that Bill 44 will be increasing taxes for the taxpayers, not the County, but with proposed Bill 28, which amends Chapter 19, Article 7, Section 19-53 and Article 10, Section 19-71, of the Hawaii County Code 1983 (2016 Edition, as amended), if adopted will create tax savings to the taxpayer instead to which Ms. Miura agreed. Ms. Evans asked if Ms. Kimball and Ms. Galimba felt this bill was accomplishing their intended purpose. Ms. Kimball responded by thanking Ms. Evans for eloquently stating what their intended purpose was and confirming that she thought that this measure did address that. Ms. Kimball addressed Mr. Kaneali`i-KI einfelder's previous statements and reiterated that the purpose of this measure is to create an incentive and encourage people to participate in the programs and contribute to the food sustainability efforts. Mr. Kaneali`i-Kleinfelder expressed concerns towards some proposed scenarios. Ms. Kimball offered to discuss the measure offline. Committee Member Ashley L. Kierkiewicz provided a comment in support of the intent of this bill and asked Ms. Miura and Mr. Jo if she could reach out to them and go over how these benefits will look for Council District 4. Ms. Miura confirmed they were available and established that these proposed scenarios would look different for Ms. Kierkiewicz and Mr. Kaneali`i-KI einfelder's district than Ms. Evans. FC Report No. 51 FC-51 Page 4 May 2,2023 A motion to amend Bill 44 with the contents of Comm. No. 218.1 was made by Ms. Kimball and seconded by Ms. Lee Loy. Said amendment amends the dates and adds some proposed language from Finance Committee Meeting held on April 18, 2023. Ms. Lee Loy, Ms. Evans, and Mr. Inaba commented in support of the amendment. All nine members voted in favor of the amendment. Multiple committee members commented in support of postponing this bill to the next finance committee meeting with the suggestion of seeing Bill 28, Bill 43, and Bill 44 all together for further analysis. Mr. Inaba suggested that the bill be advanced and not postponed. Committee Member Rebecca Villegas commented that she would support any decision the Council would like to make regarding the advancement of this measure and invited Ms. Galimba to speak about what she would like to see happen. Ms. Galimba said that she agrees that seeing all measures side by side can help to provide more context on the purpose and intent. Your Committee on Finance is in accord with the purpose and intent of Bill No. 44, as amended to Draft 2, and recommends its passage on first reading. 1kh AYES NOES ABS Ex Respectfully submitted, EVANS X GALIMBA X COMMITTEE ON FINANCE INABA X KAGIWADA X KANEALI`I-KLEINFELDER X KIERKIEWICZ x MATT KANE LI`I- INFELDER, KIMBALL X CHAIR. LEE LOY X FC REPORT NO.: 51 VILLEGAS X ADOPTED: JUN 2 1 2023