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HomeMy WebLinkAboutCOM 0118.027 2002-2004 PO Box 387 Hakalau, HI 96710-0387 September 23, 2004 1 G'} r.. L~ ~ t-*_i Councilman Dr. Fred Holschuh r\ County of Hawaii 's' 25 Aupuni Street, Room 209 Hilo, HI 96720 ~ Dear Fred: EnGosed is a copy of a letter I have sent to the Director of Finance regarding suggestions for changes in the draft of Bill 49. Thank you for arranging for the Pepeekeo meeting last week. Sincerely, John Smith encl. C©mm. No. I ~ O • t7 Ref. To: Ref. L`cte PO Box 387 Hakalau, HI 96710-0387 September 23, 2004 Mr. William Takaba Director of Fnance County of Hawaii 25 Aupuni Street, Room 118 Hilo, HI 96720 re: Bill 49 Dear Mr. Takaba: Thank you for your presentation last Thursday at Pepeekeo regarding the current proposal for changing the procedures for assessing property taxes on agricultural lands. I appreciate the time spent by you and others from different administrative departments to clarify the proposal and listen to landowner concerns. I suggest changing Draft 3 of Bill 49 as follows. My comments follow: Section 19-60 (f) Changing Between Commercial Agricultural Categories. (Page 18 of Draft 3) (1) The owner shall notify the director of finance when the owner Changes the total acreage of his taxable parcel used for one commercal agricultural category to another commercial agricultural category. (2) The owner shall be allowed twenty-four months from the time he or she ceases to utilize land under the former commercial agricultural category to prepare the land for use under the new commercial agricultural category. (A) Should the end of a dedication period occur within this twenty-four month period and before the completion of the change to the new commercial agricultural activity, the owner shall be allowed to rededicate the land or convert it to non-dedicated commercial agricultural use. (B) A violation of a dedication existing at the beginning of the twenty-four month period shall not be createdrf the conversion to the new commercial agricultural use is completed by the end of that twenty-four month period, whether or not that dedication is still in force on that completion date. (C) The owner shall be permitted to revert to the original commercial agricultural category or to convert to a different commercial agricuRural category within the original twenty-four month conversion period. Such a change shall not extend the length of the originally permitted twenty-four month conversion period. (3) The owner shall notfy the director of finance when the conversion to the new commercial agricultural category is complete. (4) Agricultural use valuations appropriate to the new commercial agricultural category shall be applied when the land is converted to the new use. (5) ff the owner fails to utilize the subject land in a commercial agricultural category within the specified time limit, the owner will be subject to the taxes and penalties provided herein. (6) Any other provision to the contrary notwithstanding, an approved change in use as provided herein shall not alter the original dedication period. Comments: As I stated at the Pepeekeo meeting, it is not proper that a farmer must obtain advance permission from the tax authority to change the agricultural use of his land, as is implied in the wordirx~ of Draft 3. The change proposed to paragraph (1) clarifies this as well as clarifies that the tax authorities are only concerned with the overall use of the owners taxable land unit. For instance, the tax authority needs to know 'rf 10 acres of land is changed from 8 acres of pasture and 2 acres of roger to 5 acres of pasture and 5 acres of ginger. It is of no concern rf a farmer chooses to periodically change which 2 acres are used for ginger as long as the use of the remaining 8 acres remains as pasture. As it appears to me, the only purpose of the twenty-four month conversion period described in paragraph (2) of this section of Draft 3 is to recognize a period of time in which the land might not appear to be m agricultural use. In many, if not most cases, an owner will probably have completed a conversion prior to notifying the county. I believe that the changes t propose provide clar'rfication and needed flexibility for the owner. Following is an example of why I included subparagraph (C): A couple of years ago, I planned to convert some of my pasture to awa production. Just as I was ready to begin the land preparation, a health scare essentially destroyed the fast growing commercial market for awa root. Although I didn't intend to spend twenty-four months preparing the land, if I had started this work prior to the time the unfavorable news broke, I would have had to salvage the work in a manner to either revert the land use to pasture or change it to a different commercal agricultural use. Government permission should not be required for these changes unless they could not reasonably be performed within the allotted twenty-four month period. If the unanticipated change of plans occurs near the end of the twenty-four month period, a special situation would exist in which the landowner should be allowed to declare a new conversion and establish a new twenty-four month conversion period. I didn't provide for this option in my recommendation above but, perhaps, it should be added. Paragraph (3) in this section of Draft 3 required interim progress reports from the owner during the twenty-four month conversion period. This seems to be just "busy work" for both the owner and the tax authority. I suggest that the owner only be required to report when the conversion is completed so that the new valuation may be properly applied. My proposed paragraph (4) is new as I don't believe it was clear in Draft 3 as to when the new agricultural land valuation would apply. My proposed paragraph (5) corresponds to Draft 3 paragraph (4) except that it specifies that the land in question must be in any commercial agricultural category at the end of the conversion period to avoid penalty. The reason for this was discussed in regard to paragraph (2) (C), above. My paragraph (6) is the same as Draft 3 paragraph (5). Please contact me if I may provide clarification. My mailing address is shown in the header. I regularly check my email or can usually be reached by phone as follows: email: kolekolefarmQureach.com phone: 963-6808 Sincerely, Lr_ ~C~~` -t_ ~ ~ Jo?~Smith Councilman Dr-Fred Holschuh~