HomeMy WebLinkAboutCOM 0118.037 2002-2004
MIC'LAEL C. TULANG Phone: (808) 961- 8261
Councilmember ~?~,°.,`.!V~y FAX: (808) 961-8912
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October 26, 2004
Mr. Aazon Chung, Chairman
Finance Committee
Hawaii County Council
Deaz Mr. Chung:
Subject: Agricultural Property Tax Bill No. 49
Thanks for setting up the workshops throughout the County to allow all interested parties to take
part in formulating a credible agricultural property tax program. I think they have been very
productive forme and the rest of the Council. I have the following suggestions:
L In general, we should try to complete our work to: (1) protect the bona fide
commercial farmer or rancher, (2) provide a home exemption for the farmer or
rancher, (3) provide a reasonable tax schedule on buildings used as part of the
agricultural operation including employee housing, (4) provide for an annual
certification of agricultural operations, and (5) provide consideration for land that is
set aside, and protected for watershed purposes for public benefit.
2. Section 19-2 Definitions - "Commercial agricultural activities" The $2,000 income
minimum to determine bona fine agricultural operators does not work for orchard
operations such as Macadamia or fruit fauns because of the lag in production income.
The first few years those farmers would be experiencing a negative cash flow, and the
proposed minimum income would not work. Therefore, we should use the IRS
schedule F to determine the commercial agricultural operations and at the same time
simply the certification process on the annual basis to resolve the year to year leasing
contract issue.
3. Section 19-60-(c) The Real Property Division needs to revisit the productivity value
schedule in the future. It is too complicated to take on this year. Not withstanding,
we should make every effort to pass this Bill and have the division undertake the
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value schedule w pater date as provided in the administro~..e rules and regulations
of the department.
4. Subsistence farming should be recognized in the revision process. I think we should
encourage the administration to institute an inspection program to confirm declaration
by the property owner. I think some kind of annual reimbursement contract for
services with the six (6) Soil & Water Conservation District of the Big Island could
be the most cost-efficient program. The districts already have an existing program
agreement with the Department of Public Works to assist with the administration of
the County Grading Ordinance.
5. One agricultural tax rate at the lowest rate on our schedule for the whole property
including only those buildings engaged in agricultural production seems reasonable.
It would be easier to administer.
6. It would be prudent for the county to encourage open space, watershed enhancement,
forestry, livestock production, and other agricultural pursuits in all related programs
such as agricultural property tax to improve groundwater recharge and reduce
flooding.
7. Additionally, we should revise the definition of agriculture to include the above to
capture the essence of encouraging all agriculturally related pursuits.
8. The above would resolve the issue of employee or farm worker housing. This would
perhaps encourage farmers to provide adequate and safe housing for their workers
and directly relieve the need for safe affordable housing, transportation and traffic
pressure on our rural highway system.
9. Lastly, We should certainly consider a really stiff penalty clause for fraudulent
declaration like doubling the taxes due back plus interest due dated to the alleged
fraudulent filing date.
10. Just a closing note, I have discussed the issue of the short term leases with some of~
the lazge land owners and some farmers who lease land for short periods of time. As
a benefit to their lessees, they (the large land owners) would definitely support a
yeazly certification program to give some flexibility in their land management
programs. The short term lessees feel they understand the land owners situation and
would be adjusting their cropping patterns to fit the annual certification program. In
that sense, they would strongly support using the IRS Schedule F, particularly, if they
don't have to prepare another set of forms.
In closing, I will be still willing to assist the Finance Director and the Department to fine tune
this Ordinance in the future, assuming it passes this year. Thank you for your attention on this
matter.
Sincerely,
Michael C. Tulang, Council Member
Hawaii County Council
xc: Bill Takaba, Director of Finance
All Council Members
MCT/kc