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HomeMy WebLinkAboutCOM 1144.001 2012-2014Jeffrey Melrose Island Planning 1405 Waianuenue Ave. Hilo, HI 96720 November 18, 2014 Hawaii County Council Finance Committee Subject: Bill 317: Related to Exemptions from Real Property Tax by Way of Dedication of Land for Agricultural Use Aloha Chairperson Valerie Poindexter and Members of the Finance Committee PIFC CN-10 , 11+1 _ My name is Jeffrey Melrose. I am a land planner by profession and have spent much of the last 30 years trying to shape new agricultural responses to the many challenges that were left from the departure of plantation agriculture statewide. Updating the current real property tax treatment for a new generation of farmers and ranchers is one of the most important steps the County could take to address the challenges of Hawaii's changing agricultural landscape. I'd like to start by acknowledging the members of the Real Property Tax Task Force for their hard work to address a number of the issue brought up by the tax review report. It has been a long process and their recommendations have already sparked some positive changes in the County's tax system. As it relates to Bill 317, I believe the Committee identified just one of many approaches to address what has long been perceived as a big tax loop hole that is being taken advantage of by thousands of property owners, whether they are legitimate farmers or ranchers, or not. There is much that could be said about the Bill now before you, both positive and negative. Let me focus my comments in just four areas. 1. Elimination of the Non Dedicated Ag Tax program I believe it would be a mistake to eliminate entirely the current non - dedicated tax program. It was originally established to encourage agricultural land owners to put, and keep, their ag lands in active use, as opposed to letting them sit fallow. There is still good reason to encourage active land use in Hawaii County and I would suggest that an amended non - dedicated program be preserved and that the rate of valuation for that program be amended from just 2X the commercial ag use rate to some percentage of fair market value of the and, say 30 -50 %. We need to draw a sharper line between the benefits we give to commercial ag operations who are committed to agriculture for a period of years and those we grant to owners who do not necessarily farm for a living but do actively manage agricultural lands for small scale production. Comm. N(I `'7 • Ref. To: Ref. Date 2014 2. Enforcement Responsibility: Traditionally, the Real Property Tax Office has had to the primary enforcer of the agricultural use programs and catch tax payers who claim use but do not actually sustain their use. It should not be the department's responsibility to check all parcels to catch violators; it should be the obligation of the landowner /beneficiary of the tax break to submit proof of agricultural use every 2 -3 years to confirm their use if they want to keep receiving the benefits of the program. The County Water Department requires farmers and ranchers who use County water at the reduced agricultural rate to show proof of their ongoing commercial ag use annually in order to continue to receive the preferential rate. A similar principle should be applied to those seeking agricultural tax breaks. More frequent reporting by all tax payers in the ag program would also provide the County with much better data on the state of ag operations in the County and help measure our collective process towards improved food self - sufficiency on the island. 3. Short Term Dedication: The creation of a 3 year tax dedication program for commercial agriculture is a step in the right direction but the term of three years is simply too short. Given the investment and personal commitment needed for commercial agricultural activity to be successful, a three year horizon is too short. I suggest the Council adopt a 5 year dedication program at 2X the 10 year dedication valuation. This will give incentives for land owners to enter into contracts with farmers to farm under -used land and give the farmer some comfort that they might be able to stay on a property long enough to recapture their initial investments in items like fencing and soil enrichment. 4. Much More Public Input Needed The RPT Task Force held open meetings to discuss their recommendation but they got very little public input and they did not reach out to major sectors of the ag community to get input before submitting Bill 317. I urge this Council to take the time needed to help the community understand both what the committee proposed and to present some alternative approaches that could help to get a better handle on which of several solutions will best meet the needs of the County and the active farm community. As written, I do not support Bill 317 and I encourage the Council to work closely with the Administration to take the issue to stakeholder groups, explain various alternative approaches and adopt improved rules that will address the realities of agriculture today and for the foreseeable future.