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Home My WebLink AboutCOM 0280.005 2014-2016P/ ft ( !MM. 2. Si, Murashige Laura From: Wesley Takai <takaiw001@hawaii.rr.com> Sent: Sunday, May 03, 2015 11.47 AM To: Council Testimony Subject: Testimony Against Bill 317, Finance Committee, May 5, 2015 Attachments: Real Property Testimony, Bill 317, 5-5-15.docx To the County Clerk's Office, Attached is my written testimony against Bill 317 which is on the May 5, 2015, 1:00 p.m. Finance Committee schedule. Hopefully, a signature is not required as I do not know how to insert my signature on the computer. If I need to physically sign the letter, please call me at 961-4601 and I will drive down on Monday. I plan to be in the area of the county building between 1 — 1:30 on Monday afternoon. Thanks — Wesley Takai 2g�'S Comm. No.� Ref. To: V 1 PF Ref. Dote MAY0_ 3_ 2_ 015 May 3, 2015 RE: Testimony Against Bill 317 May 5, 2015 Name: WesleyTakai Dear Members of the Hawaii County Council I have attached my November 17, 2014 testimony against Bill 317 below for the benefit of the new members who were not present when I personally appeared to testify last November. Regretfully I cannot attend this hearing due to a prior commitment. The main reason given for proposing Bill 317 was to eliminate the loopholes that allow property owners who aren't farming to take advantage of the program at the expense of other taxpayers. These abuses result in a relatively sizable revenue loss for the county. I have briefly discussed my position on Bill 317 with some real property personnel on several occasions mainly to determine if my personal opposition to this bill was consistent with the division's present and future plans. It was great to hear that the division is listening to the concerns addressed by the IAAO audit and almost immediately planned and started to implement enforcement procedures. The revenue loss due to the seemingly low per acre agricultural assessment may be another issue that the division is actively reviewing. It is my opinion that any action on Bill 317 be deferred to give the real property division time to resolve the abuse and revenue loss issues addressed by the audit. If I can be of any help, please call on me. The one area that I probably can best assist in is as a historian on discussions to improve the 40 year old nondedicated agricultural use assessment program. I am one of the very few citizens of this county who had worked intensively with this program from its initial passage and had experienced the amendments throughout the years to better its provisions. Thank you for your time. Sincerely, Wesley Takai November 17, 2014 RE: Testimony Against Bill 317 Name: WesleyTakai Background: Real Property Employee 39 years (1969 — 2007) Real property appraiser, supervising appraiser, administrator Member, real property chapter 19 review committee, 1995 — 1997 Member, real property chapter 19 review committee, 2001 — 2003 Member, Department of Finance, Board of Review, 2008 - 2012 • This is the biggest change in the agricultural program in 40 years. • Act 175 was passed by the State Legislature in 1973 when the real property office was still a State agency. • Act 175 created the provisions of the 20 year dedication and nondedicated agricultural use assessment programs. • The nondedicated agricultural use assessment (hereafter to be noted as AU) is now Section 19-57, Hawaii County Code, as printed on Bill 317, starting at the bottom of page 1. • Intent of Act 175: "to encourage owners of agricultural lands to keep lands in agricultural production or to put back lands taken out of agricultural production into such production, through tax incentives for keeping or dedicating such lands for agricultural use on the one hand, and providing tax penalty features on the other hand to curb speculation". • Act 175 was a pro -taxpayer legislation giving tax benefits to owners who put unused agr lands into production with minimal paperwork. • Bill 317, on the other hand, is adverse to landowners requiring them to face "paperwork hoops", time and expenses to get benefits readily available under the AU program. • Because Bill 317 will have the greatest impact on the farming community, did they have any input to this bill? • The county should not just post an agenda on the bulletin board and in the internet 6 days prior to the Task Force and Council meetings and feel the public was adequately notified of such a major change in the real property program. • This will have such a great impact on the agr community that the county really needs to have town hall meetings on this bill and notify all agr organizations of these proposals. • The information needs to be sent to the major players for feedback before voting on this bill. • What are some of the merits of the AU program? 4• This is a good, easy, and flexible program to work with. :• Shortly after this program was enacted, there was a large movement to put vacant lands into production. Literally hundreds of acres have been put into agr use since its inception and there are currently about 10,000 parcels in this program. Through various means of communication with farmers, I personally saw many abandoned coffee farms being brought back to production while I was the appraiser assigned to North Kona for 19 years. When the plantations closed, the transition from sugar cane to other agr uses was seamless primarily because of this program. :• The increase in this county's agr production and diversity has positively contributed to the motto, "Buy Local". • Excerpt from Act 175 informational flyer: Because the Act itself makes amendments to different sections of the real property tax laws, it is assumed that the reader is familiar enough with the existing sections of the laws to understand these amendments in a total context". • How many council members have read Bill 317 and understand what is said in this lengthy document? The above Act 175 excerpt also applies to Bill 317. • The findings and purposes of Bill No. 317 states in part: "The Council finds it necessary to phase out the nondedicated use assessment program'... • Why does the Council find it necessary to phase out this program? Not one reason is listed to back up the above statement. Is it because the other counties may have repealed the AU program? v Take care of the needs of this county and don't worry about what the other counties do with their agr programs. v This county has the largest number of agr parcels, number of parcels in agr use, and number of parcels vacant and available for future agr use. Is this trying to close loopholes and abuses? If so, what guarantees are there that the new section proposed in this bill will not also encounter abuses? Is the AU program not working? Have other options to improve the AU program being considered such as having the real property office implement a monitoring or enforcement program which up to this time, unfortunately, was not a high priority item on the appraisal staff's annual schedule? • Probably the most damaging part of Bill 317 is the proposed addition (page 3), 19-57(e), This section shall be revealed in its entirety on June 30. 2019." • What and whose advice was given to the Task Force to make this drastic change to a program that has been highly productive for the past 40 years? • The dedication and AU programs are both good and can co -exist as they have for the past 40 years. • If it's not broken, don't try to fix it. • A dedication program can be cumbersome and costly, and for this county's agr program future, Bill 317 is not the "wonder" solution it portrays. • Two examples of the adverse effect dedications have had in this county are: :• The bankruptcy of Hamakua Sugar Company that resulted in $18 million of back taxes for the breach of its 20 year dedication. :• The closure of Puna Sugar Company that resulted in thousands of dollars of back taxes when they closed in the 1980's, again for the breach of its 20 year dedication. In summary: Dedication is not the Viagra for the agr program; a good enforcement program is and the real property division is working hard developing this. They have already started by sending out letters to potential non-users discovered via satellite images. If there are loopholes and abuses in the present AU program, the solution is the tightening of office and enforcing procedures, not making ordinance changes. It's like having a good, reliable car that gets a flat tire; fix the flat or change the tire, not buy a new car that may turn out to be a lemon.