HomeMy WebLinkAboutBIL 126 Draft 01 2014-2016OFFICE INFORMATION ONLY
Meeting: Finance Committee July 18, 2016
Action: Withdrawn by introducer (;Wille).
Re: Bill 126; Comm. 604 (2014-2016 term)
COUNTY OF HAWAII
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• STATE OF HAWAII
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BILL NO. 126
ORDINANCE NO.
AN ORDINANCE AMENDING CHAPTER 19, ARTICLE 7, SECTION 19-57 AND
ADDING NEW SECTIONS TO CHAPTER 19, ARTICLE 8 OF THE HAWAII
COUNTY CODE 1983 (2005 EDITION, AS AMENDED), RELATING TO EXEMPTIONS
FROM REAL PROPERTY TAX BY WAY OF DEDICATION OF LAND FOR
AGRICULTURAL USE.
BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII:
SECTION 1. Findings and purpose. The purpose of the agricultural use assessment
program is to encourage continual and committed agricultural use of lands, by affording those
engaged in farming a substantial break in real property taxes. In order to better achieve this
purpose, the Council finds it necessary to phase out the nondedicated agricultural use assessment
program and replace that program with a short-term dedicated agricultural use assessment
program. This ordinance provides for a three-year transition period to provide ample opportunity
to implement the transition to the new short-term agricultural use dedication program or to the
existing ten year dedicated agricultural use program. This phase out period provides an
opportunity for those seeking to participate in the short-term agricultural use dedication program
to make any necessary adjustments in their farming operations. This ordinance will also allow
owners of agriculturally zoned vacant land, who do not participate in one of the agricultural use
dedication programs but who intend to preserve agriculturally zoned vacant land, the option of
participating in the vacant land program based on a 70% of the market value property tax
valuation.
As of January 1, 2018, those parcels not in the three-year or ten year dedicated agricultural use
programs or in the agriculturally zoned vacant land program, shall thereafter be assessed at
market value.
SECTION 2. Chapter 19, article 7, section 19-57 of the Hawaii County Code 1983
(2005 Edition, as amended), is amended to read as follows:
"Section 19-57. Nondedicated agricultural use assessment.
(a) [Lands classified and used fl+ d] Agricultural lands which are not
dedicated pursuant to section 19-60, may be assessed for real property tax purposes
as established in subsection [(a)(2�] fl2) of this section, provided: [and shall be
subjeet to the following--.
(4) The] the land [in nondedie-ated- agr-ieultur-al-terse] must be used on a
continuous and regular basis for intensive agriculture, orchards, feed crops
and fast rotation forestry or pasture and slow rotation forestry on lands
zoned by the County to be in the districts of agricultural, residential and
agricultural, family agricultural, intensive agricultural, and agricultural
project district[;].
[(-2)](b) Assessment.
The portion of land that is committed in specific nondedicated agricultural
use shall be assessed at: two times dedieated agr4ettitural use valtle as
established b3the di-r-ester-o€frnanee undefthis ehapten ]
(A) Two times the dedicated agricultural use value as established by the
director under this chapter for the tax year 2016•
(B) Three times the dedicated agricultural use value as established by the
director under this chapter for the tax year beginning 2017.
[(3)](2) A farm dwelling site shall be assessed at the highest commercial
agriculture use value, provided that the maximum farm dwelling site area to
be assessed at the highest commercial agriculture use value shall not exceed
one-fourth acre.
[(b)](3) All portions of land that are not committed or used for a specific
agricultural use shall be assessed based on the proportional market value of
the total property.
(c) Application; filings; assessment effective; renewal.
(1) The director shall prescribe the form of the nondedicated agricultural use
application.
(2) The application shall be filed with the director by December 31 of any
calendar year.
(3) The application for a nondedicated agricultural use assessment must be
signed by all owners of the land being committed.
(4) If the application is approved, the assessment based upon the use requested
in the application shall be effective as of January 1 for the following tax
year.
(5) Renewal of the application shall be in such form and at such time as
required by the director.
(d) [r'��r mak] Rollback tax.
(1) A Mr, rollback tax shall be imposed on the owner of the
agricultural land upon any of the following events:
(A) Conversion to any County zoned district other than agricultural,
residential and agricultural, family agricultural, intensive agricultural,
or agricultural project district as a result of a petition by the owner or
lessee;
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(B) The property is subdivided into parcels of less than five acres in size;
or
(C) A condominium property regime is declared for the property having
condominium units with an area equivalent to less than five acres in
size.
(2) The [defeffed] rollback tax shall commence from the date the conversion
was made retroactive to the date the agricultural use assessment was
approved, but for not more than a period of two years plus the current year.
(3) The amount of [deferred] rollback taxes shall be based on the difference
between the assessed market value at highest and best use and the assessed
agricultural use value of the land at the tax rate applicable for the respective
years, with a ten percent penalty.
(e) This section shall be repealed in its entirety on June 30 2019."
SECTION 3. Chapter 19, article 8 of the Hawaii County Code 1983 (2005 Edition, as
amended), is amended by adding two new sections to be appropriately designated and to read as
follows:
"Section 19- . Short term commercial agricultural use dedication.
(a) A special land reserve is established to enable the owner of any parcel of land or
lessee of a recorded agricultural lease with a minimum of three years remaining on
the lease at time of petition, to dedicate the land to the short term commercial
agricultural use program, and to have the land assessed its value in such use for a
period of three years, or in the case of a recorded agricultural lease the term of the
lease up to three ears, provided:
(1) The commercial agricultural use is limited to farming operations that adhere
to generally accepted standards or recognized practices within the
agricultural industry that are not otherwise prohibited by law, and generate
income, monetary gain or economic benefit in the form of money or
money's worth of a minimum $2,000 annual gross income per farm
operation. In the absence of generating a minimum of $2,000 annual gross
income, an applicant may alternatively submit an IRS form 1040 Schedule F
(Profit and Loss from Farming) or such other IRS form showing profit and
loss from farming that includes expenses in an amount in excess of $2,000.
No more than two applications for the short term commercial agricultural
program, each for a three year period, may be submitted without meeting
the required minimum of $2,000 in annual gross income;
(2) The land is designated by County zoning district classification as
agricultural, residential and agricultural family agricultural intensive
agricultural, agricultural project district; and
(3) The land dedicated for short term commercial agricultural use must be used
on a continuous and regular basis for intensive agriculture orchards feed
crops and fast rotation forestry or pasture and slow rotation forestry and
have a minimum lot size per farm operation for that dedicated category of
commercial activity as provided for in the administrative rules and
regulations of the department. In the absence of complying with the
minimum lot size for the applicable type of commercial farm operation, the
applicant may demonstrate a commercial_ agricultural use by submission of
the applicant's IRS form 1040 Schedule F (Profit and Loss from Farming)
that includes annual gross income in an amount in excess of $2,000 as well
as photographs and a description of the agricultural operation
(b) The portion of land that is committed in short term commercial agricultural use
shall be assessed at two times the dedicated agricultural use value as established by
the director under this chapter.
(c) Determining short term agricultural use value
(1) In determining the value of lands classified and used for short term
commercial agriculture use consideration shall be given to rent
productivity, nature of actual short term commercial agricultural use the
advantage or disadvantage of factors such as location accessibility,
transportation facilities size shape topography, quality of soil water
privileges, availability of water and its cost easements and appurtenances
and to the opinions of persons who may be considered to have special
knowledge of land values.
(2) Four general short term agricultural categories shall be used in determining
the value of lands dedicated for short term commercial agriculture:
(A) "Intensive agriculture," which includes such crops as vegetables
ginger, taro, herbs, nurseries foliage cut and potted flowers
piggeries dairy,poultry, feedlots aquaculture honey and honeybees;
(B) "Orchards," which includes such crops as macadamia nutsguava,
banana, papaya avocado grapes passion fruit coffee citrus cacao
pineapple and tropical specialty fruits;
(C) "Feed crops and fast rotation forestry," which includes forage crops
seed crops cane short rotation forestry, biomass grasses and other
similar types of crops and grasses; and
(D) "Pasture and slow rotation forestry," which includes pasture and
longer rated forestry.
(3) Lands classified as tree farm property pursuant to chapter 186 Hawaii
Revised Statutes, shall be considered for classification and valuation as
agricultural.
(4) The portion of land that is not dedicated for short term commercial
agriculture use shall be assessed based on the proportional market value of
the total property_
(5) A farm dwelling site shall be assessed at the highest short term commercial
agricultural use value, provided that the maximum farm dwelling site area to
be assessed at the highest short term commercial agriculture use value shall
not exceed one-fourth acre.
(d) Short term commercial agricultural use dedication petition.
(1) If any owner desires to dedicate the owner's land for a short term
commercial agricultural use and to have the land taxed as its assessed value
in this use, the owner shall so petition the director and declare in the petition
that the land can best be used for the purpose for which the owner requests
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permission and that if the petition is approved the land will be used for this
purpose. The director may require evidence of short term commercial
agricultural use in such form and at such times as provided for in the
administrative rules and regulations of the department.
(2) The director shall prescribe the form of theetip tion.
(3) The petition shall be filed with the director by September 1 of any calendar
year and shall be either approved or denied by December 15 of that same
year. If approved, dedication shall be effective on July 1 of the following tax
year.
(4) The petition for short term commercial agricultural use dedication must be
signed by all owners of the land for which the dedication is sought.
(5) For the purposes of this section, a recorded lessee of the land with a term of
three or more years remaining from the date of the petition and who is
responsible for payment of the real property tax shall also be deemed an
owner of the land.
(6) Action by director on petition.
(A) Upon receipt of a petition, the director shall make a finding of fact as
to whether the land in the petition area is reasonably well suited for
the intended use. The finding shall include and be based upon the
productivity ratings of the land in those uses for which it is best
suited, a study of the ownership, size of operating unit therp esent
use of surrounding similar lands, and other criteria as may be
appropriate.
(B) The director shall also make a finding of fact as to whether the
intended use is in conflict with the overall development plan of the
State and County;provided that for lands that are not classified by
County zoning district regulations as agricultural, residential and
agricultural, familyagricultural, intensive agricultural, or agricultural
project district, the director shall make further findings respecting the
economic feasibility of the intended use of the land.
(C) If all findings are favorable, the director shall approve the petition and
declare the land to be dedicated as described within the petition.
(D) In order to place prospective buyers on notice of the rollback liability.
the petitioner shall record the dedication in accordance with the
procedures of the bureau of conveyances within ninety days of notice
of approval.
(e) Approval by the director of the petition to dedicate shall constitute a forfeiture on
the part of the owner of any right to change the use of the land to a use other than
short term commercial agriculture for at least three years, unless otherwise
provided by this chapter, subject to cancellation or renewal as follows:
(1) At least one hundred eighty days prior to any cancellation or termination,
the department shall notify the owner by mail of such cancellation or
termination. The owner may apply for renewal of the dedication by filing an
application with the director on or before September 1 of the last year of
dedication. The renewal petition shall, in all respects, be processed similarly
to an original petition. Upon approval by the director of succeeding
dedications, the property shall continue to be assessed in accordance with
the provisions of the dedication.
(2) In the case of a change in zoning district classification not as a result of a
petition by any property owner or lessee such that the owner's land is placed
within any zoned district other than a County zoned district of agricultural
residential and agricultural, family agricultural, intensive agricultural or
agricultural project district, the dedication may be cancelled by the owner
within sixty days of the change in zoning district classification.
(3) Upon any conveyance or any change in ownership during the period of
dedication, the land shall continue to be subject to the terms and conditions
of the dedication unless a release has been issued by the director.
(f) Reclassifying a designated short term commercial agricultural use.
(1) If the owner desires to change from a specific short term commercial
agricultural category to a different short term commercial agricultural
category, the owner shall so petition the director and declare in the petition
that:
(A) The owner's land can best be used for a short term commercial
agricultural activity other than that for which the petition was
originally approved; and
(B) The owner will use the land for that new short term commercial
agricultural activityipetition is approved.
(2) If an owner is permitted to change the use as provided in this subsection, the
owner shall be allowed up to twenty-four months from the effective date of
the petition to convert to the new short term commercial agricultural
category. This conversion must be completed prior to the end of the
dedication period.
(3) The petitioner shall submit a progress report of the petitioner's efforts to
convert from one short term commercial agricultural category to a different
short term commercial agricultural category to the director one year from
the date that the petition to convert to a new short term commercial
agricultural category was approved, and yearly, thereafter, as long as such
conversion period remains.
4) If the owner fails to convert the Dropertv to its newlv designated short term
commercial agricultural category within the specified time limit, the owner
shall be subject to the taxes and penalties provided in subsection (g).
(5) An other ther provision to the contrary notwithstanding an approved change in
use as provided in this subsection shall not alter the original dedication
period.
(g) Breach of dedication; rollback taxes; penalties and interest.
(1) A rollback tax shall be imposed on the owner of short term commercial
agricultural use dedicated lands upon any of the following_
(A) Failure of the owner to observe any restriction, condition, or
provision on the use of the land; or
(B) If the dedicated property or any portion thereof is sold by way of a
conveyance which is subject to conveyance tax under the terms of
chapter 247, Hawaii Revised Statutes unless a notarized affidavit is
signed by the owner stating that the land will continue to be subject to
the full requirements of the dedication including any penalties for
violation. The director shall record the notarized affidavit with the
bureau of conveyances.
(2) The rollback tax shall commence from the date of the failure to observe the
restriction condition or provision or the property's conveyance retroactive
to the date the assessment was made pursuant to paragraph (3)(C) of this
subsection, but for not more than three years.
(A) Failure to observe the restrictions on the use means failure for a
period of six consecutive months to use the land in the manner
requested in the petition or the overt act of chane the use for any
period; provided that the petition by the owner for a change in use as
provided in subsection (f) and the owner's subsequent change in use
of such dedicated lands, shall not be deemed to constitute a failure of
the owner to observe the restrictions on the use.
(B) Any other provisions to the contrary notwithstanding when a portion
of the dedicated land is subsequently applied to a use other than the
use set forth in the original petition only such portion as is withdrawn
from the dedicated use and applied to a use other than the short term
commercial agricultural category shall be taxed as provided by this
subsection.
(3) Calculating rollback taxes.
The tax during the first three year dedicated agricultural use period
shall commence from the date the conversion was made retroactive to
the date the agricultural use period began.
(B) Following the first three year dedicated agricultural use period the
rollback tax shall commence from the date the conversion was made
retroactive to the date the current agricultural use period began.
(C) The rollback tax shall be based on the difference between the
assessed market value at highest and best use and the short term
commercial agricultural use of the land at the rate applicable for the
respective
(D) All differences in the amount of taxes that were paid and those that
would have been due from assessment in the higher use shall be due
and payable with a ten percent penalty.
(E) If the owner of dedicated land breaches a condition of the dedication
before its completion, rollback taxes shall be imposed on the subject
parcel from the end of the tax year in which the breach occurs
retroactive to the date of dedication.
(F) In any case in which rollback taxes are imposed after successful com lep tion
of an agricultural dedication period, the rollback taxes shall be retroactive
only to the end of the completed dedication period, and shall not be imposed
for any time covered by a successfully completed agricultural dedication
period.
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(4) The additional taxes and penalties due and owing shall be a paramount lien
upon the property as provided for by this chapter.
(h) The director may cancel a dedication without rollback taxes or penalties in the
event of any of the following_
(1) A recognized natural disaster-,
(2) The land can no longer be used for the dedicated agricultural use-, or
(3) The death or severe disability of the principal farmer such that the farm
operation cannot continue; provided however, that a corporation or a
partnership shall not qualifyprincipal farmer and shall not be exempt
from rollback taxes or penalties under this subsection."
Section 19- . Agriculturally zoned vacant land dedication.
(a) A special land _reserve is established to enable the owner of anv auiculturall
zoned vacant parcel of land, to dedicate the vacant land to have the land assessed at
?t}% of its market value, provided:
(1) The land is designated by County zoning district classification as
agricultural, residential and agricultural, family agricultural intensive
agricultural, agricultural project district; and
(2) The individual parcel is at least three acres in size; and
(3) The agriculturally zoned vacant land remains vacant for at least ten years with no
structures constructed other than as permitted herein, and no state or county
application submitted for any structures or other development during the ten year
period. Permitted structures in an agriculturally zoned vacated land program is
limited to agricultural outbuildings and fences.
(b) Short term agriculturally zoned vacant landetip tion.
(1) If any owner desires to dedicate the owner's agriculturally zoned land for a
vacant land dedication, the owner shall so petition the director and declare in
the petition that the land is vacant, there are no structures on the land there
are no permits being processed for any structures or other development and
that the land is being held for future agricultural use.
(2) The director shall prescribe the form of the petition.
(3) The petition shall be filed with the director by September 1 of any calendar
year and shall be either approved or denied by December 15 of that same
year. If approved, dedication shall be effective on July 1 of the following tax
year.
(4) The petition for a vacant land dedication must be signedy all owners of the
land for which the dedication is sought.
(5) Action by director on petition.
(A) Upon receipt of a petition, the director shall make a finding of fact as
to whether the land in the petition area is vacant and reasonably well
suited for future agricultural use.
(B) If the findings is favorable, the director shall approve the petition and
declare the land to be dedicated as described within the petition.
(C) In order to place prospective buyers on notice of the rollback liabilitL
the petitioner shall record the dedication in accordance with the
procedures of the bureau of conveyances within ninety days of notice
of approval. The Finance Department _ is available to assist in the
filing with the bureau of conveyances.
(c) Approval by the director of the petition to dedicate shall constitute a forfeiture on
the part of the owner of any right to change or to petition for change of the use of
the land to a use other than to the option of a commercial agriculture use pro ram
for at least three years, subject to cancellation or renewal as follows:
fW In case of a finding of non-compliance with the requirements of the agriculturally
zoned vacant land dedication program:
(1) At least one hundred eighty days prior to any cancellation or termination
the department shall notify the owner by mail of such cancellation or
termination. The owner may apply for renewal of the dedication by filing an
application with the director on or before September 1 of the lastey ar of
dedication. The renewal petition shall, in all respects be processed similarly
to an originalpetition. Upon approval by the director of succeeding
dedications, the property shall continue to be assessed in accordance with
the provisions of the dedication.
(2) In the case of a change in zoning district classification not as a result of a
petition by any property owner or lessee such that the owner's land is placed
within any zoned district other than a County zoned district of agricultural
residential and agricultural, familyagricultural, intensive agricultural or
agricultural project district, the dedication may be cancelled by the owner
within sixty days of the change in zoning district classification.
(3) Upon any conveyance or any change in ownership during the period of
dedication, the land shall continue to be subject to the terms and conditions
of the dedication unless a release has been issued by the director.
fie,) Reclassifying agriculturally zoned vacant land to a dedicated agricultural use
program.
(1) If the owner desires to change from a vacant land dedication to the ten yea
commercial agricultural use program, the owner shall so petition the director
and declare in the petition that the owner will use the land for the
designated commercial agricultural use activity for a minimum period of ten
years.
(2) If an owner changes from dedicated vacant land to the ten year agriculture
use dedication as provided for in this subsection, the owner shall be allowed
up to twenty-four months from the effective date of the petition to convert to
the agricultural use program.
(3) If the owner fails to convert the property to its newly designated ten year
commercial agricultural use program within the specified time limit, the
owner shall be subject to the taxes and penalties provided in subsection (fl.
(f) Breach of dedication; rollback taxes; penalties and interest.
(1) A rollback tax shall be imposed on the owner of vacant dedicated lands
upon any of the following_
(A) Failure of the owner to observe any restriction, condition, or
provision on the use of the land; or
(B) If the dedicated property or any portion thereof is sold by waw
conveyance which is subject to conveyance tax under the terms of
chapter 247, Hawaii Revised Statutes unless a notarized affidavit is
signed by the owner stating that the land will continue to be subject to
the full requirements of the dedication including any penalties for
violation. The director shall record the notarized affidavit with the
bureau of conveyances.
(C) The maximum period of rollback shall be five years
(2) The rollback tax shall commence from the date of the failure to observe the
restriction condition or provision or the property's conveyance retroactive
to the date the assessment was made pursuant to paragraph (3)(C) of this
subsection, but for not more than five years.
(A) Failure to observe the restrictions on the use means failure for a
period of six consecutive months to use the land in the manner
requested in the petition or the overt act of changing the use for any
period; provided that the petition by the owner for a change in use as
provided in subsection (f) and the owner's subsequent change in use
of such dedicated lands, shall not be deemed to constitute a failure of
the owner to observe the restrictions on the use.
(B) Any other provisions to the contrary notwithstanding when a portion
of the dedicated vacant land is subsequently applied to a use other
than the use set forth in the original petition onlysuch uch portion as is
withdrawn from the dedicated use and is applied to a use other than to
the ten year commercial agricultural shall be subject to the rollback
tax.
(C) The roll back period shall not exceed 5 years in total.
(3) Calculating rollback taxes.
(A) The rollback tax during the first three year or first ten year dedicated
agricultural use period for that applicant shall commence from the
date the conversion was made retroactive to the date the agricultural
use assessment was approved, but for not more than a period of one
year plus the current year.
(B) Following the first three year or first ten year dedicated agricultural use
period for that applicant, the rollback tax shall commence from the
date the conversion was made retroactive to the date the agricultural
use assessment was approved.
(C) The rollback tax shall be based on the difference between the
assessed market value at highest and best use and the vacant land rate
at the rate applicable for the respective years.
(D) All differences in the amount of taxes that were paid and those that
would have been due from assessment in the higher use shall be due
and payable with a ten percentep nalty.
(E) If the owner of dedicated land breaches a condition of the dedication
before its completion, rollback taxes shall be imposed on the subject
parcel from the end of the tax year in which the breach occurs
retroactive to the date of dedication.
(F) In any case in which rollback taxes are imposed after successful
completion of a vacant land dedication period, the rollback taxes shall
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be retroactive only to he end of the completed dedication period. and
shall not be imposed for any time covered by a successfully
completed vacant land dedicationerp iod.
(4) The additional taxes and penalties due and owing shall be a paramount lien
upon the property as provided for by this chapter.
SECTION 4. Material to be repealed is bracketed and stricken. New material is
underscored. In printing this ordinance, the brackets, bracketed and stricken material and
underscoring need not be included.
SECTION 5. Severability. If any provision of this ordinance, or the application thereof
to any person or circumstance is held invalid, such invalidity shall not affect other provisions or
applications of the ordinance which can be given effect without the invalid provision or
application, and to this end, the provisions of this ordinance are declared to be severable.
SECTION 6. This ordinance shall take effect upon its approval.
, Hawai`i
Date of Introduction:
Date of 1St Reading:
Date of 2nd Reading:
Effective Date:
REFERENCE Comm. 604
INTRODUCED BY:
CO CIL ME ER, COUNTY OF HAWAI`1
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