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HomeMy WebLinkAboutBIL 218 Draft 01 2014-2016 ;MtY of N��.., • COUNTY OF HAWAII STATE OF HAWAII BILL NO. 218 ORDINANCE NO. AN ORDINANCE AMENDING CHAPTER 19, ARTICLE 7, SECTION 19-57 AND ADDING A NEW SECTION 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 bona fide farming a substantial break in real property taxes. In order to better achieve this purpose, the Council finds it necessary to revise the nondedicated agricultural use assessment program and to establish a new short-term dedicated agricultural use assessment program. This ordinance provides an opportunity for those currently in the non-dedicated program seeking to participate in either the three year or ten year commercial agricultural use dedication programs to make any necessary adjustments in their farming operations prior to when the existing non- dedicated program is fully phased out on December 31, 2017. This ordinance also allows owners to remain in the revised non-dedicated program rather than participate in one of the commercial dedicated programs, but at seventy percent of the market value for the qualifying agricultural use land. SECTION 2. Chapter 19, article 7, section 19-57 of the Hawai`i 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 fo -a ] Agricultural lands which are not dedicated pursuant to section 19-60, may be assessed for real property tax purposes as established in subsection [rte] (b) of this section, provided [and—shall—be subject to the following: (1) The] the land [in nondedicatcd 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 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. (1) The portion of land that is committed in specific nondedicated agricultural use shall be assessed at: [two times the dedicated agricultural use value as (A) Three times the dedicated agricultural use value as established by the director under this chapter for the tax year beginning 2017; and (B) Seventy percent of its market value for the tax year beginning 2018. [(3)](2) A farm dwelling site shall be assessed at [the highest commercial agriculture use] seventy percent of its market value, provided that the maximum farm dwelling site area to be assessed at [the highest commercial agriculture use] seventy percent of its market 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) [Deferred or rollback] Rollback tax. (1) A [deferred or] 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; (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 (2) The [deferred] 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." SECTION 3. Chapter 19, article 8 of the Hawai`i County Code 1983 (2005 Edition, as amended), is amended by adding a new section 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 years, 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 related to the particular type of farming operation involved. No more than one application for the short term commercial agricultural program 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. 3 (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 nuts, guava, 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, Hawai`i 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 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 the petition. 4 (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, the present 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, family agricultural, 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. 5 (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 activity if the petition 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 property to its newly 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) Any other 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 6 (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, Hawai`i 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 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 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. (A) 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 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 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. 7 (F) In any case in which rollback taxes are imposed after successful completion 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. (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 qualify as a principal farmer and shall not be exempt from rollback taxes or penalties under this subsection." 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. INTRODUCED BY: A idelfik COUNCIL ME ER, COUNTY OF HAWAI`I , Hawai`i Date of Introduction: Date of 1St Reading: Date of 2nd Reading: Effective Date: 8 REFERENCE Comm. 923