HomeMy WebLinkAboutCOM 0923.007 2014-2016 Margaret Willeo:!! Phone No. Hilo: (808)961-8027
Council Member :cP•J';L; +.,. Phone No. Waimea: (808)887-2043
District 9-North and South Kohala �� Fax No.: (808)887-2072
. E-Mail: mwille@co.hawaii.hi.us
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HAWAII COUNTY COUNCIL
County of Hawai'i
Hawaii County Building Holomua Center West Hawaii Civic Center Bldg.A
25 Aupuni Street 64-1067 Mamalahoa Highway,Suite C-S 74-5044 Ane Keohokalole Hwy.
Hilo, Hawaii 96720 Waimea, Hawaii 96743 Kailua-Kona, Hawai'i,96740
TO: Dru Mamo Kanuha, Council Chair
and Members of the Hawai`i County Council
FROM: ''argaret Wille, Council Member w_
DATE: August 11, 2016
SUBJECT: Proposed Amendments to Bill No. 218; Relating to Exemptions from Real
Property Tax by Way of Dedication of Land for Agricultural Use
Please find attached proposed amendments to Bill No. 218. The proposed amendments are
illustrated below by Ramseyer format with respect to the contents of Bill No. 218 (material to
be deleted is bracketed and stricken, material to be added is underscored). A draft copy of
Bill No. 218, Draft 2, is attached with the amendments incorporated therein.
1. Bill No. 218 is amended by amending the findings and purpose to read as follows:
"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 1[: •: : - - - - - -_
: .. ' . ! , ! ]. This ordinance also allows owners
to remain in the revised non-dedicated program rather than participate in one of the commercial
COMM. No. 49,1.3.7
Ref. To: FG—
Serving the Interests of the People of Our Island Ref. Date 5EP 0 6 2016
Hawai`i County Is An Equal Opportunity Provider And Employer
Page 2 of 11
dedicated programs, but at seventy percent of the market value for the qualifying agricultural use
land."
2. Bill No. 218 is amended by amending Section 2 to read as follows:
" 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) Agricultural lands which are not dedicated pursuant to section 19-60, may be
assessed for real property tax purposes as established in subsection (b) of this
section, provided the land [must-be] is used on a continuous and regular basis for
intensive agriculture, orchards, feed crops and fast rotation forestry or pasture and
slow rotation forestry or is left fallow for a customary period of time for any of
the aforementioned purposes, or is agricultural waste lands, on lands zoned by the
County to be in the districts of agricultural, residential and agricultural, family
agricultural, intensive agricultural, and agricultural project district.
(b) Assessment.
(I) The portion of land that is committed in specific nondedicated agricultural
use shall be assessed at:
(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.
(2) A farm dwelling site shall be assessed at seventy percent of its market value,
provided that the maximum farm dwelling site area to be assessed at seventy
percent of its market value shall not exceed one-fourth acre.
(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; notice. assessment effective; inspection. 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) The director shall send every applicant a written notice providing the
director's determination that the application is approved in whole, approved
in part, or denied. If the application is approved in part, the notice shall
indicate the portion of the land that qualifies for the assessment.
[(4)] 5 If the application is approved, in whole or in part the assessment based
upon the use requested in the application shall be effective as of January 1
for the following tax year.
(6) The Director may conduct an onsite inspection for any land proposed as
eligible for the non-dedicated agricultural use program and may make
inspections without prior notice. The Director may also require the owner to
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furnish additional evidence to the director's satisfaction that the land use is
consistent with the requirements of subsection (a) of this section.
[(5)] (7) Renewal of the application shall be in such form and at such time as
required by the director. In the event the applicant intends to renew his three
or ten year dedication, no renewal application is required to be filed unless
the information provided in the previously filed and approved application is
no longer accurate or if requested in writing by the director.
(d) Rollback tax.
(I) A 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]
without having reapplied and thereafter obtained approval based on
the re-subdivision: or
(C) A condominium property regime is declared for the property [having
(D) The land is not being used as required in subsection (a) of this
section.
(2) The rollback tax shall commence from the date the conversion was made
retroactive to the date the agricultural use assessment was approved, [but-fer
not more than a period of two y ars plus the current y ar] provided the
rollback tax shall not be applied to those years for which the owner can
provide evidence to the director's satisfaction that commercial agricultural
activity was occurring on the land that had been approved for the
agricultural use assessment.
(3) The amount of 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) The administrative rules of the department shall include criteria to determine
whether a particular land use is eligible for the nondedicated agricultural
assessment under subsection(a) of this section"
M W,'dh
Att.
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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. 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 Hawaii County Code 1983
(2005 Edition, as amended), is amended to read as follows:
"Section 19-57. Nondedicated agricultural use assessment.
(a) [Lands clacsiticd and used for agriculture and] Agricultural lands which are not
dedicated pursuant to section 19-60, may be assessed for real property tax purposes
as established in subsection [(aX2)] (b) of this section provided [aaa sh. ' be
(-) The] the land [- . - - - -- ] [must-be] is be used on a
continuous and regular basis for intensive agriculture, orchards, feed crops
and fast rotation forestry or pasture and slow rotation forestry or is left
fallow for a customary period of time for any of the aforementioned
purposes. or is agricultural waste lands 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.
(I) The portion of land that is committed in specific nondedicated agricultural
use shall be assessed at: [ - -- - • : - . . • •
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(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)]gi A farm dwelling site shall be assessed at [ he h�cial
agriculture uac] seventy percent of its market value, provided that the
maximum farm dwelling site area to be assessed at [t`e `' 'iail
agr,z "ar° • se] 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; nonce. assessment effective; inspection 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.
(l The director shall send every applicant a written notice providing the
director's determination that the application is approved in whole, approved
in part, or denied. If the application is approved in part, the notice shall
indicate the portion of the land that qualifies for the assessment.
[(43] 5 If the application is approved, in whole or in part, the assessment based
upon the use requested in the application shall be effective as of January 1
for the following tax year.
(6) The Director may conduct an onsite inspection for any land proposed as
eligible for the nondedicated agricultural use program and may make
inspections without prior notice. The Director may also require the owner to
furnish additional evidence to the director's satisfaction that the land use is
consistent with the requirements of subsection(a) of this section.
[(5)] (7) Renewal of the application shall be in such form and at such time as
required by the director. In the event the applicant intends to renew his three
or ten year dedication, no renewal application is required to be filed unless
the information provided in the previously filed and approved application is
no longer accurate or if requested in writing by the director.
(d) [Deferred-or rollback] Rollback tax.
(I) 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 [- n. •- - -. - - -
without having reapplied and thereafter obtained approval based on
the re-subdivision; or
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(C) A condominium property regime is declared for the property [having
size].
(D) The land is not being used as required in subsection (a) of this
section.
(2) The [deferred] rollback tax shall commence from the date the conversion
was made retroactive to the date the agricultural use assessment was
provided the rollback tax shall not be applied to those years for which the
owner can provide evidence to the director's satisfaction that that
commercial agricultural activity was occurring on the land that had been
approved for the agricultural use assessment.
(3) The amount of [defcwed] 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) The administrative rules of the department shall include criteria to determine
whether a particular land use is eligible for the nondedicated agricultural
assessment under subsection(a) of this section."
SECTION 3. Chapter 19, article 8 of the Hawaii 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.
(al 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.
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(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 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, Hawaii
Revised Statutes, shall be considered for classification and valuation as
agricultural.
Ell 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.
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(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.
(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.
(j 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.
(§1 Action by director on petition.
(Al 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.
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(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 the use of the land to a use other than
short term commercial a.riculture for at least three ears unless otherwise
provided by this chapter, subject to cancellation or renewal as follows:
(U 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.
O 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
a_ricultural Bate or , to a different short term commercial a•ricultural
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 he 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).
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(5) Any other provision to the contrary notwithstanding, an approved change in
use as provided in this subsection shall not alter the original dedication
ep riod.
(al Breach of dedication;rollback taxes; penalties and interest.
(I) 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, 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.
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(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 an agricultural dedication period, the rollback taxes
shall be retroactive only to the end of the completed dedication
period, and shall not he 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
O 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.
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