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Home My WebLink AboutCOM 0923.009 2014-2016 KAREN WEI' '''''"\ AARON S.Y.CHUNG Chairperson MAILS"MEDE.IROS-DAVID •i,i:'CW le GREGGOR (LAGAN VALERIE T. POINDEXTER ""�' ' DRU MAMO KANUHA Vice Chair '..4;;;0.: .-.""y:`\. DENNIS"FRESH"ONISHI .r.. DANNY PALEKA MARGARET WILLE HAWAII COUNTY COUNCIL County of Hawaii Hawaii County Building S.Utpuni Street Hilo. Hawaii 96720 2G 152pipC 0 0 < DATE: September 19, 2016 zr "f0: Dru Mamo Kanuha, Council Chair "al 21E and Members of the Hawaii County Council r FROM: .fl"Karen Eoff, Council Member Council District 8 SUBJECT: Summary of the September 8, 2016 Finance Committee Workshop Regarding the Dedicated & Nondedicated Agricultural Programs Attached please find a brief summary of the discussion that took place during the September 8, 2016 Finance Committee Workshop regarding the dedicated and nondedicated agricultural programs of lIawai`i County's real property tax office. This tool was prepared by the Legislative Research Branch staff to attempt to capture some of the concerns, suggestions, and comments raised during the workshop. Thank you. KE/wpb Comm. No: 2 3. 9 Ref. Tot OP; C Ref. Date SEP 2 0 ante Ha.vai'i County is an Equal Opportunity Provider and Employer LRB 9/18/16 Hawaii County Council's Committee on Finance 9/8/16 Workshop on Hawaii County's Agricultural Real Property Tax Program SUMMARY OF CONCERNS, SUGGESTIONS, AND COMMENTS EXPRESSED DURING THE WORKSHOP This summary attempts to capture some of the perspectives shared during the workshop in order to facilitate further discussion. Please feel free to clarify as needed. 1. Concerns,suggestions,and comments expressed during workshop: A. Agriculture: o Industry has changed due to trend towards diversified agriculture and many tenant farmers are elderly. How can farmers who are just starting out be supported? o Land is not affordable. Related Suggestions: o Use ag assessment programs as means to promote agriculture and farmers by providing lower RPT taxes for bona fide farmers and assuring fairness in system. o Preserve farmland for future farming. o Promote availability of affordable land for farming/ranching. o Use tax incentives to encourage large landowners to dedicate their land to long- term ag use and provide longer term leases for ranchers/farmers. o Need to allow time for short-term farmers to move into different crops as needed without immediately applying roll-back tax. o Keep nondedicated ag program. It is an entry pathway for small farmers and diversified ag that encourages start-up farming and local agriculture. It serves many farmers whose business models don't fit in the dedicated program. B. Ag RPT concern—Abuse/Enforcement: o Some people are abusing agricultural RPT exemption,taking advantage of"loopholes." Results in inequitable disparities in tax rates. o Some enforcement actions are overturned by RPT appellate board. Related Suggestions: o Clarify goals of RPT program. Develop fair and consistent tax policy. o Define behavior that wish to promote. What is "intensive"agriculture? o Clarify indicators that desired behavior is occurring; conservation plan,filing schedule f, qualifications, length of commitment, etc. o Close loopholes that enable "gentleman farmers" and "gardeners`to take advantage of inappropriate tax benefits. o Improve enforcement. o Need RPT staff to inspect. o Consider assessing administrative costs to tax appeal board appellants who refused access to inspector did not timely file appropriate paperwork. C. Ag RPT concern—Staffing: o RPT office staff lack necessary knowledge and expertise to determine what are reasonable improvements/activities to demonstrate that intensive ag use is occurring relating to ranchers. Sometimes costly and unrealistic infrastructure requirements are imposed. o Insufficient staffing resources to conduct inspections at required intervals. RPT staff is responsible to inspect all properties not just ag properties. Related Suggestions: o Utilize inspectors rather than appraisers to inspect as a more affordable means to utilize staff resources. o Shift burden of showing that they are still engaging in ag use to persons seeking tax exemption. D. Ag RPT concern—Inspections: o Law does not provide authority to enter private property to verify land use. Staff cannot enter property if owner denies access. Related Suggestions: o Need to provide staff with right to enter private property for inspection purposes. o Shift burden of showing that they are still engaging in ag use to persons seeking tax exemption. E. Ag RPT concern—Dedicated Ag Use Program: o Have people in dedicated program that shouldn't be there and people in non-dedicated program getting tax benefits but not in commercial agriculture. Need to promote better alignment. o Need greater incentives to enroll in dedicated ag use program. Most of productive ag lands are in non-dedicated program because there are insufficient incentives to enroll. Too much red tape, hoops to jump through to enroll, and penalties and threats if change use of land in the future. o Not all farmers fit model of current dedicated agricultural use program. Need a third category or"bucket" to accommodate. Consider circumstances of big land owners committed to keeping their land in ag production and those with situations that do not fit in current categories and determine how to promote keeping these lands in legitimate long term ag production. o In current form, dedicated ag use program does not fit circumstances of many small farmers. o Landowners committed to keeping their land in ag production cannot dedicate vacant land unless they have a farmer for their parcels. This does not support keeping land in long term agriculture use. 2 Related Suggestions and Comments: o Threshold question is whether need to make any changes or not. Is program something to keep as is or do we need to change it? If so, change in what way? o Is there a need to further define dedicated and nondedicated agriculture at this point or do existing requirements need to be enforced and is there a process currently in effect to address this. o Ag ded program is broken. Farmers are not in program. They're in non- dedicated agriculture program. Most of productive agriculture lands are in non- dedicated program. There are insufficient incentives to go into dedicated program. o Dedicated and nondedicated agriculture use assessment programs can be improved. o Ag ded works for single user on parcel of land. For parcels with many licensees clearly dedicated long term to agriculture it doesn't work. If want to keep land in long term ag it's people like Shipman that provide basis for that. Nondedicated is a failsafe. o Nondedicated program serves a lot of people. If want to encourage farming at local level and encourage start up farming need to keep nondedicated program. o 90%of lands in this discussion are in pasture. Need to distinguish between pasture vs farming. o Consider inclusion of and impact on other categories such as: native forest, waste (what rates does RPT use as they are not in the Code), internal roads, fallow lands. o Some valuations are too high. Feed crop, pasture? Need to be flexible as valuations for same use in different regions may vary widely. o Will rates be set on basis of agricultural or market use rates? o Landowners dedicate,farmers don't. In many cases farmers are not landowners. Rancher or farmer shouldn't have to bear increase in cost if landowner decided not to dedicate and taxes go up. 2. Procedural considerations: o Need to identify goals of the County's agricultural real property tax program. o If goal is to help farmers, consider whether other means besides amending agricultural dedication law might be appropriate means to accomplish this goal. o If change in law is needed to accomplish goal(s), be clear on what is appropriate topic for County ordinance, administrative rule, or state law. o Policymakers were asked to look at the issue holistically and with care. Rather than just "tweaking" the law, instead consider the entire issue before making changes. Agriculture RPT program is only one piece of an array of efforts to support local agriculture production. Changes need to be made with care to avoid negatively affecting those whom the program is intended to help. For instance, raising non-dedicated rates to 70%of fair market value may incentivize some large landowners to develop their lands. o Various parties that have relevant knowledge and experience with agriculture in the County and the development of the agricultural tax law,expressed appreciation for chance to share input via workshop and willingness to share their knowledge and interest in participating in further discussions leading to change in law. 3