HomeMy WebLinkAboutRules 31, 31A, 31B, 34, and 34A from July 18, 2024 meetingDEPARTMENT OF FINANCE
COUNTY OF HAWAI`I
STATE OF HAWAI`I
RULES AND REGULATIONS OF THE DIRECTOR OF FINANCE
RULE 31
RESERVED
DEPARTMENT OF FINANCE
COUNTY OF HAWAI`I
STATE OF HAWAI`I
RULES AND REGULATIONS OF THE DIRECTOR OF FINANCE
RULE 31A
RULES AND REGULATIONS RELATING TO LONG-TERM COMMERCIAL
AGRICULTURAL USE DEDICATION UNDER CHAPTER 19,ARTICLE 8,SECTION 19-60,
HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED)
Rule 31A.1 Purpose of rules; designation to real property tax office.
These rules and regulations are intended to implement the provisions of chapter 19, article 8,
section 19-60 of the county code,relating to long-term commercial agricultural use dedication.
The director designates the real property tax office to perform the administration ofthe long-term
commercial agricultural program.
Rule 31A.2 Definitions.
A. As used in these rules and regulations, these terms shall have the following meaning:
1. "Agricultural use"shall mean lands 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.
The term"agricultural use"does not include or apply to areas used primarily as farm
dwelling sites, such as, but not limited to, yard space, setbacks, or open landscape
associated with residential use planted with ornamental plants,fruit or ornamental trees
and vegetables primarily for home use or recreation.
2. "Change ofuse date"means the effective date of change ofuse dedication approved by
the real property tax office.
3. "Commercial dedicated agricultural use value"shall mean the agricultural use values
established under the provisions of section 19-53(a)(2)of the county code.
4. "Commercial agricultural activities" shall mean farm operations, that may include
multiple parcels that need not be contiguous,that 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 or adhere to generally accepted standards or recognized
practices within that agricultural industry.
5. "Commercially viable agricultural operation"shall mean an agricultural business or
service with the ability to compete effectively and to make a profit, either without
subsidies or with reliable,long-term subsidies as demonstrated by an analysis of
comparable practices within the area of operation under comparable conditions.
6. "Date of the dedication"means the effective date of dedication approved by the real
property tax office.
7. "Dedicated area"means the land area approved as dedicated lands by the real property
tax office.
8. "Diversified agriculture"means a blend of agricultural activities while
transitioning from one category to the other during the term ofthe dedication or on
a continuous and regular basis.
9. "Farm dwelling site"means that portion of the land not exceeding one-fourth acre which
is used for residential purposes, including the land upon which any house is located,
together with all accessory buildings and the land designated to be the yard space.
10. "Farm equipment"means machinery,implements,and tools used exclusively and directly
for farming or ranching operations.
11. "Farm plan"means an agricultural business plan,in a form prescribed by the director,
that describes the agricultural practices of a commercially viable agricultural operation,
all relevant tax map key numbers, and a financial projection.
12. "Fertilizers"means a natural or synthetic material added to the soil to supply plant
nutrients.
13. "Long-term commercial agricultural use dedication" means the use of land on a
continuous and regular basis for a minimum of ten(10)years that demonstrates the owner
is engaged in commercial agriculture activities from intensive agriculture;orchards; feed
crops and fast rotation forestry;pasture and slow rotation forestry; or diversified
agriculture.
14. "Owner"means the fee simple owner, or a recorded lessee of the land with a term of five
5)or more years remaining on the lease as ofthe date ofthe dedication and who
is responsible for payment of the real property taxes.
15. "Soil amendments"meansmaterial added to the soil to improve its physical properties
such as compost, agricultural lime, greensand, or manure.
16. "Violation"means the failure by the owner or any owner by succession who signed a
notarized affidavit to use the land for the general agricultural category,that was listed on
the petition and approved by the real property tax office,for a period of six consecutive
months. It also means the overt act of changing between commercial agricultural
categories without prior notification and approval ofsuch change by the realproperty tax
office for anyperiod oftime during the life ofthe dedication or any failure by the owner
to observe any of the terms, conditions, or restrictions of the dedication.
B. Use of gender and number. Words importing the singular number shall extend to and
include the plural;words importing the plural shall extend to and include the singular,
words importing the masculine or the feminine gender shall extend to and include the male
or the female as the case may be.
Rule 31 A.3 Dedication;requirements.
A. The dedication of lands for long-term commercial agricultural use shall be initiated by the
property owner by filing a complete application with the real property tax office on orbefore
September 1 for the dedication to become effective on July 1 ofthe following tax year if the
application is approved. If an applicant submits an incomplete application before the
September 1 deadline,the real property tax office shall make reasonable efforts to notify the
applicant ofthe deficiency in the application,and it shall be the responsibility ofthe applicant
to correct the deficiency and return the completed application to the real property tax office
by the September 1 deadline. The real property tax office shall either disapprove or approve
all timely and complete applications for dedication by December 15.Where multiple parcels
are being considered for dedication,a separate application for dedication is required for each
parcel with its own tax map key to apply for, and receive if approved, the agricultural
preferential assessment value.
1. The application for dedication shall be submitted on a form prescribed by the real
property tax office.Applications shall be available at the physical locations ofthe
real property tax office and the real property tax office website.
2. All applicants shall submit the Schedule F(IRS Form 1040)or State of Hawaii
tax form G-49 from the previous tax year as evidence of long-term commercial
agricultural use minimum of $2,000 annual gross income.
3. In addition, the application shall include at least one of the following:
a. A farm plan, as defined;
b. Documentation of organic certification from U.S.Department of
Agriculture;
c. A plan from U.S.Department of Agriculture,Natural Resources
Conservation Service;
d. Documentation of food safety certification from the U.S.Department
of Agriculture;
e. Receipts demonstrating an investment of a minimum of$10,000 in
farm equipment,fertilizers,or soil amendments for use on the subject
property within the previous two years of the application for
dedication; or
f. Documentation of an agricultural conservation easement with a term of
at least ten(10)years,that has been recorded with the state bureau of
conveyances.
B. The proposed parcel included within the application for dedication shall be located within
a county-zoned district of agricultural, residential and agricultural, family agricultural,
intensive agricultural, agricultural project district, or any other county-zoned district
meeting the approval of the director of planning in accordance with chapter 25 of the
county code;provided that,with respect to any parcel located within county-zoned
districts other than agricultural,residential and agricultural,family agricultural,intensive
agricultural, or agricultural project district, the real property tax office shall make
additional findings of fact on the petition for dedication as set forth in rule 31A.4.
C. Only the following five(5)general agricultural categories shall be eligible and
considered for dedication of land for long-term commercial agriculture use:
1. 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.
2. Orchards,which includes such crops as macadamia nuts,guava,banana,papaya,
avocado, grapes,passion fruit, coffee, citrus, cacao, pineapple, and tropical
specialty fruits.
3. Feed crops and fast rotation forestry,which includes forage crops, seed crops,
cane, short rotation forestry, biomass, and grasses.
4. Pasture and slow rotation forestry,which includes pasture and longer rated
forestry.
5. Diversified agriculture,which includes a blend of agricultural activities.
D. Lands petitioned for dedication shall be ofthe following minimum lot size schedule in
each of the following five agricultural categories.
1. Intensive agriculture: 0.25 acres
2. Orchards: 1.0 acre
3. Feed crops or fast rotation forestry: 2.5 acres
4. Pasture or slow rotation forestry: 5.0 acres
5. Diversified agriculture: 0.25 acres
Exceptions to these minimum lot sizes are allowed where the dedication application
indicates a commercially viable agricultural operation on a smaller lot. Where a parcel
does not meet the minimum size requirements, but all or a portion of land is in active
agriculture by way oflease to a farm or ranch,the lease shall be recorded with the state
bureau of conveyances to be eligible for consideration ofthe dedication.The lessee shall
complete the application and provide documentation for the commercially viable
agricultural operation.
E. The land dedicated for long-term commercial agricultural use for the following three(3)
agricultural categories shall not be fallow for more than three(3)out of every ten (10)
years of the dedication period,unless the dedication application describes and provides
reasons why it is necessary to have greater fallow periods, whose determination of
necessity shall be subject to review of the real property tax office:
1. Intensive agriculture;
2. Orchards; and
3. Diversified agriculture.
For purposes of this section,the term"fallow"shall mean cultivated land that is allowed
to lie idle during the growing season.
F. Each application for dedication shall be signed byall livingowners of the land, shallpp
indicate the general agricultural category to which the land is to be dedicated,and shall
include a map delineating the area to be dedicated. Any farm dwelling site shall be
indicated in the application and shall not be in the dedicated area.
G. A separate application shall be filed for each parcel or portion thereof to be dedicated;
however,one farm plan listing all tax map keynumbers may be submitted. For parcels
where animals are grazing on a rotational basis,all TMK numbers for where the animals
are rotated shall be included with a farm plan indicating the rotation schedule.
H. Applications shall be for a ten-year dedication term unless the remaining recorded lease is
for a term of less than ten(10)years;provided that a minimum of five years remaining on
the lease is required. The provision for a twenty (20)year agricultural dedication has
been repealed.
I. The real property tax office shall utilize and refer to the agricultural use guidelines for
density,crops types to agricultural categories and rotation schedule for proper ranching
management.The agricultural use guidelines provide for fair and equitable treatment of
the real property tax office's validation process to approve or disapprove a preferential
agricultural use value.
J. Each timely,completed application and document filed shall be reviewed,and any errors
or deficiencies shall be corrected by the applicant.No application for dedication shall be
deemed to have been filed unless the application is complete in form and any and all
errors or deficiencies have been corrected. The real property tax office shall assign a
dedication number to each completed and timely submitted application.
K. The real property tax office shall conduct site inspections for all parcels included within
each timely,completed application. Thereafter,the real property tax office shall conduct
periodic inspections of dedicated lands and shall note any violations for appropriate
action pursuant to rule 31A.8. Submittal of an application by the owner or lessee shall
constitute an acknowledgement that site visit inspections may be performed without prior
notice, unless the application requests that the real property tax office provide prior
notification ofthe site inspection. In the event the application requests such prior notice,
the real property tax office will make reasonable efforts to contact the applicant, which
may include but is not limited to telephone calls or email.
Rule 3 1A.4 Findings of facts.
The real property tax office shall, by December 15 of each year, make a finding of fact as to
whether the land in the application has been approved in full, approved in part, or denied. The
following criteria must be considered:
A. That the land has been visually inspected to confirm active agricultural use as noted in the
application.
1. Criteria for active agricultural use may include,but is not limited to,the
following:
a. For intensive agriculture, orchards, diversified agriculture, or feed
crops and fast rotation forestry,plantings must be observed at time of
inspection. Rows of plantings, including crops, must be made in a
manner as to maximize the productivity ofthe land being committed to
the agricultural dedication.
2. Criteria for active agricultural use for pasture and slow rotation forestry may
include, but is not limited to, the following:
a. Permanent water source and perimeter fencing or another barricade
sufficient to restrain freely grazing animals.
b. Only the areas with perimeter fencing or barricades shall be included in
the total dedicated area.
c. Where multiple parcels are contiguous and have animals grazing,
perimeter fencing may be around the exterior boundary ofall parcels.
B. That the productivity ratings of the land provide that the land is well suited for the
intended long-term commercial agricultural use.
C. A study of the ownership ofthe land to ensure the application is submitted by the proper
owner.
D. The size of the farm operation as a whole.
E. The present use of other surrounding similar lands.
F. The size or area for the proposed agricultural use is adequate or sufficient.
G. The use is permissible under the county-zoning district or ordinance.For parcels located
within county-zoned districts other than agricultural,residential and agricultural,family
agricultural,intensive agricultural,or agricultural project district,the real property tax
office shall make additional findings of fact on the economic feasibility of the intended
use of the land in accordance with allowable uses for planning purposes.
H. The intended use does not conflict with either the general plan of the county or any
applicable community development plan for the area.
Rule 3 1A.5 Approval or disapproval.
A. If all findings of fact from rule 3 1A.4,as applicable,are approved in full,or approved in
part,the real property tax office shall accept the application for dedication and declare
that the land be dedicated.
B. The real property tax office shall notify the owner of record, the lessee, and the person
named on the application for petition,if different from the owner or lessee,of approval or
disapproval of the application for dedication no later than December 15.Upon approval,
the dedication shall become effective July 1 of the following tax year, but the assessed
value shall be determined on the assessment date of January 1.
C. The application number and the effective date of the dedication are to be noted on
appropriate records accessible to the public.
D. If the application for dedication was not approved in full,the notice shall state the reasons
for such disapproval.
E. Upon approval,the owner(s)of record or the real property tax office shall record the
dedication in accordance with the requirements of the Hawai`i bureau of conveyances
within ninety(90)days ofthe date the application for dedication was approved. The
county shall not be responsible for any recording fees.
F. The land dedicated for long-term commercial agricultural use for intensive agriculture,
orchards,or diversified agriculture shall not grow any crops designated as noxious weeds
for eradication or control purposes by the state department of agriculture, set forth in
chapter 68,subtitle 6,title 4,ofthe Hawai`i Administrative Rules, as amended, or any
crops included in schedule I of the Controlled Substances Act in 21 U.S.C. § 812.
Rule 31 A.6 Effects of dedication;enforceable restriction upon use;changes in dedicated
use.
A. The effective date of any approved application for dedication shall be July 1. The real
property tax office shall assess,at the applicable agricultural use value,only those areas
actually in active agricultural use as of the assessment date of January 1. A farm plan is
required when there is an anticipated or intended agricultural use within the first year of
the dedication period,and the application shall not be accepted or assessed as dedicated
agricultural use,unless the anticipated or intended uses are included in the farm plan
approved by the real property tax office.
B. Unless otherwise provided, each approved application for long-term commercial
agriculture dedication shall constitute a forfeiture on the part of the owner of any right to
change the use ofthe land,except where the use is for another long-term commercial
agriculture dedication for a minimum period often(10)years or the use is for a native
forest dedication for a minimum period of twenty (20)years.
C. In the case of a change in zoning not as a result ofan application by an owner or lessee
such that the dedicated land is placed within any zoned district other than agricultural,
residential and agricultural, family agricultural, intensive agricultural, or agricultural
project district,the dedication may be canceled by the owner within sixty (60)calendar
days of the change in zoning. The owner shall provide written notice to the real property
tax office of the cancellation within the sixty (60)calendar day period.
D. The dedication shall bind and inure to each successor owner unless the dedication is
properly cancelled by the owner and released by the real property tax office. The
dedication shall be cancelled if the dedicated land,or anyportion thereof,is sold by way
of a conveyance subject to conveyance tax under the terms of chapter 247, Hawai`i
Revised Statutes;provided that the dedication shall not be canceled if a notarized
affidavit is signed by all new owners of the land stating that the land will continue to be
subject to the full requirements ofthe dedication,including any penalties for violation.
E. Where dedicated land has been subdivided,each parcel shall be independently subject to
the provisions of the original dedication. The owner shall notify the real property tax
office,within thirty(30)calendar days,of any subdivision of the dedicated land and shall
submit a copy of the approved subdivision map or the registered file plan number,
whichever is applicable.
1. The real property tax office shall note the dedication upon appropriate records of
each subdivided parcel and record the subdivided dedication. The owner shall be
responsible for all recording fees.
2. The owner(s)shall inform each prospective purchaser of a subdivided parcel of
the dedicated status of the land.
3. Each owner of a subdividedparcel may,independently ofany other owner,apply
for a change in dedicated use or may provide the notice of cancellation to the real
property tax office within sixty(60) calendar days.
4. Any action taken by the owner ofa subdivided parcel shall not have any effect on
the owners of the other parcels resulting from the subdivision.
F. If any owner wishes to change its dedicated use from one commercial agricultural
category to another category,the owner shall submit for evaluation a change ofuse form
to the real property tax office that identifies the newproposed commercial agricultural
category.
1. The owner shall submit the change of use form within six(6)months from the
date that the land was last used for the approved dedicated agricultural use.
a. Any change ofuse form received after the sixth month shall be deemed
in violation of the original terms, conditions, and restrictions of the
dedicated use of the land, and the dedication shall be cancelled, and
retroactive assessments may be imposed.
2. The owner's change of use form shall be subject to the dedication requirements
of rule 31A.3, as applicable, and required findings of facts of rule 31A.4, as
applicable;provided the deadline for the real property tax office to approve or
disapprove the change ofuse form shall be within ninety(90)calendar days from
receipt.
3. If the change of use form is approved,the real property tax office shall provide a
written notice ofits approval and indicate the effective change ofuse date. The
owner shall havetwenty-four(24)months from the effective change ofuse date
to convert to the new long-term commercial agricultural use category. The
change ofuse shall not alter the initial dedication period, and the conversion to
the new use shall be completed prior to the end of the initial dedication period.
a. Failure to initiate the approved change in use or conversion plan may
cancel the dedication and subject special tax assessments retroactive to
the date the assessment was made but for not more than ten (10)years.
b. Failure for a period of six(6)consecutive months to show any visible
signs of converting to the new commercial agricultural activity shall
constitute a failure to initiate the approved change in use or conversion
plan.
c. The owner or lessee shall submit annual progress reports explaining the
efforts in converting to the change of use. The progress report shall be
submitted to the real property tax office on or before the anniversary of
the change of use date, and yearly thereafter.
4. If the change of use form or the native forest dedication application is
disapproved,the written notice shall state the reasons for such disapproval.
Rule 31A.7 Special tax assessment of dedicated lands.
A. The determination ofthe value ofdedicated lands for long-term commercial agricultural
use,which includes intensive agriculture,orchards,feed crops and fast rotation forestry,
pasture and slow rotation forestry, and diversified agriculture, shall be based upon
considerations prescribed in chapter 19,article 7,section 19-53(a)(2), and chapter 19,
article 8, section 19-60(c) of the county code, including the following:
1. Rent;
2. Productivity;
3. Nature of actual commercial agricultural use;
4. The advantage or disadvantage of factors, such as location, accessibility,
transportation facilities,size,shape,topography,water privileges,availability of
water and its cost, easements and appurtenances; and
5. Opinions ofpersons who may be considered to have special knowledge of land
values, such as agriculturalists and/or experts in the field.
B. In the event of any violations,pursuant to rule 31A.8, or cancellations,pursuant to rule
31 A.9,ofthe dedicated use,dedicated lands shall be assessed at their highest and best use
as though not dedicated for purposes of determining and computing retroactive taxes.
C. All portions of land,excluding the farm dwelling site,that are not dedicated for long-term
commercial agricultural use,shall be assessed based on the proportional market value of
the total property.
D. Each farm dwelling site,if any,shall not exceed one-fourth acre and shall be assessed at
the highest commercial agricultural use value.The farm dwelling site area for the parcel
shall be determined when the owner applies for the long-term commercial agricultural
use dedication.The assigned appraiser for that zone shall be responsible for verifying the
accuracy of the farm dwelling site area listed in the application and shall make
corrections upon observation of the land, if necessary.
E. The real property tax office shall report the total market value of land,along with the
assessed value of land for tax assessment purposes.
Rule 31A.8 Retroactive assessment, violation, and penalty.
A. The retroactive assessment and penalty provisions of chapter 19,article 8,section 19-
60(g)of the county code, shall be imposed by the real property tax office for any
violation of the dedication.
1. The retroactive assessment shall be the difference in the amount of taxes between
what should have been paid when assessed at the highest and best use and the
amount paid based upon its assessment for dedicated uses for each year the land
has been dedicated,based on the rollback tax schedule provided in section 19-
60(g)(3)(F)of the county code or the latest renewal date of the dedication. The
retroactive assessment shall be subject to a penalty of ten percent per year.
B. Whenever a violation of the dedication occurs(whether in whole or in part ofthe area in
the dedication),the owner shall first be provided written notice of such violation. The
notice of such violation shall be mailed to the last known address on file with the real
property tax office.Each owner shall be afforded an opportunity to discuss the violation
informally with the real property tax office. In the absence of any appropriate
justification,the real property tax office shall cancel the dedication and subject the lands
to retroactive assessments and penalties. A violation occurs upon any one of the
following:
1. Failure of the owner to comply with any restriction,condition,orprovision on
the use of the dedicated land;
2. If the dedicated land, or any portion thereof, is sold by way of a conveyance
subject to the conveyance tax under the terms of chapter 247, Hawai`i Revised
Statutes,provided that the dedication shall not be canceled if a notarized affidavit
is signed by all new owners of the land stating that the land will continue to be
subject to the full requirements of the dedication, includingpenalties forqany
violation;
3. For an approved change ofuse pursuant to Rule 31A.6,the failure to initiate the
approved change in use or conversion plan for a period of six (6) consecutive
months,or if the land remains vacant,idle,or fallow for twelve(12)consecutive
months from the date of approval of the change in use; or
4. The land dedicated for intensive agriculture,orchards,or diversified agriculture
is fallow forno more than three(3)out of every ten(10)years of the dedication
period,except when greater fallow periods are necessary as described in the
dedication application or change of use form.
C. If a violation occurs with respect to only a portion of the dedicated lands,such as when a
portion ofthe land is subsequently applied to a use other than its dedicated use or such
portion is not put to its long-term commercial agricultural use,the real property tax office
shall cancel only that portion that is in violation and subject that portion to retroactive
assessment and penalties.
D. In situations where the owner has satisfied the original terms and conditions of the
dedication and has renewed the dedication,the real property tax office shall, in cases of
violation,calculate the deferred or rollback taxes from the date of violation back to the
latest renewal date and apply the deferred or rollback tax schedule provided in section 19-
60(g)(3)(F)of the county code.
E. A change in zoning as a result of an application by an owner or lessee such that the
dedicated land is placed within any zoned district other than agricultural,residential and
agricultural,family agricultural, intensive agricultural, or agricultural project district,
shall be deemed to constitute an overt act ofchanging the use ofthe dedicated land and
may be subject to a retroactive assessment including rollback taxes and penalties.
F. All unpaid taxes,including retroactive assessments andpenalties shall constitute
a paramount lien upon the property.
Rule 31 A.9 Cancellation (withdrawal)without penalty.
A. Where lands have been rezoned in any county-zoned district other than agricultural,
residential and agricultural, family agricultural, intensive agricultural, or agricultural
project district by the county council not as a result of a petition initiated by the owner of
the dedicated land,such owner may cancel the dedication within sixty(60)days after the
reclassification and shall not be subject to the retroactive assessment and penalty
provisions by this rule 3 IA,or by the provisions of chapter 19,article 8,section 19-60 of
the county code. If the owner desires to cancel the dedication,the owner shall notify the
real property tax office in writing ofthe cancellation. The notice of cancellation shall be
accompanied by a copy of the notice of zoning change from the county Council.
B. All cancellations shall become effective July 1 of the following tax year.
C. The real property tax office may cancel a dedication without rollback taxes orpenalties in
the event of any of the following:
1. A recognized natural disaster beyond the farmer's control;
2. The land can no longer be used for the dedicated agricultural use,which final
determination shall be made by the real property tax office; or
3. The death or severe disability of the principal fanner such that the farm operation
cannot continue. Corporations and partnerships are not eligible for this death or
severe disability exemption.
D. The dedication shall be canceled upon expiration of the dedication.At least one hundred
eighty(180)days prior to the ending of the dedication period,the real property tax office
shall notify the owner by mail of such expiration. If the owner desires,the owner shall
reapply for renewal of the dedication by filing a renewal petition on or before September
1 of the last year of the dedication.
Rule 31A.10 Appeals.
The owner may appeal any disapproved petition or cancellation of dedication to the county tax
board ofreview. Appeals shall be governed by the appropriate sections of chapter 19 of the
county code.
Rule 31 A.11 Severability.
If any provision of these rules or the applicability thereof should be held invalid for any reason,
such invalidity shall not affect otherprovisions or applications,which can be given effect without
the invalid provisions or applications and to this end, these rules are declared to be severable.
Rule 31A.12 Effective date.
These rules and regulations shall take effect ten (10)days after filing with the county clerk.
DEPARTMENT OF FINANCE
COUNTY OF HAWAI`I
STATE OF HAWAI`I
RULES AND REGULATIONS OF THE DIRECTOR OF FINANCE
RULE 31 B
RULES AND REGULATIONS RELATING TO SHORT-TERM COMMERCIAL
AGRICULTURAL USE DEDICATION UNDER CHAPTER 19,ARTICLE 8,SECTION 19-61,
HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED)
Rule 31B.1 Purpose of Rules; designation to real property tax office.
These rules and regulations are intended to implement the provisions of Chapter 19,Article 8,
Section 19-61 of the county code, relating to the short-term commercial agricultural use
dedication. The director of finance designates the real property tax office to perform the
administration of the short-term commercial agricultural program.
Rule 3 1B.2 Definitions.
A. As used in these rules and regulations, these terms shall have the following meaning:
1. "Agricultural use"shall mean lands 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.
The term"agricultural use"does not include or apply to areas used primarily as farm
dwelling sites, such as, but not limited to, yard space, setbacks, or open landscape
associated with residential use planted with ornamental plants,fruit or ornamental trees
and vegetables primarily for home use or recreation.
2. "Change of use date"means the effective date of change of use dedication approved by
the real property tax office.
3. "Commercial dedicated agricultural use value"shall mean the agricultural use values
established under the provisions of section 19-53(a)(2) of the county code.
4. "Commercial agricultural activities" shall mean farm operations, that may include
multiple parcels that need not be contiguous, that 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 faun operation or adhere to generally accepted standards or recognized
practices within that agricultural industry.
5. "Commercially viable agricultural operation"shall mean an agricultural business or
service with the ability to compete effectively and to make a profit, either without
subsidies or with reliable,long-term subsidies as demonstrated by an analysis of
comparable practices within the area of operation under comparable conditions.
6. "Date of the dedication"means the effective date of dedication approved by the real
property tax office.
7. "Dedicated area"means the land area approved as dedicated lands by the real property
tax office.
8. "Diversified agriculture"means a blend of agricultural activities while
transitioning from one category to the other during the term of the dedication or on
a continuous and regular basis.
9. "Farm dwelling site"means that portion of the land not exceeding one-fourth acre which
is used for residential purposes, including the land upon which any house is located,
together with all accessory buildings and the land designated to be the yard space.
10. "Farm equipment"means machinery,implements,and tools used exclusively and directly
for farming or ranching operations.
11. "Farm plan"means an agricultural business plan,in a form prescribed by the director,
that describes the agricultural practices of a commercially viable agricultural operation,
all relevant tax map key numbers, and a financial projection.
12. "Fertilizers"means a natural or synthetic material added to the soil to supply plant
nutrients.
13. "Owner"means the fee simple owner, or a recorded lessee of the land with a term of
three(3)or more years remaining on the lease as ofthe date ofthe dedication and who is
responsible for payment of the real property taxes.
14. "Short-term commercial agricultural use dedication"means the use of land on a
continuous and regular basis for a minimum of three years that demonstrates the owner is
engaged in commercial agricultural activities from: Intensive agriculture;orchards;feed
crops and fast rotation forestry;pasture and sole rotation forestry; or diversified
agriculture.
15. "Soil amendments"meansmaterial added to the soil to improve its physical properties
such as compost, agricultural lime, greensand, or manure:
16. "Violation"means the failure by the owner or any owner by succession who signed a
notarized affidavit to use the landfor the general agricultural category,that was listed on
the petition and approved by the real property tax office,for a period of six consecutive
months. It also means the overt act of changing between commercial agricultural
categories without prior notification and approval of such change by the real property tax
office for any period of time during the life of the dedication or any failure by the owner
to observe any of the terms, conditions, or restrictions of the dedication.
B. Use of gender and number.Words importing the singular number shall extend to and
include the plural;words importing the plural shall extend to and include the singular,
words importingthe masculine or the feminine gender shall extendto and include the male
or the female as the case may be.
Rule 31B.3 Dedication;requirements.
A. The dedication of lands for short-term commercial agricultural use shall be initiated by
the property owner filing a complete application with the real property tax office on or
before September 1 for the dedication to become effective on July 1 ofthe following tax
year if the application is approved. If an applicant submits an incomplete application
before the September 1 deadline, the real property tax office shall make reasonable
efforts to notify the applicant of the deficiency in the application, and it shall be the
responsibility of the applicant to correct the deficiency and return the completed
application to the real property tax office by the September 1 deadline. The real property
tax office shall either disapprove or approve all timely and complete applications for
dedication by December 15.Where multiple parcels are being considered for dedication,
a separate application for dedication is required for each parcel with its own tax map key
to apply for, and receive if approved, the agricultural preferential assessment value.
1. The application for dedication shall be submitted on a form prescribed by the real
property tax office.Applications shall be available at the physical locations of the
real property tax office and the real property tax office website.
2. All applicants shall submit the Schedule F(IRS Form 1040)or State of Hawaii
tax form G-49 from the previous tax year as evidence of short-term commercial
agricultural use minimum of$2,000 annual gross income.
3. In addition, the application shall include at least one of the following:
a. A farm plan, as defined;
b. Documentation of organic certification from U.S.Department of
Agriculture;
c. A plan from U.S.Department ofAgriculture,Natural Resources
Conservation Service;
d. Documentation of food safety certification from the U.S.Department
of Agriculture; or
e. Receipts demonstrating an investment of a minimum of$10,000 in
farm equipment,fertilizers,or soil amendments for use on the subject
property within the previous two years of the application for
dedication.
B. The proposed parcel included within the application for dedication shall be located within
a county-zoned district of agricultural, residential and agricultural, family agricultural,
intensive agricultural, agricultural project district, or any other county-zoned district
meeting with the approval ofthe county director of planning in accordance with chapter
25 of the county code;provided that,with respect to any parcel located within county-
zoned districts other than agricultural, residential and agricultural, family agricultural,
intensive agricultural,or agricultural project district, the real property tax office shall
make additional findings of fact on the petition for dedication as set forth in rule 31 B.4.
C. Only the following five(5)general agricultural categories shall be eligible and
considered for dedication of land for short-term commercial agriculture use:
1. 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.
2. Orchards,which includes such crops as macadamia nuts,guava,banana,papaya,
avocado, grapes,passion fruit, coffee, citrus, cacao,pineapple, and tropical
specialty fruits.
3. Feed crops and fast rotation forestry,which includes forage crops,seed crops,
cane, short rotation forestry, biomass, and grasses.
4. Pasture and slow rotation forestry,which includes pasture and longer rated
forestry.
5. Diversified agriculture,which includes a blend of agricultural activities.
D. Lands petitioned for dedication shall be of the following minimum lot size schedule in
each of the following five agricultural categories.
1. Intensive Agriculture: 0.25 acres
2. Orchards: 1.0 acre
3. Feed Crops or Fast Rotation Forestry: 2.5 acres
4. Pasture or Slow Rotation Forestry: 5.0 acres
5. Diversified agriculture: 0.25 acres
Exceptions to these minimum lot sizes are allowed where the dedication application
indicates a commercially viable agricultural operation on a smaller lot. Where a parcel
does not meet the minimum size requirements, but all or a portion of land is in active
agriculture by way oflease to a farm or ranch,the lease shall be recorded with the State
of Hawai`i bureau of conveyances to be eligible for consideration of the dedication. The
lessee shall complete the application andprovide documentation for the commercially
viable agricultural operation.
E. The land dedicated for short-term commercial agricultural use for the following three(3)
agricultural categories shall not be fallow for more than one (1) of out every three (3)
years of the dedication period,unless the dedication application describes and provides
reasons why it is necessary to have greater fallow periods,whose determination of
necessity shall be subject to review of the real property tax office:
1. Intensivel raagriculture;
2. Orchards; and
3. Diversified agriculture.
For purposes of this section,the term"fallow"shall mean cultivated land that is allowed
to lie idle during the growing season.
F. Each application for dedication shall be signed by all living owners of the land, shall
indicate the general agricultural category to which the land is to be dedicated,and shall
include a map delineating the area to be dedicated.Any farm dwelling site shall be
indicated in the application and shall not be in the dedicated area.
G. A separate application shall be filed for each parcel or portion thereof to be dedicated;
however,one farm plan listing all tax map key numbers may be submitted. For parcels
where animals are grazing on a rotational basis,all TMK numbers for where the animals
are rotated shall be included with a farm plan indicating the rotation schedule.
H. Applications shall be for a three-year dedication term, or in the case of a recorded
agricultural lease,a minimum ofthree(3)years remaining on the lease as of the date of
the dedication.
I. The real property tax office shall utilize and refer to the agricultural use guidelines for
density,crops types to agricultural categories and rotation schedule for proper ranching
management.The agricultural use guidelines provide for fair and equitable treatment of
the real property tax office's validation process to approve or disapprove a preferential
agricultural use value.
J. Each timely,completed application and document filed shall be reviewed,and any errors
or deficiencies shall be corrected by the applicant.No application for dedication shall be
deemed to have been filed unless the application is complete in form and any and all
errors or deficiencies have been corrected. The real property tax office shall assign a
dedication number to each completed and timely submitted application.
K. The real property tax office shall conduct site inspections for all parcels included within
each timely,completed application. Thereafter,the real property tax office may conduct
periodic inspections of dedicated lands and shall note any violations for appropriate
action pursuant to rule 3 1B.8. Submittal of an application by the owner or lessee shall
constitute an acknowledgement that site visit inspections may be performed without prior
notice, unless the application requests that the real property tax office provide prior
notification ofthe site inspection. In the event the application requests such prior notice,
the real property tax office will make reasonable efforts to contact the applicant, which
may include but is not limited to telephone calls or email.
Rule 3 1B.4 Findings of facts.
The real property tax office shall, by December 15 of each year, make a finding of fact as to
whether the land in the application has been approved in full, approved in part, or denied. The
following criteria must be considered:
A. That the land has been visually inspected to confirm active agricultural use as noted in the
application.
1. Criteria for active agricultural use may include,but is not limited to,the
following:
a. For intensive agriculture, orchards, diversified agriculture, or feed
crops and fast rotation forestry,plantings must be observed at time of
inspection. Rows of plantings, including crops, must be made in a
manner as to maximize the productivity of the land being committed to
the agricultural dedication.
2. Criteria for active agricultural use for pasture and slow rotation forestry may
include, but is not limited to, the following:
a. Permanent water source and perimeter fencing or another barricade
sufficient to restrain freely grazing animals.
b. Only the areas with perimeter fencing or barricades shall be included in
the total dedicated area.
c. Where multiple parcels are contiguous and have animals grazing,
perimeter fencing may be around the exterior boundary ofall parcels.
B. That the productivity ratings of the land provide that the land is well suited for the
intended long-term commercial agricultural use.
C. A study of the ownership ofthe land to ensure the application is submitted by the proper
owner.
D. The size of the farm operation as a whole.
E. The present use of other surrounding similar lands.
F. The size or area for the proposed agricultural use is adequate or sufficient.
G. The use is permissible under the county-zoning district or ordinance.For parcels located
within county-zoned districts other than agricultural,residential and agricultural,family
agricultural,intensive agricultural,or agricultural project district, the real property tax
office shall make additional findings of fact on the economic feasibility ofthe intended
use of the land in accordance with allowable uses for planning purposes.
H. The intended use does not conflict with eitherthe general plan ofthe county or any
applicable community development plan for the area.
Rule 31B.5 Approval or disapproval.
A. If all findings of fact from rule 3 1B.4,as applicable,are approved in full,or approved in
part,the real property tax office shall accept the application for dedication and declare
that the land be dedicated.
B. The real property tax office shall notify the owner of record,the lessee, and the person
named on the application for petition,ifdifferent from the owner orlessee,ofapproval or
disapproval of the application for dedication no later than December 15.Upon approval,
the dedication shall become effective July 1 of the following tax year, but the assessed
value shall be determined on the assessment date of January 1.
C. The application number and the effective date of the dedication are to be noted on
appropriate records accessible to the public.
D. If the application for dedication was not approved in full,the notice shall state the reasons
for such disapproval.
E. The land dedicated for short-term commercial agricultural use for intensive agriculture,
orchards,or diversified agriculture shall not grow anycrops designated as noxious weeds
for eradication or control purposes by the state department of agriculture, set forth in
chapter 68,subtitle 6,title 4,of the Hawai`i Administrative Rules, as amended, or any
crops included in schedule I of the Controlled Substances Act in 21 U.S.C. § 812.
Rule 31 B.6 Effects of dedication;enforceable restriction upon use;changes in dedicated
use.
A. The effective date of any approved application for dedication shall be July 1. The real
property tax office shall assess,at the applicable agricultural use value,only those areas
actually in active agricultural use as ofthe assessment date of January 1. A farm plan is
required when there is an anticipated or intended agricultural use within the first year of
the dedication period,and the application shall not be accepted or assessed as dedicated
agricultural use,unless the anticipated or intended uses are included in the farm plan
approved by the real property tax office.
B. Unless otherwise provided, each approved application for short-term commercial
agriculture dedication shall constitute a forfeiture on the part of the owner of any right to
change the use of the land,except where the use is for another short-term commercial
agriculture dedication for a minimum period of three(3)years or the use is for a native
forest dedication for a minimum period of twenty (20)years.
C. In the case of a change in zoning not as a result of an application by an owner or lessee
such that the dedicated land is placed within any zoned district other than agricultural,
residential and agricultural, family agricultural, intensive agricultural, or agricultural
project district,the dedication may be canceled by the owner within sixty (60) calendar
days of the change in zoning. The owner shall provide written notice to the real property
tax office of the cancellation within the sixty (60)calendar day period.
D. The dedication shall bind and inure to each successor owner unless the dedication is
properly cancelled by the owner and released by the real property tax office. The
dedication shall be cancelled ifthe dedicated land,or any portion thereof,is sold by way
of a conveyance subject to conveyance tax under the terms of chapter 247, Hawai`i
Revised Statutes.
E. Where dedicated land has been subdivided,each parcel shall be independently subject to
the provisions of the original dedication. The owner shall notify the real property tax
office,within thirty(30)calendar days,of any subdivision of the dedicated land and shall
submit a copy of the approved subdivision map or the registered file plan number,
whichever is applicable.
1. The real property tax office shall note the dedication upon appropriate records of
each subdivided parcel.
2. The owner(s)shall inform each prospective purchaser of a subdivided parcel of
the dedicated status of the land.
3. If the subdivision results in a change in ownership that is subject to conveyance
tax under chapter 247, Hawai`i Revised Statutes, then each owner of the
subdivided parcels shall apply for a new short-term commercial agricultural use
dedication.
4. Failure of the new owner to apply for a new short-term commercial agricultural
use dedication by the statutory deadline shall result in the loss ofthe preferential
agricultural use assessment value.
F. If any owner wishes to change its dedicated use from one commercial agricultural
category to another,the owner shall submit for evaluation a change of use form within
twelve(12)months from the effective date of the dedication to the real property tax
office that identifies the new proposed commercial agricultural category.
1. The owner's change of use form shall be subject to the dedication requirements of
rule 31B.3, as applicable, and required findings of facts of rule 31B.4, as
applicable.
2. If the change ofuse form is approved,the real property tax office shall provide a
written notice of its approval and indicate the effective change of use date. The
owner shall have twelve(12)months from the effective change of use date to
convert to the new short-term commercial agricultural use category.The change
of use shall not alter the initial dedication period,and the conversion to the new
use shall be completed prior to the end of the initial dedication period.
a. Failure to initiate the approved change ofuse or conversion plan may
cancel the dedication and subject special tax assessments retroactive
to the date the assessment was made but for not more than three (3)
years.
b. Failure for a period of six(6)consecutive months to show any visible
signs of converting to the new commercial agricultural activity shall
constitute a failure to initiate the approved change of use or
conversion plan.
c. The owner or lessee shall submit a progress report explaining the efforts
in converting to the change in use at the conclusion of the change of
use. The progress report shall be submitted to the real property tax
office on orbefore the anniversary of the change ofuse date,and yearly
thereafter.
3. If the change of use form is disapproved,the written notice shall state the reasons
for such disapproval.
Rule 31B.7 Special tax assessment of dedicated lands.
A. The determination of the value of dedicated lands for short-term commercial agricultural
use shall be assessed at two times the value of the lands dedicated for long-term
commercial agricultural use.
B. The agricultural use value shall be based upon considerations prescribed in chapter 19,
article 7,section 19-53(a)(2),and chapter 19,article 8,section 19-60(c)of the county
code, including the following:
1. Rent;
2. Productivity;
3. Nature of actual commercial agricultural use;
4. The advantage or disadvantage of factors, such as location, accessibility,
transportation facilities,size,shape,topography,water privileges,availability of
water and its cost, easements and appurtenances; and
5. Opinions ofpersons who may be considered to have special knowledge of land
values, such as agriculturalists and/or experts in the field.
C. In the event ofany violations,pursuant to rule 31 B.8, or cancellations,pursuant to rule
31 B.9,ofthe dedicated use,dedicated lands shall be assessed at their highest and best use
as though not dedicated for purposes of determining and computing retroactive taxes.
D. All portions of land,excluding the farm dwelling site,that are not dedicated for short-
term commercial agricultural use,shall be assessed based on the proportional market
value of the total property.
E. Each farm dwelling site,if any,shall not exceed one-fourth acre and shall be assessed at
the highest commercial agricultural use value.The farm dwelling site area for the parcel
shall be determined when the owner applies for the short-term commercial agricultural
use dedication.The assigned appraiser for that zone shall be responsible for verifying the
accuracy of the farm dwelling site area listed in the application and shall make
corrections upon observation of the land, if necessary.
F. The real property tax office shall report the total market value of land,along with the
assessed value of land for tax assessment purposes.
Rule 3 1B.8 Retroactive assessment, violation, and penalty.
A. The retroactive assessment and penalty provisions of chapter 19, article 8, section 19-
61(f)ofthe county code,shall be imposed by the real property tax office for anyviolation
of the dedication.
1. The retroactive assessment shall be the difference in the amount oftaxes between
what should have been paid when assessed at the highest and best use and the
amount paid based upon its assessment for dedicated uses for each year the land
has been dedicated.The retroactive assessment shall be subject to a penalty often
percent per year.
B. Whenever a violation ofthe dedication occurs(whether in whole or in part ofthe area in
the dedication),the owner shall first be provided written notice of such violation. The
notice of such violation shall be mailed to the last known address on file with the real
property tax office.Each owner shall be afforded an opportunity to discuss the violation '
informally with the real property tax office. In the absence of any appropriate
justification,the real property tax office shall cancel the dedication and subject the lands
to retroactive assessments and penalties. A violation occurs upon any one of the
following:
1. Failure of the owner to comply with any restriction,condition,or provision on
the use of the dedicated land;
2. For an approved change of use pursuant to Rule 31 B.6,the failure to initiate the
approved change in use or conversion plan for a period of six (6) consecutive
months,or ifthe land remains vacant,idle,or fallow for more than twelve (12)
consecutive months from the date of approval of the change in use; or
3. The land dedicated for intensive agriculture,orchards,or diversified agriculture
is fallow for no more than one(1)out of every three(3)years of the dedication
period,except when greater fallow periods are necessary as described in the
dedication application or change of use form.
C. If a violation occurs with respect to only a portion of the dedicated lands,such as when a
portion of the land is subsequently applied to a use other than its dedicated use,the real
property tax office shall cancel only that portion that is in violation and subject that
portion to retroactive assessment and penalties.
D. In situations where the owner has satisfied the terms and conditions of the initial
dedication and has renewed the dedication,the real property tax office shall,in cases of
violation,calculate the deferred or rollback taxes from the date of violation back to the
latest renewal date.
E. A change in zoning as a result of an application by an owner or lessee such that the
dedicated land is placed within any zoned district other than agricultural,residential and
agricultural,family agricultural, intensive agricultural, or agricultural project district,
shall be deemed to constitute an overt act ofchanging the use of the dedicated land and
shall be subject to a retroactive assessment including rollback taxes and penalties.
F. All unpaid taxes,including retroactive assessments and penalties shall constitute
paramount lien upon the property.
Rule 31 B.9 Cancellation (withdrawal)without penalty.
A. Where lands have been rezoned in any county-zoned district other than agricultural,
residential and agricultural, family agricultural, intensive agricultural, or agricultural
project district by the county council not as a result of a petition initiated by the owner of
the dedicated land,such owner may cancel the dedication within sixty(60)days after the
rezoning and shall not be subject to the retroactive assessment and penalty provisions.
B. All cancellations shall become effective July 1 of the following tax year.
C. The real property tax office may cancel a dedication without rollback taxes or penalties in
the event of any of the following:
1. A recognized natural disaster beyond the farmer's control;
2. The land can no longer be used for the dedicated agricultural use,which final
determination shall be made by the real property tax office; or
3. The death or severe disability of the principal fanner such that the farm operation
cannot continue. Corporations and partnerships are not eligible for this death or
severe disability exemption.
D. The dedication shall be canceled upon expiration of the dedication.At least one hundred
eighty(180)days prior to the ending of the dedication period,the real property tax office
shall notify the owner by mail of such expiration. If the owner desires, the owner shall
reapply for renewal of the dedication by filing a renewal petition on or before September
1 of the last year of the dedication.
Rule 31B.10 Appeals.
The owner may appeal any disapproved petition or cancellation of dedication to the county tax
board of review. Appeals shall be governed by the appropriate sections of chapter 19 of the
county code.
Rule 31 B.11 Severability.
If any provision of these rules or the applicability thereof should be held invalid for any reason,
such invalidity shall not affect otherprovisions or applications,which can be given effect without
the invalid provisions or applications and to this end, these rules are declared to be severable.
Rule 31 B.12 Effective date.
These rules and regulations shall take effect ten (10)days after filing with the county clerk.
DEPARTMENT OF FINANCE
COUNTY OF HAWAI`I
STATE OF HAWAI`I
RULES AND REGULATIONS OF THE DIRECTOR OF FINANCE
RULE 34
RULES AND REGULATIONS RELATING TO THE NONDEDICATED AGRICULTURAL
USE ASSESSMENT UNDER CHAPTER 19, ARTICLE 7, SECTION 19-57,
HAWAII COUNTY CODE 1983 (2016 EDITION, AS AMENDED)
Rule 34.1 Purpose of Rules.
A. These rules and regulations are intended to implement the provisions of chapter 19, article 7,
section 19-57 of the county code, relating to nondedicated agricultural use assessment of land
classified and used for agriculture.
B. The purpose of section 19-57 (to be consistent with Act 175, Session Laws of Hawaii 1973)
is to encourage the owners of land, which are situated within the agricultural district and
suitable for agriculture, to put that land to agricultural uses on a continuous and regular basis,
and to discourage the conversion of such lands or the reduction or subdivision of agricultural
land parcels to less than reasonable economic size. Such lands classified and used for
agriculture shall be assessed at their use in agriculture without regard to market value or
neighboring land values.
Rule 34.2 Definitions.
A. As used in these rules and regulations:
1. The term"agricultural use"shall mean lands 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 owned by the County to be in the districts of
agricultural,residential and agricultural, family agricultural, intensive agricultural,
and agricultural project district. The term "agricultural use" does not include nor
apply to areas used primarily as farm dwelling sites, such as,but not limited to, yard
space,setbacks,or open landscape associated with residential use planted with fruit
and ornamental trees,flowers, and vegetables primarily for home use or recreation.
2.The term"conversion"shall mean(i)the change of zoning 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;(ii)the government approved subdivision ofagricultural land into parcels of less
than five acres; or(iii)a condominium property regime is declared for the property
having condominium units with an area equivalent to less than five acres in size.
3.The term"farm dwelling site"shall mean that portion ofthe land not exceeding one-
fourth acre which is used for residential purposes,including the land upon which the
house is located,together with all accessory buildings and the land designated to be the,
yard space.
B. Use of gender and number.Words importing the singular number shall extend to and include the
plural;words importing the plural shall extend to and include the singular; and words importing
the masculine or the feminine gender shall extend to and include the male and the female as the
case may be.
Rule 34.3 Land Subject to the Deferred or Rollback Tax.
Agricultural lands shall be subject to the deferred or rollback tax when:
A. The land is zoned by the county to be in the districts of agricultural, residential and
agricultural,family agricultural,intensive agricultural,and agricultural project district.
B. The land is committed to a specific nondedicated agriculture use.
C. The land has been assessed by the director according to its value in nondedicated agricultural
use.
D. The land has not been dedicated under the provisions of chapter 19,article 8,section 19-60 of
the county code.
Rule 34.4 Assessment of Lands Subject to the Deferred or Rollback Tax.
A. Where lands have been annually applied for,approved and used for nondedicated agricultural
purposes, the director shall:
1,1 Classify the land in its nondedicated agricultural use,and determine the assessed value
of the land in its nondedicated agricultural use.
2. Classify the land according to its highest and best use and determine the assessed value
of the land according to such highest and best use.
3. Record the assessed value of the land(i)in its highest and best use and(ii)in its
nondedicated agricultural use for at least the current and past two years.
4. Tax the land according to its nondedicated agricultural use assessment.
B. All portions of land,excluding the farm dwelling site,that are not committed or used for a
specific agricultural use shall be assessed based on the proportional market value ofthe total
property.
The farm dwelling site for the parcel,if any,shall not exceed one-fourth acre, shall be reported
on the "Non-Dedicated Agricultural Use Application," and shall be assessed at the highest
commercial agricultural use value.The assigned appraiser for the zone shall be responsible for
verifying the accuracy of this area and make corrections, if necessary.
C. The director shall report the total market value of land,along with the assessed value of land, for
tax assessment purposes.
Rule 34.5 Valuation Considerations.
A. The agricultural use value of lands classified and used for nondedicated agriculture use shall
be assessed at two times the commercial dedicated agricultural use value as established by the
Director, as prescribed in chapter 19, article 8, section 19-60(c)of the county code.
B. The farm dwelling site shall be assessed at the highest commercial agriculture use value as
prescribed in chapter 19,article 8,section 19-60(c)of the county code, provided that the
maximum farm dwelling site shall not exceed one-fourth acre.
Rule 34.6 Reserved.
Rule 34.7 Liens.
All taxes and penalties due and owing as deferred taxes shall attach to the land as a
paramount lien pursuant to chapter 19, article 5, section 19-37 of the county code.
Rule 34.8 Appeals.
The owner shall have thirty days from the mailing ofthe notice of deferred tax assessment,and
within the time prescribed following a subdivision to appeal the assessment of the deferred tax.
Appeals shall be governed by the appropriate sections of chapter 19 ofthe county code,and may be
taken to the tax board of review or be taken directly to the Tax Appeal Court without appealing to the
tax board of review.
Rule 34.9 Severability.
If any provision of these rules or the applicability thereof should be held invalid for any
reason,such invalidity shall not affect other provisions or applications which can be given effect
without the invalid provisions or applications and to this end these rules are declared to be severable.
Rule 34.10 Effective Date and Sunset Date.
These rules and regulations shall take effect ten(10)days after filing with the county clerk.Rule 34
shall automatically sunset on January 1,2029(however,the tax benefit shall end on June 30,2029).
DEPARTMENT OF FINANCE
COUNTY OF HAWAI`I
STATE OF HAWAI`I
RULES AND REGULATIONS OF THE DIRECTOR OF FINANCE
RULE 34A
RULES AND REGULATIONS RELATING TO COMMUNITY FOOD SUSTAINABILITY USE
ASSESSMENT UNDER CHAPTER 19, ARTICLE 7, SECTION 19-57.1,
HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED)
Rule 34A.1 Purpose of Rules; designation to real property tax office.
These rules and regulations are intended to implement the provisions of chapter 19, article 7, section 19-
57.1 of the county code, relating to the community food sustainability use assessment. The director
designates the real property tax office to perform the administration ofthe community food sustainability
use assessment.
Rule 34A.2 Definitions.
A. As used in these rules and regulations, these terms shall have the following meaning:
1. "Agricultural use" shall mean lands used on a continuous and regular basis for intensive
agriculture,orchards,or diversified agriculture on lands zoned by the county to be in the districts
of agricultural, residential and agricultural, family agricultural, intensive agricultural, and
agricultural project district.The term"agricultural use"does not include or apply to areas used
primarily as farm dwelling sites, such as, but not limited to, yard space, setbacks, or open
landscape associated with residential useplanted with ornamental plants,fruit or ornamental trees
and vegetables primarily for home use or recreation.
2. "Commercially viable agricultural operation"shall mean an agricultural business or service with
the ability to compete effectively and to make a profit,either without subsidies or with reliable,
long-term subsidies as demonstrated by an analysis of comparable practices within the area of
operation under comparable conditions.
3. "Community Food Sustainability Use Assessment"means the use ofland on a continuous and
regular basis that demonstrates the owner is engaged in agricultural activities to provide food to
the community,including intensive agriculture,orchards,diversified agriculture,or pasture for
food production.
4. "Diversified agriculture" means a blend of agricultural activities while transitioning from one
category to the other during the term of the dedication or on a continuous and regular basis.
5. "Farm dwelling site"means that portion of the land which is used for residential purposes,
including the land upon which any house is located,together with all accessory buildings and the
land designated to be the yard space.
6. "Farm equipment"means machinery,implements,and tools used exclusively and directly for
farming or ranching operations.
7. "Farm plan"means an agricultural business plan, in a form prescribed by the director, that
describes the agricultural practices of a commercially viable agricultural operation,all relevant
tax map key numbers, and a financial projection.
8. "Fertilizers" means a natural or synthetic material added to the soil to supply plant nutrients.
9. "Intensive agriculture"includes,but is not limited to, such crops as vegetables, ginger, taro,
herbs,nurseries,foliage,cut and potted flowers,piggeries,dairy,poultry,feedlots,aquaculture,
honey and honeybees.
10. "Orchards"includes,but is not limited to,such crops as macadamia nuts,guava,banana,papaya,
avocado,grapes,passion fruit,coffee,citrus,cacao,pineapple,noni and tropical specialty fruits.
11. "Owner"means the fee simple owner,or a recorded lessee ofthe land with a term of five(5)or
more years remaining on the lease as of the date of the community food sustainability use
assessment and who is responsible for payment of the real property taxes.
12. "Soil amendments"means material added to the soil to improve its physical properties such as
compost, agricultural lime, greensand, or manure.
13. "Violation"means the failure by the owner or any owner by succession who signed the
community food sustainability use assessment application to use the land for the general
agricultural category,that was listed on the petition and approved by the real property tax office,
for a period of six consecutive months. It also means the overt act of changing between
commercial agricultural categories without priornotification and approval ofsuch change by the
real property tax office for any period of time during the term of the use assessment except as
allowed under the diversified agricultural use category,or any failure by the owner to observe any
of the terms, conditions, or restrictions of the use assessment.
B. Use of gender and number.Words importing the singular number shall extend to and include the
plural;words importing the plural shall extend to and include the singular;words importing the
masculine or the feminine gender shall extend to and include the male or the female as the case
may be.
Rule 34A.3 Use Assessment; requirements.
A. Lands committed to the community food sustainability use assessment shall be initiated by the
property owner filing a complete application with the real property tax office on or before
December 31 for the agricultural use assessment to become effective on July 1 of the
following tax year if the application is approved. If an applicant submits an incomplete
application before the December 31 deadline, the real property tax office shall make
reasonable efforts to notify the applicant of the deficiency in the application,and it shall be the
responsibility of the applicant to correct the deficiency and return the completed application to
the real property tax office by the December 31 deadline. Where multiple p arcels are being
considered for the agricultural use assessment, a separate application is required for each
parcel with its own tax map key to apply for, and receive if approved, the agricultural
preferential assessment value.
1. The application for the agricultural use assessment shall be submitted on a form
prescribed bythe real property tax office.Applications shall be available at the physical
locations of the real property tax office and the real property tax office website.
2. In addition, the application shall include at least one of the following:
a. A farm plan, as defined;
b. Documentation of organic certification from U.S. Department of Agriculture;
c. A plan from U.S.Department ofAgriculture,Natural Resources Conservation
Service;
d. Documentation of food safety certification from the U.S.Department of
Agriculture; or
e. Receipts demonstrating an investment of a minimum of$10,000 in farm
equipment,fertilizers,or soil amendments for use on the subject property
within the previous two years ofthe application for the community food
sustainability use assessment.
B. The proposed parcel included within the application for the agricultural use assessment shall be
located within a county-zoned district of agricultural, residential and agricultural, family
agricultural, intensive agricultural, agricultural project district.
C. Only the following three(3)general agricultural categories shall be eligible and considered for
the agriculture use assessment:
1. 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.
2. Orchards,which includes such crops as macadamia nuts,guava,banana,papaya,avocado,
grapes,passion fruit, coffee, citrus, cacao, pineapple, and tropical specialty fruits.
3. Diversified agriculture, which includes a blend of agricultural activities.
D. Lands committed to the community food sustainability use assessment shall not be fallow for
more than one(1)ofout every five(5)years ofthe agricultural use assessment period,unless the
agricultural use assessment application describes and provides reasons why it is necessary to have
greater fallow periods,whose determination of necessity shall be subject to review of the real
property tax office:
1. Intensive agriculture;
2. Orchards; and
3. Diversified agriculture.
For purposes of this section,the term"fallow"shall mean cultivated land that is allowed to lie
idle during the growing season.
E. Each application for the agricultural use assessment shall be signed by all living owners of the
land,shall indicate the general agricultural category to which the land is to be committed to
community food production,and shall include a map delineating the area to be committed.Any
farm dwelling site shall be indicated in the application and shall not be included in the
agricultural use assessment area.
F. A separate application shall be filed for each parcel or portion thereof to be committed to
agricultural use;however,one farm plan listing all tax map key numbers may be submitted.
G. Applications shall carry a specified term offive years,or in the case ofa recorded agricultural
lease,a minimum offive(5)years remaining on the lease as ofthe date ofthe agricultural use
assessment.
H. The real property tax office shall utilize and refer to the agricultural use guidelines for density,
crop types to agricultural categories for proper agricultural land management. The agricultural
use guidelines provide for fair and equitable treatment ofthe real property tax office's validation
process to approve or disapprove a preferential agricultural use value.
I. Each timely, completeda lication and document filed shall be reviewed, and anyerrors orospp
deficiencies shall be corrected bythe applicant.No application for the agricultural use assessment
shall be deemed to have been filed unless the application is complete in form and any and all
errors or deficiencies have been corrected.
J. The real property tax office shall conduct site inspections for all parcels included within each
timely,completed application. Thereafter,the real property tax office may conduct periodic
inspections oflands receiving the agricultural use assessment and shall note anyviolations for
appropriate action pursuant to rule 34A.8. Submittal of an application by the owner or lessee
shall constitute an acknowledgement that site visit inspections may be performed without prior
notice,unless the application requests that the real property tax office provide prior notification
of the site inspection. In the event the application requests such prior notice, the real property
tax office will make reasonable efforts to contact the applicant, which may include but is not
limited to telephone calls or email.
Rule 34A.4 Findings of facts.
The real property tax office shall make a finding of fact as to whether the land in the application has
been approved in full, approved in part, or denied. The following criteria must be considered:
A. That the land has been visually inspected to confirm active agricultural use as noted in the
application.
1. Criteria for active agricultural use may include,but is not limited to, the following:
a. For intensive agriculture,orchards,diversified agriculture, plantings must be
observed at time of inspection. Rows of plantings, including crops, must be
made in a manner as to maximize the productivity of the land being committed
to the agricultural use assessment.
B. That the productivity ratings of the land provide that the land is well suited for the intended
agricultural use.
C. A study of the ownership of the land to ensure the application is submitted by the proper owner.
D. The size of the farm operation as a whole.
E. The present use of other surrounding similar lands.
F. The size or area for the proposed agricultural use is adequate or sufficient.
G. The use is permissible under the county-zoning district or ordinance.
H. The intended use does not conflict with either the general plan uf the county or any applicable
community development plan for the area.
Rule 34A.5 Approval or disapproval.
A. If all findings offact from rule 34A.4,as applicable,are approved in full,or approved in pad the
real property tax office shall accept the application for the agricultural use assessment and declare
that the land be committed for the use as applied.
B. The real property tax office shall notify the owner of record,the lessee,and the person named on
the application for petition,if different from the owner or lessee,of approval or disapproval ofthe
application for the agricultural use assessment. Upon approval, the agricultural use assessment
shall become effective July 1 ofthe following tax year,but the assessed value shall be determined
on the assessment date of January 1.
C. If the application for the agricultural use assessment was not approved in full,the notice shall
state the reasons for such disapproval.
D. The land committed to the community food sustainability use assessment for intensive
agriculture,orchards,or diversified agriculture shall not grow any crops designated as noxious
weeds for eradication or control purposes by the state department of agriculture, set forth in
chapter 68,subtitle 6,title 4,of the Hawai`i Administrative Rules,as amended; or any crops
included in schedule I of the Controlled Substances Act in 21 U.S.C. § 812.
E. If the application is approved,renewal of the application for the assessment,based upon the use
requested,shall be required every five years from the initial approval date or earlier, at the
discretion of the director,provided that:
1. The documentation provided under subsection 34A.3(A)(2)encompasses at least five years
and remains in effect; and
2. Documentation of annual sales or donations of food totaling a minimum of$1,000 are
provided to the director at the time of renewal. Sales or donations must be generated from
the assessed property. Annual sales shall be documented through excise tax receipts.
Donations of food must be to a nonprofit501(c)(3) organization.anization.P
Rule 34A.6 Effects ofagricultural use assessment;enforceable restriction upon use;changes in
committed use.
A. The effective date of any approved application for agricultural use assessment shall be July 1.
The real property tax office shall assess,at the applicable agricultural use value,only those areas
actually in active agricultural use as of the assessment date of January 1.
B. Unless otherwise provided,each approved application for the community food sustainability use
assessment shall constitute a forfeiture on the part ofthe owner of any right to change the use of
the land.
C. In the case of a change in zoning not as a result of an application by an owner or lessee such that
the committed land is placed within any zoned district other than agricultural, residential and
agricultural, family agricultural, intensive agricultural, or agricultural project district, the
agricultural use assessment shall be canceled without penalty July 1 of the following tax year.
D. The agricultural use assessment shall be canceled without penalty July 1 of the following tax year
if the committed land, or any portion thereof, is sold by way of a conveyance subject to
conveyance tax under the terms of chapter 247, Hawai`i Revised Statutes.
E. Where committed land has been subdivided into parcels equal to or greater than five acres in size:
1. The agricultural use assessment shall be canceled without penalty July 1 of the following
tax year unless the owner of the subdivided parcels has applied for no later than December
31 and been approved for a new agricultural use assessment on the newly subdivided
parcels.
2. Failure of the new owner to apply fora new agricultural use assessment by the statutory
deadline shall result in the loss of the preferential agricultural use assessment value.'
F. If any owner wishes to change the committed use from one agricultural category to another,the
owner shall apply for a new agricultural use assessment by the statutory deadline.
Rule 34A.7 Special tax assessment of committed lands.
A. The portion of land committed to specific community food production shall be assessed at 30%of
the fair market value.
B. In the event of any violations,pursuant to rule 34A.8,or cancellations,pursuant to rule 34A.9,of
the committed use,lands shall be assessed at their highest and best use as though not committed
for purposes of determining and computing retroactive taxes.
C. All portions ofland,excluding the farm dwelling site,that are not committed for the agricultural
use assessment,shall be assessed based on the proportional market value of the total property.
D. A farm dwelling site shall be assessed based on the proportional market value of the total
property.The farm dwelling site area for the parcel shall be determined when the owner applies
for the agricultural use assessment.The assigned appraiser for that zone shall be responsible for
verifying the accuracy ofthe farm dwelling site area listed in the application and shall make
corrections upon observation of the land, if necessary.
E. The real property tax office shall report the total market value of land,along with the assessed
value of land for tax assessment purposes.
Rule 34A.8 Retroactive assessment, violation, and penalty.
A. The retroactive assessment and penalty provisions ofchapter 19,article 7,section 19-57.1(d)of
the county code, shall be imposed by the real property tax office for any violation of the
agricultural use assessment.
1. The retroactive assessment shall be the difference in the amount of taxes between what
should have been paid when assessed at the highest and best use and the amount paid
based upon its assessment for committed uses,but for not more than a period of two plus
the current year.
B. Whenever a violation of the committed use occurs (whether in whole or in part of the area
committed)the owner shall first be provided written notice of such violation.The notice of such
violation shall be mailed to the last known address on file with the real property tax office.Each
owner shall be afforded an opportunity to discuss the violation informally with the real property
tax office.In the absence of any appropriate justification,the real property tax office shall cancel
the agricultural use assessment and subject the lands to retroactive assessments and penalties. A
violation occurs upon any one of the following:
1. Failure of the owner to comply with any restriction,condition,or provision on the use of
the committed land; or
2. The land committed for intensive agriculture, orchards, or diversified agriculture is
fallow for more than one(1)out ofevery five(5)year period,except when greater fallow
periods are necessary as described in the application.
C. If a violation occurs with respect to only a portion of the committed lands,such as when a portion
of the land is subsequently applied to a use other than its committed use without the required
reapplication,the real property tax office shall cancel only that portion that is in violation and
subject that portion to retroactive assessment and penalties.
D. A change in zoning as a result of an application by an owner or lessee such that the committed
land is placed within any zoned district other than agricultural,residential and agricultural,family
agricultural,intensive agricultural,or agricultural project district,shall be deemed to constitute an
overt act of changing the use of the committed land and shall be subject to a retroactive
assessment including rollback taxes and penalties.
E. All unpaid taxes,including retroactive assessments and penalties shall constitute paramount lien
upon the property.
Rule 34A.9 Cancellation (withdrawal)without penalty.
A. Where lands have been rezoned in any county-zoned district other than agricultural,residential
and agricultural,family agricultural,intensive agricultural,or agricultural project district by the
county council not as a result of a petition initiated by the owner of the dedicated land, the
agricultural use assessment shall be canceled without penalty July 1 ofthe following tax year.
B. All cancellations shall become effective July 1 of the following tax year.
C. The real property tax office may cancel an agricultural use assessment without rollback taxes or
penalties in the event of any of the following:
1. A recognized natural disaster beyond the farmer's control;
2. The land can no longer be used for the committed agricultural use,which final
determination shall be made by the real property tax office; or
3. The death or severe disability ofthe principal farmer such that the farm operation cannot
continue.Corporations and partnerships are not eligible for this death or severe disability
exemption.
D. The agricultural use assessment shall be canceled upon failure to submit an application to renew
the agricultural use assessment every five years from the initial approval date or earlier, at the
discretion of the director. If the owner desires, the owner shall reapply for renewal of the
agricultural use assessment by filing a renewal application on or before December 31 of the last
year of the agricultural use assessment.
Rule 34A.10 Appeals.
The owner may appeal any disapproved application or cancellation of the agricultural use assessment to
the county tax board ofreview.Appeals shall be governed by the appropriate sections of chapter 19 of
the county code.
Rule 34A.11 Severability.
If any provision of these rules or the applicability thereof should be held invalid for any reason, such
invalidity shall not affect other provisions or applications, which can be given effect without the invalid
provisions or applications and to this end, these rules are declared to be severable.
Rule 34A.12 Effective date.
These rules and regulations shall take effect ten (10) days after filing with the county clerk.