REPORT TITLE:
Agriculture Land


DESCRIPTION:
Requires the counties to provide for greater agricultural credits
where agriculture is in active production with annual or short
duration crops and employees are hired to plant, maintain, and
harvest the crops.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.874        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO AGRICULTURE LAND.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The valuation of agricultural land for the
 
 2 purposes of real property incorporates a variety of evaluations.
 
 3 The law requires that consideration be given to many different
 
 4 facets of the production, including the advantages and
 
 5 disadvantages of location, quality of soil, and water privileges,
 
 6 among others.  One facet that is often overlooked is labor costs.
 
 7      Labor costs are a large expense that can change the bottom
 
 8 line of agricultural production.  Labor costs differ widely from
 
 9 crop to crop.  For example, a eucalyptus grove requires virtually
 
10 no labor during the twenty years of growth before they are
 
11 harvested, but annual or shorter duration crops require a
 
12 considerable amount of labor to plant, maintain, and harvest.
 
13 Valuations of agricultural land need to consider these labor
 
14 expenses.  The counties need to develop a credit system to
 
15 encourage agricultural producers to continue to employ workers
 
16 and farm the land.
 
17      The purpose of this Act is to ensure that agricultural
 
18 production thrives within the State by directing the counties to
 

 
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 1 consider labor costs in their valuations and develop a credit
 
 2 system to provide fair and equal treatment of diversified
 
 3 agricultural production.
 
 4      SECTION 2.  Section 246-10, Hawaii Revised Statutes, is
 
 5 amended by amending subsection (f) to read as follows:
 
 6      "(f) (1)  In determining the value of land, other than land
 
 7                classified and used for agriculture, consideration
 
 8                shall be given to selling prices and income
 
 9                (including, where available, such data relating to
 
10                the property being assessed and similar data for
 
11                comparable properties), productivity, and nature
 
12                of use (actual and potential), the advantage or
 
13                disadvantage of factors such as location,
 
14                accessibility, transportation facilities, size,
 
15                shape, topography, quality of soil, water
 
16                privileges, availability of water and its cost,
 
17                easements and appurtenances, zoning, dedication of
 
18                lands as provided for in section 246-12, and
 
19                further to the opinions of persons who may be
 
20                considered to have special knowledge of land
 
21                values, and all other influences, whether similar
 
22                to those listed or not, which fairly and
 

 
 
 
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 1                reasonably bear upon the question of value.
 
 2           (2)  In determining the value of lands which are
 
 3                classified and used for agriculture, whether such
 
 4                lands are dedicated pursuant to section 246-12 or
 
 5                not, consideration shall be given to rent,
 
 6                productivity, nature of actual agricultural use,
 
 7                the advantage or disadvantage of factors such as
 
 8                location, accessibility, transportation
 
 9                facilities, size, shape, topography, quality of
 
10                soil, water privileges, annual labor costs,
 
11                availability of water and its cost, easements and
 
12                appurtenances, and to the opinions of persons who
 
13                may be considered to have special knowledge of
 
14                land values.
 
15           (3)  A deferred or roll back tax shall be imposed on
 
16                the owner of agricultural lands assessed according
 
17                to its agricultural use as provided in subsection
 
18                (a) of this section in the event of a change in
 
19                land use classification by the authorized state
 
20                agency to urban or rural districts or upon the
 
21                subdivision of the land into parcels of five acres
 
22                or less, provided that the tax shall not apply if
 

 
 
 
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 1                the owner dedicates the owner's land as provided
 
 2                in section 246-12 within three years from the date
 
 3                of the change in land use classification and
 
 4                fulfills all of the requirements of the
 
 5                dedication.  The deferred tax shall be due and
 
 6                payable at the end of the third year following the
 
 7                change in land use classification provided that
 
 8                the land shall continue to be used for agriculture
 
 9                during this period.  The total amount of deferred
 
10                taxes shall be computed commencing at the end of
 
11                the third year following the change in
 
12                classification where the land has continuously
 
13                been used for agriculture; provided however that
 
14                where the land has been put to a higher urban or
 
15                rural use prior to the expiration of the three-
 
16                year period the amount of deferred taxes shall be
 
17                computed commencing at the end of the year in
 
18                which the land has been put to such higher urban
 
19                or rural use, and shall be retroactive to the date
 
20                the assessment was made pursuant to subsection (a)
 
21                of this section provided the retroactive period
 
22                shall not exceed ten years.  Where the owner has
 

 
 
 
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 1                subdivided the owner's land into parcels of five
 
 2                acres or less, the deferred tax shall commence
 
 3                from the date the conversion was made retroactive
 
 4                to the date the assessment was made pursuant to
 
 5                subsection (a) of this section but for not more
 
 6                than ten years.  Any other provisions to the
 
 7                contrary notwithstanding, the deferred or roll
 
 8                back tax shall apply only if a change in land use
 
 9                classification has been made as a result of a
 
10                petition by any property owner or lessee and shall
 
11                apply only upon lands owned by the owner or lessee
 
12                who has petitioned for the change in
 
13                classification.  The deferred or roll back tax
 
14                shall not apply to lands owned by any owner or
 
15                lessee who has not petitioned for the change in
 
16                classification provided the owner or lessee shall
 
17                continue to use the land in its agricultural use
 
18                for a period of three years after the change in
 
19                land use classification is made, or where the
 
20                change in classification is initiated by any
 
21                governmental agency or instrumentality.  The
 
22                deferred or roll back tax shall be based on the
 

 
 
 
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 1                difference in assessed value between the highest
 
 2                and best use and the agricultural use of the land,
 
 3                at the tax rate applicable for the respective
 
 4                years.
 
 5                (A)  Where the owner subdivides the owner's land
 
 6                     into parcels of five acres or less, the
 
 7                     deferred tax shall be due and payable within
 
 8                     sixty days of such conversion, subject to a
 
 9                     ten per cent per annum penalty, provided that
 
10                     if the conversion occurs within five years of
 
11                     the date of enactment of this law, twice the
 
12                     amount of taxes and penalties as provided
 
13                     herein shall become due and owing.
 
14                (B)  Where the owner changes the land use
 
15                     classification, the deferred tax shall be due
 
16                     and payable within three years of such
 
17                     conversion except that where the land has
 
18                     been put to its higher urban or rural use,
 
19                     the tax shall be due and payable at the end
 
20                     of the year in which the land has been put to
 
21                     such higher use, subject to a ten per cent
 
22                     per annum penalty.
 

 
 
 
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 1                Any other provisions to the contrary
 
 2                notwithstanding, the land shall continue to be
 
 3                assessed in its agricultural use as provided in
 
 4                subsection (a) [of this section] until the land is
 
 5                put to its higher urban or rural use or for a
 
 6                period of three years following the change in
 
 7                classification whichever is shorter, provided that
 
 8                for purposes of determining the amount of deferred
 
 9                taxes to be assessed to the owner or lessee, the
 
10                retroactive period shall include the period during
 
11                which the land is continued to be assessed in its
 
12                agricultural use following the change in
 
13                classification.  Any tax due and owing shall
 
14                attach to the land as a paramount lien in favor of
 
15                the State pursuant to section 246-55.
 
16           (4)  Where lands located within agricultural districts
 
17                are put to agricultural uses, that portion of such
 
18                lands not usable or suitable for any agricultural
 
19                use, whether dedicated pursuant to section 246-12
 
20                or not, the tax upon such unusable or unsuitable
 
21                land shall be deferred and shall be payable upon
 
22                conversion as provided under this section."
 

 
 
 
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 1      SECTION 3.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 4.  This Act shall take effect upon its approval.
 
 4 
 
 5                              INTRODUCED BY:______________________