Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committees on Agriculture and Water, Land Use, and Hawaiian Affairs, to which was referred H.B. No. 1558 entitled:

beg leave to report as follows:

The purpose of this bill is to fulfill the mandate of preserving and protecting important agricultural lands as stipulated in Article XI, Section 3, of the Hawaii State Constitution by establishing:

To expedite the hearing, your Committees on Agriculture and Water, Land Use, and Hawaiian Affairs received testimony simultaneously on this and several other measures relating to this subject. Prior to receiving testimony, your Committee Chairs explained that:

Because of its broad and complex scope, including concepts not before considered seriously, most of the testifiers supported the intent of the bill or some of the bill's provisions, but also expressed concerns or strong opposition to other provisions. These testifiers included the Department of Agriculture, Department of Land and Natural Resources, City and County of Honolulu, Land Use Commission, College of Tropical Agriculture and Human Resources, Hawaii Farm Bureau Federation, Maui County Farm Bureau, Land Use Research Foundation of Hawaii, Hawaii Agriculture Research Center, Hawaii Leeward Planning Conference, The Estate of James Campbell, Hawaii Reserves, Inc., and Hawaii's Thousand Friends.

Accordingly, your Committees have retained in this bill only the concept of "development rights" in order to allow for further discussion and understanding of this option, which your Committees believe have considerable merit. Enactment of this concept into law would also enhance the State's ability to secure federal moneys, which are reportedly available as a result of recent passage of the Federal Farm Act.

The bill, as amended, provides tax credits to owners of "important agricultural lands" who voluntarily surrender their development rights in perpetuity. Essentially, the tax credits would amount to a percentage of the financial benefits that would have been realized by the landowner if development had occurred. The bill also allows a landowner to donate land to a charitable, non-profit entity and receive additional tax credits for the value of the land. Under this arrangement, the land would also be preserved in perpetuity for agricultural use.

Your Committees note that this concept would be administered largely by a contracted private financial institution and that associated costs could be absorbed by surcharges in "development rights" transactions or moneys in a special fund. As such, no government bureaucracy need be established and no public funds would be required, except for oversight.

Your Committees, at this juncture, also considered the inclusion of provisions to allow for the acceptance of funds from federal, state, public trust, or any other source, but such a provision would have required the establishment of a depository. This proposed amendment is not contained in this draft because of legislative time constraints and because discussion on the establishment of such a special fund had been inadvertently overlooked in committee deliberations. Your Committee Chairs will vigorously pursue the inclusion of such a special fund in subsequent committees in preparation for and to enhance any possibility of securing external funds.

As affirmed by the records of votes of the members of your Committees on Agriculture and Water, Land Use, and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1558, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1558, H.D.1, and be referred to the Committee on Finance.