STAND

STAND. COM. REP. NO. 531

Honolulu, Hawaii

, 2005

RE: H.B. No. 1640

H.D. 2

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Economic Development & Business Concerns, to which was referred H.B. No. 1640, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO IMPORTANT AGRICULTURAL LANDS,"

begs leave to report as follows:

The purpose of this bill is to provide financial incentives to encourage agricultural development. This bill establishes an Agricultural Infrastructure Improvement Tax Credit for improvements made to agricultural infrastructure on important agricultural lands (IALs) designated pursuant to chapter 205, Hawaii Revised Statutes. The amount of the tax credit is equal to the cost of improvements made during the taxable year. Tax credits may be applied to a taxpayer's liability in subsequent years until exhausted.

The Hawaii Farm Bureau Federation and Land Use Research Foundation of Hawaii testified in support of this bill. The Department of Agriculture and the Hawaii Crop Improvement Association supported the intent of this measure. Alexander & Baldwin, Inc., Sierra Club, Hawaii Chapter, Kamehameha Schools, and University of Hawaii's Environmental Center offered comments. The Department of Taxation opposed this bill.

Many of the testifiers urged your Committee to restore the original language of this bill which provides for the identification of important agricultural lands (IAL) as well as a package of incentive-based initiatives to encourage agriculture development.

Upon further consideration, your Committee has amended this bill by restoring the original provisions from the bill as introduced, including:

(1) Establishing a new part in the Land Use Commission (LUC) law that sets forth policies and procedures for IALs, including:

(A) Policies that promote the long-term viability of agricultural use on IALs;

(B) Standards and criteria for the identification of IALs;

(D) Standards and criteria for the reclassification or rezoning of IALs; and

(E) Incentive policies for IALs to achieve long-term agricultural viability and use of the lands;

(2) Requiring agricultural incentive programs to be developed concurrently with the process of identifying IALs specified in paragraph (1);

(3) Establishing that the designation of IALs and adoption of maps by LUC shall take effect only upon the enactment of legislation containing incentives and protections for IALs;

(4) Providing for a process to develop proposals for state and county incentives;

(5) Appropriating $100,000 for the development of proposals for incentives and other programs for agricultural development and land protection;

(6) Appropriating $2,000,000 for grants-in-aid to the counties for the identification and mapping of IALs; and

(7) Conforming various land use provisions under the LUC law, including district boundary amendments, special permits, and LUC decision-making criteria, to the policies, processes, procedures, and standards established for IALs in this bill.

As affirmed by the record of votes of the members of your Committee on Economic Development & Business Concerns that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1640, H.D. 1, as amended herein, and recommends that it be referred to the Committee on Finance in the form attached hereto as H.B. No. 1640, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Economic Development & Business Concerns,

		____________________________ ROBERT N. HERKES, Chair