SB1756

SECTION 1. The legislature finds that under Article XI, section 3, of the state constitution, the State is required to conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency, and assure the availability of agriculturally suitable lands. These lands are critical to the long-term viability of Hawaii's agriculture and self-sufficiency, and assists in the building of an export industry, which contributes to Hawaii's economy.

The purpose of this Act is to establish a state agricultural land protection program for the voluntary acquisition of agricultural easements on lands identified and designated as important agricultural lands.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

state agricultural land protection program

§ -1 Purpose. The legislature finds that Hawaii's quality of life is dependent upon the vitality and viability of its agricultural industry. The sustainability of agriculture in Hawaii depends on factors relating to agricultural business viability, and affordable access to productive agricultural lands. The State has a compelling interest in ensuring the continuance of key agricultural enterprises while providing a strategic agricultural land base that is affordable to farmers, the industry, and current and future agricultural entrepreneurs.

The voluntary acquisition of easements that restrict agricultural use on lands identified and designated as important agricultural lands under part III, chapter 205, will enable the State to ensure that agricultural lands remain affordable and protected for long-term agricultural use.

§ -2 Agricultural land protection foundation. (a) There is established the Hawaii agricultural land protection foundation to assist the State in the acquisition of agricultural easements. The foundation shall be placed within the department of agriculture for administrative purposes.

(b) The foundation shall consist of seven voting members and three ex officio nonvoting members; provided that:

(1) Seven voting members shall be appointed by the governor as provided in section 26-34; provided that:

(A) Four members shall be farmers actively engaged in or retired from farming who represent each county and shall each be appointed from a list of three nominees submitted by the mayor of each respective county;

(B) One member shall be appointed from a list of three nominees by the speaker of the house of representatives;

(D) One member shall be appointed from a list submitted by the Hawaii Farm Bureau Federation;

(2) The chairperson of the board of agriculture or the chairperson's designee shall serve as an ex-officio nonvoting member;

(3) The director of finance or the director's designee shall serve as an ex-officio nonvoting member; and

(4) The director of the office of planning or the director's designee shall serve as an ex-officio nonvoting member.

The members of the board shall elect a chairperson from among the seven voting members. A majority of the members serving at any one time constitutes a quorum for the transaction of business.

(c) The members shall receive no compensation for services, but shall be entitled to necessary expenses including travel expenses incurred in the performance of their duties.

§ -3 Rules and procedures of the foundation. The foundation shall adopt rules pursuant to chapter 91 to carry out the purposes of this chapter. The rules shall include but not be limited to criteria and procedures for:

(1) Evaluation and selection criteria for the acquisition of agricultural easements on important agricultural land, as defined under part III, chapter 205;

(2) Acquisition of agricultural easements including options for installment purchase agreements;

(3) Guidelines for county programs that would be eligible for state matching funds;

(4) Management of easements by the State, counties, or other nonprofit entities;

(5) Allowable uses within agricultural easements;

(6) Monitoring and evaluation of the agricultural land protection program; and

(7) Administration of the agricultural land protection fund.

§ -4 Responsibilities of the foundation. (a) From funds appropriated by the legislature to carry out the purposes of this chapter or received from other sources, the foundation may pay an amount to any owner of agricultural land identified and designated as important agricultural land under part III, chapter 205. The amount paid may be equitable in consideration of the benefits to the public, but shall not exceed the difference between the fair market value of the land and the fair market value of the land restricted to agricultural purposes. Title to the agricultural easement shall be held in the name of the State; provided that if the county in which the land is located provides financial assistance required for the purchase, the county may hold title to the land jointly with the State.

(b) The foundation shall report to the legislature its findings and recommendations for any proposed amendments to this chapter, including but not limited to:

(1) Developing mechanisms for long term funding for the foundation;

(2) Developing enforcement mechanisms to ensure that the intent of agricultural easements is met; and

(3) Developing mechanisms to enact amendments as needed to carry out the purposes of this chapter.

§ -5 Functions: agricultural preservation advisory board. The foundation shall serve as an agricultural preservation advisory board for each county. The purpose of serving this function shall be:

(1) To assist each county in identifying priority standards and criteria for agricultural land preservation;

(2) To assist each county in identifying long-term funding mechanisms;

(3) To identify monitoring mechanisms for preserving agricultural lands;

(4) To promote the preservation of agriculture within each county by providing information and assistance to farmers relating to the designation of important agricultural lands and the purchase of easements; and

(5) To perform other related duties for each county, as necessary.

§ -6 State matching of county agricultural land protection purchases; guidelines. The board of agriculture shall adopt guidelines and procedures pursuant to chapter 91 for county purchases of agricultural easements that are matched by state agricultural land protection funds. State funds requested as a match for county or other sources of funding shall only be used by entities participating in an agricultural land protection program adopted by each county that meets these guidelines. The foundation shall coordinate and cooperate with the board of agriculture to carry out the purposes of this section.

§ -7 Eligibility for tax incentives. The sale or the donation of any agricultural easement on important agricultural lands that is acquired or whose acquisition is matched with state funds pursuant to this chapter shall entitle the landowner to be eligible to the extent allowable for tax incentives enacted to promote the protection of important agricultural land. An agricultural business with agricultural operations on important agricultural lands with an agricultural easement that is acquired or whose acquisition is matched with state funds pursuant to this chapter shall be eligible for tax incentives enacted to promote long-term agricultural use of important agricultural lands.

§ -8 Use of land for which easement purchased. Uses on lands subject to an agricultural easement shall be restricted to agricultural uses, and normal agricultural operations including but not limited to the sale of farm products produced on the land with the easement purchased.

§ -9 Termination of easement. (a) The easement purchased under this chapter shall be held by the State in perpetuity. If circumstances have changed and farming is no longer feasible on the land under easement, then the easement may be terminated only in the manner and at the time specified under this section. Notwithstanding any other law to the contrary, any easement purchased under this chapter that is to be matched by funds from the federal farm and ranch lands protection program pursuant to 7 Code of Federal Regulations Part 1491, as amended, shall be held by the State in perpetuity.

(b) At any time after thirty years from the date of purchase of an easement, the landowner may request that the easement be reviewed for possible termination of the easement. Upon a request for review, an inquiry shall be conducted by the foundation to determine whether conditions on the land subject to an agricultural easement have changed so significantly that agricultural production is no longer viable and it has become impossible to fulfill the easement’s purposes. The inquiry shall be concluded and a decision reached by the foundation within one hundred eighty days after the request for termination, and shall include:

(1) An on-site inspection of the land; and

(2) A public hearing conducted by the foundation within the county containing the land after adequate public notice.

(c) In deciding whether to approve the request for termination, the foundation shall receive the recommendations from farming organizations in the county the land is situated. The decision of the foundation shall be made after the public hearing required under subsection (b).

(d) Upon the affirmative vote of a majority of the foundation, and upon the approval of the chairperson of the board of agriculture and the comptroller, the request for termination shall be forwarded to the legislature for action to affirm by a concurrent resolution.

(e) If the request for termination is approved, an appraisal of the land shall be ordered by the foundation at the expense of the landowner requesting termination of the easement. No more than one hundred eighty days following the appraisal, the landowner may repurchase the easement by paying to the foundation the difference between the fair market value and the agricultural value of the subject land, as determined by the appraisal. For purposes of this section, the agricultural value is the price as of the valuation date that a vendor, willing but not obligated to sell, would accept, and that a purchaser, willing but not obligated to buy, would pay for comparable land that is restricted to agricultural use.

(f) In the case of the termination of an easement that was originally purchased under a matching purchase, the foundation shall deposit the state portion of the repurchase payment received under subsection (e) that is equal to the percentage of the original easement purchase price contributed by the State in the agricultural land protection fund. The foundation shall also distribute to the contributing county the portion of the repurchase payment that is equal to the percentage of the original easement purchase price contributed by the county.

(g) If the request for termination is denied, or if the landowner fails to repurchase the easement within one hundred eighty days of the appraisal, the landowner may not again request termination of the easement until five years after the last request for termination.

§ -10 Agricultural land protection fund. (a) There is established in the state treasury the agricultural land protection fund, into which shall be deposited funds from state, federal, or private grants and appropriations, which shall be a permanent source of funds to be restricted to program expenditures as authorized under this chapter.

(b) Moneys in the agricultural land protection fund shall be used to purchase agricultural easements or to match funds for the purchase of agricultural easements of important agricultural lands to be enrolled in the state agricultural land protection program pursuant to section -4.

(c) The fund shall be administered by the department of agriculture. Appropriations or authorizations from the fund shall be expended by the board of agriculture. The department may contract with other public or private entities for the provision of all or a portion of the services necessary for the administration and implementation of the fund. The department may set fees or charges for fund management or technical assistance provided under this section.

(d) All interest earned on the deposit of investment of the moneys in the funds shall become a part of the fund.

§ -11 Annual report. The foundation shall submit to the governor and the legislature no later than twenty days prior to the commencement of the 2008 regular session a report of its interim findings and recommendations including any proposed legislation. A final report shall be submitted to the governor and the legislature no later than twenty days prior to the commencement of the 2009 regular session. After that, the foundation shall submit to the governor and the legislature no later than twenty days prior to the commencement of each regular session, a complete report describing the activities and easements acquired and fund administration pursuant to this chapter."

SECTION 3. Section 198-1, Hawaii Revised Statutes, is amended to read as follows:

"§198-1 Conservation easement defined. For the purposes of this chapter, a "conservation easement" is an interest in real property created by deed, restrictions, covenants, or conditions, the purpose of which is to:

(1) Preserve and protect land predominantly in its natural, scenic, forested, or open-space condition;

(2) Preserve and protect the structural integrity and physical appearance of cultural landscapes, resources, and sites which perpetuate indigenous native Hawaiian culture; [or]

(3) Preserve and protect historic properties as defined in section 6E-2, and traditional and family cemeteries[.]; or

(4) In case of agricultural land, restrict use of the affected land to agricultural uses, and forbid or limit activities and uses that would adversely affect the land's current and future use for agriculture. A conservation easement on agricultural land shall be known as an "agricultural easement" for the purposes of this chapter and other programs and incentives relating to easements for agricultural purposes."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1756
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII