STAND. COM. REP. NO. 3134

Honolulu, Hawaii

RE:    H.B. No. 2807

       H.D. 2

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committees on Agriculture and Hawaiian Affairs and Water and Land and Intergovernmental and Military Affairs, to which was referred H.B. No. 2807, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO LAND USE,"

beg leave to report as follows:

     The purpose of this measure is to provide incentives for landowners to designate their lands as important agricultural lands (IALs) by:

     (1)  Allowing a landowner, who has been granted a declaratory order from the Land Use Commission (LUC) to designate all or some of the landowner's land as IAL, to fulfill a state or county affordable housing assessment (assessment) by providing affordable housing in lands zoned as rural in lieu of satisfying the assessment in the urban district; and

     (2)  Revising the landowner petition process for IAL designation by:

          (A)  Specifying that a farmer or landowner may petition LUC for declaratory order to designate lands as IALs in perpetuity; and

          (B)  Allowing farmers or landowners that petition the LUC for declaratory order to designate lands as IALs in perpetuity to seek, in the same petition, a reclassification of land from the agricultural district to the rural district, urban district, or a combination of both, under certain conditions.

     Your Committees received testimony in support of this measure from the Hawaii Farm Bureau Federation, the Hawaii Association of Realtors, Kamehameha Schools, and the Land Use Research Foundation of Hawaii.  Your Committees also received testimony in support with amendments from Castle and Cooke, Alexander and Baldwin, Dole Food Company, Department of Agriculture, The Chamber of Commerce of Hawaii, and the Kauai Chamber of Commerce.  Testimony in opposition was received from the City and County of Honolulu Department of Planning and Permitting, the Department of Business, Economic Development and Tourism, Office of Planning, the Hawaii Chapter of the Sierra Club, Hawaii's Thousand Friends, Puakala Farms, a Councilmember from the County of Kauai, and four individuals.

     Your Committees find that Act 183, Session Laws of Hawaii 2005, was enacted to establish standards, criteria, and mechanisms to identify important agricultural lands and to implement the intent of Article XI, section 3, of the Hawaii State Constitution, which provided the framework for state policies to promote agriculture and the conservation of productive agricultural lands in the State.

     Your Committees also find that it is a long recognized policy of the State to promote agricultural operations and to conserve productive agricultural lands.  Although discussion of an incentives package to preserve important agricultural lands has been under discussion for several years, no such incentive package has yet been enacted.

     To this end, your Committees have amended the measure by deleting its contents and inserting therefor, language that provides incentives to landowners of important agricultural lands by:

     (1)  Providing that rental income from agricultural leases are to be excluded from gross income calculations;

     (2)  Allowing agricultural landowners to receive a real property tax credit;

     (3)  Allowing agricultural landowners to construct residential housing for its employees, farmers, and families;

     (4)  Allowing agricultural landowners to receive a business tax credit; and

     (5)  Providing a loan guaranty program to agricultural producers for the purpose of agricultural or aquacultural operations or capital improvements.

     Your Committees believe that this amended measure represents a very broad-based approach with tax credits for rental income from agricultural leases, for payment of real property taxes, and for qualified agricultural business expenditures.  Other features of this measure include provisions for residential housing on important agricultural lands, loan guaranty programs to be administered by the Department of Agriculture, and expedited permit processing for agricultural operations.

     As affirmed by the records of votes of the members of your Committees on Agriculture and Hawaiian Affairs and Water and Land and Intergovernmental and Military Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2807, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2807, H.D. 2, S.D. 1, and be referred to the Committee on Commerce, Consumer Protection, and Affordable Housing.

Respectfully submitted on behalf of the members of the Committees on Agriculture and Hawaiian Affairs and Water and Land and Intergovernmental and Military Affairs,

____________________________ CLAYTON HEE, Chair	____________________________ JILL TOKUDA, Chair
	____________________________ LORRAINE R. INOUYE, Chair