SB3098.DOC

SECTION 1. The legislature finds that the State must meet its constitutional mandate of conserving agricultural lands. Article XI, section 3, of the Constitution of the State of Hawaii outlines the State's responsibilities to conserve and protect agricultural lands. It also charges the State with the responsibility of promoting diversified agriculture, increasing agricultural self-sufficiency, and assuring the availability of agriculturally suitable lands.

The legislature further finds that the downsizing of Hawaii's agricultural industry over the decades and the closures of large operations have had a significant impact on the State and have resulted in the availability of large tracts of agricultural land for sale. Introduced to the islands in 1813, pineapple grew into one of Hawaii's largest export crops in the early twentieth century after significant Oahu land investments by Del Monte and Hawaiian Pineapple Company, today known as Dole Food Company. Hawaiian Pineapple Company president James Dole purchased the entire island of Lanai for pineapple production in 1922, eventually growing acreage there into the world's largest pineapple plantation. Hawaii pineapple production declined in the 1980s as Dole and Del Monte relocated much of their acreage elsewhere in the world, primarily due to high labor and land costs. Dole closed down the entirety of its Lanai pineapple operations in 1992, while Del Monte harvested its final Hawaii crop in 2008. Dole continues to grow pineapple on Oahu; however, it has restructured and decreased production. Hawaii remains the only state where pineapple is grown.

Sugar plantations began to close in the 1950s and accelerated in pace in the 1980s and 1990s. United States tariff and quota protections for sugar began declining in the decades after World War II amid broader trade liberalization. Sugar plantation workers began to unionize in the 1930s, which helped build Hawaii's middle class but also made the industry less competitive compared to other countries. Hawaii's land values began to spike as the introduction of passenger jets reduced travel times to Hawaii and launched a tourism boom. Many landowners found they could make more money building hotels and homes than growing sugar cane. The last sugar plantation, the Hawaiian Commercial & Sugar Company, announced its closing in 2016. Today, eighty-five per cent of Hawaii's food is imported.

The purpose of this Act is to provide for the acquisition and management of agricultural lands having value to the State by the department of agriculture and the agribusiness development corporation.

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

"Chapter

ACQUISITION OF AGRICULTURAL LAND

§ -1 Purpose. The State has provided for the regulation of agricultural land use and development throughout the State, and has provided for the controlled regulation of land use and development of lands that have natural, environmental, recreational, scenic, or historic value. However, agricultural lands, though protected by law, may in many instances require placement under public ownership and management so that they can benefit all of the people of the State. The purpose of this chapter is to provide for the acquisition and management of agricultural lands having value to the State.

§ -2 Definitions. As used in this chapter:

"Agricultural land" means land lying within an existing or proposed irrigation project and of such location and character as may be profitably employed in the growing of irrigated crops.

"Board" means the board of directors of the agribusiness development corporation.

"Corporation" means the agribusiness development corporation.

"Department" means the department of agriculture.

"Land" means the earth, water, and air, above, below, or on the surface, and includes easements and rights in land, and any improvement on land.

§ -3 Agricultural land acquisition plan. In consultation with the senate president and speaker of the house of representatives, the department shall prepare and, from time to time, revise a plan for the acquisition of agricultural land having value to the State. This plan shall guide the board in acquiring agricultural land in the exercise of its powers under this chapter. In preparing this plan, the department may institute studies relating to the need for agricultural land and shall consider any plan relating to the acquisition of agricultural land that has been prepared by any state or county agency.

§ -4 Authority to acquire and convey; easement required and exemption. (a) In consultation with the senate president and speaker of the house of representatives, the board may acquire, by purchase, gift, or the exercise of the power of eminent domain as authorized by chapter 101, any agricultural land having value to the State. Such acquisition is hereby declared to be for a public use.

(b) The board may, subject to chapter 171, in consultation with the senate president and speaker of the house of representatives, and with the approval of the governor, sell, lease, or otherwise convey any agricultural land having value to the State subject to terms and conditions that it deems appropriate and that will ensure that the transferee shall not use the agricultural land in a manner that is inconsistent with the purposes for which it was acquired by the board. The terms and conditions shall run with the land and shall be binding on the transferee's heirs, successors, and assigns. The board may seek enforcement of the terms and conditions in any court of appropriate jurisdiction.

(c) The board, in consultation with the senate president and the speaker of the house of representatives, shall require as a condition of the receipt of funds that state and county agencies receiving funds under this chapter provide an agricultural easement or deed restriction or covenant to the department; the department of land and natural resources; the corporation; an appropriate agricultural organization; or a county, state, or federal agricultural agency, that shall run with the land and be recorded with the land to ensure the long-term protection of agricultural land and preserve the interests of the State. The board shall require as a condition of the receipt of funds that it be an owner of an agricultural easement.

(d) The board or an appropriate agricultural organization or county, state, or federal agency required to be provided an easement pursuant to this section may grant an exemption for any easement required pursuant to this section.

§ -5 Appraisal of agricultural land. (a) Notwithstanding section 171-30, the appraisal of agricultural land having value to the State and acquired by the State under this chapter may be performed as follows:

(1) The board may review, approve, and accept any existing appraisal prepared on behalf of a nonprofit organization if:

(A) The appraisal was completed within one year before the decision by the board to approve the acquisition of agricultural land; and

(B) The board finds that the appraisal was performed according to applicable and accepted professional standards for agricultural land appraisal; or

(2) The board may contract for an independent appraisal from no more than three disinterested appraisers who shall follow applicable and accepted professional standards for agricultural land appraisal.

The board shall submit the appraisal to the attorney general for review and approval before it acquires the agricultural land having value to the State.

(b) No agricultural land shall be purchased for a sum greater than the highest value fixed by any appraisal accepted or performed under subsection (a); provided that this limitation shall not apply to any acquisition that is made by condemnation.

(c) After the agricultural land having value to the State has been acquired or the State abandons the acquisition, the appraisal reports shall be made available for inspection and copying by the public.

(d) Anything contained in this section notwithstanding, no appraisal shall be required under this section in the event that any interest in agricultural land having value to the State is donated to the State.

§ -6 Agricultural land acquisition fund. (a) An agricultural land acquisition fund, hereinafter called "fund", is hereby established.

(b) The proceeds from the sale of any general obligation bonds authorized and issued for purposes of this chapter shall be deposited in or credited to the fund.

(c) Any net proceeds or revenue from the operation, management, sale, lease, or other disposition of agricultural land or the improvements on the agricultural land acquired or constructed by the board under the provisions of this chapter shall also be deposited in or credited to the fund.

(d) Moneys from any other private or public source may be deposited in or credited to the fund; provided that mandates, regulations, or conditions on these funds do not conflict with the use of the fund under this chapter. Moneys received as a deposit or private contribution shall be deposited, used, and accounted for in accordance with the conditions established by the agency or person making the contribution.

(e) The fund shall be administered and managed by the department.

(f) The acquisition of interests or rights in agricultural land having value to the State for the preservation of agricultural production shall constitute a public purpose for which public funds may be expended or advanced.

(g) The fund shall be used for:

(1) The acquisition of interests or rights in agricultural land having value to the State, whether in fee title or through the establishment of permanent agricultural easements;

(2) The payment of any debt service on state financial instruments relating to the acquisition of interests or rights in agricultural land having value to the State;

(3) Annual administration costs for the fund, not to exceed five per cent of annual fund revenues of the previous year; and

(4) Costs related to the operation, maintenance, and management of lands acquired by way of this fund that are necessary to protect, maintain, or restore resources at risk on agricultural lands, or that provide for greater public access and enjoyment of agricultural lands; provided that the costs related to the operation, maintenance, and management of lands acquired by way of this fund do not exceed five per cent of annual fund revenues of the previous year.

(h) Based on applications from state agencies, counties, and nonprofit agricultural organizations, the department, in consultation with the senate president and speaker of the house of representatives, shall recommend to the board specific parcels of agricultural land to be acquired. The board shall review the selections and approve or reject the selections according to the availability of moneys in the fund. To be eligible for grants from the fund, state and county agencies and nonprofit agricultural organizations shall submit applications to the department that contain:

(1) Contact information for the project;

(2) A description of the project;

(3) The request for funding;

(4) Cost estimates for acquisition of the interest in the agricultural land;

(5) Location and characteristics of the agricultural land;

(6) The project's public benefits, including but not limited to where public access may be practicable or not practicable and why;

(7) Results of the applicant's consultation with the staff of the department and the corporation regarding the maximization of public benefits of the project, where practicable; and

(8) Other similar, related, or relevant information as determined by the department.

(i) For applications approved by the board, the board may acquire agricultural land having value to the State, pursuant to section -4, or the board may award grants from the fund to the qualifying state or county agencies or nonprofit agricultural organizations for the preservation of the real property. Where the recipient of a grant is a county agency or nonprofit agricultural organization, the board shall require additional matching funds of at least twenty-five per cent of the total project costs. Matching funds may be in the form of:

(1) Direct moneys;

(2) A combination of public and private funds;

(3) Land value donation;

(4) In-kind contributions; or

(5) Any combination of the above.

(j) Evidence of the matching funds in subsection (i) shall be made available by the qualifying entities prior to distribution of the fund grant.

(k) The board shall:

(1) Track amounts disbursed from the fund;

(2) Prepare and submit an annual report to the governor and the legislature at least twenty days prior to the convening of each regular session. The annual report shall include:

(A) A summary of all interests or rights in agricultural land acquired during the preceding fiscal year;

(B) A summary of what value each newly acquired agricultural land has as a resource to the State;

(C) Proposals for future agricultural land acquisitions, including a summary of the agricultural value that the agricultural land may possess;

(D) A financial report for the preceding fiscal year; and

(E) Objectives and budget projections for the following fiscal year; and

(3) Make copies of the annual report available to the public.

§ -7 Acquisition of agricultural land; annual program. The board shall prepare an annual program for the purchase or acquisition by eminent domain of agricultural land having value to the State.

§ -8 Administration and management of acquired agricultural land. The department shall, subject to chapter 171, administer, maintain, and manage any agricultural land acquired under the provisions of this chapter, may charge such fees for the use of any agricultural land as it considers to be reasonable, and may construct on agricultural land any improvement which it deems to be necessary to carry out the purposes of this chapter. The department may adopt and from time to time amend regulations implementing the provisions of this chapter.

§ -9 Development of acquired agricultural land. On the agricultural land acquired under this chapter, the department may undertake any development that is consistent with the land use law and all other laws applicable to the land and development.

For purposes of this section, "development" includes:

(1) Any building;

(2) Any material change in use, intensity of use, or appearance of any structure or land; or

(3) The division of land into two or more parcels.

§ -10 Grants to state agencies, counties, and nonprofit agricultural organizations. After consultation with the senate president and speaker of the house of representatives, and subject to the approval of the governor, the board may make grants to state agencies, counties, and nonprofit agricultural organizations from available funds for the purchase or acquisition of interests or rights in agricultural land having value to the State, whether in fee title or through the purchase of permanent agricultural easements, and approved for purchase or acquisition by the board, or for the operation, maintenance, and management of lands acquired under this chapter that are necessary to protect, maintain, or restore resources at risk on agricultural lands, or that provide for greater public access and enjoyment of agricultural lands. Any land so acquired by any state agency or county may be sold, leased, or otherwise disposed of, subject to chapter 171, with the prior written approval of the board. Any land acquired by any nonprofit agricultural organization under this chapter may be sold, leased, or otherwise disposed of with the prior written approval of the board. Any permanent agricultural easement established under this section that includes partnership with a federal program may be transferred only as provided by rules of the federal program.

§ -11 Proceeds of sale, lease, or other disposition. Whenever any agricultural land is sold by any state agency, county, or nonprofit agricultural organization, that portion of the net proceeds (sale price less actual expenses of sale) of the sale equal to the proportion that the grant by the State bears to the original cost of the agricultural land or other property shall be paid to the State. In the event any agricultural land or other property is leased, rented, or otherwise disposed of, that portion of the rental or proceeds equal to the proportion that the grant by the State bears to the original cost of the agricultural land or other property shall be paid to the State. Any proceeds received by the State pursuant to this section that were originally paid out of the fund pursuant to section -10 shall be redeposited in or credited to the fund.

§ -12 General powers. In carrying out its functions under this chapter, the board may do all things necessary, useful, and convenient in connection with the acquisition of agricultural lands having value to the State, subject to all applicable laws, and may provide any necessary assistance to any county in the acquisition of agricultural land having value to the State. The authority to acquire agricultural land which is conferred by this chapter is in addition and supplemental to any authority to acquire agricultural land which is conferred on the board by any other chapter.

§ -13 Federal and other grants. The board and any county may comply with any condition, regulation, restriction, or requirement imposed by the United States or any other governmental agency, or by any person in any program providing grants or other funds for the acquisition of agricultural land having value to the State."

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	3098
TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII