Farmers groups offer support for Amendment 2

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Proponents of a state constitutional amendment to allow farmers, ranchers and owners of other agricultural endeavors to request special purpose revenue bonds say the measure won’t cost taxpayers any money.

Proponents of a state constitutional amendment to allow farmers, ranchers and owners of other agricultural endeavors to request special purpose revenue bonds say the measure won’t cost taxpayers any money.

That’s one of the misconceptions several people in favor of the amendment pointed out last week during conversations promoting Amendment 2.

“The state doesn’t issue anything,” said Kyle Datta, founder of the Ulupono Initiative, which supports the amendments. “The state is not selling anything.”

Instead, if voters approve the amendment in November, a group of farmers, for example, can band together to build a certified kitchen to create value-added products from the crops they grow. Those farmers would ask the Legislature for approval to issue bonds for the project, and if legislators say yes, the farmers then could go to the capital market to get tax-exempt bonds to pay for the work.

Because the bonds are tax exempt and because they cost less to repay, using that funding source can lower the cost of the project, which means lower food costs for consumers, Datta said.

That end result fits in with the Ulupono Initiative’s goals of supporting sustainable, local food, he added.

Chris Manfredi, president of the Hawaii Farm Bureau, said he hasn’t heard any criticisms of the proposed amendment.

Right now, land owners who designate their lands as important agricultural lands, forgoing future development there, are already eligible for the special purpose revenue bonds, but that program doesn’t reach all farmers.

“This would make special purpose revenue bond financing available to small holder farms, leaseholder farms,” Manfredi said, adding that not all landowners want to designate their property as important agricultural lands. “It just opens it up to more producers and co-ops.”

Sen. Laura Thielen, D-Kailua, Waimanalo, Hawaii Kai, wrote about her opposition to the amendment on her website earlier this month. Her concern focused on what impact allowing any agricultural user to access the special purpose revenue bonds would have on important agricultural lands, which she abbreviated as IAL in her post.

“The IAL designation provides some guarantee that the land will remain in agricultural zoning, and not be developed for other purposes,” she wrote. “Authorizing (special purpose revenue bonds) for IAL was an incentive to get the large agricultural landowners to commit to keeping land in agriculture and putting fallow land into production. We have way too much privately held agricultural land that is fallow because it’s essentially being ‘banked’ for future development.”

Thielen said she doesn’t see why the state would approve the bonds for ag landowners who are not willing to designate their land.

“If anything, that eliminates any incentive for them to commit to agriculture over the long term,” she wrote. “I don’t want to see landowners putting in improvements that later serve a different purpose when the land is developed.”

Reached by phone Tuesday afternoon, Thielen said a recent discussion she had with state Budget and Finance Department officials showed her that bond underwriters also are unlikely to finance projects of less than $5 million.

“If small farmers want to build a $500,000 greenhouse, which is a big investment, this is not the process that’s going to help you,” she said.

Farmers could band together to form a hui and seek a larger bond amount created by pooling several smaller projects, but the Legislature still would need to approve each individual project and all of the applicants would need to be ready to proceed on the same timeline.

Email Erin Miller at emiller@westhawaii today.com.