The future of a property tax break for farm owners is uncertain after Hawaii County Council members discussed Wednesday whether to scrap a bill that would overhaul the process.
Over the past few months, the County Council has mulled several bills that would revamp the county’s current processes for offering real property tax breaks to farmers. Two of those bills were discussed at Wednesday’s meeting of the full council, but council members were unsure whether to pass them or toss them.
Bill 44 would, if passed, sunset the county’s nondedicated agricultural use assessment, one of two county programs that allows property owners whose lands are used in part for agriculture to have that land assessed at lower values for tax purposes.
The nondedicated assessment values eligible land at two times the land’s commercial agricultural use value instead of its market value, whereas the dedicated agricultural use assessment only assesses the land at just its commercial use value without the multiplier.
In that assessment’s place, Bill 44 would establish a “community food sustainability use assessment,” which would instead allow eligible nondedicated lands on which farmers raise food crops to be assessed at 30% market value.
But Hamakua Councilwoman Heather Kimball, who introduced the bill, said Wednesday she was considering scrapping the community food sustainability use assessment entirely.
“The idea here was to phase out the nondedicated program and replace it with other programs, one being a short-term three-year dedicated program,” Kimball said, referring to a new agricultural dedication system proposed within Bill 43, which was not discussed Wednesday. “That particular program is not, probably, alone going to capture everybody that’s in the nondedicated program. So, I wanted to put forth this other thing that would capture folks who are contributing to food systems and still allow them to get a tax benefit.”
But Kimball said she would withdraw the bill and replace it with one that simply abolishes the nondedicated assessment if the council was uninterested in supporting the community food sustainability assessment.
Kimball’s fellow council members had no resounding support or opposition for the program, however. Kohala Councilwoman Cindy Evans said she would be fine with killing the program, raising concerns about how it could ever be feasibly enforced. Bill 44 states that the land that would be eligible for the tax break must be “committed to specific community food production,” which Evans suggested would be difficult for county tax authorities to confirm.
Lisa Miura, real property tax administrator, said the existing nondedicated use system needs updating because it was written loosely enough to allow for people to exploit loopholes and claim the tax credit despite keeping their land largely as open space. Bill 44, she said, would at least require more documentation from claimants than is currently required.
Meanwhile, Miura said that simply phasing out the nondedicated program without setting up a replacement would leave some beneficiaries in the lurch. Roughly 8,000 properties are eligible for the nondedicated program, but, she said, not all of them would be able to qualify for the dedicated agricultural use assessment.
Keita Jo, real property tax assistant administrator, said that a $400,000 property with no farming benefit would have $3,700 in taxes levied against it annually. With the assessment established by Bill 44, the tax burden would be reduced to $1,100.
Most other council members agreed that the nondedicated assessment needs to be reworked — several cited the problem of “gentleman farmers,” wealthy landowners with sizable lands claiming agricultural benefits despite not farming at any significant scale — and opted to keep Bill 44 alive simply to keep the options open.
“I do feel like we would be penalizing quite a few people who are doing some (agricultural work) but aren’t able to make the jump,” said Hilo Councilwoman Jenn Kagiwada. “I feel like something like this is really important. … I would hate to see it taken completely off the table, because I do think a lot of individuals in our county would see a big jump in their tax rates when they’re really trying to do the right thing.”
Ultimately, the council voted to postpone Bill 44 until June 21, when it will be considered alongside the similar Bill 43.
Meanwhile, Bill 28, which would allow farm lands on which the property owners live to qualify for the county’s homeowner tax exemption, also appeared before the council Wednesday, but was also postponed with little discussion until June.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.
