Report Title:

Agribusiness Development Corporation

Description:

Transfers management of agricultural lands and state irrigation systems, and agricultural marketing duties from the Department of Agriculture to the Agribusiness Development Corporation. Requires transfers of non-agricultural park lands to the corporation by July 1, 2007. Establishes an irrigation repair and maintenance special fund. Establishes a tax credit for matching funds provided by landowners who receive funding from the special fund.

HOUSE OF REPRESENTATIVES

H.B. NO.

2179

TWENTY-THIRD LEGISLATURE, 2006

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to Agriculture.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. This Act shall be known as the New Directions for Diversified Agriculture Act.

SECTION 2. Chapter 163D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§163D- Irrigation repair and maintenance special fund. (a) There is established in the state treasury the irrigation repair and maintenance special fund which shall be administered by the corporation.

(b) Moneys in the irrigation repair and maintenance special fund shall be used to fund repair and maintenance of the following irrigation systems:

(1) East Kauai irrigation system;

(2) Kekaha ditch;

(3) Kokee ditch;

(4) Maui Land/Pioneer Mill irrigation system;

(5) Waiahole ditch;

(6) Lower Hamakua irrigation system;

(7) Molokai irrigation system;

(8) Upcountry Maui irrigation system;

(9) Waimanalo irrigation system;

(10) Waimea irrigation system;

(11) East Maui irrigation system;

(12) Kauai coffee irrigation system;

(13) West Maui irrigation system;

(14) Kau irrigation system;

(15) Honomalino irrigation system; and

(16) Other privately-owned irrigation systems on former sugarcane and pineapple plantation lands that have been converted to diversified agriculture.

(c) The irrigation repair and maintenance special fund shall be funded by legislative appropriations, including general obligation bond funds and federal funds.

(d) Landowners may apply for funding assistance from the irrigation repair and maintenance special fund; provided that the landowner:

(1) Provides matching funding equal to the amount received from the irrigation repair and maintenance special fund;

(2) Agrees to file a petition for declaratory ruling pursuant to section 205-45 designating all lands within two miles of the water produced by the irrigation system as important agricultural lands as defined under chapter 205 and notifies the corporation and county of the petition and designation for the purpose of inclusion on maps; and

(3) Agrees to use all lands served by the water produced by the irrigation system for diversified agriculture production.

The corporation shall develop processes, policies, standards, and criteria for selecting the landowners that are to receive funding and the amount of such funding. The corporation shall also develop processes, policies, standards, and criteria for determining the amount of funding provided to irrigation systems in subsection (b) owned by the State.

(e) Landowners who apply for and receive funding from the irrigation repair and maintenance special fund, and who provide matching funding under subsection (d)(1), may apply for an income tax credit for their matching funds as specified under section 235- .

(f) As used in this section:

"Diversified agriculture" means agricultural operations that produce diversified agricultural products, including flowers, nursery products, vegetables, herbs, melons, seed crops, macadamia nuts, aquaculture, coffee, milk, cattle, eggs, hogs, and fruit but excluding sugarcane and pineapple.

"Irrigation system" means the agricultural system of intakes, diversions, wells, ditches, siphons, pipes, reservoirs, and accessory facilities established to provide water for agricultural production.

"Landowner" means a private entity that:

(1) Owns agricultural land, formerly used as a sugarcane or pineapple plantation, that contains a privately-owned irrigation system that is necessary for the sustained production of diversified agriculture on the land served by the irrigation system; or

(2) Owns, or partially owns, an irrigation system listed in subsection (b)(1) through(15)."

SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Irrigation repair and maintenance special fund tax credit. (a) There shall be allowed to each qualified taxpayer, pursuant to section 163D- (e) and subject to the taxes imposed by this chapter, an income tax credit which shall be deductible from the qualified taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

The amount of the credit shall be equal to the amount of matching funds provided by the qualified taxpayer in obtaining funding from the irrigation repair and maintenance special fund, as specified in section 163D- (d)(1); provided that:

(1) The amount of the credit shall not exceed $ per year in the aggregate for all qualified taxpayers;

(2) The amount of the credit shall not exceed $ in the aggregate for all qualified taxpayers for all taxable years; and

(3) The tax credit shall be available for matching fund costs incurred after December 31, 2005, and before January 1, 2026.

In the case of a partnership, S corporation, estate, or trust, the cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to section 235-110.7(a).

If a deduction is taken under Section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the construction or renovation cost for which the deduction is taken.

The basis of eligible property for depreciation or accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the qualified taxpayer shall treat the amount of the credit allowable and claimed as a taxable income item for the taxable year in which it is properly recognized under the method of accounting used to compute taxable income.

(b) If the tax credit under this section exceeds the qualified taxpayer's income tax liability, the excess of credit over liability may be used as a credit against the qualified taxpayer's income tax liability until exhausted. All claims for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(c) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the qualified taxpayer to furnish information to ascertain the validity of the claim for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(d) To qualify for the income tax credit, the qualified taxpayer shall be in compliance with all applicable federal, state, and county statutes, rules, and regulations.

(e) No qualified taxpayer that claims a credit under this section shall claim any other tax credit for the same costs for which a credit is claimed under this section.

(f) No later than March 31 of each year following the year in which the cost of matching funds provided by the qualified taxpayer in obtaining funding from the irrigation repair and maintenance special fund were incurred, each qualified taxpayer claiming the tax credit shall submit a written, notarized statement to the director of taxation identifying the matching fund costs incurred in the year being claimed.

(g) The department of taxation, with the assistance of the agribusiness development corporation, shall maintain records of the names of qualified taxpayers eligible for the credit and the total amount of eligible costs incurred in each taxable year, beginning after December 31, 2005, by each qualified taxpayer. The department of taxation, with the assistance of the agribusiness development corporation, shall compile all eligible matching fund costs, and upon each determination, shall issue a certificate to the taxpayer pursuant to subsection (h) indicating:

(1) The amount of matching fund costs eligible for the tax credit;

(2) The amount of the tax credit that the qualified taxpayer may use for the tax year in which the costs were incurred; and

(3) The amount of previous tax credits the qualified taxpayer may carry forward.

(h) The department of taxation shall certify no more than $ in credits in the aggregate, including carryforward amounts, for all qualified taxpayers for each taxable year; provided that if the total amount claimed on all statements in the aggregate, including carryforward amounts, filed by March 31 for the previous tax year amounts to:

(1) $ or less, the department of taxation shall certify all claims; and

(2) More than $ , the department of taxation shall

certify claims for each qualified taxpayer in an

amount proportional to the total amount claimed.

The department of taxation shall certify no more than

$ in credits, including carryforward amounts, in the aggregate for all qualified taxpayers for all taxable years.

(i) As used in this section "qualified taxpayer" means the same as "landowner" under section 163D- (e)."

SECTION 4. Section 26-16, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) The department shall:

(1) Promote the conservation, development, and utilization of agricultural resources in the State;

[(2) Assist the farmers of the State and any others engaged in agriculture by research projects, dissemination of information, crop and livestock reporting service, market news service, and any other means of improving the well-being of those engaged in agriculture and increasing the productivity of the lands;

(3)] (2) Administer the programs of the State relating to animal husbandry, entomology, farm credit, [development and promotion of agricultural products and markets,] and the establishment and enforcement of the rules on the grading and labeling of agricultural products; and

[(4)] (3) Administer the aquaculture program under section 141-2.5."

SECTION 5. Section 141-1, Hawaii Revised Statutes, is amended to read as follows:

"§141-1 Duties in general. The department of agriculture shall:

(1) Gather, compile, and tabulate, from time to time, information and statistics concerning:

(A) Entomology and plant pathology: Insects, scales, blights, and diseases injurious, or liable to become injurious, to trees, plants, or other vegetation, and the ways and means of exterminating pests and diseases already in the State and preventing the introduction of those not yet here; and

(B) General agriculture: Fruits, fibres, and useful or ornamental plants and their introduction, development, care, and manufacture or exportation, with a view to introducing, establishing, and fostering new and valuable plants and industries;

(2) Encourage and cooperate with the agricultural extension service and agricultural experiment station of the University of Hawaii and all private persons and organizations doing work of an experimental or educational character coming within the scope of the subject matter of chapters 141, 142, and 144 to 150A, and avoid, as far as practicable, duplicating the work of those persons and organizations;

(3) Enter into contracts, cooperative agreements, or other transactions with any person, agency, or organization, public or private, as may be necessary in the conduct of the department's business and on such terms as the department may deem appropriate; provided that the department shall not obligate any funds of the State, except the funds that have been appropriated to the department. Pursuant to cooperative agreement with any authorized federal agency, employees of the cooperative agency may be designated to carry out, on behalf of the State the same as department personnel, specific duties and responsibilities under chapters 141, 142, 150A, and rules adopted pursuant to those chapters, for the effective prosecution of pest control, and animal disease control, and regulation of import into the State and intrastate movement of regulated articles;

(4) Secure copies of the laws of other states, territories, and countries, and other publications germane to the subject matters of chapters 141, 142, and 144 to 150A, and make laws and publications available for public information and consultation;

(5) Provide buildings, grounds, apparatus, and appurtenances necessary for the examination, quarantine, inspection, and fumigation provided for by chapters 141, 142, and 144 to 150A; for the obtaining, propagation, study, and distribution of beneficial insects, growths, and antidotes for the eradication of insects, blights, scales, or diseases injurious to vegetation of value and for the destruction of injurious vegetation; and for carrying out any other purposes of chapters 141, 142, and 144 to 150A;

(6) Formulate and recommend to the governor and legislature additional legislation necessary or desirable for carrying out the purposes of chapters 141, 142, and 144 to 150A;

(7) Publish at the end of each year a report of the expenditures and proceedings of the department and of the results achieved by the department, together with other matters germane to chapters 141, 142, and 144 to 150A, and which the department may deem proper;

(8) Administer a program of agricultural planning and development, including the formulation and implementation of general and special plans, including but not limited to the functional plan for agriculture; [administer the planning, development, and management of the agricultural park program; plan, construct, operate, and maintain the state irrigation water systems;] review, interpret, and make recommendations with respect to public policies and actions relating to agricultural land and water use; assist in research, evaluation, development, enhancement, and expansion of local agricultural industries; and serve as liaison with other public agencies and private organizations for the above purposes. In the foregoing, the department of agriculture shall act to conserve and protect agricultural lands and irrigation water systems, promote diversified agriculture, increase agricultural self-sufficiency, and ensure the availability of agriculturally suitable lands."

SECTION 6. Section 163D-3, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) The board shall appoint an executive director, subject to confirmation by the senate, who shall serve at the pleasure of the board and shall be exempt from chapter 76. The salary of the executive director shall be set by the board."

SECTION 7. Section 163D-4, Hawaii Revised Statutes, is amended to read as follows:

"§163D-4 Powers; generally. (a) Except as otherwise limited by this chapter, the corporation may:

(1) Sue and be sued;

(2) Have a seal and alter the same at its pleasure;

(3) Make and alter bylaws for its organization and internal management;

(4) Adopt rules under chapter 91 necessary to effectuate this chapter in connection with its projects, operations, and properties;

(5) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter;

(6) Carry out surveys, research, and investigations into technological, business, financial, consumer trends, and other aspects of agricultural production in the national and international community;

(7) Acquire or contract to acquire by grant or purchase, or by eminent domain, any real, personal, or mixed property or any interest therein for its immediate or future use for the purposes of this chapter; own, hold, improve, and rehabilitate any real, personal, or mixed property acquired, and sell, assign, exchange, transfer, convey, lease, or otherwise dispose of, or encumber the same;

(8) By itself, or in partnership with qualified persons, acquire, construct, reconstruct, rehabilitate, improve, alter, or repair any infrastructure or accessory facilities in connection with any project; own, hold, sell, assign, transfer, convey, exchange, lease, or otherwise dispose of, or encumber any project;

(9) [In cooperation with the department of agriculture, pursuant] Pursuant to chapter 167, or otherwise through direct investment or coventure with a professional investor or enterprise or any other person, or otherwise, to acquire, construct, operate, and maintain water facilities for conveying, distributing, and transmitting water for irrigation and agricultural uses at rates or charges determined by the corporation; provided that:

(A) This chapter shall not be construed to permit or allow the [department of agriculture or any] agribusiness development corporation to:

(i) Amend or modify rights or entitlements to water as provided for by [Article] article XI, section 7, of the Constitution of the State of Hawaii, or the Hawaiian Homes Commission Act, 1920, as amended, and chapter 168;

(ii) Diminish or abridge the traditional and customary rights of ahupua`a tenants who inhabited the Hawaiian Islands prior to 1778 under sections 1-1 and 7-1; and

   (iii) Impair, abridge, or terminate the legal rights or interests to water and its uses, whether by lease, easement, or other means, which are possessed or held by organizations whose primary purpose is to benefit people of Hawaiian ancestry; and

(B) All usage of water shall be in accordance with chapter [[]174C[]] and other applicable laws in the State;

(10) Assist agricultural enterprises by conducting detailed marketing analysis and developing marketing and promotional strategies to strengthen the position of those enterprises and to better exploit local, national, and international markets;

(11) Carry out specialized programs designed to develop new markets for Hawaii agricultural products;

(12) Receive, examine, and determine the acceptability of applications of qualified persons for allowances or grants for the development of new crops and agricultural products, the expansion of established agricultural enterprises, and the altering of existing agricultural enterprises;

(13) Coordinate its activities with any federal or state farm credit programs;

(14) Grant options to purchase any project or to renew any lease entered into by it in connection with any of its projects, on the terms and conditions it deems advisable;

(15) Provide advisory, consultative, training, and educational services, technical assistance, and advice to any person, partnership, or corporation, either public or private, [in order] to carry out the purposes of this chapter, and engage the services of consultants on a contractual basis for rendering professional and technical assistance and advice;

(16) Procure insurance against any loss in connection with its property and other assets and operations in such amounts and from such insurers as it deems desirable;

(17) Accept gifts or grants in any form from any public agency or any other source; [and]

(18) Assist the farmers of the state and any others engaged in agriculture by research projects, dissemination of information, crop and livestock reporting service, market news service, and any other means of improving the well-being of those engaged in agriculture and increasing the productivity of the lands; and

[(18)] (19) Do all things necessary or proper to carry out the purposes of this chapter.

(b) The corporation shall [develop,]:

(1) Develop, promote, assist, and market export crops and other crops for local markets[.];

(2) Administer the programs of the State relating to the development and promotion of agricultural products and markets;

(3) Administer the planning, development, and management of the agricultural park program;

(4) Manage the non-agricultural park lands transferred to the corporation under chapter 166E; and

(5) Plan, construct, operate, and maintain the state irrigation water systems."

SECTION 8. Section 163D-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The corporation shall prepare the Hawaii agribusiness plan which shall define and establish goals, objectives, policies, and priority guidelines for its agribusiness development strategy. The plan shall include but not be limited to:

(1) An inventory of agricultural lands with suitable adequate water resources that are or will become available due to the downsizing of the sugar and pineapple industries that can be used to meet present and future agricultural production needs;

(2) An inventory of agricultural infrastructure that will be abandoned by sugar and pineapple industries such as irrigation systems, drainage systems, processing facilities, and other accessory facilities;

(3) An inventory of lands designated as agricultural parks pursuant to chapter 166;

(4) An inventory of non-agricultural park lands managed under chapter 166E;

[(3)](5) An analysis of imported agricultural products and the potential for increasing local production to replace imported products in a manner that complements existing local producers and increases Hawaii's agricultural self-sufficiency;

[(4)](6) Alternatives in the establishment of sound financial programs to promote the development of diversified agriculture;

[(5)](7) Feasible strategies for the promotion, marketing, and distribution of Hawaii agricultural products in local, national, and international markets;

[(6)](8) Programs to promote and facilitate the absorbing of displaced agricultural workers into alternative agricultural enterprises;

[(7)](9) Strategies to insure the provision of adequate air and surface transportation services and supporting facilities to support the agricultural industry in meeting local, national, and international market needs;

[(8)](10) Proposals to improve the gathering of data and the timely presentation of information on market demands and trends that can be used to plan future harvests and production; and

[(9)](11) Strategies for federal and state legislative actions that will promote the development and enhancement of Hawaii's agricultural industries."

SECTION 9. Chapter 166E, Hawaii Revised Statutes, is amended as follows:

1. By amending section 166E-1 to read:

"[[]§166E-1[]] Legislative findings. The legislature finds that article XI, section 10, of the State Constitution establishes that "the public lands shall be used for the development of farm and homeownership on as widespread a basis as possible, in accordance with procedures and limitations prescribed by law."

Therefore, the legislature finds that certain public lands classified for agricultural use by the department of land and natural resources should be transferred to the [department of agriculture, with the approval of the board of land and natural resources and the board of agriculture,] agribusiness development corporation for purposes and in a manner consistent with article XI, section 10, of the State Constitution.

The purpose of this chapter is to ensure the long-term productive use of public lands leased or available to be leased by the department of land and natural resources for agricultural purposes by allowing these lands to be transferred to and managed by the [department of agriculture.] agribusiness development corporation."

2. By amending section 166E-2 to read:

"[[]§166E-2[]] Definitions. For the purposes of this chapter:

["Agricultural activities"] "Agricultural use" means the care and production of livestock, livestock products, poultry, or poultry products, or apiary, horticultural, or floricultural products, or the planting, cultivating, and harvesting of crops or trees.

"Board" means the board of [agriculture.] directors of the agribusiness development corporation.

["Department" means the department of agriculture.]

"Corporation" means the agribusiness development corporation.

"Non-agricultural park lands" means public lands that are [not]:

(1) Not designated as agricultural parks pursuant to chapter 166[.]; and

(2) Classified for agricultural use by the department of land and natural resources."

3. By amending section 166E-3 to read:

"[[]§166E-3[]] Transfer [and management] of non-agricultural park lands and related facilities to the [department of agriculture.] corporation; corporation management of lands. (a) [Upon mutual agreement and approval of the board and the board of land and natural resources:] By July 1, 2007:

(1) [The department may accept the transfer of and manage certain qualifying non-agricultural] Certain non-agricultural park lands; and

(2) Certain assets, including position counts, related to the management of existing encumbered and unencumbered non-agricultural park lands and related facilities,

shall be transferred from the department of land and natural resources to the [department.] corporation under a plan developed and administered by the corporation. The board of land and natural resources shall assist the corporation to plan and timely implement the transfer.

(b) The [department] corporation shall administer a program to manage the transferred non-agricultural park lands under rules adopted by the board pursuant to chapter 91. The program and its rules shall be separate and distinct from the agricultural park program and its rules. Non-agricultural park lands are not the same as, and shall not be selected or managed as are lands under agricultural park leases. Notwithstanding any other law to the contrary, the program shall include the following conditions pertaining to encumbered non-agricultural park lands:

(1) The lessee or permittee shall perform in full compliance with the existing lease or permit;

(2) The lessee or permittee shall not be in arrears in the payment of taxes, rents, or other obligations owed to the State or any county;

(3) The lessee's or permittee's agricultural operation shall be economically viable as specified by the board; and

(4) No encumbered or unencumbered non-agricultural park lands with soils classified by the land study bureau's detailed land classification as overall (master) productivity rating class A or B shall be transferred for the use or development of golf courses, golf driving ranges, and country clubs.

The transfer of non-agricultural park lands managed by the corporation shall be done in a manner to be determined by the board [of agriculture].

(c) For any encumbered or unencumbered non-agricultural park lands transferred to the [department] corporation that are not being [utilized] used or required for the public purpose stated, the order setting aside the lands shall be withdrawn and the lands shall be returned to the department of land and natural resources."

4. By amending section 166E-4 to read:

"[[]§166E-4[]] Conversion of qualified and encumbered [other agricultural] non-agricultural park lands. The [department] corporation shall establish criteria and rules pursuant to chapter 91 and subject to approval by the board to convert qualified and encumbered non-agricultural park lands to [department] corporation leases or other forms of encumbrance."

5. By amending section 166E-5 to read:

"[[]§166E-5[] Extension] Management of qualified and encumbered non-agricultural park lands [transferred to and managed] by the [department.] corporation. Notwithstanding chapter 171, the board shall establish criteria and rules to allow the cancellation, renegotiation, and extension of transferred encumbrances by the [department.] corporation. Notwithstanding any law to the contrary, qualified and encumbered non-agricultural park lands transferred to the [department] corporation shall not have the respective length of term of the lease or rents reduced over the remaining fixed term of the applicable encumbrances."

6. By amending section 166E-6 to read:

"[[]§166E-6[]] Rules. The board shall adopt rules pursuant to chapter 91 to effectuate the purposes of this chapter."

7. By amending section 166E-7 to read:

"[[]§166E-7[]] Non-agricultural park lands special fund; established. (a) There is established in the state treasury the non-agricultural park lands special fund, into which shall be deposited:

(1) Legislative appropriations to the fund; and

(2) All lease rent, fees, penalties, and any other revenue or funds collected from non-agricultural park lands that are transferred, or in the process of being transferred, to the [department] corporation under this chapter.

(b) Moneys in the special fund shall be used to defray the costs incurred in managing, administering, and overseeing non-agricultural park lands that are transferred, or in the process of being transferred, to the [department] corporation under this chapter.

(c) The [department] corporation shall administer the non-agricultural park lands special fund."

SECTION 10. Section 171-6, Hawaii Revised Statutes, is amended to read as follows:

"§171-6 Powers. Except as otherwise provided by law, the board of land and natural resources shall have the powers and functions granted to the heads of departments and the board of land and natural resources under chapter 26.

In addition to the foregoing, the board may:

(1) Adopt a seal;

(2) Administer oaths;

(3) Prescribe forms of instruments and documents;

(4) Adopt rules which, upon compliance with chapter 91, shall have the force and effect of law;

(5) Set, charge, demand, and collect reasonable fees for the preparation of documents to be issued, for the surveying of public lands, and for the issuing of certified copies of its government records, which fees, when collected, shall be deposited into the state general fund, unless otherwise specified in this chapter;

(6) Establish additional restrictions, requirements, or conditions, not inconsistent with those prescribed in this chapter, relating to the use of particular land being disposed of, the terms of sale, lease, license, or permit, and the qualifications of any person to draw, bid, or negotiate for public land;

(7) Reduce or waive the lease rental at the beginning of the lease on any lease of public land to be used for [any agricultural or pastoral use, or for] resort, commercial, industrial, or other business use where the land being leased requires substantial improvements to be placed thereon; provided that such reduction or waiver shall not exceed two years for land to be used for any agricultural or pastoral use, or exceed one year for land to be used for resort, commercial, industrial, or other business use;

(8) Delegate to the chairperson or employees of the department of land and natural resources, subject to the board's control and responsibility, such powers and duties as may be lawful or proper for the performance of the functions vested in the board;

(9) Utilize arbitration under chapter 658A to settle any controversy arising out of any existing or future lease;

(10) Set, charge, and collect reasonable fees in an amount sufficient to defray the cost of performing or otherwise providing for the inspection of activities permitted upon the issuance of a land license involving a commercial purpose;

(11) Appoint masters or hearing officers to conduct public hearings as provided by law and under such conditions as the board by rules shall establish;

(12) Bring such actions as may be necessary to remove or remedy encroachments upon public lands. Any person causing an encroachment upon public land shall be subject to a fine of not more than $500 a day for the first offense and shall be liable for administrative costs incurred by the department and for payment of damages. Upon the second offense and thereafter, the violator shall:

(A) [be] Be fined not less than $500 nor more than $2,000 per day;

(B) [if] If required by the board, restore the land to its original condition if altered and assume the costs thereof; and

(C) [assume] Assume such costs as may result from adverse effects from such restoration;

(13) Set, charge, and collect interest and a service charge on delinquent payments due on leases, sales, or other accounts. The rate of interest shall not exceed one per cent a month and the service charge shall not exceed $50 a month for each delinquent payment; provided that the contract shall state the interest rate and the service charge and be signed by the party to be charged;

(14) Set, charge, and collect additional rentals for the unauthorized use of public lands by a lessee, licensee, grantee, or permittee who is in violation of any term or condition of a lease, license, easement, or revocable permit, retroactive to the date of the occurrence of the violation. Such amounts shall be considered delinquent payments and shall be subject to interest and service charges as provided in paragraph (13);

(15) Set, charge, and collect reasonable fines for violation of this chapter or any rule adopted thereunder. Any person violating any of the provisions of this chapter or any rule adopted thereunder, for which violation a penalty is not otherwise provided, shall be fined not more than $500 a day and shall be liable for administrative costs incurred by the department and for payment for damages;

(16) Issue revenue bonds, subject to the approval of the legislature. All revenue bonds shall be issued pursuant to part III of chapter 39, except as provided in this chapter. All revenue bonds shall be issued in the name of the department and not in the name of the State. The final maturity date of the revenue bonds may be any date not exceeding thirty years from the date of issuance;

(17) Pledge or assign all or any part of the receipts and revenues of the department. The revenue bonds shall be payable from and secured solely by the revenue derived by the department from the industrial park or parks for which the bonds are issued;

(18) Reimburse the state general fund for debt service on general obligation bonds or reimbursable general obligation bonds issued by the State for purposes of this chapter; and

(19) Do any and all things necessary to carry out its purposes and exercise the powers granted in this chapter."

SECTION 11. Chapters 166, 167, and 168, Hawaii Revised Statutes, are amended by substituting the terms:

(1) "Agribusiness development corporation" or like term, wherever the term "department of agriculture" or like term appears; and

(2) "Board of directors of the agribusiness development corporation" or like term, wherever the term "board of agriculture" or like term appears,

as the context requires.

SECTION 12. The functions and authority heretofore exercised by the department of agriculture pursuant to chapters 166, 166E, 167, and 168; section 26-16(c)(3) relating to the development and promotion of agricultural products and markets; and section 141-1(8) relating to the management of agricultural parks and state irrigation water systems, are transferred to the agribusiness development corporation.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the State who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

If an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the State with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the State as determined by the head of the department or the governor.

SECTION 13. All appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property heretofore made, used, acquired, or held by the department of agriculture relating to the functions transferred to the agribusiness development corporation shall be transferred with the functions to which they relate.

SECTION 14. All rules previously adopted by the board of agriculture pursuant to the provisions of the Hawaii Revised Statutes affected by this Act, shall remain in effect unless repealed by, or superceded by rules adopted by the agribusiness development corporation.

SECTION 15. The agribusiness development corporation shall submit to the legislature not later than twenty days prior to the convening of the 2007 regular session:

(1) A progress report on the transfer of non-agricultural park lands under sections 9 and 12 of this Act; and

(2) Any proposed legislation relating to the transfer of non-agricultural park lands.

SECTION 16. The director of finance is authorized to issue general obligation bonds in the sum of $30,000,000 or so much thereof as may be necessary, and the same sum or so much thereof as may be necessary is appropriated for fiscal year 2006-2007 to be deposited into the irrigation repair and maintenance special fund and used for the repair and maintenance of the irrigation systems specified under subsection (b) of section 163D- , Hawaii Revised Statutes; provided that $50,000,000 in federal matching funds are also deposited into the irrigation repair and maintenance special fund.

The sum appropriated shall be expended by the department of budget and finance for the purposes of this Act.

SECTION 17. There is appropriated out of the irrigation repair and maintenance special fund the sum of $80,000,000 or so much thereof as may be necessary for fiscal year 2006-2007 to be expended for the repair and maintenance of the irrigation systems specified under subsection (b) of section 163D- , Hawaii Revised Statutes.

The sum appropriated shall be expended by the agribusiness development corporation for the purposes of this Act.

SECTION 18. There is appropriated out of the general revenues of the State of Hawaii the sum of $11,886,000 or so much thereof as may be necessary for fiscal year 2006-2007 for repair and maintenance of irrigation systems as follows:

(1) $2,336,000 for the East Kauai irrigation system;

(2) $500,000 for the Waimanalo irrigation system;

(3) $2,500,000 for the Molokai irrigation system;

(4) $4,850,000 for the Waimea irrigation system; and

(5) $1,700,00 for the Lower Hamakua irrigation system.

The sum appropriated shall be expended by the agribusiness development corporation for the purposes of this Act.

SECTION 19. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2006-2007 for operational, management, and administrative costs incurred by the agribusiness development corporation.

The sum appropriated shall be expended by the agribusiness development corporation for the purposes of this Act.

SECTION 20. The appropriation made for the capital improvement irrigation repair and maintenance projects authorized in this Act shall not lapse at the end of the fiscal year for which the appropriation is made; provided that all moneys from the appropriation unencumbered as of June 30, 2008, shall lapse as of that date.

SECTION 21. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 22. This Act shall take effect upon its approval; provided that:

(1) Section 3 shall take effect on July 1, 2006, and apply to taxable years beginning after December 31, 2005; and

(2) Sections 16, 17, 18, 19, and 20 shall take effect on July 1, 2006.

INTRODUCED BY: