Report Title:

Important Agricultural Lands; Identification and Management

Description:

Establishes an important agricultural lands (IAL) identification process. Requires an incentives study. Prohibits IAL designation without landowner petition until 7/1/11. Provides an agricultural infrastructure improvement tax credit and IAL leasehold subdivisions. Makes identification of IAL contingent on enactment of legislative incentives. Makes appropriation.

THE SENATE

S.B. NO.

1743

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to agricultural lands.

 

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

SECTION 1. In 1978, voters approved article XI, section 3 of the Hawaii State Constitution, which sets out the framework for state policies to promote agriculture and the conservation of productive agricultural lands in the State of Hawaii. Article XI, section 3 reads as follows:

"The State shall conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands. The legislature shall provide standards and criteria to accomplish the foregoing.

Lands identified by the State as important agricultural lands needed to fulfill the purposes above shall not be reclassified by the State or rezoned by its political subdivisions without meeting the standards and criteria established by the legislature and approved by a two-thirds vote of the body responsible for the reclassification or rezoning action."

The legislature finds that there is a compelling need to provide standards and criteria and mechanisms to fulfill the intent and purpose of article XI, section 3 of the State Constitution and enable implementation of the constitutional mandate.

The legislature additionally finds that land is the basic resource for agriculture and the supply of lands suitable for agriculture is an irreplaceable resource. The long-term viability of agriculture, however, also depends on factors that affect the profitability of agriculture, such as commodity prices, the availability of water for irrigation, agricultural research and outreach, the application of production technologies, marketing, and the availability and cost of transportation services. Hawaii’s agricultural producers face operating costs that increasingly threaten the viability of their agricultural operations and the sustainability of agriculture in Hawaii.

The primary intent of this measure is to identify and set policies for important agricultural lands. This measure is also intended to provide for the development of incentives for agricultural viability in Hawaii, and in particular, for agricultural enterprises farming important agricultural lands and the landowners of important agricultural lands. These incentives would be designed to promote the retention of important agricultural lands for productive agricultural use for the long-term or in perpetuity.

The purpose of this Act is to:

(1) Establish a new part in chapter 205, Hawaii Revised Statutes, setting forth policies and procedures for the identification and management of important agricultural lands of the State, to include:

(A) Policies to assure the conservation and availability of important agricultural lands of the State for long-term agricultural use;

(B) Standards and criteria for the identification of important agricultural lands of the State;

(C) A process for the identification of important agricultural lands of the State;

(D) Standards and criteria for the reclassification and rezoning of lands identified as important agricultural lands of the State;

(E) Policies for incentives for the long-term or permanent retention of important agricultural lands of the State for agricultural use; and

(2) A process to develop proposals for state and county incentives to promote agricultural viability and the long-term use of important agricultural lands for agricultural use.

PART I

SECTION 2. Chapter 205, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART   . IMPORTANT AGRICULTURAL LANDS

§205-A Declaration of policy. It is declared that the people of Hawaii have a substantial interest in the health and sustainability of agriculture as an industry in the State. There is a compelling state interest in conserving the State’s agricultural land resource base and assuring the long-term availability of agricultural lands for agricultural use to achieve the purposes of conserving and protecting agricultural lands, promoting diversified agriculture, increasing agricultural self-sufficiency, and assuring the availability of agriculturally suitable lands pursuant to article XI, section 3 of the Hawaii State Constitution.

§205-B Important agricultural lands; definition and objectives. (a) As used in this part, unless the context otherwise requires, "important agricultural lands" means those lands identified pursuant to this part that:

(1) Are capable of producing sustained high agricultural yields when treated and managed according to accepted farming methods and technology;

(2) Contribute to the economic base of the State and produce agricultural commodities for export or local consumption; or

(3) Are needed to promote the expansion of agricultural activities and income for the future, even if currently not in production.

(b) The objective for the identification of important agricultural lands is to identify and plan for the maintenance of a strategic agricultural land resource base that can support a diversity of agricultural activities and opportunities, which expand agricultural income and job opportunities and increase agricultural self-sufficiency for current and future generations. In order to achieve this objective, the State shall promote agricultural development and land use planning that delineates blocks of productive agricultural land and areas of agricultural activity for protection from the encroachment of non-agricultural uses, and for incentives that promote the long-term viability of agriculture and the long-term agricultural use of these productive agricultural lands.

§205-C Important agricultural lands; policies. State and county agricultural policies, tax policies, land use plans, ordinances, and rules shall promote the long-term viability of agricultural use of important agricultural lands, and shall be consistent with and implement the following policies:

(1) Promote the retention of important agricultural lands in blocks of contiguous, intact, and functional land units large enough to allow flexibility in agricultural production and management;

(2) Discourage the fragmentation of important agricultural lands and the conversion of these lands to non-agricultural uses;

(3) Direct non-agricultural uses and activities from important agricultural lands to other areas and ensure that uses on important agricultural lands are agricultural uses;

(4) Limit physical improvements on important agricultural lands to maintain affordability of these lands for agricultural purposes;

(5) Provide a basic level of infrastructure and services limited to the minimum necessary to support agricultural uses and activities;

(6) Facilitate the long-term dedication of important agricultural lands for future agricultural use;

(7) Facilitate access of farmers to important agricultural lands for long-term agricultural use; and

(8) Promote the maintenance of essential agricultural infrastructure systems, including irrigation systems.

§205-D Standards and criteria for the identification of important agricultural lands. The standards and criteria in this section shall be used to identify important agricultural lands of the State. Lands identified as important agricultural lands need not meet every standard and criteria listed below; rather, lands meeting any of the criteria below shall be given initial and prime consideration, provided that the designation of important agricultural lands shall be made by weighing the standards and criteria with each other in order to meet the constitutionally mandated purposes in article XI, section 3 of the State Constitution and the policy objectives for important agricultural lands in sections 205-B and 205-C. The standards and criteria are as follows:

(1) Land currently in agricultural production;

(2) Land with soil qualities and growing conditions that support agricultural production of food, fiber, or fuel and energy-producing crops;

(3) Land identified under agricultural productivity rating systems, such as the agricultural lands of importance to the State of Hawaii (ALISH) system adopted by the board of agriculture on January 28, 1977;

(4) Land types associated with traditional native Hawaiian agricultural uses, such as taro cultivation, and unique agricultural crops and uses, such as coffee, vineyards, and energy production;

(5) Land with sufficient quantities of water that support viable agricultural production;

(6) Land whose designation as important agricultural lands is consistent with county general and community plans;

(7) Land which contributes to maintaining a critical land mass important to agricultural operating productivity; and

(8) Land with, or close to, support infrastructure conducive to agricultural productivity, such as transportation to markets, water, or power.

§205-E Landowner voluntary designation. (a) A landowner with lands qualifying under section 205-D may petition the commission to designate and map the lands as important agricultural lands pursuant to section 205-H.

(b) Petitions under this section shall be made and considered by the commission pursuant to section 205-4.

§205-F Incentives for important agricultural lands. (a) To achieve the long-term protection of important agricultural lands, the State and each county shall ensure that their respective agricultural development, land use, water use, and permitting and approval procedures enable and promote the economic sustainability of agriculture conducted on lands identified as important agricultural lands of the State. Persons with a property interest in lands identified as important agricultural lands, and agricultural operations occurring on these lands, shall be eligible for tax, regulatory, and agricultural program incentives and protections enacted by the State and the counties to promote agricultural viability of agricultural enterprise on important agricultural lands and to assure the availability of important agricultural lands for long-term agricultural use.

(b) State and county incentive programs shall provide preference to important agricultural lands and agricultural businesses on important agricultural lands. The State and each county shall cooperate in program development to prevent duplication and to streamline and consolidate access to programs and services for agricultural businesses located on important agricultural lands.

(c) Incentive and protection programs shall be designed to provide a mutually supporting framework of programs and measures that enhance agricultural viability on important agricultural lands, including but not limited to the following:

(1) Grant assistance;

(2) Real property tax systems that support the needs of agriculture, including property tax assessments based on agricultural use valuation;

(3) Reduced infrastructure requirements and facilitated building permit processes for dedicated agricultural structures;

(4) Tax incentives to offset operational costs, promote agricultural business viability, and promote the long-term protection of important agricultural lands;

(5) Agricultural business planning and implementation grants;

(6) Tax incentives and programs for equity investments and financing for agricultural operations;

(7) Other programs and mechanisms that promote investment in agricultural businesses or agricultural land protection;

(8) State funding mechanisms to fund business viability and land protection programs;

(9) Water regulations and policy that provide farmers of important agricultural lands access to adequate and cost-effective sources of water; and

(10) Other measures that would ensure that state capital investments, projects, programs, and rules are consistent with this part.

(d) State and county agencies shall review the protection and incentive measures enacted for important agricultural lands and agricultural viability pursuant to this part, at a minimum, every two years, to determine their effectiveness in sustaining agriculture in Hawaii, assuring agricultural diversification, and increasing agricultural self-sufficiency, and to modify measures and programs as needed.

(e) This section shall apply only to those lands designated as important agricultural lands pursuant to section 205-E.

§205-G Identification of important agricultural lands; county process. (a) Each county shall identify and map important agricultural lands within its respective jurisdiction based on the standards and criteria in section 205-D, except lands that have been designated, either through zoning or county planning process, for urban use by the State or county.

(b) Each county shall develop maps of lands to be considered for designation as important agricultural lands in consultation and cooperation with the United States Department of Agriculture – Natural Resources Conservation Service, department of agriculture, office of planning, agricultural interest groups, including representatives from the Hawaii Farm Bureau Federation and other farmer organizations, landowners, and other groups as necessary.

(c) Each county through its planning department shall develop an inclusive process for public involvement in the identification of potential lands and the development of maps of lands to be recommended as important agricultural lands of the State, to include a series of public meetings throughout the identification and mapping process. The county planning departments may also establish one or more citizen advisory committees on important agricultural lands so as to provide further public input.

Upon identification of potential lands to be recommended as important agricultural lands, the counties shall notify each owner of those lands by mail or posted notice on the affected lands, to inform them of the potential designation of their lands.

In formulating its final recommendations to the respective county councils, the planning departments shall report on the manner in which the important agricultural lands mapping relates to, supports, and is consistent with:

(1) The standards and criteria set forth in section 205-D;

(2) The county’s adopted land use plans, as applied to both the identification and exclusion of important agricultural lands from such designation;

(3) The comments received from government agencies and others identified in subsection (b); and

(4) The viability of existing and emerging agribusiness.

(d) The important agricultural lands maps shall be submitted to the county council for decision-making. The county council shall adopt the maps, with or without changes, by resolution. The adopted maps shall be transmitted to the state land use commission for further action pursuant to section 205-H.

§205-H Important agricultural lands; land use commission; designation; adoption of maps. (a) After receipt of the maps of eligible important agricultural lands from the counties and the recommendations of the department of agriculture and office of planning, the commission shall then proceed to render a decision on the designation of important agricultural lands. The decision shall consider the county maps of eligible important agricultural lands, landowner petitions, and any other relevant information.

In designating important agricultural lands in the State the commission may consider different lands than those included in the counties’ maps of eligible important agricultural lands, remove some or all of the lands identified as eligible important agricultural lands by the counties, and consider different maps pursuant to and in accordance with the policies, objectives, standards and criteria of this chapter.

Any decision regarding the designation of lands as important agricultural lands and the adoption of maps of those lands pursuant to this section shall be based upon written findings of fact and conclusions of law, pursuant to section 205-4, that the subject lands meet the standards and criteria set forth in section 205-D, and shall be approved by two-thirds of the membership to which the land use commission is entitled.

(b) No land shall be designated as important agricultural land and no map for such land shall be adopted by the commission in the absence of a petition by the landowner for such designation prior to July 1, 2011, unless the commission determines that this designation is necessary to meet the objectives, policies, standards and criteria of this chapter.

The July 1, 2011 date provided in this section is intended to coincide with the end of the estimated seven-year period required to enact the legislation establishing incentives and protections contemplated by section 205-F, and to authorize the commission’s designation of important agricultural lands by landowner petition for five years upon enactment of that legislation.

(c) Copies of the maps of important agricultural lands adopted under this section shall be transmitted to each county planning department and county council, the department of agriculture, the agribusiness development corporation, the office of planning, and other state agencies involved in land use matters. The maps of important agricultural lands shall guide all decision-making on the proposed reclassification or rezoning of important agricultural lands, state agricultural development programs, and other state and county land use planning and decision-making.

(d) The land use commission shall have the sole authority to interpret the adopted map boundaries delineating the important agricultural lands of the State of Hawaii.

(e) No designation of land as important agricultural land and no map adopted for this designation pursuant to this section shall be effective prior to the enactment of legislation establishing incentives and protections contemplated under section 205-F.

§205-I Standards and criteria for the reclassification or rezoning of important agricultural lands. (a) Any land use district boundary amendment or change in zoning involving important agricultural lands identified pursuant to this part shall be subject to this section.

(b) Upon acceptance by the county for processing, any application for a special permit involving important agricultural lands shall be referred to the department of agriculture and the office of planning for review and comment.

(c) Any land use commission or county decision pursuant to this section shall specifically consider the following standards and criteria:

(1) The relative importance of the land for agriculture based on the stock of similarly suited lands in the area and the State as a whole;

(2) The impact the proposed district boundary amendment or zone change will have on the productivity and viability of existing and future agricultural activity in the area, and on the viability of other agricultural activities or operations that share infrastructure, processing, marketing, or other production-related costs or facilities with the agricultural activities on the land in question;

(3) The degree to which the district boundary amendment or zone change would contribute to the fragmentation of or intrusion of non-agricultural uses into largely intact areas of lands identified by the State as important agricultural lands;

(4) The public benefit to be derived from the proposed action is justified by a need for additional lands for nonagricultural purposes; and

(5) The impact of the proposed district boundary amendment or zone change on the necessity and capacity of state and county agencies to provide and support additional infrastructure or services in the area.

(d) Any decision pursuant to this section shall be based upon a determination that on balance the public benefit from the proposed district boundary amendment or zone change outweighs the benefits of retaining the land for agricultural use, and that the proposed action will have no significant impact upon the viability of agricultural operations on adjacent agricultural lands.

(e) The standards and criteria of this section shall be in addition to the decision-making criteria of section 205-17 governing decisions of the land use commission under this chapter, and the decision-making criteria adopted by each county governing decisions of county decision-making authorities under this chapter.

(f) Any decision of the land use commission and any decision of any county on a land use district boundary amendment or change in zoning involving important agricultural lands shall be approved by the body responsible for the decision by a two-thirds vote of the membership to which the body is entitled.

(g) A landowner may also petition the land use commission to remove the important agricultural lands designation from lands if a sufficient supply of water is no longer available to profitably farm the land due to governmental actions, acts of God, or other causes beyond the landowner’s reasonable control.

§205-J Periodic review and amendment of important agricultural lands maps. The maps delineating important agricultural lands shall be reviewed in conjunction with the county general plan and community and development plan revision process, or at least once every ten years following the adoption of the maps by the land use commission; provided that the maps shall not be reviewed more than once every five years. Any review and amendment of the maps of important agricultural lands shall be conducted in accordance with this chapter. In these periodic reviews, the important agricultural lands designation shall be removed from those important agricultural lands where a sufficient supply of water is no longer available to profitably farm these lands due to governmental actions, natural disasters, or other causes beyond the landowner’s reasonable control.

§205-K Important agricultural lands; leasehold subdivisions. Important agricultural lands designated pursuant to this part may be subdivided into leasehold lots to be used solely for the agricultural uses; provided that, except as provided in section 205-4.5, no residential occupancy shall be allowed on the subdivided lots; and provided that the leasehold lots shall return to their original lot of record upon the expiration or termination of the lease. Leasehold subdivision of important agricultural lands for agricultural purposes shall be exempted from all county subdivision ordinances."

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

"§235-   Important agricultural lands; agricultural infrastructure improvement credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an agricultural infrastructure improvement tax credit for improvements made to agricultural infrastructure on important agricultural lands designated pursuant to chapter 205, which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The tax credit shall be an amount equal to the cost of improvements made by the taxpayer for agricultural infrastructure for the taxable year in which the improvements were made.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this credit, the "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for improvement costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule.

(d) A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims, including any amended claims, for tax credits 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.

(e) The director of taxation shall prepare forms as may be necessary to claim a credit under this section and may adopt rules pursuant to chapter 91. The director may require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section.

(f) As used in this section:

"Agricultural infrastructure improvement" means the planning, design, construction, improvement, altering, or repair of supporting infrastructure used or formerly used by a plantation system or other large agricultural operation, including irrigation systems, roads, and drainage systems.

"Drainage systems" means an agricultural system of channels, ditches, pipes, pumps, and accessory facilities established for the purpose of drawing off water from a land area larger than twenty acres.

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

"Roads" means an agricultural system of cane haul roads or ways established to take agricultural products from the fields to processing facilities without using the public highways."

SECTION 4. Section 205-3.1, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:

"(a) District boundary amendments involving lands in the conservation district, land areas greater than fifteen acres, and lands delineated as important agricultural lands shall be processed by the land use commission pursuant to section 205-4.

(b) Any department or agency of the State, and department or agency of the county in which the land is situated, or any person with a property interest in the land sought to be reclassified may petition the appropriate county land use decision-making authority of the county in which the land is situated for a change in the boundary of a district involving lands less than fifteen acres presently in the [agricultural,] rural[,] and urban districts[.] and agricultural districts that are not designated as important agricultural lands.

(c) District boundary amendments involving land areas of fifteen acres or less, except [in conservation districts,] as provided in subsection (a), shall be determined by the appropriate county land use decision-making authority for said district and shall not require consideration by the land use commission pursuant to section 205-4[. District boundary amendments involving land areas of fifteen acres or less in conservation districts shall be processed by the land use commission pursuant to section 205-4.]; provided that boundary amendments and approved uses are consistent with this chapter.

The appropriate county land use decision-making authority may consolidate proceedings to amend state land use district boundaries pursuant to this subsection, with county proceedings to amend the general plan, development plan, zoning of the affected land or [such] other proceedings. Appropriate ordinances and rules to allow consolidation of [such] proceedings may be developed by the county land use decision-making authority."

SECTION 5. Section 205-4, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) Any department or agency of the State, any department or agency of the county in which the land is situated, or any person with a property interest in the land sought to be reclassified, may petition the land use commission for a change in the boundary of a district. This section applies to all petitions for changes in district boundaries of lands within conservation districts, lands designated or sought to be designated as important agricultural lands, and [all petitions for changes in district boundaries involving] lands greater than fifteen acres in the agricultural, rural, and urban districts, except as provided in section 201G-118. The land use commission shall adopt rules pursuant to chapter 91 to implement section 201G-118."

2. By amending subsection (h) to read:

"(h) No amendment of a land use district boundary shall be approved unless the commission finds upon the clear preponderance of the evidence that the proposed boundary is reasonable, not violative of section 205-2 and part    of this chapter, and consistent with the policies and criteria established pursuant to sections 205-16 and 205-17. Six affirmative votes of the commission shall be necessary for any boundary amendment under this section."

SECTION 6. Section 205-6, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) [The] Subject to this section, the county planning commission may permit certain unusual and reasonable uses within agricultural and rural districts other than those for which the district is classified. Any person who desires to use the person's land within an agricultural or rural district other than for an agricultural or rural use, as the case may be, may petition the planning commission of the county within which the person's land is located for permission to use the person's land in the manner desired. Each county may establish the appropriate fee for processing the special permit petition. Copies of the special permit petition shall be forwarded to the land use commission, the office of planning, and the department of agriculture."

2. By amending subsections (c), (d), and (e) to read:

(c) The county planning commission [may], under such protective restrictions as may be deemed necessary, may permit the desired use, but only when the use would promote the effectiveness and objectives of this chapter. A decision in favor of the applicant shall require a majority vote of the total membership of the county planning commission[.]; provided that a use proposed for designated important agricultural lands shall not conflict with part    of this chapter.

(d) Special permits for land the area of which is greater than fifteen acres or for lands designated as important agricultural lands shall be subject to approval by the land use commission. The land use commission may impose additional restrictions as may be necessary or appropriate in granting such approval, including the adherence to representations made by the applicant.

(e) A copy of the decision together with the complete record of the proceeding before the county planning commission on all special permit requests involving a land area greater than fifteen acres or for lands designated as important agricultural lands shall be transmitted to the land use commission within sixty days after the decision is rendered. Within forty-five days after receipt of the complete record from the county planning commission, the land use commission shall act to approve, approve with modification, or deny the petition. A denial either by the county planning commission or by the land use commission, or a modification by the land use commission, as the case may be, of the desired use shall be appealable to the circuit court of the circuit in which the land is situated and shall be made pursuant to the Hawaii rules of civil procedure."

SECTION 7. Section 205-17, Hawaii Revised Statutes, is amended to read as follows:

"§205-17 Land use commission decision-making criteria. In its review of any petition for reclassification of district boundaries pursuant to this chapter, the commission shall specifically consider the following:

(1) The extent to which the proposed reclassification conforms to the applicable goals, objectives, and policies of the Hawaii state plan and relates to the applicable priority guidelines of the Hawaii state plan and the adopted functional plans;

(2) The extent to which the proposed reclassification conforms to the applicable district standards; and

(3) The impact of the proposed reclassification on the following areas of state concern:

(A) Preservation or maintenance of important natural systems or habitats;

(B) Maintenance of valued cultural, historical, or natural resources;

(C) Maintenance of other natural resources relevant to Hawaii's economy, including, but not limited to, agricultural resources;

(D) Commitment of state funds and resources;

(E) Provision for employment opportunities and economic development; and

(F) Provision for housing opportunities for all income groups, particularly the low, low-moderate, and gap groups; [and]

(4) The representations and commitments made by the petitioner in securing a boundary change[.]; and

(5) The criteria for reclassification or rezoning of important agricultural lands in section 205-I."

SECTION 8. Each county shall submit its report and maps with recommendations for lands eligible for designation as important agricultural lands to the land use commission no later than twenty-four months from the date the county receives state funds appropriated for the identification process. In addition, each county shall submit an annual progress report to the land use commission on their progress in identifying lands eligible for designation as important agricultural lands. Upon receipt of the county maps, the land use commission shall review and adopt maps designating important agricultural lands to the State in accordance with section 205-I, Hawaii Revised Statutes.

SECTION 9. The land use commission shall submit annual reports on the progress of the counties in identifying and mapping important agricultural lands to the legislature at least twenty days before the convening of the regular session of 2006 and 2007.

SECTION 10. There is appropriated out of the general revenues of the State of Hawaii the sum of $2,000,000, or so much thereof as may be necessary for fiscal year 2005-2006, and the same sum, or so much thereof as may be necessary for fiscal year 2006-2007, for grants-in-aid to each county for the identification and mapping of important agricultural lands pursuant to section 2 of this Act.

The sums appropriated shall be expended by the department of business, economic development, and tourism for each county. The funds shall only be disbursed upon receipt of a county proposed work plan and scope of work that is satisfactory to the commission for the identification of important agricultural lands pursuant to this Act.

PART II

SECTION 11. (a) It is the intent of this Act:

(1) That agricultural incentive programs to promote agricultural viability, sustained growth of the agricultural industry, and the long-term use and protection of important agricultural lands for agricultural use shall be developed concurrently with the process of identifying important agricultural lands as required under section 2 of this Act; and

(2) That the adoption of important agricultural lands by the land use commission pursuant to section 2 of this Act shall be contingent upon the enactment of legislation establishing incentives for important agricultural lands.

(b) Pursuant to section 205-F, Hawaii Revised Statutes, the department of agriculture, with the assistance of the Hawaii Farm Bureau Federation, shall develop and recommend a package of proposals for agricultural incentives and other measures that promote agricultural viability, sustained growth of the agricultural industry, and the long-term use and protection of important agricultural lands.

The department, in consultation with the Hawaii Farm Bureau Federation, may seek the assistance and input from landowners, affected state and county agencies, other stakeholders, and persons with relevant expertise that are necessary to develop and implement a comprehensive and integrated framework of incentives and programs that will promote agricultural viability, sustained growth of the agricultural industry, and the long-term use and protection of important agricultural lands for agricultural use in Hawaii, including tax policy, agricultural business development and financing, marketing, and agricultural land use techniques.

The department of agriculture shall report its findings and recommendations, including proposed legislation, to the legislature twenty days before the convening of the regular session of 2006. The report shall include an analysis of the impacts and benefits of its recommendations, and shall provide the supporting rationale for the incentives being proposed.

(c) Incentives and other programs to promote agricultural viability, sustained growth of the agricultural industry, and the long-term use and protection of important agricultural lands for agricultural use in Hawaii to be considered by the department of agriculture shall include but not be limited to the following:

(1) Assistance in identifying federal, state, and private grant and loan resources for agricultural business planning and operations, assistance with grant and loan application processes, and the processing of grants and loans;

(2) Real property tax systems that support the needs of agriculture, including property tax assessment of land and improvements used or held only for use in agriculture based on agricultural use value rather than fair market value;

(3) Reduced infrastructure requirements and facilitated building permit processes for the construction of dedicated agricultural structures;

(4) Tax incentives that include but are not limited to:

(A) Tax credits for the sale or donation of agricultural easements on important agricultural lands; and

(B) General excise tax exemption for retail sales of farm produce;

(5) Incentives that promote investment in agricultural businesses or value-added agricultural development, and other agricultural financing mechanisms;

(6) Incentives and programs that promote long-term or permanent agricultural land protection, and the establishment of a dedicated funding source for these programs;

(7) Establishment of a permanent state fund and dedicated funding sources to provide moneys for incentives and other programs;

(8) Establishment of a means to analyze the conformity of state-funded projects with the intent and purposes of part I of this Act, and a mechanism for mitigation measures when projects are not in conformance;

(9) Institution of a requirement for the preparation of an agricultural impact statement that would include mitigation measures for adverse impacts for proposed state or county rulemaking that may affect agricultural activities, operations, and agricultural businesses on important agricultural lands; and

(10) Other programs to carry out the intent of part I of this Act.

SECTION 12. Within one year of the adoption of maps of important agricultural lands by the land use commission for the lands within the jurisdiction of each county, all state agencies shall report to the department of agriculture on the impact of projects and programs on the designated important agricultural lands and sustained agricultural use of these lands. State agencies shall develop implementation programs, as needed, to ensure that their programs are supportive of agriculture and consistent with the intent and purposes of this Act.

SECTION 13. There is appropriated out of the general revenues of the State of Hawaii the sum of $100,000, or so much thereof as may be necessary for fiscal year 2005-2006, and the same sum, or so much thereof as may be necessary for fiscal year 2006-2007, for developing proposals for agricultural development and land protection incentives and programs.

The sums appropriated shall be expended by the department of agriculture for the purposes of this Act.

PART III

SECTION 14. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 15. Statutory material to be repealed is bracketed. New statutory material is underscored.

SECTION 16. This Act shall take effect on July 1, 2005.

INTRODUCED BY:

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