Ag Land Property Tax (BF-70)
KCA Position on BF-70
The Kula Community Association opposes BF-70 for the following reasons:
The bill would assess agricultural land at fair market value, not agricultural use value. Agricultural use value is based on what the land can produce in agriculture, not as a real estate investment. The Ag Use Value assessment method was created to support farmers and slow urban development and is used by all 50 states.Assessing ag land at market value will encourage the development of agricultural land, and does not support farming.
This bill would cancel all existing ag land dedications and require everyone to complete a new Dedication. Only Dedicated land would be eligible to receive a reduction in real property tax.Not all land can be dedicated, due to issues such as lack of clear title. Land that has been condominiumized and is actively farmed cannot be dedicated.
This bill requires that leased lands have recorded leases which coincide with the term of the Dedication. This creates problems for properties that are already leased, and could cause property owners to decide not to continue leasing. In addition, many leases include payment of the property tax. If the landowner does not dedicate, at a market value assessment the property tax can become higher than the income realized from the property.
Today, you are not required to produce income from your ag land. The bill requires a gross income of $2,500 to be able to dedicate land to agriculture, which does not support subsistence farming. It also creates problems for ranchers, who cannot produce this much income from smaller parcels.
The bill creates an agricultural dedication advisory commission or committee, to be used when the property owner disagrees with a decision made by the Director.Such a commission or committee should be representative of more than Farm Bureau members and should not be used only by the Finance department.
Penalties for failure to complete a dedication period are so severe as to deter dedication, instead of encouraging it.
Without more community input and study, the County has no way of knowing how many farmers will choose to dedicate and at what level, causing unknown problems for expected tax revenue.
The bill is in conflict with Hawaii State Law, Act 183, which requires agricultural lands to be assessed at agricultural use value.
The Kula Community Association is in favor of using qualified, agriculturally knowledgeable inspectors to assess agricultural land by the use value method. Including knowledgeable inspectors at the assessment step is the most efficient way to ensure that the County collects the correct tax, prevents fraud and makes the agriculture tax rate available to all those who Maui County has determined are eligible to receive it.
The Kula Community Association is in favor of continuing to encourage agricultural lands to be dedicated through a reduction of assessed value calculated on agricultural use value.
The Kula Community Association supports the Council reviewing how tax policies affect the agriculture community and long term prospects for agriculture in Maui County. We are in support of efforts that will bring together our Ag community, the Council and the Administration to work on improvements to our agricultural tax laws.
Other Related Content
Syd Smith Presentation 2-14-16
BF-70 Revised Bill
Dr. Margaret Stumpp Testimony