Posted on: Thursday, July 29, 2004

Farmers, city will rework tax plan

By Johnny Brannon
Advertiser Staff Writer

After months of acrimony over taxes on agricultural land, farmers, property owners and city officials are hustling to come up with a new plan for next year.

City Council members began creating a task force yesterday to study O'ahu's agricultural tax structure and make recommendations for changes within 10 weeks. The goal is to pass legislation before property tax assessments begin in October for 2005 tax bills.

Mayor Jeremy Harris is expected to veto a bill today that would have granted broad tax relief on all agricultural land this year, whether it's used for farming or kept vacant for future development. The administration is considering tax breaks for active farms on a case-by-case basis, however.

Harris says the bill could have cost more than $9 million in lost tax revenue and left the city's budget illegally unbalanced.

Some small farmers and big landowners have complained that taxes skyrocketed this year, partly because a new system that bases agricultural taxes on property values rather than crop yield. The rising value of most land in all categories also helped increase taxes.

The tax bill for Kamehameha Schools' Kawailoa Plantation, for instance, increased from $514,500 to $4.27 million. Plantation project manager Kapu Smith said she supports the plan for a task force but that its members must be knowledgeable about agriculture.

"There are many people who want to help ag, but few who really understand ag," she said.

Waiahole Valley papaya farmer David Chinen, whose tax bill jumped from $220 to $5,100, said he also supports the task force but wants to make sure it includes small farmers.

The panel is to consist of five members selected by the City Council if the council approves the idea Aug. 11.

Some farmers have complained that their taxes unfairly increased this year because they lease land and have no authority to restrict, or "dedicate," the property to farming for up to 10 years to qualify for a tax discount offered under the new system.

A bill introduced by council chairman Donovan Dela Cruz on Tuesday would allow lessee farmers to dedicate land if their lease extends as long as the dedication period. He said the bill is a starting point that can include recommendations from the task force.

More than 90,000 acres on O'ahu are zoned for agriculture. As of July 14, agriculture dedication petitions had been filed for at least 1,278 parcels, and 1,115 had been approved.

Of the approved petitions, 342 dedicated land to agriculture for one year, 121 dedicated for five years, and 652 dedicated for 10 years or more.

Reach Johnny Brannon at 525-8070 or jbrannon@honoluluadvertiser.com.