Posted on: Thursday, September 23, 2004
Council revises rules on farm tax
| • | Tax changes |
By Johnny Brannon
Advertiser Staff Writer
Taxes on much of O'ahu's agricultural and ranch land should decline and remain stable, thanks to assessment changes the City Council unanimously approved yesterday, according to farmers, ranchers and city officials.
Pressure to develop farm and pasture land also should subside, because the council increased the tax discount for such land that is unused or restricted to agricultural production for a specified time.
"We want to carry our load, but we want it to be realistic, too," said North Shore rancher Calvin Lum, vice chairman of a special city panel that recommended the changes.
Taxes on some farm and ranch land skyrocketed this year because of earlier changes to a city tax law for owners who did not want to restrict, or "dedicate," their property to active agricultural production.
Land was assessed at a fraction of its value if it was dedicated for up to 10 years. The bill approved yesterday increases the discount for shorter dedications. It also provides a new discount for unused land that is dedicated.
"If you penalize landowners too much for vacant land, what's to stop them from looking at it the other way, and wanting to develop it?" said Waimanalo vegetable farmer Dean Okimoto.
The bill does not roll back this year's tax bills, but will affect assessments for next year, which are done next month.
Kamehameha Schools, a charitable trust that is among the island's biggest owners of farmland, supported the bill. Kapu Smith, who manages the trust's Kawailoa Plantation, said the changes will help landowners who remain committed to agriculture on a long-term basis and aren't seeking to develop.
Council chairman Donovan Dela Cruz called the bill a solid compromise based on good cooperation. "For a lot of people, at the beginning this was an impossible situation," he said. "A lot of things are possible when you work together."
The city administration proposed much of the language in the bill, and Mayor Jeremy Harris is expected to sign it into law.
City budget director Ivan Lui-Kwan said it's too soon to know how much tax revenue the city will lose under the new law, as that will depend on how many landowners dedicate property.
O'ahu has more than 90,000 acres zoned for agriculture.
Reach Johnny Brannon at jbrannon@honoluluadvertiser.com or 525-8070.
| Tax changes
The bill approved by the City Council yesterday is meant to encourage agriculture by: • Reducing the assessment on farm land that is "dedicated," or restricted to agricultural production. Land will be assessed at 5 percent of its fair market value if dedicated for one year, 3 percent for five years and 1 percent for 10 years. The old law set assessments at 10, 5 and 1 percent, respectively. • Setting a per-acre cap on assessments based on agricultural production values. • Not imposing a "rollback" tax on property taken out of production during its dedicated term if it remained in production for half its term. • Creating a new classification for unused agricultural land. Vacant land dedicated for 10 years will be assessed at half its fair market value. • Allowing dedicated vacant land to qualify for a seven-year tax exemption on the value of new improvements that promote agriculture. • Allowing pastureland to be assessed at 1 percent of its fair market value. |
