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The Honolulu Advertiser
Posted on: Sunday, June 12, 2005

Farming finds no home on agricultural land

 •  Chart (opens in a new window): Little tax benefit to living on agriculture-zoned land
 •  Two subdivisions make effort to tie in farming plans

By Andrew Gomes
Advertiser Staff Writer

With rapidly rising prices and overwhelming demand for homes in Hawai'i, there is a bounty of new house lots being carved from farmland where 1-acre subdivided parcels once valued for pineapple, sugar or cattle cultivation are selling for up to and over $1 million.

Million-dollar homes, such as this one in the Menehune Bluffs subdivision in Niumalu, Kaua'i, are becoming a common sight on land zoned for agriculture on the Neighbor Islands. Poorly enforced rules are allowing for residential use without farming.

Jan TenBruggencate • The Honolulu Advertiser

Controversial residential projects on land zoned for agriculture are nothing new in Hawai'i, but the state's superheated housing market is driving more creation of so-called agricultural subdivisions with buyers building luxury homes on land a typical farmer could never afford.

Take, for instance, Kulana and Kulana Kai ag subdivisions on Kaua'i where roughly 3-acre lots are priced around $500,000 and are marketed by brokers as a place to build a dream home with scenic views, underground utilities, trails for biking, jogging and horseback riding but with little mention of farming.

Kulana and Kulana Kai developers note in project design guidelines that agricultural use is "encouraged," and state in regulatory disclosures that residences are required to be "farm dwellings" related to agricultural activity.

Bill Knowlton, a Maui schoolteacher who has lived the rural life near Ha'iku for 15 years, worries that his community on former pineapple land is growing into farmless large estates with luxury homes that are ruining the rural fabric of the area.

"It used to be all pineapple fields, and now it's mostly million-dollar homes," he said. "My neighbor's house just sold for $2 million."

At least six ag subdivisions on Maui and Kaua'i are in planning or sales stages, intensifying the debate over what is acceptable land use and whether counties are properly allowing homes on farmland.

The Launiupoko agricultural subdivision on Maui has been challenged as a violation of state land-use law.

Timothy Hurley • The Honolulu Advertiser

Development of ag subdivisions was expected by some observers to be curtailed because of a 2003 Circuit Court ruling that deemed the Big Island luxury golf homesite project Hokuli'a an illegal use of agriculture land.

But despite the landmark Hokuli'a decision, which is on appeal to the state Supreme Court, ag subdivisions continue to grow.

Longtime loopholes

Agricultural subdivisions, primarily on the Neighbor Islands and often on land with poor soil for crops, grew out of the state's 1961 Land Use Act that sought to preserve open space and generally permit one or two "farm dwellings" on lots as small as two acres if they are accessories to a primary agricultural operation.

County rules that further permit farm dwellings vary, but loopholes allow for residential use without farming because of poorly defined and enforced regulations. On Maui, the current hotbed of ag subdivisions, a farm plan must be filed with the county before a home can be built. But execution of the farm plan, which could be harvesting trees in 20 years or keeping a horse or two, isn't required unless a second home is built. On Kaua'i and the Big Island, no farm plan is required until a second farm dwelling is built.

Because there is little enforcement to ensure farm plans are carried out, many ag subdivisions were accepted as de facto rural neighborhoods with little or no farming. But occasionally others, such as Hokuli'a and Lihi Lani on O'ahu's North Shore, have been derailed by community and environmental opponents.

"A million-dollar home on a 5-acre lot with one cow and one goat — that's a 'gentleman's farm,' " said Alan Takemoto, executive director of the Hawai'i Farm Bureau Federation. "They are reaping the lands of the farmer."

Supply and demand

Much of the state's residential neighborhood growth, especially on O'ahu, has been carved from farmland reclassified to urban use, a process that consumes more time and money for developers and results in more dense housing equated with urban sprawl.

Some one-bedroom and two-bedroom "farm dwellings" at the West Maui agricultural subdivision Launiupoko are being advertised by their owners as vacation rentals. A group of West Maui landowners and farmers is questioning the project's use of agriculture land.

Timothy Hurley • The Honolulu Advertiser

With rapidly rising prices and overwhelming demand for homes in Hawai'i over the past few years, there is much pressure to develop houses on farmland that historically has been quicker and less costly to subdivide for residential use.

Among ag subdivisions or condominium lots under development, the majority are on Maui. Some derided as having little to do with agriculture — such as Pu'unoa, Launiupoko and Ukumehame — have been challenged as violations of state land-use law.

However, others including Pe'ahi Farms and Pioneer Farms, are incorporating unique farming plans that while still controversial, have met with more acceptance.

Much of the criticism of ag subdivisions is that "farm dwellings" built primarily as residences for nonfarmers, including luxury mansions and vacation rentals, drive up the price of other farmland that becomes cost-prohibitive for bona fide farmers.

"Values are skyrocketing and farmers are worried," Takemoto said. "They are being priced out."

Another criticism is that ag subdivision developers don't pay traditional housing developer fees that help finance public facilities such as schools, parks and roads.

And until recently, farm dwelling owners without agricultural operations sometimes paid lower property tax rates.

Little farming done

Of the agricultural lot projects under development, most make little reference to farming.

For instance, Pacific Rim Land Inc. is seeking county approval to sell 45 agricultural lots each between 3 acres and 25 acres at its proposed 439-acre Ukumehame project in West Maui.

According to the developer's draft environmental assessment filed with the state in March, the subdivision will cost about $15 million, and lots will be sold at prevailing market conditions at the time of completion. Pacific Rim Land states that agricultural activities are the responsibility of lot buyers.

Near Ukumehame, 3-acre to 5-acre ag subdivision parcels at Makila Plantation and Olowalu Mauka are on the market for $1.3 million to $1.9 million.

One-bedroom and two-bedroom "farm dwellings" at another West Maui ag subdivision called Launiupoko are advertised by their owners as vacation rentals for $130 to $250 a night.

The Ukumehame, Launiupoko and Olowalu projects are part of several pending and existing ag subdivisions over 4,500 acres of West Maui uplands, much of which was planted in sugar cane until Pioneer Mill Co. closed in 1999.

The projects have drawn challenges from a group of West Maui landowners and farmers, who organized as Kuleana Ku'ikahi LLC and in October 2002 petitioned the state Land Use Commission to determine whether Ukumehame, Olowalu, Launiupoko and another ag subdivision called Kauaula qualified as permitted uses on agriculture land.

In the midst of 2003 commission hearings, the commission said "disturbing" testimony and evidence raised serious concerns.

The commission said promotional subdivision brochures suggest that agricultural requirements are secondary to residential use and could be ignored by purchasers. It also said evidence indicated that Maui County allowed single-family home construction without the required submission of farm plans.

Maui County Planning Director Mike Foley said the county has since stiffened requirements for farm plans before issuing home construction permits, though he said there is no mechanism to require farming for people who build just one house.

In the past 18 months or so Maui County has approved 500 to 600 farm plans while having only limited success making sure homes are only accessories to a predominant agricultural use of the land, Foley said.

"Frankly we're doing more than any of the other counties in trying to regulate nonagricultural activities on agricultural subdivisions," he said. "But it's still a problem."

In 1998, Maui County reduced the number of lots that could be created by subdividing farmland, limiting ag subdivisions to 14 2-acre lots plus a few larger lots on about 100 acres or more. Previously, developers could make 100 acres of farmland into 50 lots.

Stress on resources

But several ag subdivisions being sold today were grandfathered under old rules because they received preliminary permits before the change.

One such project is Wailuku Country Estates, 184 mostly 2-acre home lots covered with macadamia trees planted in the 1980s by C. Brewer & Co. unit Wailuku Agribusiness. Brewer intended to subdivide the land for sale in the mid-1990s but a bad housing market deferred the plan.

Big Island developer Brian Anderson led a purchase of the property in 2002 for $10 million and started selling lots in 2003 for $200,000 to $400,000. Lot prices last year were up to $525,000. One 2-acre lot on the market now is listed for $750,000.

Farming the mac nut trees is up to buyers, though critics of the project say little farming is done.

Maui Mayor Alan Arakawa finds particular irritation with Wailuku Country Estates because he said the project increased stress on public resources without helping pay for it as urban residential projects do.

"There was no consideration from that developer for additional schools, sewers and other infrastructure," Arakawa said.

In general, Arakawa opposes ag land development in rural areas or if it extends urban sprawl, though he said he doesn't have a problem with development on ag land if it's near urban areas and doesn't impact the existing community too much.

The group of West Maui rural residents and farmers, Kuleana Ku'ikahi, continues to oppose nearby ag subdivisions, and filed a new petition with the LUC last July after it withdrew is previous petition to pursue mediation.

If the LUC rules in the plaintiff's favor, there could be another Hokuli'a-like precedent established.

The new petition is limited to one subdivision called Pu'unoa, though Kuleana Ku'ikahi attorney Richard McCarty said his client intends to file petitions separately against similar West Maui ag subdivisions.

Kuleana Ku'ikahi in its new petition said the Pu'unoa subdivision is developed with mostly luxury homes without agricultural use.

The group also contends that the Pu'unoa land is poorly suited for farming without irrigation, and that a plan to draw water from Kaua'ula Stream would disrupt taro and other farm operations of petitioners.

According to property records, the 5-acre Pu'unoa lots have been sold since 2001. The most recent sold last year for $900,000. An LUC hearings officer conducted a contested case hearing last week, and will issue recommendations for the full commission to adopt, modify or reject.

In need of reform

The Pu'unoa could add to the conflict between state land-use law and county subdivision approval processes that erupted with the Hokuli'a case, although Hokuli'a's legality was decided by a Big Island Circuit Judge as opposed to the LUC.

Hokuli'a also was different in that 750 1-acre home lots were primarily developed around a Jack Nicklaus-designed golf course, which was until recently an allowable use on ag land. Other Hokuli'a elements included 200 acres for a leased coffee farm, a spa, tennis courts, club and beach house.

Dean Uchida, executive director of the Land Use Research Foundation, said the bar has been raised on what is deemed acceptable use of agricultural land because of the Hokuli'a decision, and that some developers are trying to better address farming requirements.

"People are going to take a closer look at the ag requirement. People are not going to go into (an ag subdivision) planting some green onions and thinking you're OK."

But Uchida also believes that the state's land-use process is worn out and in need of major reform that lawmakers began to address this year.

The Legislature last month passed two bills that no longer allow development of golf courses on low-grade agriculture property, and direct counties to define important agricultural lands on which nonfarming uses would be discouraged.

Gov. Linda Lingle has yet to take action on the bills, but she has been a key proponent of counties and the LUC identifying important ag lands for protection.

Uchida said the legislation is a start, but that part of the solution is that poor quality agriculture land should be reclassified as rural, which would better guide residential development and alleviate much of the controversy surrounding ag subdivisions.

"You see a lot of development of ag lands because there isn't any rural land," he said. "It's a business decision. Developers are going to go with the shortest route to development."

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065. Advertiser staff writer Tim Hurley contributed to this report.

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