Farmers taking advantage of county property tax breaks could soon be required to dedicate the land to farming for at least three years to qualify.
Farmers taking advantage of county property tax breaks could soon be required to dedicate the land to farming for at least three years to qualify.
A bill being finalized by the Real Property Tax Stakeholders Task Force would do away with the so-called “nondedicated” agricultural exemption, and require commitment to a set time period, likely three years, for the reduced property values. The task force is worried that too many property owners are taking advantage of the agricultural exemption without growing crops.
The proposed bill, which must first be approved by the County Council and the mayor, would phase out the nondedicated program and phase in the new program over a number of years. As the bill currently stands, nondedicated property values would rise to three times that of dedicated property in the first year, four times that of dedicated the second year and five times that of dedicated the third year.
Task force co-chairmen Dennis “Fresh” Onishi and Margaret Wille, both members of the County Council, are at odds over how long the dedication should be for, with Onishi suggesting five years and Wille pushing for three. Those who commit to dedicate the property and then change their mind are subject to rollback taxes.
“The purpose is to move as many people (into the program) as possible,” Wille said at a task force meeting Monday in the county building in Hilo. “I’m trying to not make it as big a jump. … I want the public to feel good about it.”
Currently, property owners taking the agricultural exemption pay taxes based on a set property valuation countywide, regardless of the market value of the land. For example, land growing feed crops is valued for tax purposes at $1,000 an acre, while pastureland is valued from $28 to $420 an acre, depending on whether it’s poor, average or good pasture. Land growing truck crops is valued at $4,000 an acre.
Property owners who commit to keeping the land in agriculture at least 10 years — the so-called “dedicated exemption ” — pay taxes based on half those values. There are an estimated 10,000 farmers in the nondedicated part of the program, compared to only 500 in the dedicated.
The new wording for the three-year dedicated program follows the current wording for the 10-year dedicated one, an issue that could be difficult for some of the current farmers, noted task force member Bob Price.
In particular, Price said, the acreage requirements could knock out 400 to 500 parcels. The dedicated program requires pastureland to be a minimum 10 acres, feed crops 5 acres, orchards 1 acre and intensive agriculture one-quarter acre.
“If we follow the minimum requirements there’s going to be a lot of people who will be eliminated,” Price said. “(Currently) it’s a wide-open door. … Put your show horse there, it qualifies as long as you have a fence and water.”
The task force is trying to strike a balance between ensuring the county has enough revenues and making it fair for all property owners, without unduly discouraging people who want to make a living farming. Wille noted the nondedicated exemptions account for $28 million annually in lost property tax revenues.
Email Nancy Cook Lauer ncook-lauer@westhawaiitoday.com.