Report Title:

Agricultural Land Preservation

Description:

Provides standards and criteria to conserve and protect agricultural lands and the purchase of development rights as an incentive for landowners to keep important agricultural lands in agricultural uses.

HOUSE OF REPRESENTATIVES

H.B. NO.

1558

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO AGRICULTURAL LAND PRESERVATION.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that land is the basic resource which supports the production of all agricultural commodities. The supply of lands suitable for the production of agricultural commodities is an irreplaceable resource. The best way to protect agricultural lands and promote agriculture is to ensure the profitability of agricultural operations. The survival of agriculture depends on more than the availability of land, it depends also on other factors that affect the profitability of agriculture such as commodity prices, the availability of water for irrigation, and the application of production technologies.

Since the demise of plantation agriculture in Hawaii, the availability of agricultural lands has not been a major impediment of agriculture. Rather, availability of irrigation, marketing, transportation rates, and environmental costs are greater roadblocks for agricultural development and expansion.

The legislature finds that land use policies and planning alone will not insure successful, profitable agriculture. The viability of agriculture will depend on policies and incentives that give landowners and entrepreneurs the flexibility to determine which lands are best to farm and which lands to use to minimize business risks.

Article XI, section 3 of the Hawaii state constitution requires the State to conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency, and to assure the availability of agriculturally suitable lands. To achieve this objective, Article XI, section 3 directs the legislature to provide standards and criteria to accomplish the objectives of the section.

The purpose of this Act is to carry out the directives of article XI, section 3, to provide the standards and criteria to conserve and protect agricultural lands without imposing a burdensome policy that becomes a disincentive for the owners of agricultural lands to maintain agricultural operations. This Act also implements the authority under Article XI, section 4, relating to public land banking, to provide for the purchase of development rights as an incentive for landowners to keep important agricultural lands in agricultural uses.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

AGRICULTURAL LAND PRESERVATION

PART I. GENERAL PROVISIONS

-1 Definitions. Whenever used in this chapter, unless the context otherwise requires:

"Agricultural land preservation easement" or "easement" means a recorded restriction on exercising the development rights on important agricultural land designated pursuant to section 205-B.

"Bank" means the agricultural land preservation bank.

"Board" means the agricultural land preservation board.

"Commission" means the land use commission.

"Designation" means the action of the commission pursuant to section 205-B to qualify lands as important agricultural lands within an agricultural district.

"Development rights" means the right to develop designated important agricultural lands for purposes other than agricultural uses, including but not limited to industrial use, commercial use, and residential use.

"Installment purchase agreement" or "agreement" means a contract entered into by the bank for the purchase of transferable development credits on important agricultural land designated pursuant to section 205-B.

"Transferable development credits" or "credits" means the credits allocated to designated important agricultural land to be used to fulfill the requirements established for permissible uses in rural districts designated for growth or growth zones designated by the counties.

-2 Agricultural land preservation bank; establishment. (a) There shall be an agricultural land preservation bank, which shall be a body corporate and politic and an instrumentality and agency of the State. The bank shall be a part of the department of land and natural resources for administrative purposes, as provided in section 26-35.

(b) The bank shall be headed by the agricultural land preservation board. The board shall consist of nine members who shall be appointed by the governor as provided in section 26-34. Three members shall be selected on the basis of their experience and proven expertise in agriculture and shall receive at least fifty per cent of their annual income from agricultural endeavors. Three members shall be selected on the basis of their knowledge and experience in economics, real estate, finance, or management. The director of business, economic development and tourism; the chairperson of the board of agriculture; and the chairperson of the board of land and natural resources, or their designated representatives, shall be ex-officio voting members of the board. The board shall elect its chairperson from among its members; provided that the chairperson shall not be an ex-officio member.

The board shall appoint an executive director, who shall serve at the pleasure of the board and shall be exempt from chapters 76. The salary of the executive director shall be set by the board. The board, through its executive director, may appoint officers, agents, and employees without regard to chapter 76, prescribe their duties and qualifications, and fix their salaries.

-3 Powers. The bank may:

(1) Sue and be sued;

(2) Have a seal and alter the same at its pleasure;

(3) Make and alter bylaws for its organization and internal management;

(4) Adopt rules under chapter 91 necessary to effectuate this chapter;

(5) Make and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter;

(6) Acquire by grant, gift, or purchase any transferable development credits on designated important agricultural lands;

(7) Establish a clearinghouse and information source on transferable development credits to assist in matching buyers with sellers of credits;

(8) Sell any transferable development credits acquired by the bank or any transferable development credits on public lands designated as important agricultural lands as provided in this chapter;

(9) Guarantee loans secured by transferable development credits; and

(10) Contract with a financial institution to carry out the functions of the bank authorized in sections -8,    -10, and -12.

-4 Agricultural land preservation fund. (a) There is established in the agricultural land preservation fund, into which shall be deposited:

(1) Any appropriations or other moneys made available to the fund;

(2) Moneys from the sale of transferable development credits on public lands;

(3) Moneys from the sale of transferable development credits purchased by the bank; and

(4) Moneys from the repurchase of easements by landowners.

(b) The bank shall hold the fund in an account or accounts separate from other funds. The bank shall invest and reinvest the income thereof to:

(1) Purchase transferable development credits in compliance with this chapter; and

(2) Guarantee loans made to landowners that are secured by transferable development credits; provided that if the landowner defaults on the loan the bank may pay the loan and take possession of the credits.

(c) The bank shall maintain in the agricultural land preservation fund, moneys sufficient to make the payments on its agreements for the purchase of transferable development credits.

(d) The fund may be used by the bank for the expenses incurred in the administration of this chapter; provided that the expenditures of the bank shall be in accordance with legislative appropriations.

-5 Agricultural land preservation easements; establishment; certification. (a) The bank may establish an agricultural land preservation easement on land designated as important agricultural land pursuant to section 205-B.

(b) The bank shall, upon application by the landowner, certify the easement and establish the value of the easement as provided in section -6, for the designated land under the application. The landowner shall record the easement and the deed restrictions on use of the land as provided by law.

(c) The bank may certify agricultural land preservation easements for public lands designated as important agricultural lands pursuant to section 205-B. The bank shall work with the board of land and natural resources in establishing the value of the easements as provided in section -6, and establish the valuation as the value of the agricultural land preservation easements for the designated public lands.

-6 Valuation of easement. (a) The value of any agricultural land preservation easement shall be the asking price of the landowner for the easement or the difference between the fair market value of the land and the agricultural value of the land, whichever is lower.

(b) The fair market value of the land is the price as of the valuation date for which a purchaser, willing but not obligated to buy the land would pay to the landowner, willing but not obligated to sell, taking into consideration all uses to which the land was adapted and might in reason be applied, provided it was not subject to any restriction imposed under this chapter. The fair market value shall be determined by the bank based on one or more appraisals by an appraiser selected by the bank and an appraiser, if any, selected by the landowner.

(c) The agricultural value of the land is the price as of the valuation date which a purchaser, willing but not obligated to buy the land, would pay to a landowner, willing but not obligated to sell, for land to be used for agricultural purposes. The agricultural value of the land shall be determined by a formula established by the bank by rule which considers the income from agricultural productivity, capitalization rate, size, developability, continuity to other important agricultural lands, and other characteristics of the land on which the landowner has applied to sell an agricultural land preservation easement.

(d) If the landowner and the bank cannot agree on the valuation of the easement as determined pursuant to this section, and the landowner requests that the matter be submitted to arbitration, the bank shall submit the matter to a three-member arbitration panel.

One member of the arbitration panel shall be selected by the landowner, one member shall be selected by the bank, and the third member shall be selected by mutual agreement of the two parties. If the parties fail to select a third member of the panel within thirty days, a request shall be made by the board to the American Arbitration Association, or its successor in function, to furnish a list of three qualified arbitrators from which the parties shall select the third member.

(e) The value of the easement determined by the arbitration panel shall be binding upon the landowner and the bank in a purchase of an agricultural land preservation easement for a period of two years unless the landowner and the bank agree upon another amount.

(f) The value of the agricultural land preservation easement on any public land shall be determined by an employee of the board of land and natural resources qualified to appraise lands, or by one but not more than three disinterested appraisers whose services shall be contracted for by the board of land and natural resources. The bank shall reimburse the board of land and natural resources for the cost of any appraisal contracted.

-7 Transferable development credits; allocation. (a) The bank shall issue transferable development credits to the owners of land with a certified agricultural land preservation easement.

(b) The bank shall issue transferable development credits for public lands with certified agricultural land preservation easements.

(c) The bank shall issue one credit for every twenty acres of land under the easement and a pro rata credit for any portion of land under twenty acres. The bank shall assign a minimum value for each credit based upon the valuation of the easement established pursuant to section -6.

-8 Registry of transferable development credits. (a) The bank shall establish and maintain a registry of transferable development credits, which shall include:

(1) The name and address of every landowner to whom transferable development credits have been issued and the tax map key of the parcel or parcels of land to which the credits are assigned;

(2) The number of transferable development credits allocated to a parcel of land and the minimum value of each credit;

(3) The number of credits from a parcel of land that have been sold or conveyed and the number of credits that have not been sold or conveyed, if any;

(4) The name and address of every person to whom transferable development credits have been sold or conveyed, the date of conveyance, the payment for the credits, if any; and

(5) The name and address of any person, not the bank, who has bought credits and the location of the land to which the credits were transferred.

(b) No person shall purchase or acquire a transferable development credit without first recording the transaction with the bank.

-9 Termination of easement; repurchase. (a) When important agricultural land is reclassified by the land use commission or rezoned by a county land use decision-making authority pursuant to section 205-C, the landowner may request the bank to terminate the easement.

(b) When land is reclassified by the land use commission after the landowner has petitioned the commission and demonstrated that profitable agricultural operations are no longer feasible on the land, if the landowner has sold the transferable development credits on the land, the landowner shall request the bank to terminate the easement and repurchase the easement by paying to the bank the initial value of the easement established pursuant to section -6.

(c) When the landowner requests the termination of an easement because the county land use decision-making authority rezones the land pursuant to section 205-C(b)(3), the landowner shall not be required to repurchase the easement.

-10 Purchase of transferable development credits by landowners. (a) Only the owner of land in a rural district designated for growth or a growth zone designated by the county may purchase transferable development credits from the owner of designated important agricultural lands to which credits have been allocated. The credits shall be purchased on lands on the same island as the lands to which the credits will be transferred.

(b) If the owner of land in a rural district designated for growth or a growth zone designated by the county cannot find a landowner of designated important agricultural lands who is willing to sell transferable development credits or cannot find sufficient credits to purchase, the owner may apply to the bank to purchase any credits that may be available from the bank on the island on which the owner's land is located.

(c) The landowner purchasing the credits shall record the transaction with the bank and shall submit the proof of purchase of the credits when applying for a special permit as required under section 205-E(c), or a permissible use in growth zones designated by the county.

-11 Purchase of transferable development credits by the bank. (a) If the owner of transferable development credits is not able to find a buyer for the credits on the land, the owner may apply to the bank to purchase the transferable development credits on the entire contiguous acreage of important agricultural lands designated pursuant to section 205-B.

(b) The bank shall consider applications to sell transferable development credits in batches, based upon the availability of funds for the purchase of credits. The bank shall from time to time give notice of when applications will be accepted from landowners to sell credits.

(c) Notice by the bank of its acceptance of applications from landowners to sell credits on the entire contiguous acreage designated as important agricultural lands pursuant to section 205-B shall be published at least once in each of three successive weeks statewide, the last public notice to be not less than ten days before the first day applications are to be accepted. The notice shall contain the following:

(1) The first day and the last day that applications will be accepted;

(2) The form in which the application is to be submitted;

(3) The information required to be submitted with the application; and

(4) The application fee in the amount set by the bank.

(d) The bank shall notify the county land use decision-making authorities of the applications to sell transferable development credits from landowners within their respective counties. A county land use decision-making authority shall submit any comments and recommendations, if any, on the applications from landowners within its county to the board within sixty days of receipt of notice from the board.

(e) The bank shall prepare a list of applications accepted and rank the applications based on its evaluation of the parcels. The bank shall establish a priority for the purchase of credits based upon the availability of funds for the purchase of credits.

(f) Upon approval of a majority of its members, the board may authorize the purchase of credits and submit an offer to the landowner to buy the credits containing the terms of the purchase. The landowner shall have thirty days from the date of the offer to buy the credits to accept or reject the offer.

(g) If the landowner agrees to the sale of the credits, the landowner and the bank shall agree upon whether the landowner shall receive payment for the credits in a lump sum or through an installment purchase agreement pursuant to section    -12.

-12 Installment purchase agreements; interest payment. (a) The bank may establish installment purchase agreements for the purchase of transferable development credits which shall have a term of not more than thirty years. The bank shall structure agreements pursuant to provisions of the Internal Revenue Code of 1986, as amended, to defer recognition of capital gain until all of the purchase price is paid. The agreements shall include provisions for the periodic payment of a portion of the purchase price with the remainder of the purchase price paid at the end of the term of the agreement. The bank shall purchase United States Treasury zero coupon bonds with a maturity date equal to the term of the installment purchase agreement. The interest rate paid on an installment purchase agreement shall not be less than the interest rate on the zero coupon bonds at the closing of the agreement or eight per cent, whichever is higher.

(b) The bank shall make semi-annual interest payments on the outstanding balance of the installment purchase agreement purchase price from the agricultural land preservation fund."

SECTION 3. Part IX, chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"46- Growth zones; designation. (a) The counties are authorized to establish a program for the preservation of important agricultural lands utilizing transferable development credits by designating growth zones as receiving districts in residential, resort, commercial, and industrial districts within the framework of the county's long range, comprehensive general plan, and to establish development guidelines to allow the use of transferable development credits from designated important agricultural lands qualifying as sending districts to:

(1) Increase the height, bulk, number of stories, and size of buildings and other structures;

(2) Increase the density and distribution of population in the zone;

(3) Make adjustments in the percentage of lot which may be occupied, the size of yards, courts, and other open spaces;

(4) Adjust minimum and maximum lot sizes; or

(5) Meet the obligation of conditions or impact fees imposed by the county on any development within the growth zone.

(b) Any guidelines established by a county under this section for a receiving district shall not result in more than a fifteen per cent increase in height, bulk, number of stories, size of buildings, or density of a project.

(c) Any program established by a county shall include a schedule of transferable development credits that lists the number of credits required to be acquired for the increases allowed under this section.

(d) The uses permitted under the guidelines established by this section shall be allowed only to owners of land who have acquired transferable development credits required for the permitted uses."

SECTION 4. Chapter 174C, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"174C- Water for important agricultural lands; certification; permits. (a) The commission shall continue a certificate for water use or a permitted use in a water management area for lands designated as important agricultural lands pursuant to section 205-B as long as the lands are designated as important agricultural lands, and as long as the quantity of water under the certificate or permit does not exceed the quantity of water for the agricultural use on the designated lands.

(b) The commission may evaluate the water use on lands designated as important agricultural lands and adjust the quantity of water under the certificate for water use or a permit in water management areas based on the best available information on actual water needs of the agricultural use."

SECTION 5. Chapter 205, Hawaii Revised Statutes, is amended by adding five new sections to be appropriately designated and to read as follows:

"205-A Agricultural land preservation district advisory committees. (a) There is established for each of the land districts established pursuant to section 171-9, an agricultural land preservation district advisory committee. Each committee shall consist of five members who shall be appointed by the governor as provided in section 26-34. Three members shall be selected on the basis of their experience and proven expertise in agriculture and shall receive at least fifty per cent of their annual income from agricultural endeavors. The committees shall elect its chairperson from among its members.

(b) The committees shall:

(1) Advise and assist the land use commission on petitions for the designation of important agricultural lands within their respective districts;

(2) Advise the land use commission and county land use decision-making authorities on the reclassification or rezoning of important agricultural lands within their respective districts; and

(3) Disseminate information on the agricultural land preservation program.

205-B Important agricultural lands; qualification criteria; designation. (a) Agricultural lands shall qualify for designation as important agricultural lands, if the lands:

(1) Are within an agricultural district;

(2) Are currently in agricultural use;

(3) Have at least one hundred contiguous acres;

(4) Are irrigated or have a dependable and adequate moisture supply; and

(5) Have at least fifty per cent of the land area in the contiguous area with soils classified by the land study bureau's detailed land classification as overall (master) productivity rating class A or B.

(b) Agricultural lands not qualifying under subsection (a) for designation as important agricultural lands and unique agricultural lands shall qualify for designation as important agricultural lands if the land:

(1) Is within an agricultural district; and

(2) Has been continuously in agricultural use for the past ten years.

(c) A landowner with land qualifying under subsection (a) or (b), may petition the commission requesting the designation of the land as important agricultural lands. Two or more landowners with lands totaling not less than one hundred contiguous acres which qualify under subsection (a) may petition the commission requesting the designation of the lands as important agricultural lands. The petition shall include:

(1) The tax map key or tax map keys of the land to be designated;

(2) Proof of qualification for designation under subsection (a) or (b);

(3) The current use of the area to be designated; and

(4) A soil conservation and water quality plan for the land approved by the natural resources conservation service.

(d) The board of land and natural resources may petition the commission requesting the designation of the public lands qualifying under subsection (a) or (b) as important agricultural lands. The petition shall include:

(1) The tax map key or tax map keys of the land to be designated;

(2) Proof of qualification for designation under subsection (a) or (b);

(3) The current use of the area to be designated; and

(4) A soil conservation and water quality plan for the land approved by the natural resources conservation service.

(e) The commission shall refer any petition and its accompanying material for the designation of important agricultural lands to the agricultural land preservation advisory committee of the district in which the land is located to evaluate whether the land qualifies for designation as important agricultural lands. The committee shall review the petition and accompanying material and evaluate the qualification of the land for designation as important agricultural lands. Within one hundred twenty days of the referral of the petition, the agricultural land preservation advisory committee shall submit its findings and recommendation to the commission on the petition to designate the land as important agricultural lands. The commission shall decide on the designation of the lands as important agricultural lands after reviewing the findings and recommendation from the agricultural land preservation advisory committee.

(f) The designation of important agricultural lands shall not be considered an amendment to district boundaries under sections 205-3.1 and 205-4.

(g) The designation of important agricultural lands shall not take effect until all the landowners in the area proposed for designation have recorded the instruments for designation as important agricultural lands and the restriction on uses. The designation of public lands as important agricultural lands shall take effect upon the recording of the designation and restrictions on uses of the land by the board of land and natural resources.

(h) As used in this section, "unique agricultural lands" mean lands possessing special characteristics or conditions, or enhanced by the input of resources for the cultivation of crops and the production of agricultural products and commodities.

205-C Important agricultural lands; reclassification or rezoning. (a) The commission, by a two-thirds vote of its members, may reclassify important agricultural lands if:

(1) Not less than five years after designation, the landowner petitions the commission to reclassify all or a portion of the land and demonstrates that profitable agricultural operations are no longer feasible on the land to be reclassified; or

(2) The county land use decision-making authority at any time determines that rezoning of all or a portion of the land is required to conform to the county general plan or to facilitate a demonstrated need for a non-agricultural use which overrides the important agricultural land designation, and petitions the commission to reclassify the land.

(b) The county land use decision-making authority, by a two-thirds vote of its members, in the case of land areas of fifteen acres or less, may rezone important agricultural lands if:

(1) Not less than five years after designation, the landowner petitions the county land use decision-making authority to rezone all or a portion of the land and demonstrates that profitable agricultural operations are no longer feasible on the land;

(2) The land use commission has reclassified all or a portion of the land pursuant to subsection (a); or

(3) The county land use decision-making authority at any time determines that rezoning of all or a portion of the land is required to conform to the county general plan or to facilitate a demonstrated need for a non-agricultural use which overrides the important agricultural land designation.

(c) The land use commission or a county land use decision-making authority may submit a request to the agricultural land preservation advisory committee of the district in which the land is located to review and submit its recommendations on any petition or determination to reclassify or rezone any important agricultural lands. The agricultural land preservation advisory committee shall submit its recommendations to the commission or county land use decision-making authority on any petition or determination for reclassification or rezoning submitted it within ninety days.

205-D Permissible uses on important agricultural lands. (a) Important agricultural lands designated pursuant to section 205-B shall be restricted to the following permitted uses:

(1) Production of plant and animal life for food, fiber, and raw materials, including general farming, fruit growing, flower growing, aquaculture, growing of timber and forest products, apiary, grazing, dairying, and the production of any form of livestock or poultry.

(2) Buildings and uses, including but not limited to mills, storage facilities, water and irrigation facilities, processing facilities, maintenance facilities, vehicle and equipment storage areas, and roadside stands that are normally considered directly accessory to the abovementioned uses; and

(3) Utilities and alternative energy facilities, including the appurtenances associated with the production and transmission of energy generated from alternantive energy resources defined in section 46-19 that are accessory to agricultural uses.

(b) Uses not expressly permitted in subsection (a) shall be prohibited. A single dwelling on not more than one acre shall be permitted for the sole use of the landowner or child of the landowner. No other uses shall be allowed by special permit on important agricultural lands.

(c) Important agricultural lands designated pursuant to section 205-B may be subdivided into leasehold lots to be used solely for the agricultural uses expressly permitted in subsection (a); provided that, except as provided in subsection (b), no farm dwelling or structure suitable for residential occupancy shall be allowed on the subdivided lots; and provided that the leasehold lots shall return to their original lot of record upon expiration or termination of the lease. Leasehold subdivision of important agricultural lands for agricultural purposes shall be exempted from all county subdivision ordinances.

205-E Rural districts designated for growth; permissible uses. (a) The commission may establish rural districts designated for growth, giving consideration to the master plan or general plan of the county. The commission may include in these districts, contiguous land areas with soil classified by the land study bureau's detailed land classification as overall (master) productivity rating class C, D, E, or U, agricultural lands with residential subdivisions existing before January 1, 2003, and areas not suited to agricultural and ancillary activities by reason of topography and other related characteristics.

(b) Within the rural district designated for growth, lands shall be restricted to the following permitted uses:

(1) Small agricultural or farming operations;

(2) Public institutions and buildings;

(3) Public and private open area types of recreational uses including campgrounds, picnic grounds, overnight camps, parks, riding stables, golf courses, golf driving ranges, and country clubs;

(4) Educational institutions;

(5) Public utilities;

(6) Low density retail and commercial facilities; and

(7) Low density residential subdivisions with not more than dwelling units per acre;

provided that the permissible uses described in this section may be further defined by each county by zoning ordinance.

(c) The uses permitted in this section in rural districts designated for growth shall be allowed by the commission by special permit as provided in section 205-6 only to landowners who have acquired transferable development credits on designated important agricultural lands on the island where the credits will be applied.

(d) The commission shall establish a schedule of transferable development credits that lists the number of credits required to be acquired for the permitted uses within rural districts designated for growth.

(e) The owner of land within a rural district designated for growth seeking a use permitted under this section, who has acquired the transferable development credits required for the permitted use, shall petition the planning commission of the county in which the land is located for a special permit as provided in section 205-6."

SECTION 6. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"235- Important agricultural lands; real property tax credit. (a) There shall be allowed to each taxpayer, subject to the taxes imposed by this chapter, a tax credit for real property taxes paid on important agricultural lands designated pursuant to section 205-B, which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. The tax credit shall be an amount equal to fifty per cent of the real property tax paid by the taxpayer on important agricultural lands designated pursuant to section 205-B for the taxable year.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. For the purpose of this credit, the "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) The credit shall not be allowed for any important agricultural lands where the landowner has sold the transferable development credits on the land."

SECTION 7. Section 46-162, Hawaii Revised Statutes, is amended to read as follows:

"46-162 Definitions. As used in this part, unless the context clearly requires otherwise:

"Council" means the county council.

"Development rights" means the rights permitted for a lot, parcel, or area of land under a zoning ordinance or local law respecting permissible use, area, density, bulk, or height or improvements thereon. For important agricultural lands designated pursuant to section 205-B, "development rights" means the right to develop the lot, parcel, or area of land for purposes other than agricultural uses, including but not limited to industrial use, commercial use, and residential use, the valuation of which shall be determined as provided in chapter    . Development rights may be calculated and allocated in accordance with factors such as area, floor area ratios, density, height limitations, or any other criteria that will effectively quantify a value for the development right in a reasonable and uniform manner that will carry out the objectives of this part.

"Receiving district" means one or more designated districts or areas of land to which development rights generated from one or more sending districts may be transferred and in which increased development is permitted to occur by reason of this transfer. For important agricultural lands designated pursuant to section 205-B, "receiving district" means growth zones designated by the council pursuant to section 46- to which transferable development credits may be applied.

"Sending district" means one or more designated districts or areas of land in which development rights may be designated for use in one or more receiving districts. For important agricultural lands designated pursuant to section 205-B, "sending district" means important agricultural lands designated pursuant to section 205-B to which transferable development credits have been allocated.

"Transfer of development rights" means the process by which development rights are transferred from one lot, parcel, or area of land in any sending district to another plot, parcel, or area of land in one or more receiving districts.

"Transferable development credits" shall have the same meaning as defined in section -1."

SECTION 8. Section 171-30, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The board of land and natural resources shall have the exclusive responsibility, except as provided herein[,] and except for the acquisition of agricultural land preservation easements as provided in chapter , of acquiring, including by way of dedications:

(1) All real property or any interest therein and the improvements thereon, if any, required by the State for public purposes, including real property together with improvements, if any, in excess of that needed for such public use in cases where small remnants would otherwise be left or where other justifiable cause necessitates the acquisition to protect and preserve the contemplated improvements, or public policy demands the acquisition in connection with such improvements.

(2) Encumbrances, in the form of leases, licenses, or otherwise on public lands, needed by any state department or agency for public purposes or for the disposition for houselots or for economic development.

The board shall upon the request of and with the funds from the state department or agency effectuate all acquisitions as provided under this section."

SECTION 9. Section 205-2, Hawaii Revised Statutes, is amended to read as follows:

"205-2 Districting and classification of lands. (a) There shall be four major land use districts in which all lands in the State shall be placed: urban, rural, agricultural, and conservation. Important agricultural lands designated pursuant to section 205-B shall be included in an agricultural district. The land use commission shall group contiguous land areas suitable for inclusion in one of these four major districts. The commission shall set standards for determining the boundaries of each district, provided that:

(1) In the establishment of boundaries of urban districts those lands that are now in urban use and a sufficient reserve area for foreseeable urban growth shall be included;

(2) In the establishment of boundaries for rural districts, areas of land composed primarily of small farms mixed with very low density residential lots, which may be shown by a minimum density of not more than one house per one-half acre and a minimum lot size of not less than one-half acre shall be included, except as herein provided;

(3) In the establishment of the boundaries of agricultural districts the greatest possible protection shall be given to those lands with a high capacity for intensive cultivation; [and]

[(4)] (5) In the establishment of the boundaries of conservation districts, the "forest and water reserve zones" provided in Act 234, section 2, Session Laws of Hawaii 1957, are renamed "conservation districts" and, effective as of July 11, 1961, the boundaries of the forest and water reserve zones theretofore established pursuant to Act 234, section 2, Session Laws of Hawaii 1957, shall constitute the boundaries of the conservation districts; provided that thereafter the power to determine the boundaries of the conservation districts shall be in the commission.

In establishing the boundaries of the districts in each county, the commission shall give consideration to the master plan or general plan of the county.

(b) Urban districts shall include activities or uses as provided by ordinances or regulations of the county within which the urban district is situated.

(c) Rural districts shall include activities or uses as characterized by low density residential lots of not more than one dwelling house per one-half acre, except as provided by county ordinance pursuant to section 46-4(c), in areas where "city-like" concentration of people, structures, streets, and urban level of services are absent, and where small farms are intermixed with low density residential lots except that within a subdivision, as defined in section 484-1, the commission for good cause may allow one lot of less than one-half acre, but not less than 18,500 square feet, or an equivalent residential density, within a rural subdivision and permit the construction of one dwelling on such lot, provided that all other dwellings in the subdivision shall have a minimum lot size of one-half acre or 21,780 square feet. Such petition for variance may be processed under the special permit procedure. These districts may include contiguous areas which are not suited to low density residential lots or small farms by reason of topography, soils, and other related characteristics.

(d) Agricultural districts shall include activities or uses as characterized by the cultivation of crops, orchards, forage, and forestry; farming activities or uses related to animal husbandry, [aquaculture,] and game and fish propagation; aquaculture, which means the production of aquatic plant and animal life for food and fiber within ponds and other bodies of water; wind generated energy production for public, private, and commercial use; bona fide agricultural services and uses which support the agricultural activities of the fee or leasehold owner of the property and accessory to any of the above activities, whether or not conducted on the same premises as the agricultural activities to which they are accessory, including but not limited to farm dwellings as defined in section 205-4.5(a)(4), employee housing, farm buildings, mills, storage facilities, processing facilities, vehicle and equipment storage areas, and roadside stands for the sale of products grown on the premises; wind machines and wind farms; small-scale meteorological, air quality, noise, and other scientific and environmental data collection and monitoring facilities occupying less than one-half acre of land, provided that such facilities shall not be used as or equipped for use as living quarters or dwellings; agricultural parks; and open area recreational facilities, including golf courses and golf driving ranges; provided that they are not located within agricultural district lands with soil classified by the land study bureau's detailed land classification as overall (master) productivity rating class A or B.

The activities or uses in lands designated as important agricultural lands pursuant to section 205-B shall be the permissible uses specified in section 205-D.

These districts may include areas which are not used for, or which are not suited to, agricultural and ancillary activities by reason of topography, soils, and other related characteristics.

(e) Conservation districts shall include areas necessary for protecting watersheds and water sources; preserving scenic and historic areas; providing park lands, wilderness, and beach reserves; conserving indigenous or endemic plants, fish, and wildlife, including those which are threatened or endangered; preventing floods and soil erosion; forestry; open space areas whose existing openness, natural condition, or present state of use, if retained, would enhance the present or potential value of abutting or surrounding communities, or would maintain or enhance the conservation of natural or scenic resources; areas of value for recreational purposes; other related activities; and other permitted uses not detrimental to a multiple use conservation concept."

SECTION 10. Section 205-4.5, Hawaii Revised Statutes, is amended to read as follows:

"205-4.5 Permissible uses within the agricultural districts. (a) [Within] Except for important agricultural lands designated pursuant to section 205-B, within the agricultural district all lands with soil classified by the land study bureau's detailed land classification as overall (master) productivity rating class A or B shall be restricted to the following permitted uses:

(1) Cultivation of crops, including but not limited to flowers, vegetables, foliage, fruits, forage, and timber;

(2) Game and fish propagation;

(3) Raising of livestock, including but not limited to poultry, bees, fish, or other animal or aquatic life that are propagated for economic or personal use;

(4) Farm dwellings, employee housing, farm buildings, or activity or uses related to farming and animal husbandry;

Farm dwelling as used in this paragraph means a single-family dwelling located on and used in connection with a farm, including clusters of single-family farm dwellings permitted within agricultural parks developed by the State, or where agricultural activity provides income to the family occupying the dwelling;

(5) Public institutions and buildings which are necessary for agricultural practices;

(6) Public and private open area types of recreational uses including day camps, picnic grounds, parks, and riding stables, but not including dragstrips, airports, drive-in theaters, golf courses, golf driving ranges, country clubs, and overnight camps;

(7) Public, private, and quasi-public utility lines and roadways, transformer stations, communications equipment buildings, solid waste transfer stations, major water storage tanks, and appurtenant small buildings such as booster pumping stations, but not including offices or yards for equipment, material, vehicle storage, repair or maintenance, or treatment plants, or corporation yards, or other like structures;

(8) Retention, restoration, rehabilitation, or improvement of buildings or sites of historic or scenic interest;

(9) Roadside stands for the sale of agricultural products grown on the premises;

(10) Buildings and uses, including but not limited to mills, storage, and processing facilities, maintenance facilities, and vehicle and equipment storage areas that are normally considered directly accessory to the abovementioned uses and are permitted under section 205-2(d);

(11) Agricultural parks; or

(12) Wind energy facilities, including the appurtenances associated with the production and transmission of wind generated energy; provided that such facilities and appurtenances are compatible with agriculture uses and cause minimal adverse impact on agricultural land.

(b) Uses not expressly permitted in subsection (a) shall be prohibited, except the uses permitted as provided in sections 205-6 and 205-8, and construction of single-family dwellings on lots existing before June 4, 1976. Any other law to the contrary notwithstanding, no subdivision of land within the agricultural district with soil classified by the land study bureau's detailed land classification as overall (master) productivity rating class A or B shall be approved by a county unless the said A and B lands within the subdivision shall be made subject to the restriction on uses as prescribed in this section and to the condition that the uses shall be primarily in pursuit of an agricultural activity.

Any deed, lease, agreement of sale, mortgage, or other instrument of conveyance covering any land within the agricultural subdivision shall expressly contain the restriction on uses and the condition as prescribed in this section which restriction and condition shall be encumbrances running with the land until such time that the land is reclassified to a land use district other than agricultural district.

If the foregoing requirement of encumbrances running with the land jeopardizes the owner or lessee from obtaining mortgage financing from any of the mortgage lending agencies set forth hereinbelow, and said requirement is the sole reason for failure to obtain mortgage financing, then such requirement of encumbrances shall, insofar as such mortgage financing is so jeopardized, be conditionally waived by the appropriate county enforcement officer; provided that such conditional waiver shall thereafter become effective only in the event that the property is subjected to foreclosure proceedings by the mortgage lender.

The mortgage lending agencies mentioned hereinabove are the Federal Housing Administration, Federal National Mortgage Association, Veterans Administration, Small Business Administration, United States Department of Agriculture, Federal Land Bank of Berkeley, Federal Intermediate Credit Bank of Berkeley, Berkeley Bank for Cooperatives, and any other federal, state, or private mortgage lending agency qualified to do business in Hawaii, and their respective successors and assigns.

(c) Within the agricultural district all lands, with soil classified by the land study bureau's detailed land classification as overall (master) productivity rating class C, D, E, or U shall be restricted to the uses permitted for agricultural districts as set forth in section 205-5(b).

(d) Within the agricultural district, designated important agricultural lands shall be restricted to the uses expressly permitted in section 205-D."

SECTION 11. Section 205-5, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Within agricultural districts, uses compatible to the activities described in [section] sections 205-2 and 205-D as determined by the commission shall be permitted; provided that accessory agricultural uses and services described in sections 205-2 and 205-4.5 may be further defined by each county by zoning ordinance. [Other] Except for lands designated as important agricultural lands pursuant to section 205-B, other uses may be allowed within agricultural districts by special permits issued pursuant to this chapter. The minimum lot size in agricultural districts, except for lands designated as important agricultural lands pursuant to section 205-B, shall be determined by each county by zoning ordinance, subdivision ordinance, or other lawful means; provided that the minimum lot size for any agricultural use shall not be less than one acre, except as provided herein. If the county finds that unreasonable economic hardship to the owner or lessee of land cannot otherwise be prevented or where land utilization is improved, the county may allow lot sizes of less than the minimum lot size as specified by law for lots created by a consolidation of existing lots within an agricultural district and the resubdivision thereof; provided that the consolidation and resubdivision do not result in an increase in the number of lots over the number existing prior to consolidation; and provided further that in no event shall a lot, which is equal to or exceeds the minimum lot size of one acre be less than that minimum after the consolidation and resubdivision action. The county may also allow lot sizes of less than the minimum lot size as specified by law for lots created or used for public, private, and quasi-public utility purposes, and for lots resulting from the subdivision of abandoned roadways and railroad easements."

SECTION 12. Section 205-6, Hawaii Revised Statutes, is amended to read as follows:

"205-6 Special permit. (a) [The] Except for lands designated as important agricultural lands pursuant to section 205-B, the county planning commission may permit certain unusual and reasonable uses within agricultural and rural districts other than those for which the district is classified. The county planning commission may permit the uses permitted in rural districts designated for growth pursuant to section 205-E. Any person who desires to use the person's land within an agricultural or rural district other than for an agricultural or rural use, as the case may be, or who desires to use the person's land within a rural district designated for growth for a use permitted under section 205-E, may petition the planning commission of the county within which the person's land is located for permission to use the person's land in the manner desired. Each county may establish the appropriate fee for processing the special permit petition."

SECTION 13. There is appropriated out of the general revenues of the State of Hawaii the sum of $           for fiscal year 2003-2004 to be paid into the agricultural land preservation fund created by this Act.

SECTION 14. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 15. In codifying the new sections added by section 5 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 16. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 17. This Act shall take effect upon its approval.

INTRODUCED BY:

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