Report Title:

Important Agricultural Lands; Preservation

Description:

Provides incentives for the ownership of important agricultural lands, including exemption from county subdivision ordinances for leasehold subdivisions, transferable development credits, real property and agricultural infrastructure improvement tax credits, and exemption from the use tax. (HB1956 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

1956

TWENTY-SECOND LEGISLATURE, 2004

H.D. 1

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. Chapter 205, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . IMPORTANT AGRICULTURAL LANDS INCENTIVES

205-A Subdivision into leasehold lots. Important agricultural lands designated pursuant to this chapter may be subdivided into leasehold lots to be used solely for the agricultural uses; provided that, except as provided in section 205-4.5, no 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 the expiration or termination of the lease. Leasehold subdivision of important agricultural lands for agricultural purposes shall be exempted from all county subdivision ordinances.

205-B Transferable development credits; allocation. (a) The commission shall issue transferable development credits to the owners of land designated as important agricultural lands.

    1. The commission shall issue one credit for every twenty acres of land designated as important agricultural lands and a pro rata credit for any portion of land under twenty acres.

205-C Transferable development credits repository; registry. (a) The commission shall select one or more federally insured national or state bank to be a repository for transferable development credits.

    1. Any bank selected as a repository for transferable development credits shall maintain a registry of transferable development credits deposited in the bank, which shall include:
    1. The name and address of every owner of transferable development credits deposited in the bank with the tax map key number of the parcel or parcels of land to which the credits have been issued;
    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 and the number of credits from a parcel of land that have not been sold; and
    4. The name and address of the person to whom transferable development credits have been sold and the date of sale.

(c) A repository shall establish a clearinghouse and information source on transferable development credits to assist in matching buyers with sellers of credits.

(d) A repository shall work with the owner of the transferable development credits to determine the minimum value of each credit and, when authorized by the owner, may negotiate the sale of transferable development credits.

(e) A repository may establish a fee or commission to be paid upon the sale of the transferable development credits.

205-D Important agricultural lands incentives. (a) The commission shall appoint an important agricultural lands incentives committee every three years that shall include owners of lands designated as important agricultural lands, members of the commission, members of county land use decision-making authorities designated by the authorities, and the chairperson of the board of agriculture.

(b) The committee shall propose to the commission and the county land use decision-making authorities a state and county incentive program to promote agricultural viability of agricultural enterprises on important agricultural lands and to promote the long-term availability of important agricultural lands for agricultural use.

(c) The committee shall consider in designing an important agricultural lands incentive program measures that enhance agricultural viability on important agricultural lands, including but not limited to:

    1. Grant assistance;
    2. Real property tax systems that support the needs of agriculture, including property tax assessments based on agricultural use valuation;
    3. Reduced infrastructure requirements and facilitated building permit processes for dedicated agricultural structures;
    4. Tax incentives to offset operational costs, promote agricultural business viability, and promote the long-term protection of important agricultural lands;
    5. Agricultural business planning and implementation grants;
    6. Tax incentives and programs for equity investments and financing for agricultural operations;
    7. Programs and mechanisms that promote investment in agricultural businesses or agricultural land protection;
    8. State funding mechanisms to fund business viability and land protection programs; and
    9. Measures that would ensure state capital investments, projects, programs, and rules that are consistent with this part."

SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"46-     Transferable development credits; receiving districts. (a) The counties shall establish zones as receiving districts for utilizing transferable development credits from the designated important agricultural lands.

(b) Within the framework of the county's long-range, comprehensive general plan, the county shall establish development guidelines to allow the use of transferable development credits from designated important agricultural lands 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 a 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 zone.

    1. The 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.

(d) The guidelines 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. The county shall implement a schedule of transferable development credits that provides an incentive for landowners to designate lands as important agricultural lands."

SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"235-A Important agricultural lands; real property tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, who has not taken a deduction for real property taxes paid, a tax credit for real property taxes paid on important agricultural lands designated pursuant to chapter 205, 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 the real property tax paid by the taxpayer on important agricultural lands designated pursuant to chapter 205 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) As used in this section, "taxpayer" includes a lessee who pays the real property tax as part of a lease agreement."

235-B Important agricultural lands; agricultural infrastructure improvement credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an agricultural infrastructure improvement tax credit for improvements made to agricultural infrastructure on important agricultural lands designated pursuant to chapter 205, 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 the cost of improvements made by the taxpayer for agricultural infrastructure for the taxable year in which the improvements were made.

(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) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for improvement costs incurred by the entity for the taxable year. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule.

(d) A tax credit under this section which exceeds the taxpayer's income tax liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(e) The director of taxation shall prepare forms as may be necessary to claim a credit under this section and may adopt rules pursuant to chapter 91. The director may require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section.

(f) As used in this section:

"Agricultural infrastructure improvement" means the planning, design, construction, improvement, altering, or repair of supporting infrastructure used or formerly used by a plantation system or other large agricultural operation, including irrigation systems, roads, and drainage systems.

"Drainage systems" means an agricultural system of channels, ditches, pipes, pumps, and accessory facilities established for the purpose of drawing off water from a land area larger than twenty acres.

"Irrigation systems" means the agricultural system of intakes, diversions, wells, ditches, siphons, pipes, reservoirs, and accessory facilities established for the purpose of providing water for agricultural production.

"Roads" means an agricultural system of cane haul roads or ways established to take agricultural products from the fields to processing facilities without using the public highways."

SECTION 4. Section 238-1, Hawaii Revised Statutes, amended by amending the definition of "use" to read as follows:

""Use" (and any nounal, verbal, adjectival, adverbial, and other equivalent form of the term) herein used interchangeably means any use, whether the use is of such nature as to cause the property, services, or contracting to be appreciably consumed or not, or the keeping of the property or services for such use or for sale, and shall include the exercise of any right or power over tangible or intangible personal property incident to the ownership of that property, but the term "use" shall not include:

    1. Temporary use of property, not of a perishable or quickly consumable nature, where the property is imported into the State for temporary use (not sale) therein by the person importing the same and is not intended to be, and is not, kept permanently in the State. For example, without limiting the generality of the foregoing language:
    1. In the case of a contractor importing permanent equipment for the performance of a construction contract, with intent to remove, and who does remove, the equipment out of the State upon completing the contract;
    2. In the case of moving picture films imported for use in theaters in the State with intent or under contract to transport the same out of the State after completion of such use; and
    3. In the case of a transient visitor importing an automobile or other belongings into the State to be used by the transient visitor while therein but which are to be used and are removed upon the transient visitor's departure from the State;
    1. Use by the taxpayer of property acquired by the taxpayer solely by way of gift;
    2. Use which is limited to the receipt of articles and the return thereof, to the person from whom acquired, immediately or within a reasonable time either after temporary trial or without trial;
    3. Use of goods imported into the State by the owner of a vessel or vessels engaged in interstate or foreign commerce and held for and use only as ship stores for the vessels;
    4. The use or keeping for use of household goods, personal effects, and private automobiles imported into the State for nonbusiness use by a person who:
    1. Acquired them in another state, territory, district, or country;
    2. At the time of the acquisition was a bona fide resident of another state, territory, district, or country;
    3. Acquired the property for use outside the State; and
    4. Made actual and substantial use thereof outside the State;

provided that as to an article acquired less than three months prior to the time of its importation into the State it shall be presumed, until and unless clearly proved to the contrary, that it was acquired for use in the State and that its use outside the State was not actual and substantial;

    1. The leasing or renting of any aircraft or the keeping of any aircraft solely for leasing or renting to lessees or renters using the aircraft for commercial transportation of passengers and goods or the acquisition or importation of any such aircraft or aircraft engines by any lessee or renter engaged in interstate air transportation. For purposes of this paragraph, "leasing" includes all forms of lease, regardless of whether the lease is an operating lease or financing lease. The definition of "interstate air transportation" is the same as in 49 U.S.C. 40102;
    2. The use of oceangoing vehicles for passenger or passenger and goods transportation from one point to another within the State as a public utility as defined in chapter 269;
    3. The use of material, parts, or tools imported or purchased by a person licensed under chapter 237 which are used for aircraft service and maintenance, or the construction of an aircraft service and maintenance facility as those terms are defined in section 237-24.9;
    4. The use of services or contracting imported for resale where the contracting or services are for resale, consumption, or use outside the State pursuant to section 237-29.53(a);

(10) The use of contracting imported or purchased by a contractor as defined in section 237-6 who is:

    1. Licensed under chapter 237;
    2. Engaged in business as a contractor; and
    3. Subject to the tax imposed under section 238-2.3; [and]

(11) The use of material, parts, tools, or equipment imported or purchased by a person licensed under chapter 237 that are used for agricultural infrastructure improvements as defined in section

235-B; and

[(11)] (12) The use of property, services, or contracting imported by foreign diplomats and consular officials who are holding cards issued or authorized by the United States Department of State granting them an exemption from state taxes.

With regard to purchases made and distributed under the authority of chapter 421, a cooperative association shall be deemed the user thereof."

SECTION 5. In codifying the new sections added by sections 1 and 3 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 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2010.