Report Title:

Important Agricultural Lands; Identification

Description:

Establishes the process to identify important agricultural lands (IAL); requires a study to provide incentives; clarifies that the identification of IALs is contingent upon the enactment of incentives; establishes a process to volunteer lands for IAL designation; provides an agricultural infrastructure improvement tax credit; provides for IAL leasehold subdivisions; makes effective on 7/1/2010; and appropriates funds. (SB3052 HD2)

 

THE SENATE

S.B. NO.

3052

TWENTY-SECOND LEGISLATURE, 2004

S.D. 2

STATE OF HAWAII

H.D. 2


 

A BILL FOR AN ACT

RELATING TO IMPORTANT AGRICULTURAL LANDS.

 

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

SECTION 1. In 1978, voters approved article XI, section 3, of the Constitution of the State of Hawaii, which sets out the framework for state policies to promote agriculture and the conservation of productive agricultural lands in the State of Hawaii. Article XI, section 3, reads as follows:

The State shall conserve and protect agricultural lands, promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands. The legislature shall provide standards and criteria to accomplish the foregoing.

Lands identified by the State as important agricultural lands needed to fulfill the purposes above shall not be reclassified by the State or rezoned by its political subdivisions without meeting the standards and criteria established by the legislature and approved by a two-thirds vote of the body responsible for the reclassification or rezoning action.

Nearly twenty-six years later, the constitutional mandate has yet to be fully implemented. As a result, some high-value agricultural lands have been lost to other uses.

The agricultural district covers approximately 1.9 million acres of land in Hawaii, and is comprised of both good agricultural lands and lands that are unsuited for agriculture or were not cultivated when the land use districts were established in 1963. The large amount of land in the agricultural district and the scarcity of land in the rural district have contributed to the widespread development of residential subdivisions in the agricultural district, especially on the neighbor islands. These residential subdivisions increase the need and demand for public services and public improvements in rural areas, such as schools, libraries, roads, recreational facilities, and police and fire protection, etc. Without further direction as to which lands are most important for agriculture and deserving of further protection, it will be difficult to effectively plan for and appropriately support the protection and long-term

agricultural use of the State’s most important agricultural lands or the conversion of marginal agricultural lands for other uses.

The legislature finds that there is a compelling need to identify the state’s important agricultural lands and assure the long-term availability of these lands for agricultural use to effectively implement state agricultural objectives pursuant to article XI, section 3, of the state constitution.

The legislature further finds that while land is the basic resource for agriculture and the supply of lands suitable for agriculture is an irreplaceable resource, the long-term viability of agriculture also depends on factors that affect the profitability of agriculture, such as commodity prices, the availability of water for irrigation, agricultural research and outreach, the application of production technologies, marketing, and the availability and cost of transportation services. Hawaii’s agricultural producers face operating costs that increasingly threaten the viability of their agricultural operations and the sustainability of agriculture in Hawaii.

Thus, the intent of this Act is to not only set policies for important agricultural lands and to identify important agricultural lands, but to also provide for the development of incentives for agricultural viability in Hawaii, and in particular, for agricultural enterprises farming important agricultural lands and the landowners of important agricultural lands. These incentives would be designed to promote the retention of important agricultural lands for productive agricultural use for the long term or in perpetuity.

The purpose of this Act is to further implement article XI, section 3, of the state constitution by:

(1) Establishing a new part in chapter 205, Hawaii Revised Statutes, setting forth policies and procedures for the identification of important agricultural lands including:

(A) Policies to assure the conservation and availability of important agricultural lands for long-term agricultural use;

(B) Standards and criteria for the identification of important agricultural lands;

(C) A process for the identification of important agricultural lands;

(D) A process allowing landowners to volunteer lands for important agricultural lands designation by the county and the land use commission;

(E) Standards and criteria for the reclassification and rezoning of lands identified as important agricultural lands; and

(F) Policies for incentives for the long-term or permanent retention of important agricultural lands for agricultural use;

and

(2) Providing for a process to develop proposals for state and county incentives to promote agricultural viability, sustained growth of the agriculture industry, and the long-term use and protection of important agricultural lands for agricultural use.

PART I

SECTION 2. 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

§205-A Declaration of policy. It is declared that the people of Hawaii have a substantial interest in the health and sustainability of agriculture as an industry in the state. There is a compelling state interest in conserving the state’s agricultural land resource base and assuring the long-term availability of agricultural lands for agricultural use to achieve the purposes of conserving and protecting agricultural lands, promoting diversified agriculture, increasing agricultural self-sufficiency, and assuring the availability of agriculturally suitable lands pursuant to article XI, section 3, of the state constitution.

§205-B Important agricultural lands; definition and objectives. (a) As used in this part, unless the context otherwise requires, "important agricultural lands" means those lands identified pursuant to this part that:

(1) Are capable of producing sustained high agricultural yields when treated and managed according to accepted farming methods and technology;

(2) Contribute to the state's economic base and produce agricultural commodities for export or local consumption; or

(3) Are needed to promote the expansion of agricultural activities and income for the future, even if currently not in production.

(b) The objective for the identification of important agricultural lands is to identify and plan for the maintenance of a strategic agricultural land resource base that can support a diversity of agricultural activities and opportunities, which expand agricultural income and job opportunities and increase agricultural self-sufficiency for current and future generations. To achieve this objective, the State shall promote agricultural development and land use planning that delineates blocks of productive agricultural lands and areas of agricultural activity for protection from the encroachment of nonagricultural uses, and establish incentives that promote agricultural viability, sustained growth of the agriculture industry, and the long-term agricultural use and protection of these productive agricultural lands.

§205-C Important agricultural lands; policies. State and county agricultural policies, tax policies, land use plans, ordinances, and rules shall promote the long-term viability of agricultural use of important agricultural lands, and shall be consistent with and implement the following policies:

(1) Promote the retention of important agricultural lands in blocks of contiguous, intact, and functional land units large enough to allow flexibility in agricultural production and management;

(2) Discourage the fragmentation of important agricultural lands and the conversion of these lands to nonagricultural uses;

(3) Direct nonagricultural uses and activities from important agricultural lands to other areas and ensure that uses on important agricultural lands are agricultural uses;

(4) Buffer important agricultural lands from urban or incompatible uses and minimize nuisance conflicts that could impair agricultural activities;

(5) Limit physical improvements on important agricultural lands to maintain affordability of these lands for agricultural purposes;

(6) Provide a basic level of infrastructure and services limited to the minimum necessary to support agricultural uses and activities;

(7) Facilitate the long-term dedication of important agricultural lands for future agricultural use;

(8) Facilitate access of farmers to important agricultural lands for long-term agricultural use; and

(9) Promote the maintenance of essential agricultural infrastructure systems, including irrigation systems.

§205-D Standards and criteria for the identification of important agricultural lands. The standards and criteria in this section shall be used to identify important agricultural lands. Lands identified as important agricultural lands need not meet every standard and criteria listed below; rather, lands meeting any of the criteria below shall be given initial consideration; provided that the designation of important agricultural lands shall be made by weighing the standards and criteria with each other to meet the constitutionally mandated purposes in article XI, section 3, of the state constitution and the policy objectives for important agricultural lands in sections 205-B and 205-C. The standards and criteria shall be as follows:

(1) Land currently in agricultural production;

(2) Land with soil qualities and growing conditions that support agricultural production of food, fiber, or fuel and energy-producing crops;

(3) Land producing sustained high agricultural yields for crops, livestock, or timber, when treated and managed according to accepted farming methods and technology;

(4) Land identified under agricultural productivity rating systems, such as the agricultural lands of importance to the State of Hawaii (ALISH) system adopted by the board of agriculture on January 28, 1977, and the land study bureau's detailed land classification as overall (master) productivity rating class A or B;

(5) Land types associated with traditional native Hawaiian agricultural uses, such as taro cultivation, or unique agricultural crops and uses, such as coffee, vineyards, aquaculture, and energy production;

(6) Land with sufficient quantities of water to support viable agricultural production;

(7) Land whose designation as important agricultural lands is consistent with general, development, and community plans of the county;

(8) Land which contributes to maintaining a critical land mass important to agricultural operating productivity;

(9) Land with, or close to, support infrastructure conducive to agricultural productivity (e.g., transportation to markets, water, or power);

(10) Land that will provide a margin for future agricultural needs and opportunities; and

(11) Land fitting any one of these standards or criteria and volunteered for important agricultural lands designation by the landowner.

§205-E Landowner voluntary designation; petition; time; rules. (a) A landowner with land qualifying under section 205-D may petition the county to identify and map the land pursuant to section 205-G.

(b) The landowner shall petition the county within eighteen months from the effective date of this Act on a form prepared by the county.

(c) Any petition or portion thereof that is not denied by the county within one hundred twenty days after the submission of a complete and accurate petition shall be identified as important agricultural lands and mapped pursuant to section

205-G. Any petition or portion thereof that is denied by the county shall be submitted to the respective county council for further action under section 205-G(d). Any petition or portion thereof denied by the county council shall be submitted to the land use commission for consideration and further action under section 205-H.

(d) The county councils of the various counties or the city and county of Honolulu may adopt rules governing this section; provided that any rule adopted shall not conflict with this part or with the rules of the land use commission.

§205-F Incentives for important agricultural lands. (a) To achieve the long-term agricultural viability and use of important agricultural lands, the State and each county shall ensure that their agricultural development, land use, regulatory, tax, and land protection policies, and permitting and approval procedures, enable and promote the economic sustainability of agriculture.

(b) State and county incentive programs shall provide preference to important agricultural lands and agricultural businesses on important agricultural lands. The State and each county shall cooperate in program development to prevent duplication of and to streamline and consolidate access to programs and services for agricultural businesses located on important agricultural lands.

(c) Incentive and protection programs shall be designed to provide a mutually supporting framework of programs and measures that enhance agricultural viability on important agricultural lands, including but not limited to the following:

(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) Other programs and mechanisms that promote investment in agricultural businesses or agricultural lands protection, such as the purchase of development rights;

(8) State funding mechanisms to fund business viability and land protection programs; and

(9) Other measures that would ensure that state capital investments, projects, programs, and rules are consistent with this part.

(d) State and county agencies shall review the protection and incentive measures enacted for important agricultural lands and agricultural viability pursuant to this chapter, at a minimum, every three years, to determine their effectiveness in sustaining agriculture in Hawaii, assuring agricultural diversification, and increasing agricultural self-sufficiency, and to modify measures and programs as needed.

§205-G Identification of important agricultural lands; county process. (a) Each county shall identify and map important agricultural lands within its jurisdiction based on the standards and criteria in section 205-D, except lands that have been designated for urban use by the State or county.

(b) Each county shall develop maps of lands to be considered for designation as important agricultural lands in consultation and cooperation with landowners, the department of agriculture, agricultural interest groups, including representatives from the Hawaii Farm Bureau Federation and other farmer organizations, the United States Department of Agriculture – Natural Resources Conservation Service, office of planning, and other groups as necessary.

(c) Each county through its planning department shall develop an inclusive process for public involvement in the identification of potential lands and the development of maps of lands to be recommended as important agricultural lands, to include a series of public meetings throughout the identification and mapping process. The county planning departments may also establish one or more citizen advisory committees on important agricultural lands to provide further public input. In formulating its final recommendations to the respective county councils, the planning departments shall report on the manner in which the important agricultural lands mapping relates to, supports, and is consistent with:

(1) The standards and criteria set forth in section 205-D;

(2) The county’s adopted land use plans, as applied to both the identification and exclusion of lands from the designation of important agricultural lands;

(3) The comments received from government agencies and others identified in subsection (b); and

(4) The viability of existing and emerging agribusiness.

(d) The important agricultural lands maps shall be submitted to the county council for decision-making. The county council shall adopt the maps, with or without changes, by resolution. The adopted maps shall be transmitted to the land use commission for further action pursuant to section

205-H.

§205-H Adoption of maps of important agricultural lands; land use commission. (a) The land use commission shall consider the county recommendations and adopt maps delineating important agricultural lands, through notice and public meetings in accordance with chapter 92. The land use commission shall act within one hundred twenty days of its acceptance of the county’s report and maps. The adoption of the maps of important agricultural lands shall be approved by two-thirds of the membership to which the land use commission is entitled.

(b) The department of agriculture and the office of planning shall review the county report and recommendations and provide comments to the land use commission within forty-five days of the acceptance of the report and maps by the land use commission. The land use commission may consult with the department of agriculture and the office of planning as needed.

(c) State agency and land use commission review and decision-making shall be based on an evaluation of:

(1) The degree to which the county recommendations result in an identified resource base that meets the definition of important agricultural lands and the objectives and policies for important agricultural lands in sections 205-B and 205-C;

(2) The degree to which the county has met the minimum standards for the mapping process in sections 205-D and 205-G; and

(3) The degree to which the county recommendations are consistent with the general, community, or development plans adopted by the county.

(d) The land use commission shall conduct at least one public hearing in each county to solicit comments and concerns regarding the recommendations for the delineation of important agricultural lands. At the time the commission adopts the maps delineating important agricultural lands, the commission shall adopt a report of findings to include:

(1) Comments received in the public meeting process;

(2) The basis for the delineation of important agricultural lands;

(3) Concerns or issues related to the identified lands;

(4) Any information that may be required to identify the general boundaries of delineated important agricultural lands; and

(5) The availability of important agricultural lands incentives enacted by the legislature.

(e) After conducting a public meeting as required by subsection (a), the commission may adopt the county recommendations and maps for the designation of important agricultultural lands, or return the county recommendations for reconsideration and revision, in whole or in part. If the commission does not concur with the county recommendations in part, the commission shall return the portion of the county recommendations to the county for reconsideration and revision; provided that those recommendations approved by the commission shall have full force and effect. Any revisions and resubmittal to the commission shall be subject to public notice and at least one public hearing in the county. Submittal of revisions, state agency review, and commission decision-making on revisions shall be in accordance with this part.

(f) The commission may designate different lands and adopt different maps pursuant to and in accordance with the standards and criteria set forth in section 205-D, if the commission finds that:

(1) The county has failed to identify important agricultural lands using the standards and criteria set forth in section 205-D;

(2) The county has not followed the public process requirements set forth in section 205-G; or

(3) The county has failed to provide its recommendations to the commission in a timely manner.

(g) Copies of the maps of important agricultural lands adopted under this section shall be transmitted to each county planning department and county council, the department of agriculture, the agribusiness development corporation, the office of planning, and other state agencies involved in land use matters. The maps of important agricultural lands shall guide all decision-making on the proposed reclassification or rezoning of important agricultural lands, state agricultural development programs, and other state and county land use planning and decision-making.

(h) The land use commission shall have the sole authority to interpret the adopted map boundaries delineating the important agricultural lands.

§205-I Standards and criteria for the reclassification or rezoning of important agricultural lands. (a) Any land use district boundary amendment or change in zoning involving important agricultural lands identified pursuant to this part shall be subject to this section.

(b) Upon acceptance by the county for processing, any application for a special permit involving important agricultural lands shall be referred to the department of agriculture and the office of planning for review and comment.

(c) Any land use commission or county decision pursuant to this section shall specifically consider the following standards and criteria:

(1) The relative importance of the land for agriculture based on the stock of similarly suited lands in the area and the state as a whole;

(2) The proposed district boundary amendment or zone change will not harm the productivity or viability of existing agricultural activity in the area, or adversely affect the viability of other agricultural activities or operations that share infrastructure, processing, marketing, or other production-related costs or facilities with the agricultural activities on the land in question;

(3) The district boundary amendment or zone change will not cause the fragmentation of or intrusion of nonagricultural uses into largely intact areas of lands identified by the State as important agricultural lands which create residual parcels of a size that would preclude viable agricultural use;

(4) The public benefit to be derived from the proposed action is justified by a need for additional lands for nonagricultural purposes; and

(5) The impact of the proposed district boundary amendment or zone change on the necessity and capacity of state and county agencies to provide and support additional agricultural infrastructure or services in the area.

Any decision pursuant to this section shall be based upon a determination that on balance the public benefit from the proposed district boundary amendment or zone change outweighs the benefits of retaining the land for agricultural purposes, and that the proposed action will have no significant impact upon the viability of agricultural operations on adjacent agricultural lands.

(d) The standards and criteria of this section shall be in addition to the decision-making criteria of section 205-17 governing decisions of the land use commission under this chapter, and the decision-making criteria adopted by each county governing decisions of county decision-making authorities under this chapter.

(e) Any decision of the land use commission and any decision of any county on a land use district boundary amendment or change in zoning involving important agricultural lands shall be approved by the body responsible for the decision by a two-thirds vote of the membership to which the body is entitled.

§205-J Important agricultural lands; leasehold subdivisions. Important agricultural lands designated pursuant to this part may be subdivided into leasehold lots to be used solely for 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-K Periodic review and amendment of important agricultural lands maps. The maps delineating important agricultural lands shall be reviewed in conjunction with the county general plan and community and development plan revision process, or at least once every ten years following the adoption of the maps by the land use commission; provided that the maps shall not be reviewed more than once every five years. Any review and amendment of the maps of important agricultural lands shall be conducted in accordance with this chapter. In these periodic reviews, serious consideration for removal of the important agricultural lands designation shall be given to those lands where a sufficient supply of water is no longer available to profitably farm these lands due to governmental actions, acts of God, or other causes beyond the landowner’s control."

SECTION 3. 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; 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 that 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 205-3.1, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:

"(a) District boundary amendments involving lands in the conservation district, land areas greater than fifteen acres, or lands delineated as important agricultural lands shall be processed by the land use commission pursuant to section 205-4.

(b) Any department or agency of the State, and department or agency of the county in which the land is situated, or any person with a property interest in the land sought to be reclassified may petition the appropriate county land use decision-making authority of the county in which the land is situated for a change in the boundary of a district involving lands less than fifteen acres presently in the [agricultural,] rural[,] and urban districts[.], and lands less than fifteen acres in the agricultural district that are not designated as important agricultural lands.

(c) District boundary amendments involving land areas of fifteen acres or less, except [in conservation districts,] as provided in subsection (a), shall be determined by the appropriate county land use decision-making authority for [said] the district and shall not require consideration by the land use commission pursuant to section 205-4[. District boundary amendments involving land areas of fifteen acres or less in conservation districts shall be processed by the land use commission pursuant to section 205-4.]; provided that such boundary amendments and approved uses are consistent with this chapter. The appropriate county land use decision-making authority may consolidate proceedings to amend state land use district boundaries pursuant to this subsection, with county proceedings to amend the general plan, development plan, zoning of the affected land, or such other proceedings. Appropriate ordinances and rules to allow consolidation of [such] those proceedings may be developed by the county land use decision-making authority."

SECTION 5. Section 205-4, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) Any department or agency of the State, any department or agency of the county in which the land is situated, or any person with a property interest in the land sought to be reclassified, may petition the land use commission for a change in the boundary of a district. This section applies to all petitions for changes in district boundaries of lands within conservation districts, lands designated as important agricultural lands, and [all petitions for changes in district boundaries involving] lands greater than fifteen acres in the agricultural, rural, and urban districts, except as provided in section 201G-118. The land use commission

shall adopt rules pursuant to chapter 91 to implement section 201G-118."

2. By amending subsection (h) to read:

"(h) No amendment of a land use district boundary shall be approved unless the commission finds upon the clear preponderance of the evidence that the proposed boundary is reasonable, not violative of section 205-2 and part of this chapter, and consistent with the policies and criteria

established pursuant to sections 205-16 and 205-17. Six affirmative votes of the commission shall be necessary for any boundary amendment under this section."

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

1. By amending subsection (a) to read:

"(a) [The] Subject to this section, 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. 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, 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. Copies of the special permit petition shall be forwarded to the land use commission, the office of planning, and the department of agriculture."

2. By amending subsections (c), (d), and (e) to read:

"(c) The county planning commission [may], under such protective restrictions as may be deemed necessary, may permit the desired use, but only when the use would promote the effectiveness and objectives of this chapter[.]; provided that a use proposed for designated important agricultural lands shall not conflict with part of this chapter. A decision in favor of the applicant shall require a majority vote of the total membership of the county planning commission.

(d) Special permits for land the area of which is greater than fifteen acres or for lands designated as important agricultural lands shall be subject to approval by the land use commission. The land use commission may impose additional restrictions as may be necessary or appropriate in granting [such] the approval, including the adherence to representations made by the applicant.

(e) A copy of the decision together with the complete record of the proceeding before the county planning commission on all special permit requests involving a land area greater than fifteen acres or for lands designated as important agricultural lands shall be transmitted to the land use commission within sixty days after the decision is rendered. Within forty-five days after receipt of the complete record from the county planning commission, the land use commission shall act to approve, approve with modification, or deny the petition. A denial either by the county planning commission or by the land use commission, or a modification by the land use commission, as the case may be, of the desired use shall be appealable to the circuit court of the circuit in which the land is situated and shall be made pursuant to the Hawaii rules of civil procedure."

SECTION 7. Section 205-17, Hawaii Revised Statutes, is amended to read as follows:

"§205-17 Land use commission decision-making criteria. In its review of any petition for reclassification of district boundaries pursuant to this chapter, the commission shall specifically consider the following:

(1) The extent to which the proposed reclassification conforms to the applicable goals, objectives, and policies of the Hawaii state plan and relates to the applicable priority guidelines of the Hawaii state plan and the adopted functional plans;

(2) The extent to which the proposed reclassification conforms to the applicable district standards; [and]

(3) The impact of the proposed reclassification on the following areas of state concern:

(A) Preservation or maintenance of important natural systems or habitats;

(B) Maintenance of valued cultural, historical, or natural resources;

(C) Maintenance of other natural resources relevant to Hawaii's economy, including[,] but not limited to[,] agricultural resources;

(D) Commitment of state funds and resources;

(E) Provision for employment opportunities and economic development; [and]

(F) Provision for housing opportunities for all income groups, particularly the low, low-moderate, and gap groups; [and]

(4) The standards and criteria for the reclassification or rezoning of important agricultural lands in section 205-I; and

[(4)](5) The representations and commitments made by the petitioner in securing a boundary change."

SECTION 8. Each county shall submit its report and maps with recommendations for the designation of important agricultural lands to the land use commission no later than twenty-four months from the date of county receipt of state funds appropriated for the identification process. Upon receipt of the county maps, the land use commission shall review and adopt maps designating important agricultural lands to the State in accordance with section 205-H.

SECTION 9. There is appropriated out of the general revenues of the State of Hawaii the sum of $2,000,000 or so much thereof as may be necessary for fiscal year 2004-2005 for grants-in-aid to each of the counties for the identification and mapping of important agricultural lands pursuant to section 2 of this Act.

The sum appropriated shall be expended by the department of agriculture for the disbursement of funds to each county upon receipt of a proposed work plan that is satisfactory to the department for the identification of important agricultural lands pursuant to this Act.

PART II

SECTION 10. (a) It is the intent of this Act:

(1) That agricultural incentive programs to promote agricultural viability, sustained growth of the agricultural industry, and the long-term use and protection of important agricultural lands for agricultural use shall be developed concurrently with the process of identifying important agricultural lands as required under section 2 of this Act; and

(2) That the adoption of important agricultural lands by the land use commission pursuant to section 2 of this Act shall be contingent upon the enactment of legislation establishing incentives for important agricultural lands.

(b) Pursuant to section 205-F, Hawaii Revised Statutes, the department of agriculture, with the assistance of the Hawaii Farm Bureau Federation, shall develop and recommend a package of proposals for agricultural incentives and other measures that promote agricultural viability, sustained growth of the agricultural industry, and the long-term use and protection of important agricultural lands. The department, in consultation with the Hawaii Farm Bureau Federation, may seek the assistance and input from landowners, affected state and county agencies, other stakeholders, and persons with relevant expertise that are necessary to develop and implement a comprehensive and integrated framework of incentives and programs that will promote agricultural viability, sustained growth of the agricultural industry, and the long-term use and protection of important agricultural lands for agricultural use in Hawaii, including tax policy, agricultural business development and financing, marketing, and agricultural land use techniques.

The department of agriculture shall report its findings and recommendations, including proposed legislation, to the legislature twenty days before the convening of the regular session of 2005. The report shall include an analysis of the impacts and benefits of its recommendations, and shall provide the supporting rationale for the incentives being proposed.

(c) Incentives and other programs to promote agricultural viability, sustained growth of the agricultural industry, and the long-term use and protection of important agricultural lands for agricultural use in Hawaii to be considered by the department of agriculture shall include but not be limited to the following:

(1) Assistance in identifying federal, state, and private grant and loan resources for agricultural business planning and operations, assistance with grant and loan application processes, and the processing of grants and loans;

(2) Real property tax systems that support the needs of agriculture, including property tax assessment of land and improvements used or held only for use in agriculture based on agricultural use value rather than fair market value;

(3) Reduced infrastructure requirements and facilitated building permit processes for the construction of dedicated agricultural structures;

(4) Tax incentives that include but are not limited to:

(A) Tax credits for the sale or donation of agricultural easements on important agricultural lands; and

(B) General excise tax exemption for retail sales of farm produce.

(5) Incentives that promote investment in agricultural businesses or value-added agricultural development, and other agricultural financing mechanisms;

(6) Incentives and programs that promote long-term or permanent agricultural land protection, and the establishment of a dedicated funding source for these programs;

(7) Establishment of a permanent state fund and dedicated funding sources to provide moneys for incentives and other programs;

(8) Establishment of a means to analyze the conformity of state-funded projects with the intent and purposes of part I of this Act, and a mechanism for mitigation measures when projects are not in conformance;

(9) Institution of a requirement for the preparation of an agricultural impact statement that would include mitigation measures for adverse impacts for proposed state or county rulemaking that may affect agricultural activities, operations, and agricultural businesses on important agricultural lands; and

(10) Other programs to carry out the intent of part I of this Act.

SECTION 11. Within one year of the adoption of maps of important agricultural lands by the land use commission for the lands within the jurisdiction of each county, all state agencies shall report to the department of agriculture on the impact of projects and programs on the designated important agricultural lands and sustained agricultural use of these lands. State agencies shall develop implementation programs, as needed, to ensure that their programs are supportive of agriculture and consistent with the intent and purposes of this Act.

SECTION 12. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2004-2005 for the development of proposals for incentives and other programs for agricultural development and agricultural land protection pursuant to section 10 of this Act.

The sum appropriated shall be expended by the department of agriculture for the purposes of this Act.

PART III

SECTION 13. In codifying the new sections added by section 2 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 14. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 15. This Act shall take effect on July 1, 2010.