Bill Introduced to End Landowner Tax Abuse

Councilmember Greggor Ilagan meets with Michael Tarring, president of ‘Ohana Banana Farms, in Puna. Courtesy photo.

Councilmember Greggor Ilagan is introducing a bill to close an often-abused loophole relating to the nondedicated agricultural use assessment.

A landowner who wants to get into agriculture production would initially apply for the nondedicated assessment. When the landowner is confident of future agriculture production, a more tax-saving and long-term option is to apply for the 10-year dedicated assessment.

The intent of Bill 219 is to stop a landowner from taking advantage of a tax relief, which was intended to encourage farming when a landowner ceased his or her agricultural activities.

Although the finance director can and does inspect properties for misuse of the nondedicated ag use assessment, the reality is that the existing Hawai‘i County Code needs to be updated to add an inspection process, a decision notification process, and to prevent abuse of the system.

Bill 219 would require the finance department to conduct inspections of land with the nondedicated assessment no later than 10 years since the last inspection. The finance department would also notify applicants whether their application was approved.

Input from the Finance Department, farmers, ranchers, and landowners has been invaluable during the drafting of this bill.

Bill 219 is expected to be heard at the Hawai‘i County Finance Committee meeting of the Council on July 18, 2016, time to be determined.