Farmland tax bill
gets final vote

The new measure combines land
and crop values to determine
taxes, but allows for a cap

---

The City Council plans to take a final vote today on a revamped method of determining agricultural land taxes, aimed at getting relief to farmers who have been hit with high tax bills.

Described by some as a compromise between the work done by the Council-appointed Task Force on Agricultural Real Property Taxes and Mayor Jeremy Harris' administration, the bill uses a combination of land and crop values in calculating agricultural taxes.

"Overall, we think there has been major philosophical changes in this bill that we feel we can support it," said Alan Takemoto, executive director of the Hawaii Farm Bureau.

The bill came about after an outcry from farmers who said their taxes went up dramatically. They blamed a 2002 ordinance that was supposed to make sure agricultural lands were used for farming by imposing higher taxes on agricultural lands not used for farming, such as those owned by "gentlemen farmers."

That ordinance led to the practice of the city appraising agricultural lands at fair-market value with farmers getting discounts on their taxes if they pledge to farm the land for one, five or 10 years.

But farmers who weren't able to dedicate their farmland found their taxes going up. And so farmers went to the City Council for relief.

The Council passed Bill 35 this summer -- it mandated tax reductions as a temporary tax fix -- but Harris vetoed it. The Council overrode the veto, but the mayor said he was going to ignore it because the bill was illegal and irrelevant.

The controversy over Bill 35 fueled debate between mayoral candidates Mufi Hannemann and Duke Bainum, who authored the 2002 ordinance, over who had the best interests of farmers at heart.

The new measure before the Council continues to use land values as the foundation for determining taxes and farmers will still get discounts for dedicating their lands to farming.

But to prevent rising land values from pushing up taxes, the bill also uses a formula that includes a per-acre valuation of crops to cap taxes at an affordable amount.

City Budget and Fiscal Services Director Ivan Lui-Kwan said that the bill is a melding of proposals including an administration bill that basically retooled the 2002 ordinance to address the concerns raised by farmers during the Bill 35 discussions.

Takemoto said while he doesn't like that the fair-market value is still the basis for determining the taxes, he believes a cap based on crop value is a fair compromise.

But Councilman Charles Djou said that had the bill calculated the taxes solely on crop value he would not have supported it because it would have been too unwieldy and an administrative nightmare to implement.

Council Budget Chairwoman Ann Kobayashi said she will support whatever comes out of the task force.

"They're very committed to getting something done. They don't want to go through what they've gone through this year," she said.

Councilman Gary Okino, who voted against Bill 35 and introduced his own proposed fix, said that except for minor concerns, he supports the proposal, which he believes vindicates the 2002 ordinance. "All it needed was some minor adjustments."