HomeMy WebLinkAbout06/18/2014 Finance & Economic Development Committee minutes MINUTES
FINANCE & ECONOMIC DEVELOPMENT (TOURISM /VISITOR
INDUSTRY/ SMALL BUSINESS DEVELOPMENT/ SPORTS &
RECREATION DEVELOPMENT / OTHER ECONOMIC
DEVELOPMENT AREAS) COMMITTEE
June 18, 2014
A meeting of the Finance & Economic Development (Tourism / Visitor
Industry / Small Business Development / Sports & Recreation Development / Other
Economic Development Areas) Committee of the County of Kaua`i, State of Hawai`i,
was called to order by JoAnn A. Yukimura, Vice Chair, at the Council Chambers,
4396 Rice Street, Suite 201, Lihu`e, Kaua`i, on Wednesday, June 18, 2014, at
11:23 a.m., after which the following members answered the call of the roll:
Honorable Gary L. Hooser
Honorable Ross Kagawa
Honorable Mel Rapozo
Honorable JoAnn A. Yukimura
Honorable Tim Bynum, Ex-Officio Member
Excused: Honorable Mason K. Chock, Sr.
Honorable Jay Furfaro, Ex-Officio Member
PUBLIC COMMENT.
Pursuant to Council Rule 13(e), members of the public shall be allowed a total of
eighteen (18) minutes on a first come, first served basis to speak on any agenda
item. Each speaker shall be limited to three (3) minutes at the discretion of the
Chair to discuss the agenda item and shall not be allowed additional time to speak
during the meeting. This rule is designed to accommodate those who cannot be
present throughout the meeting to speak when the agenda items are heard. After
the conclusion of the eighteen (18) minutes, other members of the public shall be
allowed to speak pursuant to Council Rule 12(e).
There being no objections, the rules were suspended to take public comment.
DON HEACOCK: My testimony is on Bill No. 2546. I strongly
support this Bill because I believe it is a strong tax incentive that will help promote
sustainable agriculture, food security, and food self-sufficiency, and increase the
magnifier affect in our local farming economy for the island of Kauai. First, I want
to read the Federal Register's definition of sustainable agriculture, this is in the
U.S. Farm Bill 1990. Congress defined "sustainable agriculture" as the integration
of plants and animal production practices where waste products from one (1) crop
FED COMMITTEE MEETING 2 JUNE 18, 2014
become nutrient inputs for the other. They are grown by local farmers for local
consumption. They have site specific application that over the long run will:
1) satisfy human fiber and food needs, increase food security and self-sufficiency;
2) enhance environmental quality and natural resource base upon which
agricultural economy depends; 3) make the most efficient of use of non-renewable
resources and on farm resources and integrate natural biological cycles by biological
constraints. They also sustain the economic viability of farm operations. They
enhance the quality of life for farmers and society as a whole. That is the federal,
legal definition as we said here today. Thus, this official or legal definition of
sustainable agriculture has five (5) parts: emphasizing farm productivity, the
production of food and fiber crops through protection and enhancement of
environmental qualities, the efficient use of nonrenewable resources, economic
viability and the protection of the quality of human life. Under this definition of
farm that emphasizes short-term profit, it sacrifices environmental quality or
quality of human life would not be sustainable in the short or long run. From the
other end, pursuing environmental quality without ensuring economic viability of
short-term economic returns also would be unsustainable. A farm that is very
productive but uses large qualities of a non-renewable resource, such as fossil fuel,
or a non-rechargeable aquifer, or one that pollutes aquifer, surface waters with toxic
chemicals to achieve and maintain that productivity would not be considered
sustainable in either the short or the long run. All of these things are basically
listed in our State Constitution to strive to be self-sufficient and independent.
Secondly, in a recent global publication entitled Agriculture at a Crossroads
published by the United Nations Food and Agricultural Organization. This was an
assessment of over four hundred (400) top agricultural scientists around the world.
LORI L. MARUGAME, Council Services Assistant: Three (3) minutes.
Mr. Kagawa: Thank you, Mr. Heacock. Your time is up.
Can you sum it up?
Mr. Heacock: You have my testimony. I am sorry I could
not give you more but I have to take someone to the airport in just a few minutes.
Mr. Bynum: Thank you very much.
Mr. Kagawa: Thank you. Anybody else want to speak
under this public comment period? Please step up. Thank you. If you can please
state you name and your may begin.
ADAM KELLERMAN: My name is Adam Kellerman and I have
been involved in agriculture since 1975. I have a degree from the University of
Hawai`i and Tropical Agriculture. I was employed by McBryde Sugar from 1979 to
1996, until they closed, and I am really concerned about this assault on agriculture
that this Council is doing.
FED COMMITTEE MEETING 3 JUNE 18, 2014
Mr. Bynum: Mr. Kagawa, can I interject just for a...
Mr. Kagawa: Yes.
Mr. Bynum: I just want to make sure that you are aware
that in a minute we are going to go'into Committee in which time you will have six
(6) minutes and Councilmembers could...
Mr. Kellerman: I understand. I do not want six (6) minutes.
I cannot stand to sit here and talk for six (6) minutes.
Mr. Bynum: Okay, I just want to...so you are aware...
Mr. Kellerman: I am just telling you that this Council has
been assaulting agriculture from every angle.
Mr. Bynum: Okay, I will listen. I just want to make sure
you are aware that you have an opportunity to speak longer and have...
Mr. Kellerman: Has my three (3) minutes started yet?
Mr. Kagawa: No. Can we stop and start where we broke
off and just let him have his full three (3) minutes? Thank you. Okay, you may
begin.
Mr. Kellerman: What is agriculture? To me agriculture is
everything growing in the ground. We have sugar, we have rice, we have corn, we
have soybeans, we have flowers, we have algae, we have tobacco, and we have food
crops such as banana. This Bill will affect everybody because the price will go up.
All of these property taxes will go up throughout every farm. Large scale
agriculture is supporting the infrastructure on this island. The water and the
reservoirs is all necessary twenty (20) years from now when we are all gone because
of global warming there is not going to be water in this island and we need to
protect the infrastructure. These large companies are protecting the infrastructure.
Sugar put in millions of dollars, millions of dollars in the infrastructure of this
island. Drip irrigation, agriculture is progressing. We are now looking at
subsurface irrigation. Inject the tube. Leave it in there for eight (8) years but this
all takes time and money. This Bill is killing agriculture and you guys have to
realize that. It is starting. You guys are...GMOs, agriculture...you guys are just
killing jobs and it is already starting. It is already starting. Let us get efficient.
Let us get efficient with the County money. Not raise taxes. Everything...raise
taxes. Do a good bill but this is not agriculture. We need to protect agriculture
today. That is what we need to do and we are not doing it. We are putting
obstacles, in front of obstacles, in front of obstacles and I am involved with water
systems and farming. I farm two and a half (2.5) acres of rice every year for the
FED COMMITTEE MEETING 4 JUNE 18, 2014
California Rice Research Cooperative. They are growing seed for all of the farmers
in California. It is an important business. I employ ten (10) people full time. Full
time, I have not laid anybody off in ten (10) years. But you guys are killing us and
that is all I want to say.
Minutes of the June 4, 2014 Finance & Economic Development (Tourism /
Visitor Industry / Small Business Development / Sports. & Recreation
Development / Other Economic Development Areas) Committee Meeting.
Upon motion duly made by Councilmember Kagawa, seconded by
Councilmember Rapozo, and carried by a vote of 4:0:1
(Committee Chair Chock was excused), the Minutes of the June 4, 2014
Finance & Economic Development (Tourism / Visitor Industry / Small
Business Development / Sports & Recreation Development / Other Economic
Development Areas) Committee Meeting was approved.
The Committee proceeded on its agenda item, as follows:
Bill No. 2546 A BILL FOR AN ORDINANCE AMENDING CHAPTER
5A, KAUAI COUNTY CODE 1987, AS AMENDED,
RELATING TO REAL PROPERTY TAXES [This item •
was Deferred to August 20, 2014.]
Mr. Hooser moved to approve Bill No. 2546, seconded by Mr. Kagawa
Ms. Yukimura: I will allow the introducer of the Bill to
speak or are you speaking instead?
Mr. Hooser: No. We can let the introducer speak. I
wanted to state for the record that this Bill does not raise any taxes whatsoever.
This Bill merely creates another category of taxation which granted may provide
the opportunity to raise taxes but does not cost any...raise any taxes at the present
time and merely creates another category such as we have now. We have several
tax categories. I think it is important for the public to understand that we have a
hotel/resort category, we have a vacation rental category which is similar but
different, we have a homestead category for people that live in their houses, we
have a rental category, we have a commercial and industrial category, and so this
merely creates another category of agricultural use and I just want to get that on
the record.
Ms. Yukimura: Thank you. So I will have the introducer of
the Bill to speak and then we will open it for public input and testimony and then I
will call our Finance Director up for his input and then we will come back to
Committee discussion. I would like to ask the introducer to explain the purpose of
FED COMMITTEE MEETING 5 JUNE 18, 2014
the Bill and why he has introduced it and what you hope it will accomplish and save
arguments, if you will, for later. And then we will go to public input. Mr. Bynum.
Mr. Bynum: Thank you very much, Chair. Noting that I
am not currently a member of this Committee, I would like to give a brief overview
of why this Bill is here and what I think its purpose and its intention is, and then I
would like to read two (2) documents that are germane to this discussion and give
context and understanding about why this Bill is important and why it is being
introduced.
Ms. Yukimura: Okay, we are going to do a five (5) minute
timing if we can subject to discretion of the Chair.
Mr. Bynum: Then I would like to set myself a timer.
Ms. Yukimura: And we have the time going also.
Mr. Bynum: We have had an agriculture dedication bill
for many years that promotes agriculture and the idea of the bill and any of you can
read it. It is pretty complex. It has been through a lot of iterations and it has
administrative rules that are complex. And it has been around for many years and
the basic law says we want to keep agriculture in production. We do not want it
sitting fallow. We want it producing a product. That becomes part of our commerce
and those products and that employs people and those products generate other
revenue for government through GE and through other ways, specifically for State
and County government. The law, you can read it for yourself. Its intention is it
tells us tell us what product is being produce, is it corn, is it this, is it ranching, is
it...give us the GE, tell us who has the leases and for how long. Because you are
basically are saying I dedicate this to agriculture for ten (10) or twenty (20) years to
this lessee to produce this product and then you do not pay market taxes. You pay
taxes based on what the land produces which is much, much less than market
taxes. So the practice has been for landowners forever to have this all....to have
much of their land in production and that is what we all want.
Now I am going to reading these documents. This law simply says and asks
the question this new use of agriculture land that is happening that does not
produce a product, I do not believe was ever eligible for these tax benefits but I am
not arguing that. This Bill clarifies that going forward if you are doing parent seed
and research use of the land that produced no product that is sold to someone,
either wholesale or retail, you are no longer eligible for this incentive, this tax
incentive. And then it further says if you are using this land in this purpose
consistent with us going to taxation by this use we are going to put into a different
category and let a future Council decide what the appropriate rate should be, either
lower or greater or whatever. But is not going to be part of the agriculture
dedication system it will be in its own tax category. Now, people have asked really
FED COMMITTEE MEETING 6 JUNE 18, 2014
good questions in the testimony which I have read from both sides and we need time
to clarify that. I am going to move to these documents that I am going to read as
quickly as possible. Agricultural has a long and proud tradition on Kauai. We
honor and celebrate land in production along with the rural lifestyle and character.
We support agriculture. We accept minor inconveniences and our laws protect
farmers from inappropriate nuisance lawsuits by neighbors. However, we are
finally getting access to information long withheld something vitally important is
becoming very clear. The agricultural research practices of the seed companies on
Kaua`i are far different than agricultural production practices we have traditionally
chosen to support. Big changes have occurred on Kaua`i that impact our quality of
life, our health, our economy, and our future. Many of these changes and forces are
from outside of Kaua`i and are increasingly impacting our community and our
collective future. Many residents are not aware of the important issues and the
magnitude of the impacts because facts that have been kept from us are just
beginning to be revealed. These facts are being revealed in no small part because of
empowered grassroots community efforts, led by young hama`aina families.
Important and very serious questions are being posed. This engagement for all its
tension and all the rhetoric you have heard is positive. It gives our community the
important opportunity to learn these facts, have a collective dialogue and control
our own destiny. What changes am I talking about? Local kama'aina food
producers have lost their land leases, their investments, and their businesses
replaced by seed/chemical companies that now uses the same land for agriculture
research that produces no product for Kauai or anyone. The primary use of prime
agricultural land on Kauai has transitioned from production use of agricultural
land that is part of the commerce of our island, agriculture that produces a product
that is sold, to the research use of agricultural land that produces no product. The
vast majority of plants grown here by the seed/chemical companies are destroyed
and only their researchers use the seeds grown here. The seeds are not eaten or
used by other farmers. They are experiments, not food. Because there is no
production for sale from agricultural research the seed/chemical companies do here
government has lost tax revenues that these lands used to generate. While state
and local government lose GE and other revenue from the loss of agricultural
production local taxpayers are paying higher taxes to make up the difference in
effect subsidizing this transition of land use on Kauai. However the biggest and
most important change that was hidden from us is that the relatively infrequent
and low quantity, relatively low infrequent and low quantities of pesticides applied
in production agriculture...
Ms. Marugame: Five (5) minutes.
Mr. Bynum: ...has been replaced by extremely high
frequency and quantities...
Ms. Yukimura: Excuse me.
FED COMMITTEE MEETING 7 JUNE 18, 2014
Mr. Bynum: ...of pesticides used for research and
conducted...yes.
Ms. Yukimura: Councilmember Bynum, your five (5)
minutes is up. Can you summarize?
Mr. Hooser: Point of order, Chair. According to Rule
No. 6, "if the maker, the sponsor of the matter before the board has up to twenty
(20) minutes to speak." I would encourage you to allow that Councilmember to
continue.
Ms. Yukimura: May I see? Thank you.
Mr. Rapozo: Madamee Chair, but Mr. Bynum is not a
member of the Committee.
Mr. Hooser: It does not say...it says "sponsor of the
matter pending."
Mr. Rapozo: Okay, it is the call of the Chair.
Ms. Yukimura: So, I will allow Mr. Bynum...
Mr. Rapozo: How many people...I am just curious how
many people we have waiting to testify.
Ms. Marugame: We have five (5).
Ms. Yukimura: So I will allow the speaker to continue.
Thank you.
Mr. Bynum: I am trying to read fast. I am through one
(1) page of four (4) pages since I started reading so if I may continue. However, the
biggest and most important change that was hidden from us is that the relatively
infrequent and low quantities of pesticides applied in production agriculture have
been replaced with extremely high frequency and quantities of pesticides use for
research conduct on numerous plots by the seed/chemical companies. Again these
research plots and larger fields of what they call "parent seed" do not produce a
product that is sold to farmers or any end consumer that I am aware of. The key
question I have wanted answered is this: How is pesticide use related to research
practices occurring here on Kaua`i different that the pesticide use in production
agriculture? We have been told for years and at recent public hearings they are just
responding to pests in the field like other farmers. The real answer to me is
practically inconceivable. Look at the difference. First with frequency, Kauai
Coffee used pesticides while producing their agricultural product and to the best of
FED COMMITTEE MEETING 8 JUNE 18, 2014
my knowledge these facts are true and they have not been disputed. They spray
about eight (8) times per year. Long periods of time go by between sprayings when
there is no potential for neighbors to be impacted whether they are buffer zones or
drips or not. Because you spray pesticides you do not expect to have to spray them
again the next day because they are going to work, right. So how often do
seed/chemical companies spray while conducting agricultural research? The
documents obtained through a federal court order confirm that Dupont Pioneer in
Waimea has sprayed multiple fields on an average of two hundred forty (240) times
per year. No, that is not a typo. It means that pesticides are being sprayed four to
six (4— 6) times per week, week in and week out throughout the year with potential
exposure occurring almost every day. That is just frequency. What is more
important maybe is quantity. Production agriculture in the United States typically
used about one (1) pound per acre to a pound and a half of restricted use pesticides
in a year. The highest use in the United States is on tobacco in Kentucky and
North Carolina and it could be up to two (2) pounds or more of restricted use
pesticides. Dupont Pioneer in Waimea has used over eight (8) pounds per acre per
year on some fields. More than four (4) times the heaviest use in production
agriculture in the country. No one will explain why if production agriculture
farmers need at the most two pounds to respond to pests, why Dupont Pioneer
needs to apply four (4) times as much in Waimea? Unfortunately this discussion is
just the time tip of the iceberg. There are other pressing issues to discuss including
our State's too little, too late response on this and other malama aina issues. Our
natural environment, particularly the reefs, is in a stressed condition from multiple
sources including pesticide runoff and soil erosion from intensive or improper use of
agriculture lands. Less than twenty (20) years ago the entire coral system in the
Florida Keys collapsed. This is really serious stuff. Although I am pleased that
some in the State legislature seem to have discovered the importance of these
issues, their baby steps take this year should not change Kaua`i County's efforts to
fulfill our oath to protect the health and safety. The second document is a letter
that I sent to the Mayor on May 28, 2014. Dear Mayor Carvalho in the process of
investigating the agriculture dedication law, I discovered what appears to be
numerous serious violations of County law in at least two (2) specific and significant
areas, Real Property Tax and the grading and grubbing/environmental laws
connected to the filing of conservation plans. First there appears to be a failure to
properly adjust property taxes required by law when land ceased...
Ms. Yukimura: Excuse me. Okay.
Mr. Bynum: Do you have a point of order?
Ms. Yukimura: No, I am the Chair. But I intend to allow
you to read all of this. Can you stop the clock for a second? And I just want to make
clear what I think is important that these are allegations and interpretations of the
law right.
FED COMMITTEE MEETING 9 JUNE 18, 2014
Mr. Bynum: Excuse me. Read the letter and then
comment please.
Ms. Yukimura: Okay.
Mr. Bynum: Let me read this letter. I am always
interrupted on this floor, always and I am nine and a half (9.5) minutes in and I
want to read this letter and then...
Ms. Yukimura: Alright. But I just...I do not believe you
have actually got a legal determination on this.
Mr. Bynum: Excuse me.
Ms. Yukimura: But I believe that it is very good that you are
putting forth what your thoughts and interpretations are.
Mr. Bynum: Can I continue?
Ms. Yukimura: Certainly you may continue.
Mr. Bynum: Dear Mayor Carvalho in the process of
investigating the agriculture dedication law I discovered what appears to be
numerous serious violations of County law in at least two (2) specific and significant
areas, Real Property Tax and the grading and grubbing/environmental laws
connected to the filing of conservation plans. First...
Ms. Yukimura: Excuse me. So I just want you to clarify this
is related to your Bill?
Mr. Bynum: The first sentence says in the process of
investigating the agriculture dedication law. These are related matters.
Ms. Yukimura: And the law is proposed to...
Mr. Bynum: And the law is before us at Council right
now.
Ms. Yukimura: The changes proposed in the law are to
address some of these things?
Mr. Bynum: Absolutely.
Ms. Yukimura: Alright. Thank you.
FED COMMITTEE MEETING 10 JUNE 18, 2014
Mr. Bynum: Okay. Dear Mayor Carvalho in the process
of investigating the agriculture dedication law I discovered what appears to be
numerous serious violations of County law in at least two (2) specific and significant
areas, Real Property Tax and the grading and grubbing/environmental laws
connected to the filing of conservation plans. First, there appears to be a failure to
properly adjust property taxes required by law when land ceased active agricultural
use and/or use changed. The law clearly requires a change of use petition when use
or lessees change. Administrative rules are clear and the burden is on the
landowner. The law calls for repayment of back taxes. Different agricultural uses
are taxed at different rates. So if we do not know about the changes we are taxing
them at the wrong rates. In one (1) tax map key (TMK) in question, urban zoned
land was reclassified as agriculture dedication in 2010 without any evidence that
required dedication petitions were received and processed in a timely manner. On
just this one (1) parcel alone the loss of County tax revenue starting in 2010 is over
two hundred fifty thousand dollars ($250,000) per year or over one million ninety
six thousand dollars ($1,096,000) from 2010 to 2014. I will go off of the topic and
say that this is a dramatic number because it is an urban zoned land so the
numbers are not as great as other parcels.
Ms. Yukimura: Now, Mr. Bynum. I still would like to ask
you to...is this Bill actually proposing to make changes to this problem?
Mr. Bynum: I want a ruling about whether I can continue
reading this letter uninterrupted.
Ms. Yukimura: Okay. Go ahead.
Mr. Hooser: I would suggest that we let Councilmember
Bynum continue the letter and then discuss it afterwards. The Bill before us
clearly...the second part of the Bill is requesting that the Administration to provide
information on agriculture dedication and his letter directly applies to this. It
points out that they have not...this information is not available and it is directly
applicable to the Bill that is before us and he has been interrupted three (3) or four
(4) times already and I ask that he would be allowed to finish the letter and then we
can engage in discussion. It is clear to me that it is directly relevant to the Bill that
is before us.
Ms. Yukimura: I will agree with that and allow Mr. Bynum
to continue. I think as long as it is somehow related to the subject Bill and your
point about information as to the working to the agricultural dedication law is
relevant. Go ahead, Mr. Kagawa.
Mr. Kagawa: I kind of feel like it is...the allegations of
wrong doing or improper use is not relevant to the Bill right now. If we want to talk
about that we should have another agenda that specifically says what we are trying
FED COMMITTEE MEETING 11 JUNE 18, 2014
to investigate. This Bill has nothing to do with specific allegations of pass so I mean
let us keep on topic and it is fine if he takes twenty (20) minutes but I mean to go
into an area that is not covered by this Bill is to me not proper and not properly
agenda.
Ms. Yukimura: I believe both Councilmember Kagawa and
Councilmember Hooser have good points. This is a judgment call. As Chair I will
allow the introducer of the measure to continue for whatever time is left. Go ahead
Mr. Bynum.
Mr. Bynum: Just to finish this discussion that everyone
else was engaged in, I believe we are totally off our rules right now. I had the floor
the rules require a point of order to interject. The Chair just interjected and started
this whole dialogue. I am making now a point of order. I want a ruling from the
Chair or the Committee about whether I will be able to continue to read this
document uninterrupted.
Ms. Yukimura: I just gave you the ruling. Please proceed.
Mr. Bynum: On one (1) of the tax map keys in questioned,
urban zoned land was reclassified as...I already read this. I had been inquiring
about the appropriateness of agricultural dedication for over a year. I had a
meeting with the Office of the County Attorney on August 13, 2013 thereafter I
submitted my first request in writing for documents in September 13, 2013.
Astonishingly, the Administration said that they were not able to provide a
complete set of information about dedicated lands. I asked for information on just
three (3)...so it is like hey, we are giving big tax benefits. Who has what leases on
what lands and what is the fiscal impact? Cannot tell me. Months and months
later still cannot tell me. How do we make informed decisions about our tax policies
when we do not even know who has what lands and we are giving tax benefits? So I
said just give me three (3) then. Just give me every piece of paper you have on
three (3). I asked for information on just three (3) sample affected parcels. These
documents were supplied and it was immediately clear that all of the documents
were not provided and a second batch was found. To this day I have not been
assured that all related document to these three (3) parcels have been found and
provided. When I finally received the petitions requested on the three (3) parcels,
"new" agricultural dedications were processed, dated and approved just days before
the documents were provided to me. Yet the contracts submitted with these new
leases and new uses were dated years earlier. The document provided for these new
petitions include in my opinion conclusive evidence that the current evidence of the
breach of the existing petitions. These new petitions should clearly not have been
processed and approved and the measures under the law that these breached
petitions must be initiated if they have not been already. The law says you do not
follow this we have to institute some civil proceedings to deal with it. That has not
happened that I know of. Related is the failure of the landowners or their lessee to
FED COMMITTEE MEETING 12 JUNE 18, 2014
obtain any conservation plans for their new operations and uses of the land. The
conservation plans I acquired that cover most of the new seed company operations
on Kaua`i they are dated February 2011, years after changes in lessee and use
actually occurred. This indicates that vast operations prior to that time were
occurring with none of the health and safety or environmental protections required
by law in place. The flagrant disregard of these fundamental health and safety and
farming laws means thousands of violations of County grading and grubbing
ordinance occurred. As I have always stated, these laws are designed to protect the
health and safety of our residents and the environment. I understand that reports
of serious environmental damage have already been investigated. These tentative
conclusions come from examining the public record for just three (3) parcels in
Lihue and Puhi. It appears that an investigation and audit of this conduct will
reveal that this abuse has been the norm and is prevalent. Collection the set of
information upon which these preliminary conclusions are based has been daunting
and the delays, omissions and timing of the eventual release is troubling. The
analysis has also often based on the absence of documents demonstrating
compliance with the law. It is essential that there is an accurate and complete data
set for each tax parcel. Our current failure as a County to keep accurate records is
unacceptable. Especially when it involves money and deeds and these changes get
recorded in the deed documents. Environmental laws have been ignored. Where
there complaints received from the public that were not properly followed up? Are
there other additional instances of runoff into streams, rivers and the ocean in the
absence of approved conservation plans? Are we required to report this to other
authorities? Are there potential federal violations?
Ms. Yukimura: You have five (5) minutes more. Just to let
you know.
Mr. Bynum: Please accept this letter informing you of
these very serious matters. We both took an oath to uphold the laws of the United
States, the State of Hawaii, and the County of Kaua`i, and it is our duty to
investigate these matters and report them to the proper authorities. On the advice
of counsel and in order to fulfill my responsibility, I am also preparing letters
reporting these concerns to law enforcement at several levels. I believe additional
action is required to fulfill our collective responsibilities in these matters. Finally, I
believe it is important to act now to secure all potential related documents, both
hard copy and electronic and I am formally requesting such action be taken
immediately. I remain committed to working with you, Mayor and your
Administration in resolving these issues and improving the laws in order to
effectively protect the environment and the health and welfare of the community.
This is a serious letter. I have met with the Mayor. I am a policy maker. I
am not an investigator. I have asked for assistance on this investigation and to look
at these documents for over six (6) months from the County Attorney's Office and
others and that assistance has not been forthcoming for whatever reason. I am
FED COMMITTEE MEETING 13 JUNE 18, 2014
saying to the Administration there are laws that have very specific requirements of
us to proceed when we are notified. I want to know the status of those laws and I
trust that our Mayor will respond appropriately in his leadership role to take these
matters seriously and so because separation of powers that is the administration. I
have met with the senior people at the administration just yesterday. They
understand and they are analyzing what their appropriate response should be but I
understand it. I know what their appropriate response would be. A lot of it is
outlined in this letter. Now the Council has additional actions that we can take if
necessary. This is related to this Bill because it all started with this simple notion
is this activity that I have described here something that the people of Kaua`i want
to subsidize with their tax subsidies? This is not redefining agriculture. What the
seed companies do here is part of agriculture commerce, no question. This redefines
agriculture for tax purposes for the County of Kaua`i only and it says this use of
land that uses the land purely for research and the things you grow here do not get
sold to anyone, wholesale or retail, we do not want to continue to subsidize that
because you are also taking that land out of the opportunity that we chose to
subsidize, sustainable agriculture, food, fuel, and fiber. The same goals that
Mayor's Holoholo 2020 has, the same goals that Governor has, the same goals of our
State Constitution. This is totally germane. I am done. There is really good
questions that are being asked about how do you define ultimate consumer and
have read all of the landowners testimony. Let us begin the dialogue and let us
talk.
Ms. Yukimura: Very good. Thank you, Mr. Bynum.
Councilmember Kagawa.
Mr. Kagawa: Question for the maker.
Ms. Yukimura: Sure.
Mr. Kagawa: Councilmember Bynum, did you get a
County Attorney opinion prior to submitting this?
Mr. Bynum: I am really glad you asked that and the
documents that I have provided the Mayor and I will provide to anyone, they are
public records is that I reached out to the County Attorney months and months ago.
They were supplied all of these and requested their assistance in making this Bill
because of its complexity. Jennifer Winn was someone I worked with for many
years. She was the tax person. She is gone from the County Attorneys' Office. So
the answer is not only did I send it to them but I asked them to be engaged and
involved in all of this from the beginning and in the final run for whatever reason
that input came too little, too late and it was our staff person, Ashley Bunda who
did the heavy lifting here and has done yeoman's work on this in spite of not getting
the assistance I needed from the County Attorney. Now if we go into it further, the
FED COMMITTEE MEETING 14 JUNE 18, 2014
County Attorney gave me things in writing I never requested but I do not want to
go into that right now.
Mr. Kagawa: My question was we had Bill No. 2491 pass.
We had legal concerns. Now it is Ordinance No. 990 [sic] and I was just wondering
that because it is related was any thought given to getting that legal opinion first?
Mr. Bynum: I do not know how I possibly could have been
more proactive about...I met with the County Attorney and Jennifer and our staff
and said "look, I want your help with this. I want to author a bill that you have
cleared in advance and you have all of your manao in on it." Jennifer Winn was
given all of these documents and a request was made for them for here to analyze
and see if they come to the same conclusions that I have come to. That never
happened. So the answer is yes, extremely proactive I was but the response was
inadequate.
Mr. Kagawa: The last question is the goal of this Bill is it
to possibly enable us to more fairly collect more taxes for the agricultural?
Mr. Bynum: All of my work as Finance Chair has been
about fair taxation and that is in the public record and all of the efforts that I have
made. If you were here the other day, Mr. Kagawa when on a Comprehensive
Economic Development Strategy (CEDS) issue we had a Special Counsel that went
out and he not knowing anything about this said and had been interviewing
farmers and the farmers where asked, "what can the County do for you," and their
unsolicited response was these guys that are not producing a product are getting
tax benefits that is not fair to me. That came totally unsolicited so yes this is about
fair taxation. If you read the existing Bill it says it clearly intended that whatever
was being produced was producing a product that generated GE revenue whether it
was wholesale or retail. So for instance you grew flowers now so let me say that
this Bill does not impact anyone who sell including the seed companies who sell a
product to another farmer, another consumer anywhere in that chain. But what the
seed companies do here is purely research. The seeds that they send off island go to
their researchers who do further research on them. That is the intent of this Bill, if
you are purely doing research, it is not something we choose to incentivize in taxes
and we are going to place it in a separate tax category which is consistent with our
taxation by use trend we have been doing for several years and then the Council can
decide if it is successful what the proper rate should be. Someone might argue that
the rates should be zero for this agricultural use. So I hope I am answering your
question.
Mr. Kagawa: My follow-up to that is that if it is about fair
taxation that is why even more so I would want to get the County Attorney's
opinion because the Federal Government and the State Government say that
Experimental Seed Farming is farming and for our County to treat them differently
FED COMMITTEE MEETING 15 JUNE 18, 2014
to me, there is preemptive issues and that is why I wanted the County Attorney's
opinion first. I do not want to see us pass another bill that may be challenged and
that is my concern.
Mr. Bynum: May I please respond to him?
Ms. Yukimura: I think you answered him but go ahead.
Mr. Bynum: Absolutely and but I just want to clarify that
this is not saying this is not farming. It is saying this is not something we
traditionally have supported with tax and in clarifying our intention is not to
continue to give these County tax incentives. This is really a County fiscal matter.
Ms. Yukimura: Okay, thank you. I just want to clarify that
the Special Counsel you referred to from the CEDS project was actually a special
consultant not an attorney. Mr. Hooser and then I want to open it up for
input/testimony from the public.
Mr. Hooser: If I can address the issue that is on the table.
I agree that we need to look very closely at it and need to have the County Attorney
on board with this but I think it is very clear that County has a legal authority to
authorize different categories of property taxes as we do with the hotel/resort, or
vacation rental. Some counties do timeshares as a separate one. So clearly we have
the authority to separate categories. The second part of the Bill is simply asking
the Director to provide an annual report which I think we clearly have the authority
to do that without question of having to ask an attorney. So the question really
comes down to, in my opinion, is the definition that we are addressing and I think
that is the debate is going to end up. The question how we define the activities that
deserve to be in a certain category and that is the crux of the matter would be so
thank you.
Ms. Yukimura: Thank you. I want to clarify here whether
we did in fact get the conventional County Attorney's opinion as to legal sufficiency.
I know Councilmember Bynum that you certainly brought in the County Attorney's
Office on the issue of agriculture dedication and the problems of agriculture land
assessment but did we or did we not get an opinion of legal sufficiency but we
always do, we try to do with all of our bills?
Mr. Bynum: This should be a simple answer and because
of recent...
Ms. Yukimura: (Inaudible)
Mr. Bynum: No, I do not have it yet. What I have is the
County Attorney failed to provide responses that were requested. There is a whole
FED COMMITTEE MEETING 16 JUNE 18, 2014
paper trail that you can all look at related to this but they actually answered
questions that I never asked, generated opinions that I never requested. They
generated an opinion that was withdrawn because it was not even germane and I
am not saying that this was on purpose. This has been an incredibly intense time
in the County and Jennifer Winn was the go to person. Mona came in to step up
and it just did not go well and you know who could answer this question...we had a
meeting specifically about this with our staff and I think the best person to answer
this would be our Deputy County Clerk if you want to pursue it further.
Ms. Yukimura: If there is no further discussion amongst the
Councilmembers, let us proceed to public testimony. Do we have people signed up?
Ms. Marugame: Yes, we have five (5) registered speakers.
First registered speaker is Stephanie Iona followed by Tom Shigemoto.
There being no objections, the rules were suspended to take public testimony.
Ms. Yukimura: Ms. Iona. Please state your name and
proceed. Thank you for being here.
STEPHANIE IONA: Good afternoon, Councilmembers, Ms.
Yukimura. My name is Stephanie Iona and I am basically just going to give an oral
testimony on a written testimony that was provided by the Hawaii Crop
Association that should be on record. I am just going to take three (3) minutes.
Hawai`i Crop Improvement Association (HCIA) requesting seed farming operations
on Kauai is opposed to Bill No. 2546. State and County governments readily
support science and technology initiatives as a way to build and grow local
economies in creating living wage jobs. Bill No. 2546 in fact will do just the opposite
by creating the special tax classification for subset of the agriculture industry that
inherently discourages innovation. Passage of this Bill would send a negative
signal to any industry that relies on innovation to create jobs and contribute to the
local economy. Business sectors should not be targeted for discriminatory
treatment. This particular agronomic desonation is unquestionably meant to
hinder and limit a specific group of farmers and it sends a broad, negative message
about Kauai County as a place to conduct farming operations. The rest is of record
and I just want to say the proposed Ordinance it represents bad policy and we ask
the County Council not to move it forward. HCIA and our member companies
support all types of agriculture and want to see all sectors of agriculture thrive.
Thank you for the opportunity to provide oral testimony.
Ms. Yukimura: Thank you very much. Are there any
questions? Councilmember Hooser.
Mr. Hooser: Yes, Ms. Iona, you are representing...who
are you representing?
FED COMMITTEE MEETING 17 JUNE 18, 2014
Ms. Iona: HCIA, Hawaii Crop Improvement
Association, Mr. Hooser.
Mr. Hooser: And who are the members of the Hawaii
Crop Improvement Association.
Ms. Iona: The members are the seed organizations.
Mr. Hooser: And that is...Syngenta...
Ms. Iona: Syngenta, Dow Agrosciences...
Mr. Hooser: Dow Agro...
Ms. Iona: DuPont Pioneer, BASF.
Mr. Hooser: And BASF. Those four (4). Okay, thank you
very much.
Ms. Iona: And there might be other members but those
are ones that are predominate.
Mr. Hooser: Okay and are you an employee of the Hawaii
Crop Improvement Association?
Ms. Iona: I am an employee of Dow Agrosciences as of
January of this year.
Ms. Yukimura: Thank you.
Mr. Hooser: Thank you.
Ms. Yukimura: Any other questions? If not, do we have their
written testimony on record or would you mind making available what you have?
Ms. Iona: I believe it was sent in. I do not have an
original copy.
Ms. Yukimura: We do have it. Okay, thank you.
Ms. Iona: Ms. Yukimura, I just want to state one (1)
thing.
Ms. Yukimura: Sure.
FED COMMITTEE MEETING 18 JUNE 18, 2014
Ms. Iona: There was indication on the letter that was
read with regard to conservation practices and I do want to just make mention that
Dow Agrosciences along with I believe is the Wooton family won the 2013 award for
conservation and I happen to take it out of my office as I was leaving. So I do want
to let you know that we did win an award and we do abide by all laws and
conservation laws for the State of Hawaii. So we won this award. Yes, Mr.
Bynum?
Mr. Bynum: Was Dow Agrosciences abiding by the law in
2009 and 2010 prior to...
Ms. Iona: Dow Agrosciences abides by all laws, Sir.
County, State...we abide by all laws, County, State...
Mr. Bynum: So Dow Agrosciences had an approve
conservation plans for their operations to 2011?
Ms. Iona: Yes, sir. As far as I know, yes sir. I was only
employed as I said from January this year.
Mr. Bynum: The County has not been able to provide
them to me and I just want to let you know.
Ms. Iona: Well that is between you and the County, sir.
If you would have wanted one from us, I am sure we could provide it.
Mr. Bynum: So could Dow provide those conservation
plans that they...
Ms. Iona: If the County requested it sir, I would be
happy to do it.
Mr. Bynum: Consider it requested.
Ms. Iona: Well I...put it writing sir.
Mr. Bynum: Thank you.
Ms. Iona: Thank you.
Ms. Yukimura: Thank you, Ms. Iona. Next speaker please.
Ms. Marugame: Next speaker is Tom Shigemoto followed by
Anne Punohu.
FED COMMITTEE MEETING 19 JUNE 18, 2014
Ms. Yukimura: It is afternoon. Good afternoon, Tom.
TOM SHIGEMOTO: I was wondering whether to say good
afternoon or good morning. Good afternoon, Councilmember Yukimura, Members of
the Committee. For the record my name is Tom Shigemoto. I am testifying in
opposition to Bill No. 2546. The testimony I am about to deliver is in addition to the
written testimony that was submitted last week and so I just wanted to make that
clear for the record. Now regarding the Bill, it is not clear to me what the intent
and purpose of this particular Bill is. I do understand that it is to include another
tax class but the findings and purpose section does not really explain why. Is it to
increase the County's tax coffers? If, as Councilmember Hooser stated, this Bill will
not raise taxes then what is it for? Is there an urgency to create this new tax class?
Is it subterfuge for penalizing the seed corn company or is it directly aimed at the
seed corn companies? You heard testimony from Adam Kellerman, now these are
the guys that will really be affected and you should really pay attention because
these are the guys that till the soil and they are smaller farmers but that is the kind
of unintended consequences this particular Bill can have. So that should be...his
testimony should really be taken into serious consideration. The new tax
classification and I quote from the Bill, "shall include properties that use their land
primarily for science, research, and development of crops which do not directly gain
monetary profit from the ultimate consumer." What does this mean? How does one
measure what "primarily" means? For example, our Kaua`i Coffee lands, we lease
out pockets of lands to seed corn companies. Is that "primarily use" because the
primary use is growing coffee it is not seed corn companies. Would we be affected
by this new tax classification? Furthermore, it is unclear in defining lands to be
included in the new tax class, what the wording, and I again quote, "properties that
do not directly gain monetary profit from the ultimate consumer needs." Now do
most major agricultural crops not get exported? In the case of the seed corn,
companies does the ultimate consumer not mean you, me, and the animals that
some of these products feed? Is it not the purpose to raise any crop to make a profit,
who does it for free? If a papaya farmer ships his fruit overseas, does this put him
in this new class?
Ms. Marugame: Three (3) minutes.
Mr. Shigemoto: I am almost done. The section goes on that
as a purpose the definition of agriculture use is amended by removing horticulture
as a defined use. The American Heritage Dictionary, I had to look it up, defines
horticulture as "the science or art of cultivating fruit, vegetables, flowers, and
plants." Why is this term being deleted as an activity when it is the essence of what
agriculture is? As a representative of a major landowner who has been farming the
land for over one hundred twenty (120) years, I ask you think what you are doing to
agriculture. You have all preached about preserving, promoting, and perpetuating
our agriculture for future generations. The State Legislature passed the Important
Agriculture Lands (IAL) Law to preserve important agriculture lands which we
FED COMMITTEE MEETING 20 JUNE 18, 2014
have complied with but will all bills like this all you are doing is penalizing large
scale farming and adversely impacting the economic viability of this fragile
industry. I thank you.
Ms. Yukimura: Questions? Thank you, Tom. Go ahead.
Mr. Hooser: Yes, Mr. Shigemoto. How are you?
Mr. Shigemoto: I am fine. Thank you.
Mr. Hooser: Since you called me out and you mentioned
my name on my comments I just want to be clear that what I said was that this Bill
does not raise taxes but I said all be it gives the County the option to raise taxes in
the future if it wanted to. So I just wanted to be clear on that. The Bill itself does
not cause anyone's taxes to go up.
Mr. Shigemoto: I stand corrected. Thank you.
Mr. Hooser: And secondly, I believe it is my
understanding that the County currently charges different rates for different kinds
of farming. So for ranching, tree farming, and diversified agriculture all get treated
differently as it stands today. And so this would not be a variation from that
mindset. I believe the County and many communities recognize that different
activities have different impacts and the taxation policy often times is directed at
those impacts so we want to encourage tree farming we give them a bigger break.
We want to take into consideration that ranching has certain impacts and we
charge them a certain thing. And so it is not outside the past practice of the County
on how we do our taxation. I just wanted to point that out and see if you had any
thoughts on that.
Mr. Shigemoto: No, understand I do not know exactly what
the different rates are for the different types of activities but I have always had
concerns about how lands are being taxed. For example, if a land is fallow it is
taxed lower than perhaps...no? Well I do not know but I thought it was taxed lower
than a piece of property that was in agricultural production. It is not?
Mr. Bynum: It is exactly opposite.
Mr. Shigemoto: Okay, I stand corrected. Then I do not really
fully understand that but I do understand the differences or the different types of
agricultural taxes that you assess.
FED COMMITTEE MEETING 21 JUNE 18, 2014
Mr. Hooser: And the reasons for the questions is just to
bring the dialogue to educate people in the community, in the public, people that
are here that it is a complex subject and we do treat different people differently
some times for different reasons.
Mr. Shigemoto: And I thank you for that and again I am here
to testify to protect our interests as well.
Mr. Hooser: I understand. Thank you.
Ms. Yukimura: Any other questions? Councilmember
Bynum.
Mr. Bynum: Tom, thank you so much for being here. This
is the beginning of a dialogue and I would fully expect that you would be here to
protect your interest and I am very interested in answering your questions so let me
to one by one. What we have had traditionally, you pay market taxes, right?
Agriculture, the market taxes are not that great. On a very large parcel, some of
them I have looked at, thirty to forty thousand dollars ($30,000 to $40,000) a year.
Put it in ranching, it is like one thousand dollars ($1,000). Put it into
diversified...so we have had two (2) categories traditionally, ranching and
everything else. The landowners, you know want everything in production because
it is tax benefits to them. And they have the same values and goals we do, right?
They want the land in production. They want it producing a product. So this use
now, what product does it produce? Is it diversified agriculture or is it ranching?
That is one (1) issue because it is neither. Diversified agriculture sells a product to
somebody, this does not. So this Bill just simply says...it only impacts...now you
are raising...the papaya farmers they are not impacted. Flower growers, not
impacted. Fiber growers, not impacted. Anybody that grows anything that gets
used...so the ultimate consumer is the difficult definition. I know that. That is why
we do public process. Now, I just said I did not get the help from the County
Attorney I requested. We have pretty sharp staff here that consulted other people
and I feel that the Bill as it is currently written is sufficient but I am open to
amendment. That is what the democratic process is about. You have made really
good points...is this all okay Councilmember. I am answering his question.
Ms. Yukimura: Well we do not normally have full on
discussions in question and answer from testimony. I agree with both
Councilmember Hooser and Bynum that some of this discussion is good but I do not
want to let it keep going so I guess I am just asking for...because we can also talk to
the Finance Director about the appraisal process but it is good information. So if
you could just try to summarize.
FED COMMITTEE MEETING 22 JUNE 18, 2014
Mr. Bynum: And you said what do if we have this portion
and I know agricultural parcels...I am aware the Dow is growing some hybrid seed
that they actually sell to farmers. They told me that. They will not tell me how
much or where but they are trying to obfuscate this basic concept that the majority
of what they grow is not sold to anyone. That is the distinction I am trying to make
here. We can through amendments work out allowing crop rotation and those but
we have not been given the basic information about who is doing what where and so
when we know that we will be able to answer questions more but nobody is trying to
hurt agriculture or anybody. You know as the landowner the lessee pays the taxes.
If we remove them from agriculture dedication their taxes will go back to market.
So on one (1) of the parcels I looked at it would go from about two thousand dollars
($2,000) to thirty thousand dollars ($30,000) on two hundred (200) acres. You will
pass that on to the seed companies. An additional thirty thousand dollars ($30,000)
in taxes is not going to destroy their business here.
Ms. Yukimura: Okay, I am going to have to please call it to a
close now and are there any further questions of Mr. Shigemoto? I think what you
have heard though is that amendments or proposed amendments are welcomed so
any of that which people want to proposed can be submitted to us.
Mr. Shigemoto: Can I just say one (1) more thing?
Ms. Yukimura: Yes.
Mr. Shigemoto: We have about three thousand to thirty-five
hundred (3,000 — 3,500) acres currently in coffee. I believe Dow Agronomics leases
about three thousand (3,000) acres from Robinsons. Imagine if...you may not think
it will kill the seed corn companies but imagine the three thousand (3,000) acres of
our land, three thousand (3,000) acres of Gay & Robinson's lands, and even perhaps
Kundsen's lands or Grove Farm's lands are out of production because these seed
corn companies choose not to farm. What will happen? They sit fallow, what kind
of replacement crops would feasibly be grown if this classification was created?
Ms. Yukimura: Okay, thank you. So Tom, I have a question
out of that. It sounds like from your testimony that the three thousand to thirty-
five thousand (3,000 — 35,000) acres that are in coffee would not be included in this
category that is being proposed.
Mr. Shigemoto: I do not know because the language says
"primarily" so if it is not then great. It would not affect McBryde Sugar.
Ms. Yukimura: So the definition of "primarily" maybe is
what is required either in the law itself or in the rules and regulations.
Mr. Shigemoto: Yes.
FED COMMITTEE MEETING 23 JUNE 18, 2014
Ms. Yukimura: But you probably feel better if it were in the
law itself.
Mr. Shigemoto: All I was asking is for clarification on the
situation like that what would happen?
Ms. Yukimura: Okay. Well I will allow Councilmember
Bynum to propose some amendments or languages later.
Mr. Bynum: Just two (2) questions.
Ms. Yukimura: You have a question?
Mr. Bynum: He posed a question about...
Ms. Yukimura: No. I do not want that kind of dialogue to
keep going, please. So if you have a question please ask it if not I would like to get
on to other speakers.
Mr. Bynum: It is just me...when you interrupt my train of
thought, I lose it. Tom you asked really good questions, let us meet offline and talk
about it. Maybe you can help me with an amendment that will address you
concerns.
Ms. Yukimura: Thank you.
Mr. Bynum: Can you meet with me offline?
Ms. Yukimura: And I think we could ask for a clarification
from the introducer of the Bill that is not your intention to include Kaua`i Coffee,
where coffee is grown lands in the category, is that correct.
Mr. Bynum: It is not impacted in anyway and the...
Ms. Yukimura: Alright.
Mr. Bynum: I am almost done. You asked a question
about and I have had it in my mind three (3) times, key word...horticulture, I am
sorry, horticulture. That word...that was a recommendation from Finance and the
County Attorney to remove that word...he is saying it was not a recommendation
from Finance so I will modify that because he is probably correct.
Ms. Yukimura: Okay, I think...
FED COMMITTEE MEETING 24 JUNE 18, 2014
Mr. Bynum: ...but that word horticulture has such a
broad definition that it caused issues in other laws and so taking that out is to bring
clarity not to cause any difficulties. But that is what the democratic process is
about.
Ms. Yukimura: Thank you.
Mr. Bynum: We now have your input so...and when we
get information from the companies about what they are doing...
Mr. Rapozo: Madamee Chair, point of order.
Ms. Yukimura: Yes.
Mr. Bynum: ...we can go forward.
Mr. Rapozo: I have been quiet long enough.
Ms. Yukimura: Thank you.
Mr. Rapozo: This is simply not fair. I have a lot of
discussion too and I am waiting for the appropriate time. But this is getting a little
old and...
Ms. Yukimura: Thank you.
Mr. Rapozo: Thank you.
Ms. Yukimura: And so we will go on to the next speaker,
please.
Mr. Shigemoto: Thank you.
Ms. Marugame: Next speaker, Anne Punohu followed by
Felica Cowden.
ANNE PUNOHU: Aloha. My name is Anne Punohu. I literally
have a whole lot written on this Bill so I have a lot of questions. I have a lot of
suggestions for clarifications. I have a lot of suggestions for maybe making it a
little more clear, cleaning it up, and I also want to say that I certainly do not intend
on testifying in favor of a Bill that would hurt our farmers and that would hurt our
people. It was a matter of my understanding the Bill, because I feel that some of
the Bill does need clarification. I am just going to read a little bit of my notes. I am
in favor of a creation of a new taxation category. Currently the agronomic
designation would affect operations that are subsidized already, some by taxpayer
FED COMMITTEE MEETING 25 JUNE 18, 2014
money. The County is losing tax revenues that we could be using for our island. I
used to work for C. Brewer. I use to work for a place called Kilauea Agronomics and
so I think I am well qualified to testify on a word called agronomics. Where I
worked we did do seed production. We did do seed research, however it was not
Genetically Modified Organisms (GMO). It was regular selective breeding and
natural hybridization. We were very famous for a particular variety of guava there
called the gushi sweet which was produced through University of Hawai`i with Mr.
Gushiken and it was produced and created right there on the property. One of the
things that I want to address on this is on bringing in the heirloom seed question
and natural selective breeding and natural hybridization versus (inaudible)
technology. I think that it is not addressed adequately in here because it says
anything that seed production or anything it does seed la la la la... I want to protect
heirloom seed production and I want to protect some organic seed production
(inaudible). My other question is I would like to see the definition of primarily
clarified and my suggestion is just to make a number such as fifty-one percent (51%)
or fifty-two percent (52%) or seventy-five percent (75%). That would clarify, to me,
that would make it a primary number as far as I am concern. My other concern is
the enforcement and I will get to that in a second. Unintended consequences, that
is important to me. Another on was as far as taxation and how can we make
another designation. You have a hotel would not have the same category as a
commercial fishing it is that kind of a thing. I did have some specific section
questions though. On the research and development crops should be classified as
agronomics.
Ms. Marugame: Three (3) minutes.
Ms. Punohu: What about natural selective breeding and
heirloom seeds, that was my other question. I am trying to go really fast. I can hear
those buzzers. My other big buzz word here was intends. It says intends to obtain
a monetary profit for listing activities. To me "intends" is one of those words like
shall and may. I had a suggestion for that as far as an amendment for the use
intends section or wording I would suggest a time period to prove intention by
having an applicant state a time for production to commence therefore being held
legal binding to that time frame so that this wording cannot allow someone to hold
the land by just saying intended to but not be held to a date for starting production
and do not get the tax break incentive without doing production. Let me see, did I
have anything else? No, but not written down but I just want to clarify again that I
would never support a bill that would hurt farming production on Kaua`i. I see it as
a matter of equity. Some people will see it as an imbalance still but I see it as
giving it its own category and its own tax category kind of solidifies the fact that
they are here and this is the kind of agricultural production they are doing and it is
in a whole category on itself. Which we do know it is new technology, it is different
technology and it is a different application of the process completely and I honestly
do not see it as a bad thing. I see it as a good thing and really on a long term
actually protective for the industry if they really think about it. Mahalo.
FED COMMITTEE MEETING 26 JUNE 18, 2014
Ms. Yukimura: Thank you. Questions? I have one (1)
question, Anne.
Ms. Punohu: Yes.
Ms. Yukimura: Where is the word intend?
Ms. Punohu: It is in two (2) places. The first place is on
page 4. The top of page 4, first paragraph. That is one place that it is at and I
think there was another place too. That is the only one I have underlined right
now.
Ms. Yukimura: Thank you very much.
Ms. Punohu: Mahalo.
Ms. Yukimura: Mahalo. Next speaker please and then we
will take a lunch break.
Ms. Marugame: Next speaker is Felicia Cowden followed by
Leland Nishek.
FELICIA COWDEN: Aloha, I am Felicia Cowden and I am going
to really speak in broad brush strokes and I will be brief. I think it is really
important that we are evaluating land tax structure because we need to be highly
conscious of the end effect of what happens. What I have noticed in the whole years
of living here is how we handle vacant land. Being taxed at the highest and best
use often is the very thing that forces unwanted development whether it is
agriculture or otherwise. So that is some element, I know it is not what is under
consideration right now but I just want to highlight that pressures the landowner.
Another thing in here when it is looking at selling that presumes...I believe when I
am looking at a presume subsistence agriculture is homestead land but we do not
want to penalize subsistence agriculture because that is a very foundational
element of sustainability. I put a couple of notes here. When we have the
production of end use agriculture what would be used as something like food or
building materials that supply Kaua`i first, to me that should be encouraged over
other practices that exploit the land and opportunities and exploitation had both
the good and negative connotation. It does create jobs, I am recognizing that but
when we have agriculture processes that deplete or contaminate the soil which
requires no bonding, right? There is no bonding so it leaves the citizens and the
County to have to clean the land after the companies leave. We see that heavily on
the east side where people are scratching out organic farms in very big deal is
getting the pineapple residue out of there. It becomes very costly and so in many
ways organic farmers have the opposite of the benefit that is being extended to the
large ones. So to me agriculture taxes it does belong in separated categories but I
FED COMMITTEE MEETING 27 JUNE 18, 2014
think there is value in taxing that reward or punish the care of the soil. In our new
Kilauea agriculture subdivision we are looking at that, what the end result is with
the soil and so to me what is most important with the taxes is that we are fair and
that we are looking at what is our end goal because ultimately taxes have two (2)
purposes: 1) they increase revenue but the other thing is that they discourage that
which they tax and they encourage that which they give tax credits. The form of
agriculture that we give we need to be conscious of how we tax and we have gotten
good examples of ranching and otherwise.
Ms. Marugame: Three (3) minutes.
Ms. Cowden: So to me agronomics as a title is worth
considering.
Ms. Yukimura: Thank you, Felicia. Any questions? If not,
thank you very much. We are at 12:30 p.m., Leland, do you want to make a real
quick three (3) minute and with the okay of the Council.
Mr. Rapozo: How many more do we have.
Ms. Yukimura: How many more do we have?
Ms. Marugame: That is the last registered speaker.
Ms. Yukimura: So we have to come back. We will have to
come back. Can you come back after lunch or do you want to do it...you want to do
it now? Okay. I am going to allow the next speaker and then we will go to lunch. I
am sorry we cannot take everyone. Please.
LELAND NISHEK: Good afternoon, Council. I am Leland
Nishek, Kaua`i Nursery and Landscaping. I am opposed to this Bill in its present
form. A copy of a letter submitted by Kaua`i Nursery and Landscaping should be at
the Council office. This Bill, there was some discussion about horticulture being
deleted. I am not sure. Horticulture, point "H" and point "I", cultivating trees on
land. They are being deleted, they are bracketed and being deleted in the present
Bill.
Ms. Yukimura: Cultivating is still in but horticulture is
deleted.
Mr. Nishek: Well it is bracketed. Bracketed items are
deleted.
Ms. Yukimura: No just the "I"...
FED COMMITTEE MEETING 28 JUNE 18, 2014
Mr. Nishek: You have "G", "H", and "I" bracketed.
Ms: Yukimura: It is only the letters. The text of the
provisions are still there but horticulture is deleted.
Mr. Nishek: Okay. I think I would like to some language
on how the interpretation is made on these various topics. How it is going to be
applied would be one (1) of my concerns. Then you had botanical gardens also as
being deleted and page 5, item 1, the term agriculture use shall not mean uses
primarily as yard space, landscape, open area, botanical gardens. I think that could
be misinterpreted very easily so I would like to see some explanation on that. That
is all I have for now. Thank you.
Ms. Yukimura: Any questions of Mr. Nieshek? Thank you,
very much.
Mr. Bynum:
Ms. Yukimura: Sorry.
Mr. Bynum: Thank you, Leland for being here. First of
all horticulture was a recommendation of the County Attorney to remove it. It was
removed in other bills because of its broad definition was causing problems. So it
was not my proposal but this is what we do. We dialogue and make sure we
understand all of the implications of every word being added or removed. That I
wanted to say and then everyone has talked about the work primarily. Primarily is
existing language in this Bill. It is not new language and so the questions about
defining it are good ones but I just want to point out it is not new language. These
other provisions are just renumbered. They are still in there. So these are good
questions and that is what we will follow-up on and I wanted to start with that.
Mr. Nishek: Thank you.
Ms. Yukimura: Mr. Hooser, you have a question?
Mr. Hooser: Yes just a brief question. Did you say that
you thought botanical gardens was being taken out?
Mr. Nishek: Yes.
•
Mr. looser: That is the existing language also in the
existing Ordinance. The existing law says botanical gardens are not considered
agricultural use. It is not a change that we are making. It is existing law.
Mr. Nishek: It is existing law?
FED COMMITTEE MEETING 29 JUNE 18, 2014
Mr. Hooser: Yes. Just so you know. Just to be clear.
Mr. Nishek: So you are telling me that National Tropical
Botanical Garden is not considered agriculture?
Mr. Hooser: Under existing law it does not look like it is.
Ms. Yukimura: No it is not qualified for agriculture
dedication but they may get a dedication as a non-profit.
Mr. Nishek: But I would like to see who makes that
determination and what language they are using to make that determination.
Ms. Yukimura: Well the first level is the Ordinance, which is
the Council makes the determination. The second level is the regulations which are
made by the Real Property Tax Division in Finance. But we can work on some of
those concerns.
Mr. Nishek: I think it needs more discussion.
Ms. Yukimura: Yes.
Mr. Hooser: Yes. My point is that we are not proposing
to change the law with regard to botanical gardens. That all I wanted to make
clear. That is not being proposed here. That is existing law. Thank you.
Mr. Nishek: Thank you.
Ms. Yukimura: Thank you very much. Question?
Mr. Bynum: Leland, I just had to say while I really
appreciate you being here and your testimony, I just received your written
testimony and the first sentence...it is written to me. "It has come to our attention
that you are manipulating the word of Chapter 5A of the Kaua`i County Code to suit
your vendetta against the GMO industry on Kaua`i." I am really disappointed that
you would see it that way.
Ms. Yukimura: I am sorry. This is out of order because we
are not having arguments about pros and cons. Each person is allowed to give their
position.
Mr. Bynum: I have a question if I could. If I was not
being...the only way you can interject, JoAnn, is with a point of order even if you
are the Chair, I believe and I just...I had a question but I am not going to ask it
now.
FED COMMITTEE MEETING 30 JUNE 18, 2014
Ms. Yukimura: Alright, thank you. Okay, we have come to a
lunch break. We will reconvene at 1:40 p.m. Thank you.
There being no objections, the Committee recessed at 12:36 p.m.
The meeting was called back to order at 1:42 p.m., and proceeded as follows:
Ms. Yukimura: Our Committee meeting will come back to
order and we will continue with public testimony. Do you want to read the next
speaker please?
Ms. Marugame: Mike Dyer followed by Fern Rosenstiel.
Ms. Yukimura: I do not see Mr. Dyer in the audience so we
will go ahead Ms. Rosenstiel, Ms. Fern and yes, if you can find Mike for us. Thank
you.
FERN ROSENSTIEL: Aloha.
Ms. Yukimura: Aloha. Please state your name.
Ms. Rosenstiel: Yes, my name is Fern Rosenstiel for the
record. Thank you, County Council. Councilmember Bynum, thank you for your
research efforts and crafting this Bill. I support the efforts here to clarify about tax
benefits and given our current financial situation and budgeting restraints I feel
this is incredibly important that it is addressed. I think we should be working to
make things easier for small scale farmers and help sustainable agriculture as per
Don Heacock's definition which is outlined by Congress. Thank you,
Councilmember Hooser for clarifying that this is in no way a tax increase but that
this is a change to those who get tax benefits and at what rate. I am concerned
about the reaction from this farmer that spoke earlier. I would like to understand
more about what his business does and how it may be impacted. I do think
primarily would appear to mean more than fifty percent (50%). For anyone that
requires clarity I think it might be beneficial to actually address that if it need be. I
would also like to encourage a .further conversation about the definition of
horticulture and a little more clarity as to why the County recommended it was
removed and how the removal does impact the Bill and other stakeholders. It
seems to me that the experimental nature of what is going on here with this why
definition of agriculture does need more categories and clarity. I believe we need
more incentives and support for agriculture. Maybe even more tax cuts where
appropriate and I think more importantly than ever right now we need to be
focusing on supporting farming and agriculture to make it profitable for more
people to get involved and take up business opportunities in agriculture but I do
find it appalling that huge corporation that are experimenting here with pesticides
and GE technologies would be getting the same tax benefits as small scale farmers
or possibly even more tax benefits. It is my opinion that this is totally backwards
FED COMMITTEE MEETING 31 JUNE 18, 2014
and if anything they should be being taxed at a high rate so that our County and
State can adequately monitor and investigate their practices, experimental
pesticide use permits, and their practices here which we are obviously struggling to
do and to fund. It is my opinion that the issue associated with the possible tax
evasion and fraud as mentioned by Councilmember Bynum in this introduction and
letter to the Mayor is of a criminal nature and should be investigated by the police
or possibly higher levels of investigative services. As we move forward we should
definitely be looking at ways to curb the excessive tax breaks and subsidies that our
tax money and government is giving to multibillion dollar chemical corporations
which profit billions every year. I believe this Bill is a good opportunity to start
making corrections to this issue given the controversy that their experimental use
permits and research has caused in our community I find it utterly appalling that
these corporations are on top of this actually getting tax subsidies from the very
community who is concerned. This is somewhat a slap in the face to all tax payers
and Kauai. So thank you for trying to correct the situation and for addressing the
uneven nature by which tax subsidies and breaks are being given to multinational
corporations while farmers and land prices increase and our food production
agriculture is further squeezed out by corporations utilizing land for research and
experimentation of highly controversial technologies and chemicals. I appreciate
your time.
Ms. Yukimura: Thank you very much, Fern. Any questions?
If not thank you very much and we will take Mr. Dyer now.
Ms. Marugame: Mike Dyer followed by Dustin Barca.
MIKE DYER: Sorry I am late.
Ms. Yukimura: No problem.
Mr. Dyer: My name is Mike Dyer. On the two (2)
elements in this proposed Bill, first, on the taxation side. Over the years I have
spent a lot of time working and thinking about property taxation and things like
that. One (1) of the things that I supported when I was on the taskforce was trying
to reduce the number of classifications that we had. It seems to me now and then
that creating a whole bunch of categories is in this particular case cutting another
category out of agriculture. It is a sort of a slippery slope that obviously we are
already on. We already have nine or ten (9 or 10) categories now. I am sure
sometime a few months down the road someone will come in with a new category
such as green houses. Maybe we should have green houses in another because they
are obviously really different than dirt farmers and so forth. This particular case,
you have testimony from me saying that it seems to me fairly obvious effort to cut
one specific small segment of agriculture out from the rest of agriculture maybe as
Mr. Hooser said to lower their taxes but my feeling is that probably is not the case.
It is probably an effort to try to find ways to get more money out of these companies
FED COMMITTEE MEETING 32 JUNE 18, 2014
for whatever reason. For those of us in the community who are lobbying for more
and more categories and to get more and more money out of other people to pay for
the "cost of the County" that we generate I am sorry that is not what I call fair
taxation. The people that generate the cost sadly are the residents themselves and
we already give them plenty of breaks. I am one (1) of them but I am also a former
farm owner. I went through the hell of stopping farming and going from the nice
low agriculture rate to being hit with a sixteen thousand dollar ($16,000) tax bill
the year after I got out of farming. I had to scramble and spend another thirty to
forty thousand dollars ($30,000 - $40,000) cleaning up my farm and fencing it to get
it into dedication so that I could stop the bleeding but there is no mercy for how you
transition from one thing to the other on this island. I am dedication right
now...transition to the other part of this Bill...so now we are going to look at
dedications. You are going to look at my dedication. I think I am clean but you
guys have so many rules and make things so complicated I do not know. I talked to
my pasture operator yesterday and he said "oh yeah, we just pulled the yearlings
out of there yesterday" so if you send a guy out there you would not see any cows in
my pasture right now. We are getting ready to put them back in but I am violation
today and if I am found to be in criminal violation as somebody just said of this law
you are going to roll me back. Now I am six (6) years into my ten (10) year
dedication and you are going to want to collect about eighty thousand dollars
($80,000) from me if this is fair I do not know...
Ms. Marugame: Three (3) minutes.
Ms. Yukimura: Mike, three (3) minutes but you have three
(3) minutes more. Just to let you know.
Mr. Dyer: That is about all I have to say really. I think
that this Bill to try to cut out the seed companies is a mistake. They should be
treated like other farmers. If as Mr. Bynum says so passionately they are violating
laws with respect to pesticide use and things like that then that is how you should
approach it. Not by trying to find a way to get them into a separate category so that
you can tax them more. As far as dedication goes, it should be...if you just did what
Felicia said and that is if you were fairer to vacant land people would not have to
run out and try to find ways to dedicate which almost always ends up being in
pasture because it is extremely hard to farm and make money on this island. I tried
it for twenty-two (22) years. We probably broke even over that period of time and we
were the best diversified papaya farm that this island has ever seen, I believe.
Some farmer may challenge me on that but we were extremely successful and we
still went out of business because we lost our water. You did not change you rules
for us when we lost our water and had to go out of business. We went out of
business and you immediately hit us with a big tax bill. To me this is not fair.
There has to be a better way to do this.
FED COMMITTEE MEETING 33 JUNE 18, 2014
Ms. Yukimura: Thank you. Any questions of Mr. Dyer?
Mr. Bynum, question?
Mr. Bynum: Mike, thank you very much for being here
and as always appreciate the dialogue. You and I have been talking about taxes for
many years so you do recall that I supported those proposals to simplify the tax code
and to do what you just suggested.
Mr. Dyer: Yes, I do.
Mr. Bynum: So I appreciate that you pointing out that
creating new categories and taxation by use is just the way this has gone. I might
agree with you but you have to work within a system but you have, correct?
Mr. Dyer: We also have to criticize when we think it is
incorrect.
Mr. Bynum: Right and that is great. You and I agreed
many times and disagreed many times but it has been a respectful dialogue. I want
to ask you specifically though about your experience. You were in agriculture
dedication and how did the County find out that you farm ceased, that you stopped?
Mr. Dyer: Back in those days we did not need
dedication. I am not sure that the rules are the same now. You would have to ask
Steve but when we were farming, before...in those days you just got it without it
having to be dedicated. They had a value for a certain type of crop land and I think
it was...
Mr. Bynum: It was open ended?
Mr. Dyer: Yes and it was amended. So then it just
went to market value straight. If you were not farming it was all market value and
that is what it is. We were not dedicated when we were farming so the farming did
not end at the end of dedication it just ended. We were getting a three thousand
dollar ($3,000) and acre evaluation more or less when we were in papayas and that
was fine. And we paid a much bigger bill then when we do now but I am in pasture
of course. We are talking about losing revenue, you force people into pasture and
they end up paying fifty dollars ($50) a year instead of one or two thousand dollars
($1,000 or $2,000) which would be reasonable for maybe a big piece of agricultural
unused land like ours.
Mr. Bynum: You are correctly identifying that basically
we have two (2) categories right now, pasture and everything else, right?
Mr. Dyer: Well that is one...
FED COMMITTEE MEETING 34 JUNE 18, 2014
Mr. Bynum: And you were in everything else and you
went to pasture.
Mr. Dyer: Yes and...
Mr. Bynum: And then you mentioned that you needed to
fence?
Mr. Dyer: Yes.
Mr. Bynum: So you went through a legal process that
said okay our farm has ended. You went to market taxes and then those taxes were
higher and you said I want to put this land back in to some kind of agriculture
production for I am sure several reasons but one (1) to lower the taxes, right?
Mr. Dyer: That is the only reason. I would have been
perfectly happy to mow it and leave it as open space. I am not a big fan of cows
personally, but you forced me into pasture.
Mr. Bynum: And again those are issues that we can
discuss but that is the current system. My question is though you needed to fence
it...that is not in the law anywhere, those are administrative rules. So the County
has had a really outstanding individual for years trying to interpret these rules that
they are given and he helped define what the standards are for an orchard,
for...that would become the Finance Department and it is all in the administrative
rules, right. That is the way the law works. Like primary use is coming up today,
that is existing language. You have the opportunity to define that further in
administrative rules, you are aware of that, right?
Mr. Dyer: Yes, that is true. The big crime is just
leaving your land vacant from what I understand.
Mr. Bynum: And I understand that and this is...I think
we should talk about that but as I said earlier the landowners always want to put
the land into some use and ranching is the default mode as was your experience.
But you informed the County, you got the dedication, you are required to do certain
things, right?
Mr. Dyer: Yes.
Mr. Bynum: And that lowered your taxes considerably
from market?
Mr. Dyer: Yes.
FED COMMITTEE MEETING 35 JUNE 18, 2014
Mr. Bynum: Thank you. You know I asked for all of the
records related to your farm because I asked for all of them. But I have not received
them yet. When I receive them I think I will discovery that you followed the law
because you are a very law abiding person and so you have been very helpful with
this so far. Please stay engaged in this dialogue because we can address some of
these issues and you know I am willing to go there. I have in the past. Thank you.
Ms. Yukimura: Thank you. Any other questions? I have one
(1), Mr. Dyer. I have one (1) Mike, if I may. Thank you for being here today. I
think some of the underlining concerns for the Bill are that the lease rents and the
prices that are given to landowner for use of their land for these larger seed corn
companies are much, much higher than regular agricultural small plot farming like
thirty (30), fifty (50) acres diversified crops. I am not familiar enough with the
evaluation process but my question is if you feel like we should not add more
categories can we get a more equitable assessment of agriculture lands using the
existing system that would better reflect the value of those agriculture lands based
on lease rents or some other category?
Mr. Dyer: Well I am sure you can. We use market
value if it is not being farmed and that, I think Felicia it and I think it is correct
that thing is what drives land into development obviously or into sale. It is really
hard to hold on to land now because of your tax law primarily but you can find
formulas. As I say in the old days if you were farming there was a certain category
for...they had a table with what the evaluations for those lands and I assume they
were somewhat based on what a landowner would charge for lease rate if somebody
was going to do a certain type of operation. Extremely low for pasture, if they are
going to lease to someone for papayas or something like that a different one, if it
was for hard wood fruit trees or something in the long term it would be something
different all together but those are all economic factors. You can use those.
Ms. Yukimura: So the existing system...we may be able to
achieve our goals through the existing system with more careful scrutiny of what
those values actually are.
Mr. Dyer: Yes but just remember there are two things
going on here. One is the evaluation, the assessment but what we are talking about
here really is the tax rate. If you cut out a new category the opportunity is to get
away from the evaluation and go to attack the rate and if it happened to be, I do not
know if there is anybody want to get rid of the seed companies the way to do it
would be to make their tax rate so high that it would not be economic.
Ms. Yukimura; Well I mean you are suggesting a motive
that may not be everyone's motive so if the motive is to...
FED COMMITTEE MEETING 36 JUNE 18, 2014
Mr. Dyer: But if there is one (1) person that feels that
way they might think that would be the way to go.
Ms. Yukimura: But it takes the County Council and the
Mayor to set new tax rates also, so it is not a one (1) person thing.
Mr. Dyer: Yes, I know.
Ms. Yukimura: The other factor here is agriculture
dedication. Besides category of agriculture and classes based on crop there is this
agriculture dedication so one (1) of the questions is, that I think is being raised here
is who should get agriculture dedication. What privileges does it confer and on
whom or what kind of agricultural operations do we want to confer those privileges?
Mr. Dyer: As long as you define pasture as one of the
agricultural uses a lot of big land that is not suitable for agriculture for a number of
reasons whether it be terrain or access to water, whatever they will end up in
pasture because you have to not go to market value.
Ms. Yukimura: And it is interesting what we call market
value because if you required every house to be a farm dwelling on agriculture land
rather than a country estate, the market value of agriculture land would be
different, would it not?
Mr. Dyer: Oh, if you said if everybody had to farm if
they were going to live on a piece of agricultural land?
Ms. Yukimura: Yes.
Mr. Dyer: Yes it would be different. That would drive
the prices way down but it would drive your tax base way down as well I would
think.
Ms. Yukimura: Yes but it would define market value of
agriculture land in a very different way.
Mr. Dyer: Well two (2) things, we are talking about
agriculture land that is really farm land or land that is classified in that catch all
category called agriculture.
Ms. Yukimura: That is correct too. Alright, well there are a
lot of complications here but thank you. You have been...I know you have been a
long time participant in the discussion about taxes on land and I have appreciated
both your insights and your actions on it. Thank you. Councilmember Hooser has a
question.
FED COMMITTEE MEETING 37 JUNE 18, 2014
Mr. Hooser: Since you are such a great resource, I
appreciate you taking the time in being here today. I know you have spent years
working on this very issue in terms of revising the tax structure. That is correct,
right? You were part of the task force as a volunteer and I certainly appreciate
that. You mentioned motivation. Do you think a legitimate motivation is looking at
the classes, classification or the groups impacts on the community? For example
hotels, hotels in the residence has a big impact on our community and the guest do
not pay property taxes and we do not have Transient Accommodation Tax (TAT)
now, we do not have an opportunity to pay for those services like parks, roads,
water and so I think similarly one could argue that certain agricultural operations
have larger impact than others. Small scale mom and pop operations doing organic
of some sort, would use less pesticide, less machinery, more control versus a large
agribusiness who uses more intense farming. And so there may be a motivation. I
certainly think it is justified and would like to hear your opinion, raising or
charging different rates for businesses that have different impacts.
Mr. Dyer: What are the County services that the
agribusiness has used different from what the organic farm uses? I mean the
County services are fire and police and various things like that. In terms of policing
pesticides and things like that, as I understand, it as a State function primarily
although it sounds like the County wants to get into that business. Obviously there
is a difference between a hotel and a little organic farm. There is also a difference
between a little organic farm and big corporate farm but the corporate farm is going
to be bigger taxes anyway by virtue of the size I would think but there is just as
much of a chance that they are going to have to call on the fire department, the
organic farm as the seed company and maybe the seed company has the in house
resources to take care a lot of things that the County takes care of. I know a lot of
nasty things happen up in our area on the north shore in the farming area that
relate to the employees and various things that can happen up there and...you are
right, Gary, I am sure there is a difference but I do not know how you would qualify
it.
Mr. Hooser: Okay and you mentioned your taxes went to
sixteen thousand dollars ($16,000) a year or something like that before you
dedicated and just looking at a property tax summary sheet of Pioneer and it is four
thousand (4,000) acres assessed market value of twelve million dollars
($12,000,000) and they are paying four thousand dollars ($4,000) a year in taxes.
And this is a multimillion dollar, if not more, intensive operation using a lot of land
and a lot of water, resources, pesticide, run off, resources, and impacts and they are
paying four thousand one hundred eighty dollars ($4,180) and it seems like there is
something wrong with the picture in my opinion and so I think it is a good
discussion that we are having and we can look into how to...basically to me it is
equity.
FED COMMITTEE MEETING 38 JUNE 18, 2014
Mr. Dyer: It is and I, as I said before dedication
particularly if you are dedicating a pasture which is default the go to position, I
mean these guys are spending a ton of money in the community and doing a lot of
stuff in addition to paying medium taxes. My thirteen (13) acres went to sixteen
thousand dollars ($16,000) not because of anything I was doing. It was because it
was of the market value of pieces near me. I had no defense against that except to
dedicate which then made my taxes go to fifty dollars ($50) a year. There may be
something wrong in there but it was an obvious choice for me. I had to put a fence
around there and stop the bleeding right away.
Mr. Hooser: Thank you.
Ms. Yukimura: Thank you very much. Next speaker please.
Ms. Marugame: Last speaker, Dustin Barca.
DUSTIN BARCA: Aloha.
Ms. Yukimura: Aloha.
Mr. Barca: Dustin Barca. Thank you guys for having us
and putting this issue on the table. I think it is a serious issue, very serious issue.
At a time when our County savings has gone who knows where we are kind of in a
time where we need to start taking advantage of the loopholes that are being taken
advantage by these large landowners. We need to start closing up the holes that
are preventing us from making ends meet and keep us from going more into debt
because that is the direction we are headed right now. By making large land
lessees accountable is a start to running a professional business of County. We
cannot keep accommodating wealthy entities while our local taxpaying citizens pay
the price. I think it is time to start patching the holes and regaining the trust and
respect of the people of Kaua`i because I think we are at a place where that respect
and trust is just diminishing daily. I think issues like this are very important to
start looking into and possibly patching those holes and getting out of debt is a big
issue I think we are facing on our island so mahalo you guys.
Ms. Yukimura: Thank you. Questions of Mr. Barca?
Mr. Barca: Any questions?
Ms. Yukimura: Thank you.
Mr. Barca: Mahalo.
Ms. Yukimura: Next speaker.
FED COMMITTEE MEETING 39 JUNE 18, 2014
Ms. Marugame: No other registered speakers.
Ms. Yukimura: Alright we are through the list. Elijah.
Welcome, Elijah. You would state your name.
ELIJAH FRANK: My name is Elijah Frank. Thank you all for
having us here today. I came today because for me taxes and our County budget is
a very serious issue as I am sure you are very much aware of and for me it is much
more important than just this one (1) particular Bill. I am going to ask each and
every one of you at the table here today to really take a strong look at this issue of
taxation on Kaua`i and what we have to do moving forward over the next few years.
For me the bigger picture with agriculture is what is our vision as a County for
what agriculture is going to look like in ten (10), twenty (20), thirty (30) years down
the line? I know as a County we have a vision of possibility of more food security to
where we are growing more of our own food locally and we are supporting local
farmers and we have the Kauai Made and Kauai Grown labels and I see that
happening and it is great but what is lacking to me is how much land is needed to
produce, let us say we have a goal like our energy goal of fifty percent (50%). How
much agriculture land is needed for local small farmers to grow fifty percent (50%)
of our produce or to raise fifty percent (50%) of our beef? However much that is we
need to plan on how to incentivize our large landowners to try to create that reality.
Working together, working with the landowners, working with the community. If
our goal is food security how do we achieve that together, all of us? That to me is
the most important issue, us working together to achieve our food security goals,
enhancing the local grown, feeding each other, helping our ranchers, helping our
farmers, and doing it in a way that is positive. But if our lands are all leased up
and our water is all taken away we cannot do that so it is very important to look
now to set aside those lands, set aside those waters, and how can we set a proper
tax structure to make that happen? Thank you all very much. Mahalo.
Ms. Yukimura: Thank you. Any questions? If not is there is
anyone else who wishes to speak? Jeri.
JERI DIPIETRO: Aloha Council Committee. My name is Jeri
DiPietro. I am in support of Bill No. 2546 seeking fair taxation on real property.
Since the inception of the biotech experimentation we have needed a separate
designation to separately address growing food versus tinkering with transgenics
and herbicide tolerant commodity crops. The chemical and biotech research was not
fully understood when they started to lease out our lands. I think that the
subsidies and the tax breaks for agriculture and the technology tax breaks, they
were meant for a different purpose than what we are seeing here. The agricultural
tax breaks were meant to help jump start and encourage the nurturing of our local
food market. Biotech is different. The chemical corn is so different that is patented.
It is patented down to the unique seed. If diversified agriculture is the goal it is the
resident's will that is included in our 2020 plan we need a separate category. We
FED COMMITTEE MEETING 40 JUNE 18, 2014
need to make up this revenue. The County is missing out on a lot of loss revenue.
Imagine if we do not collect adequate property taxes and the County is left with the
remediation cost for these tens of thousands of acres. We need to redefine the
property tax purpose and it is about equity. These landowners are collecting higher
rent on the chemical corn experimentation fields. It is not the same as the rent they
would collect from food farmers and it is right for the County to benefit from that
too. Since our State is not tangent to other states, there is good and bad to that. I
definitely love the benefits of being an island state but I think we sometimes do not
realize that other states do not accommodate this type of experimental toxins
without creating some kind of an offset. So for these people to be not paying their
proper share of land use it is hurting the County. We have not even mapped where
these fields are yet fully so I mean we are on the right page. This is an idea for this
property tax designation is a long time coming. This land needs to be taxed at a
different rate. It certainly is a different use. Thank you very much.
Ms. Yukimura: Thank you. Are there any questions? Jeri, I
have a question. What if there were a way without this separate classification to
achieve your same goal? Which would be just better assessment and maybe a
reevaluation of whether agriculture dedication is appropriate.
Ms. DiPietro: I think that is a possible...I am not sure
what is the best way to get there but I think the facts are the land has one (1)
zoning use that is covering food and chemical experimentation. To at least
designate that chemical experimentation is separate whether it is occurring on
agriculture land or if you wanted to reclassify that as experimentation zoning but
there needs to be a separation, a designation because we do want to encourage food
farmers. We need a lot more land to go into food farming. They should not have to
incur a high property tax rate while we are trying to encourage that. We have a
long way to go but I think, sure it just...the real outcome is that this is a different
use, they are making a much different profit, and the County is incurring a lot of
liability. We have not even talked about the birds and the aquatic life and
everything else that suffers from the use on this land. It certainly is in a different
type of use.
Ms. Yukimura: Okay, thank you very much. Is there anyone
else who wishes to speak? Mr. Kubo:
CLAYTON KUBO: I guess in my opinion...
Ms. Yukimura: Can you state your name first?
Mr. Kubo: Clayton Kubo, Waimea, Kauai.
Ms. Yukimura: Thank you.
FED COMMITTEE MEETING 41 JUNE 18, 2014
Mr. Kubo: I guess in my opinion that if you doing
research that I cannot eat it, my son cannot eat it then they should be charged a
different rate. No human consumption, I guess the tag says on the bag when it is
being exported out of Kaua`i. That is what I see but we will see how you guys play
this game out. This is definitely a game that I can see already. You guys are going
to be probably chopping up this Bill like the other bill and then is it really going to
help? Like this Bill is to help the County of Kaua`i. I really hope that this Bill is
going to help the County of Kauai meaning we the people of the County. Instead of
just continue bickering and grumbling and saying "no you have to prove, no I have
to prove." What is the sense in that? Just do the right thing. That is all this is.
Just do the right thing. And, Mr. Bynum, thank you for presenting this Bill. It
reveal a lot of mishaps that has been happening over the years. Such as Dow
grubbed Kaumakani and the major runoff went into the ocean. That is when they
found fifty thousand (50,000) or eighty thousand (80,000) sea urchins. I do not
know what year that was but I am just going to guess 2009, is my guess. Any
questions?
Ms. Yukimura: Any questions? Thank you, Clayton.
Mr: Kubo: Mahalo.
Ms. Yukimura: Is there anyone else who wishes to speak?
Alright, if not, I am going to ask with the rules still suspended ask our Finance
Director, Steve Hunt to come forward. If you would state your name.
STEVEN A. HUNT, Director of Finance: Yes, Steve Hunt, Director of
Finance, County of Kauai.
Ms. Yukimura: Thank you, Steve for being here. You are
presently Finance Director but prior to this was the head of Real Property Tax,
right?
Mr. Hunt: The Tax Manager, right.
Ms. Yukimura: So you bring a wealth of experience. Let us
see...do you have some comments that you wish to give or do you want us to just
ask questions?
Mr. Hunt: I think I should probably make some
comments just on the Bill as it exists in its current form.
Ms. Yukimura: Please proceed then and then we Will ask
questions.
FED COMMITTEE MEETING 42 JUNE 18, 2014
Mr. Hunt: Okay, thank you. In reading through the
draft Bill that is before you, I do have some concerns, primarily with the removal of
the word horticulture. As Councilmember Bynum stated earlier it was a
recommendation from the Attorneys who reviewed this, not from Finance. This is
something we looked at when we had some issues with botanical gardens. Rather
than remove the word horticulture we excluded botanical gardens from being part of
eligible properties for dedication. The issue that sort of wraps itself around
horticulture is it is not just the science and research of plants but it is going to also
impact the eligibility of dedications for such properties that do cut flowers,
ornamentals, nurseries, and some other research like Mr. Kellerman was doing
with rice. Those would be the casualties if horticulture were removed from in this
Bill, and removed from properties that are eligible from dedication. Another issue
that I had in here actually to do with in the classification section it states "parcels
which are used for no other purpose than science research and development of crop
shall be classified as agronomics," the key emphasis being on no other purpose.
There are going to be properties that have multiple uses on them. You could have a
single parcel with a portion leased for science research and development and a
portion leased for organics or commercial or other types. This says that no other
has to be classified as agronomics but if it is a split use we could have some
discrepancies on how we would classify those properties. Another one that kind of
jumped out is in the defining of what should be considered "agricultural use", again,
it was self admitted by Councilmember Bynum, what is the ultimate consumer and
does consumer mean to consume in terms of eating or consume in terms of
purchasing or a combination of the both? I guess that was one of the concerns is a
little bit better definition on what that actually constitutes. The creation of a ninth
class, agronomics from reading the Bill it sounds like this would preclude properties
that are doing solely research oriented activities from being dedicated from
agriculture but they still could be considered an agriculture use. In other words
they would go to market value because they are not considered agriculture use for
the term of valuation but they do not necessarily need to have their own
classification in terms of tax rate unless you wanted the tools to do both bring them
up to a market value and have a different rate that may be higher from agriculture
but to me it still is an agriculture activity it just may not be not one that you are
looking to promote. Again, breaking the valuation from the classification it may not
need another class.
Some concerns I guess I have in implementation of the Bill, the Bill requires
the Director to submit annual reports but does not specify a date. I would assume
that maybe with certification that is the time those would come in but again it is
not specific. The data required is not necessarily collected in our Intrusion
Detection Systems (IDS) software. Some of the items that are being asked for in
that report would actually have to be researched input which would include some
staff time. Again, I would want some clarification on that and I can go into what
those are. If in fact those fields are going to be needed to be added to the existing
software to generate that report there is likely to be some cost in terms of
FED COMMITTEE MEETING 43 JUNE 18, 2014
modifications for the software and I do not see any funding source in here either for
staff time to implement nor for changes in software to accommodate that so I think
funding should probably be a part of this as well if we go down that path.
Specifically, if I counted there were six (6) items that were requested for data.
Name of the landowner and again if we are looking at a summary because many
times you can have twenty to thirty (20 — 30) landowners for parcels that are
dedicated and many times they are family and they may have portions of interest in
the property so are you looking for a complete listing of all of the owners or is one or
two (1 or 2) of the major owners sufficient enough for that? The tax map keys
(TMKs) of the dedicated area, again some of the TMKs may be leased in portion
thereof so we could have multiple TMKs repeating themselves so I am not sure if
you are looking for the TMK per se or the dedicated area by different type, I guess.
The third item is the period of the dedication. Typically the periods of dedication
are either ten or twenty (10 or 20) years so I am not again clear whether this is
asking to say this is a ten (10) year or twenty (20) year dedication or is this asking
for a date. This is the date that this started dedication this is the end date that this
is going to end. So I am not sure again on the period of dedication whether you are
looking for the year it became dedicated and the year it is anticipated to expire or
you just want to know whether it is just a ten or twenty (10 or 20) year dedication.
Size of the dedicated area, again they are not always the same as the parcel size.
You do have some areas that are unusable, pall area, wasteland, areas where the
soil is too thin to farm but they are part of the overall dedication. We have different
degrees of what is actually being farmed and what is dedicated so again I would
want a little more clarity on what you are actually asking for in this. The
description of the agriculture use, again we somewhat generically classify into two
(2), pasture and diversified or crop. So I am not again specific if that is how we
collect the data. There are hard copy files that may specifically go into whether it is
papayas or avocadoes or corn or whatever that individual crop may be but for the
assessment side, because again from the real property assessment side all we are
concerned about is that is it diversified or pasture, what is the rate that it gets
assessed and that is how we monitor data. So if you are asking for more specific
crop data that would take time again and staff to potentially input and collect that
data. Taking it from hard copy into a digital because these reports, I would assume
would be generated by the system at some point because it is too manual to do this
every year from hard copy.
The taxes resulting from the dedication compared with their market value, I
am assuming market value taxes. Again for the most part this is a general easy
assignment but there are going to be properties like the urban property where the
underlining zoning actually determine the applicable rate so without the dedication
which is considered an agriculture use when we get into the actual individual
underlining portions of that parcel you could have some that is a multi family, you
could have some that is industrial or commercial and there are different values and
different rates that are applicable and our system is currently not geared up to
generate that kind of report because we are looking at primarily what is the net
FED COMMITTEE MEETING 44 JUNE 18, 2014
taxable, what is the assessed value. Your taxes are based on that not what are the
hypothetical taxes that we are looking at. So again it could probably done but we
are going to need resources again to generate that kind of information if that is
what you are looking for. Those are the major concerns that I have.
Ms. Yukimura: Okay. Thank you very much. Questions?
Councilmember Rapozo and then Bynum.
Mr. Rapozo: Thank you, Madame Chair. Thank you,
Steve. My first question is really for you to clarify how the property taxes on Kauai
are done. It is ad valorem.
Mr. Hunt: Correct.
Mr. Rapozo: Can you explain what that is because I
understand...I mean I hear a lot of the testimony and I have read a lot of the E-
mails where they relate the tax to the impact. Can you let the public know what we
are...how we are required to assess taxes.
Mr. Hunt: Yes. We are required to assess taxes and it
is ad valorem, based on value. The value is determined based on what we call
highest and best use. So with many of these agriculture properties, primarily the
smaller ones that we are looking at, smaller being twenty to thirty (20 — 30) acres
some of those are actually highest and best use is residential development. That is
why people who are buying these large tracks of land that do not want to farm are
developing them and they are looking at what they can sell their individual CPRs
for. What sort of reasonable rate of return would be for that investment and that is
what is driving the pricing of what people are paying for these agriculture lands.
When we do the dedication we breakaway from ad valorem and we get into what is
the agriculture value of that property and that we have had studies done, I cannot
site when the most recent one was but it basically looks at caring capacity of the
land. If you provide for the current wages, what the current cost of utilities are to
bring utilities to the property, what they anticipate an average crop truck or
ranching head of cattle or whatever livestock would be would produce. When you
sort of backwards into it and allowing for a certain amount of risk and rate of return
what would be left to pay for the land. And you capitalize that at a market rate and
say okay if they are able to pay so much per year in lease rent and you capitalize
that that would become the agriculture value of that property.
Mr. Rapozo: Right, and I think that is important because
a lot of people think that because they possibly, whether it is resort, whether it is
agriculture, whether it is residential or commercial that we have the authority and
the ability to tax based on the impact. That is not true.
Mr. Hunt: Correct.
FED COMMITTEE MEETING 45 JUNE 18, 2014
Mr. Rapozo: That is illegal if we did that.
Mr. Hunt: Yes. Well I do not know how you are
defining impact but in terms of what are the resources that are required, what is
this property cost the County we do not do that. It is ad valorem.
Mr. Rapozo: And ad valorem is based on the value of the
property, the market value of the property.
Mr. Hunt: Correct. And your control, both the Mayor
and more appropriate you at the time is the rate setting. That is how you can
control what people pay.
Mr. Rapozo: And we can dictate what we want but the
assessments are just ad valorem.
Mr. Hunt: Market.
Mr. Rapozo: The second question is, and I am not sure if
you are prepared to answer this but and I am taking this from Mr. Bynum's letter
that he read today. There was a reference to a parcel and I do not know what the
TMK is, I just saw the letter today, it was the first time that I saw it. That in fact
between 2010 and 2014 this one (1) TMK apparently underpaid taxes of one point
zero nine six million dollars ($1,096,000). Are you familiar with that?
Mr. Hunt: I am doing some research on that particular
parcel now. I can tell you that there was a correspondence that went between our
agriculture inspector, Damion Ventura and the Planning Director at the time, Ian
Costa and then back through Bryan Mamaclay to the Grove Farm owners or
representatives including David Hinazumi and Arrly Kaneshiro and then to Ian
Jung to give an opinion and it had to do with the up zoning of that property that
came before Council and part of that up zoning was a requirement, a condition
number 20 in that Ordinance that required the property to remain agriculture use.
We looked at whether there would be a requirement to do a use permit from
Planning Department to allow agriculture back on properties that were now
determined urban and the end result was essentially was it is a requirement, it was
an Ordinance by Council that required it to be and therefore it was redundant.
They did not need the use permit, it became eligible for dedication for agriculture.
Mr. Rapozo: Based on the Ordinance?
Mr. Hunt: Yes. The interpretation.
FED COMMITTEE MEETING 46 JUNE 18, 2014
Mr. Rapozo: So we did not lose one point zero nine six
million dollars ($1,096,000)?
Mr. Hunt: Well we lowered the taxes based that it
became an agriculture dedicated property.
Mr. Rapozo: But that was done through the Ordinance
that this Council passed?
Mr. Hunt: The Ordinance opened up the window for
them to come back without having to meet other requirements of the dedication.
Mr. Rapozo: Okay and I guess we can have that
discussion. I guess what I will do is...I am not sure if you saw the letter. I guess we
will send it over and maybe you can have an opportunity to respond.
Mr. Hunt: I will be responding to that letter.
Mr. Rapozo: Okay, thank you.
Ms. Yukimura: Thank you. Councilmember Bynum and
then Councilmember Hooser.
Mr. Bynum: You just mentioned document, a germane
document related to this agriculture dedication that I have never seen and I have
been begging for these documents for months and months and months and I have
even put them into now a legal UIPA request. Why was I not provided this
document?
Mr. Hunt: This document was protected by client
privilege with the attorneys.
Mr. Bynum: Okay, let me just start at the beginning.
Thank you for your very detailed response to the Bill and until the end here we
were sticking with the Bill which is what I was admonished to do earlier. The
concerns regarding horticulture, I did correct. It was not...that was the botanical
gardens. I got those confused but it was a recommendation from County Attorney's
Office and so the only reason that is in there is because they recommended it and
my memory of that was that it is a term that is so broad that it covers everything
that it can be used as a catch all. It is unnecessary because all of the things you
mentioned like cut flowers and ornamentals are covered elsewhere in this law.
Mr. Hunt: They are not.
FED COMMITTEE MEETING 47 JUNE 18, 2014
Mr. Bynum: Is the opinion you made that leaving
horticulture, and that is what this process is for, you put a bill forward and now you
get the comment, you said that "leaving the word horticulture would impact cut
flowers and ornamentals," is that your opinion or is that a County Attorney opinion?
Mr. Hunt: No, that would be my opinion.
Mr. Bynum: Okay, I just want to clarify that. So
obviously we are going to turn that into a question for the County Attorney. The
definition of ultimate consumer is obviously a thing that we need to further
dialogue and again without getting a response to numerous questions, without
getting a complete set of data our staff, myself had to do the best we could without
support that we requested. Everything you are discussing about more of these
technical implementation questions are things that we obviously work out easily.
They are meaningful, it is kind of early in the dialogue to get into those technical
questions and I understand all of them because you and I have been talking about
this stuff for many, many months but I wrote giant letters administrative rules,
anybody who is out there look for the administrative rules, they are a public
document, they are very extensive on this law. Is it not correct, Steve, that the
administrative rules can resolve a lot of those technical questions? Like things that
I mentioned earlier about fencing required, or how many trees constitute an orchard
or what is primarily yard use versus...those are all questions that have been
answered previously through administrative rules, correct?
Mr. Hunt: I would say some of them have. I would not
say all. Dates typically are in Ordinance.
Mr. Bynum: That is the kind of guidance you seek from
the County Attorney. What you need to put in the Ordinance because my position
publicly for years is do not put anything in the law, do not get too detailed in the
law, do not do more detail than it was required because then you take away
flexibility from the administrators and there is a public process for administrative
rules, correct?
Mr. Hunt: Yes.
Mr. Bynum: So a lot of the concerns that are being
expressed here other than this Bill have previously been and could be revisited
through administrative rules, correct?
Mr. Hunt: Yes and I say that with reservation because I
am not sure to the extent that this is looking at retroactive issues.
Mr. Bynum: And then back to the... you know I did not
intend to get to this level of detail today but I am prepared to and I probably bring
FED COMMITTEE MEETING 48 JUNE 18, 2014
•
back here, where I show the documents that I am referencing. I show them and tell
the whole story but that is not the Bill. Councilmember Rapozo asked questions
related to that so I just want to...I am sorry I lost my train of thought so I am going
to let it go.
Ms. Yukimura: We can come back to you.
Mr. Bynum: Yes, thank you.
Ms. Yukimura: Councilmember Hooser and then
Councilmember Kagawa.
Mr. Hooser: The parcel of land that is worth the one
million dollars ($1,000,000) in back taxes may or may not have been lost...you
mentioned that you cannot show us the documents because it is client/attorney
privilege?
Mr. Hunt: Yes, I needed to check with the author of the
opinion.
Mr. Hooser: And who is the author of the opinion?
Mr. Hunt: Ian Jung.
Mr. Hooser: It is the County's opinion? Is that what you
are saying?
Mr. Hunt: I am being potentially advised here.
Mr. Hooser: Is there someone behind me making signs to
you?
Mr. Hunt: Yes.
Mr. Hooser: And who might that be?
Mr. Hunt: That would be First Deputy County Attorney
Manua Kea Trask.
Mr. Hooser: Okay, so Mauna Kea Trask is instructing
you not to answer the question?
Mr. Hunt: Because it is not an agenda item.
FED COMMITTEE MEETING 49 JUNE 18, 2014
Mr. Hooser: Back to where we was. So he was not
signaling you not to answer me. Is that correct?
Mr. Hunt: Yes.
Mr. Hooser: So there is a letter out there that says that
there is a County Ordinance that says...
Mr. Hunt: There actually is an E-mail chain that talks
specifically about...it is a request coming initially from Damien Ventura asking
about the eligibility of a property for dedication that goes to Ian Costa.
Mr. Hooser: And that is just this month, or years ago?
Mr. Hunt: 2009.
Mr. Hooser: 2009. But you said the Council passed an
Ordinance requiring it to be in agriculture?
Mr. Hunt: Correct.
Mr. Hooser: Can we get a copy of that Ordinance now?
Mr. Hunt: It is PM...I will give you the Ordinance
number. PM-326-96.
Mr. Hooser: I am assuming staff got that and will print
out the Ordinance or something for us. Because I am aware that this information
has been requested for a long, long time and it is all of a sudden here. Back to the
Bill for a second. I agree there are some work that needs to be done on the
definitions and that type of thing. One (1) idea that I had that I might propose at
some point in the future was that the definition be limited to research and crops
that are federally regulated and that leaves everything else out. I mean everything,
orchids, whatever and it limits it to products and organisms that are not approved
for release into the environment or for consumption. They are federally regulated.
Would that definition be concise enough for you, do you believe?
Mr. Hunt: What would be the notification to the
assessors that they are federally regulated?
Mr. Hooser: We can work on that. It is a good question. I
would suggest putting the burden on the person receiving the tax benefit. They
would provide an affidavit saying this is what we are doing and then we base our
taxes on that. Right now we base our taxes on them telling us what they are
growing anyway, right? I mean is that how we do it, right?
FED COMMITTEE MEETING 50 JUNE 18, 2014
Mr. Hunt: Yes. We get a farm plan that basically tells
us what they are growing and where they are growing.
Mr. Hooser: So it would be just like that in the farm plan
we would just ask them to indicate what is regulated and what is not regulated. So
that would be a suggestion that we could talk about as we move forward. There was
some discussion on the ad valorem requirement if you would. In the case of any
property we assess it based on the highest and best use.
Mr. Hunt: Correct.
Mr. Hooser: But we set whatever tax rates we want to set
as a Council body, right? So we can set higher tax rates on whatever category we
choose is appropriate and in the best interest of the public and so if we choose to set
those rates on impacts that is our prerogative, I believe. Would you agree?
Mr. Hunt: I would concur with that statement.
Mr. Hooser: Great. Thank you and right now the parcel
that I was talking about earlier and also ad valorem...it is the value. Bigger houses
pay more taxes, more expensive homes pay more taxes so a farming operation
making millions of dollars, one would think, would pay more taxes than smaller
operations in terms of the value but right now the assessment is based on the same
so the multinational corporation making hundreds of millions of dollars pays the
same tax rate as the small mom and pop farm. Is that correct?
Mr. Hunt: The assessments are the same in terms of
the approach.
Mr. Hooser: The tax rate, if they are both dedicated the
tax rate is also the same.
Mr. Hunt: They both get the evaluation the same, they
both get the tax rate the same under the dedication.
Mr. Hooser: So they are treated exactly the same and my
point is that I believe is much of our country is based on progressive tax policy
where there are higher values and those organizations that are making more money
pay a higher share of the burden then the lower cost and so I think there is a
perfectly valid public policy purpose for this. Back to the Bill, the section of the list
of items that are being requested. I would appreciate your help with this because
you obviously have some good ideas. As we move forward with looking at how to
improve this I will speak for myself only as Councilmember Bynum is the author of
the Bill but I think basically looking for an inventory of dedicated lands. We want
FED COMMITTEE MEETING 51 JUNE 18, 2014
some confidence how much land is dedicated, what it is being used for, where it is
located and so the parsing of words could be whatever the tax in my opinion the tax
office feel is useful. Right now it is my understanding that we do not know how
much land is being dedicated or where it is located or what it is being used for. Is
that an accurate characterization of the knowledge possessed by the Department of
Taxation?
Mr. Hunt: No that is not an accurate characterization.
What would be an accurate characterization would be that the data specifically
asked for does not exist because some of it involves mapping in layers that do not
exist on a GIS map. Some of the data that exists includes hard copy files that are
not easily retrievable by a run of the system. Some of the data that is specific to the
nature of the crop does not exist in an electronic form but rather in a manual hard
copy form so to say that the data does not exist or we cannot determine how many
parcels are dedicated or what the area of the dedication would be inaccurate but
building a historic database to say what was it previously, what parcels did they
come from yes that would be a very challenging assignment to pull together that
data.
Mr. Hooser: So if I asked for a list of agriculture
properties on Kaua`i that were dedicated to agriculture you could give me the TMKs
and all of that information.
Mr. Hunt: Yes, there would probably be some clean up
if we just wanted a TMK listing that probably be done.
Mr. Hooser: And would that have the attached
agriculture dedication documents attached to them?
Mr. Hunt: No it would not. None of that is electronic.
Mr. Hooser: Is it all available?
Mr. Hunt: In files and including in storage.
Mr. Hooser: So we had an issue with the Planning
Department here a year ago, we talked about vacation rental issues and at the end
of the day there was three or four hundred (300 or 400) files of parcels that we were
receiving as if they were permitted and many of those files, if not most, have been
complete. Would you say that most of these files are complete or incomplete?
Mr. Hunt: I would say most are complete and there are
about seventeen or eighteen hundred (1,700 or 1,800) at any given year. Some come
in as new, some fall off as fulfilling their dedication, may or may not rededicate,
so...again it is at what moving point in time you are looking at but...
FED COMMITTEE MEETING 52 JUNE 18, 2014
Mr. Hooser: Okay, thank you.
Ms. Yukimura: Councilmember Kagawa.
Mr. Kagawa: Thank you, Steve. Just to follow-up on
Councilmember Rapozo's...so do we know how many acres are zoned in agriculture?
Mr. Hunt: I do not know off the top of my head but it is
something that could be determined.
Mr. Kagawa: So every agriculture parcel has a portion
that is dedicated?
Mr. Hunt: No. There are some agriculture parcels that
are not dedicated at all and they pay market taxes because they do not want to
incur the onerous roll back if they dedicate and decide to develop later so parcel that
are typically going to be developed do not dedicate.
Mr. Kagawa: So a lot of the gentlemen estates like in
Kilauea they are not...
Mr. Hunt: Dedicated?
Mr. Kagawa: Yes.
Mr. Hunt: Yes. A lot of those are not dedicated. In fact
the bulk of the value savings is on vacant land. Once a home is built on the
property that consumes a majority of the market value so the differential between
yard space and a dedicated land area is very minimal so putting all of the hooks and
strings in about what the penalties would be for breach is not worth it.
Mr. Kagawa: For a lot of the agriculture homeowners who
do not perform any agriculture, are they paying their adequate share?
Mr. Hunt: In fact most of them are actually classified as
residential now with the tax on use changes. Many of the properties that had been
in agriculture but were primarily homesteads or second homes that were rentals
that are on agriculture property have been moved to either homestead or residential
classes now.
Mr. Kagawa: And that is to take advantage of the big
difference in the homestead rate.
Mr. Hunt: And agriculture was always eligible for
homestead if that was their primary use on the property was a homestead.
FED COMMITTEE MEETING 53 JUNE 18, 2014
Mr. Kagawa: Okay because I know in the past that one of
the big gripes was that people were not farming, basically taking advantage of
having a homestead type use in an agriculture zoned area so that is no longer the
case?
Mr. Hunt: In fact if I may expand on that a little bit.
Ordinance Nos. 741 and 742 in which I helped co-author and these are agriculture
Ordinances. I believe 1998 or 1999 was the timeframe and keep in mind there are
actually three (3) sets of ongoing dedications. We have prior to that 1998-1999
ordinance there were a set of rules and an ordinance in place at that time so anyone
who dedicated for twenty (20) years still subject to those rules not the new rules.
Then there were the ones that occurred 1998-1999 that I help author and then there
was the one, I think the major revision was in 2002 was the next one. So there are
three (3) sets that the agriculture inspector has to implement. Three (3) sets of
different rules because there are three (3) dedicated periods and these are
essentially commitments or contracts. The emphasis that was really the bulk of the
Ordinance Nos. 741, 742 and was getting rid of the deferred program which was the
role of did not highlight as long as you do an agriculture you get agriculture value.
You do not have to dedicate and that was the land banking. Everyone would just...I
am doing agriculture, put a horse or cow on the property. It is agriculture and we
get the big break. So that was the crackdown. Prior to that there was no Schedule
"F", there was not asking for the GE, there was none of that, because the emphasis
on compliance was trying to get...in fact this was from my involvement with Roy
Oyama, Jerry Ornalles, Lincoln Ching, I believe Bill Spitz, I am probably missing
somebody but we had a committee that was formed and we kind of looked at it and
there emphasis was this is not real farming, we want these guys out, we do not
want them associated and getting the agriculture rates. That was the emphasis so
this whole income process did not even come into being and it is really a compliance
issue that we addressed for the gentlemen farmers that were not farming. When I
start seeing some questions about they are not paying GE therefore they are not
eligible, that is not true. It has always been physical evidence. If you are planting,
and this has never been about the big commercial agriculture operations the
physical evidence has always been there. The harder part is when you come on a
gentlemen farm and you see nothing how do you prove that they are really farming
and that is where all of these things...these are request for us to challenge whether
they are actually in agriculture use not a precursor to say if you do not have a GE, if
you do not have a Schedule "F" you are not eligible for dedication. I just want to
make that clear because I have heard some dialogue different from that but being
the co-author that was the intent of cracking down on income had to do with the
gentlemen farmers.
Mr. Kagawa: Okay, thank you.
Ms. Yukimura: Thank you. Councilmember Hooser.
FED COMMITTEE MEETING 54 JUNE 18, 2014
Mr. Hooser: I was looking at the Ordinance and just so
the public knows, this is an Ordinance that basically changed...gave them
development rights. Is that correct? To change the zoning from agriculture to
urban, right?
Mr. Hunt: Yes.
Mr. Hooser: So that is the intent. But it says prior to
development is what says in the Ordinance, land shall be kept in agriculture. So
while you are waiting to build houses keep it in agriculture. Is that correct?
Mr. Hunt: Yes, I believe it is condition 20 says "prior to
development land shall be kept in agriculture or diversified agriculture as defined
in section 8-1.5 of the Kaua`i County Code 1987 or otherwise maintained in well
kept condition."
Mr. Hooser: Right. So that when they decide that they
want to start building houses or develop it next year they can just start developing
that is my understanding. It does not say shall be dedicated. Dedication is for a
specific period of time.
Mr. Hunt: Correct.
Mr. Hooser: So it is what, ten or twenty (10 or 20) years?
So was there an agriculture dedication?
Mr. Hunt: There was a dedication in 2010.
Mr. Hooser: Do you have a copy of that?
Mr. Hunt: I am not prepared to do that. I am here to
speak on Bill No. 2546. And I will address the letter that was written to the Mayor.
Mr. Hooser: Okay. So this says basically...you do not
have to keep it dedicated. It just says it has to be in agriculture.
Mr. Hunt: It has to be in agriculture and that was the
issue that the agriculture inspector, the agriculture specialist was grappling with is
that it is now urban how does it go back into agriculture even thought they have
been maintaining it? I believe there was some...the lower valley had always
maintained pasture lands and for parcels over one hundred (100) acres I think the
requirement was only fifty percent (50%) of the area be in dedication at the time
and then there is ten percent (10%) per year that the property could come into
additional agriculture uses so that was sort of the discussion, the dialogue, the
FED COMMITTEE MEETING 55 JUNE 18, 2014
E-mail between Planning and Real Property and ultimately getting guidance from
the County Attorney's Office.
Mr. Hooser: Perhaps we will talk about this later in more
detail but I think Councilmember...thank you.
Ms. Yukimura: Other questions? Councilmember Bynum.
Mr. Bynum: Thank you for supplying this. This says, "or
otherwise maintain in well kept conditions," so it does not just say in agriculture
and it has nothing to do with dedication. Yes?
Mr. Hunt: It has to do with whether a...
Mr. Bynum: Okay well we will move on. In 2010 that
changed to agriculture dedication, where was the petition that was received to
change it in 2010?
Mr. Hunt: Again I will address that in a letter. This is
not today's agenda item.
Mr. Bynum: I will answer that. And I asked for staff to
bring it up. I did not think we were going to get into this level of detail today but I
will just ask this question...did you process an agriculture dedication in 2014 for
that land? In 2013, did you process an agriculture dedication?
Ms. Yukimura: Okay...
Mr. Hunt: I cannot speak to that and I am not sure.
There is also a provision that deals with name changes. Whether there was a name
change there is a required repetition so I am not going to speak to that without
looking at it.
Ms. Yukimura: Councilmember Bynum, I am sorry this is
not regarding the Bill. This is not related to the Bill.
Mr. Bynum: Okay, I will do whatever you say but I
brought this up because Councilmember Rapozo asked and he said I will answer
questions about this letter but I will move on to something else if that is your
judgment.
Ms. Yukimura: Please.
Mr. Rapozo: Madamee Chair, may I just real quick? I
brought it up because Mr. Bynum brought it up.
FED COMMITTEE MEETING 56 JUNE 18, 2014
Mr. Bynum: Right and that is okay.
Mr. Rapozo: He read the letter. He is making it seem like
I opened the door. I did not open the door.
Ms. Yukimura: Okay I would like to focus on the Bill please.
Any question from any Councilmembers?
Mr. Bynum: I have other questions.
Ms. Yukimura: Yes, go ahead.
Mr. Bynum: This one you are objecting to, correct?
Ms. Yukimura: Yes and you get to continue your line of
questioning regarding the Bill and we can come back to you if you wish.
Mr. Bynum: If I did not get interrupted I would keep
going. The agriculture inspector, I just want to say that I agree with you. The
agriculture inspector does not know whether that plant is being grown for research
or not and I have said I think he has done an outstanding job with very little
guidance and high level support. These issues that are brought up here are well
above this individual and in many ways way above the role you have previously
fulfilled and you just came into the middle of this, correct? But the agriculture
inspector...I am sorry. I lost track of my...I am going to make a request of this
Council for the umpteenth time. When I take the floor I have thought things
through, I lose track and I have to regroup. If you want to interrupt me do it with a
point of order according to our rules please because it impacts me significantly as an
individual because I had three or four (3 or 4) things I wanted to dialogue with you
and the interruptions keep me from remembering what they all are right now and I
will remember again in ten (10) minutes.
Ms. Yukimura: Thank you. I just want to say that point of
order...
Mr. Rapozo: Madame Chair. I just have a question on
process.
Ms. Yukimura: Yes, go ahead.
Mr. Rapozo: If you want to be allowed to have discussion
and it is your call, you are the Chair, but this period is for questions and I sit here
and I listen to the discussion going back and forth. If that is what you are going to
allow than that is fine as long as it is allowed for everybody because I do have quite
a bit of discussion but I have been waiting for that opportunity. To make a
FED COMMITTEE MEETING 57 JUNE 18, 2014
statement and then say "is that correct" is not a question and I am going to ask you,
Madame Chair that you just let us know. If that is what the rule is going to be than
I will accept it.
Ms. Yukimura: Okay, thank you for the point. I will allow
discussion as related to the Bill but I would like to ask for discretion by every
Councilmember to not us it as a way of making argumentation. I will interrupt the
speaker if I think it is argumentation. I believe that is the role of the Chair. A
point of order is raised by Members not by the Chair. The Chair can just assert a
point as a Chair. That is my understanding of the rules of parliamentary
procedure. So with that I would like to continue. I believe Councilmember Hooser,
you have a question.
Mr. Hooser: In looking at the Ordinance itself...when I
get calls from people a lot of the times they are wondering about dedication on large
parcels that look like they are vacant but there are a few cattle off in the corner
somewhere and it says in the Ordinance now "for parcels involving the ranching of
livestock the entire dedicated area shall have establish fences and livestock present
at the time of filing a petition to dedicate." So if there is a four thousand (4,000)
acre parcel this looks like the four thousand (4,000) acres have to be fenced and
have cattle on the four thousand (4,000) acres, is that fair?
Mr. Hunt: I believe that is the case unless it deals with
over one hundred (100) acres. I know that there are different rules that deal with
parcels over one hundred (100) acres which fifty percent (50%) of it needs to be
meeting the standards as of the time of the dedication. I cannot speak on the
ranching off hand.
Mr. Hooser: Right. Since I have it here...if it is over one
hundred (100) acres and it is under cultivation, over fifty percent (50%) has to be...
Mr. Hunt: Just under cultivation.
Mr. Hooser: ...at the time of dedication for cultivation.
For livestock the entire area has to have livestock present and entire area fenced
and so my question is what is the process or how do we know? Is this occurring?
When someone petitions is it inspected? Do they go out and look to make sure that
there are cattle on the entire property?
Mr. Hunt: There is one (1) agriculture inspector for the
County and I just received notice that there are actually nineteen hundred and
eighty-five (1,985) parcels that are actually in the dedication program. So to say
that he visits them annually would be a false statement. Does he do a good job on
the intake when they come in? Absolutely. So at the time of petition he does his
findings of fact and he provides a letter and that ultimately ends up as a
FED COMMITTEE MEETING 58 JUNE 18, 2014
recordation on the deed as a lien, if you will, in case there is a breach. Compliance
and monitoring, that is a challenge not only for agriculture but for a bunch of other
areas of real property as well.
Mr. Hooser: And dedication periods of ten (10) years or
twenty (20) years, is that correct?
Mr. Hunt: Correct.
Mr. Hooser: And so whether or not they are inspected
fifteen (15) years down the road, we are not sure because we have one (1) person?
Mr. Hunt: Yes. I could not tell you. For the most part
it is complaint driven. If we have complaints we address those and I know we
address them at the time of dedication to make sure that the requirements of the
dedication are in place at that time.
Mr. Hooser: And I cannot remember...I should be able to
remember because we just finished the budget but did anyone ask for additional
personnel to support the agriculture one (1) person?
Mr. Hunt: No we did not ask for additional personnel.
Mr. Hooser: Okay because...thank you.
Ms. Yukimura: Thank you. I have some questions and then
we will go to Mr. Bynum. This study that you mentioned which developed
agriculture values...you said the agriculture based on a study that was based on
caring capacity of the land and you explained the different items that were in the
formula. When was this study done?
Mr. Hunt: I mentioned earlier I do not know. There
was one (1) done...there use to be even lower...I think we doubled the rates from
one thousand (1,000) to two thousand (2,000) for diversified agriculture some time
ago. I would say probably in the mid 90s. I am just going off of memory here. But I
believe it was the College of Tropical Agriculture Research that actually provided
those figures to help.
Ms. Yukimura: It would be interesting to apply this study to
the biotech crops. Just based on caring capacity, which is at this point the standard
of measurement apparently of agriculture value so it would not be treating them
any differently than any other agriculture and it makes me wonder also whether we
should mandate that a study be done every so many years so that we have current
evaluations.
FED COMMITTEE MEETING 59 JUNE 18, 2014
Mr. Hunt: I guess if you are down that path one (1) of
the concerns that I have is that we are now trying to establish a rate for each type
of use or crop and that could actually...
Ms. Yukimura: That was my next question.
Mr. Hunt: But that could dictate if you say we
determined that mangos is the most profitable and the highest rate that people
growing mangos and everyone grows mangos and it floods the market and then it
does the opposite.
Ms. Yukimura: I would not worry about that. There are a lot
more factors than agriculture valuation of crops.
Mr. Hunt: I think keeping it simple into diversified and
pasture is advisable only because unless you are willing to really start ramping up
our staffing and research and support funding to develop this...you know.
Ms. Yukimura: But you may find by a survey or a study that
there is actually three categories, diversified crops, pasture, and biotech or research.
Mr. Hunt: Well Adam Killerman was up here earlier
and I do not know...he does research on rich but I do not know if he would agree
that there is necessarily a higher rate for research.
Ms. Yukimura: Well we do not need any agreement. We
need a study perhaps that would tell us what we are talking about. We do not even
know what we are talking about right now, right? Right now we only have two (2)
categories, pasture and diversified crops.
Mr. Hunt: With four (4) different rates because we have
the ten (10) year and the twenty (20) year for each.
Mr. Bynum: Tree farms?
Mr. Hunt: Tree farms actually, I am sorry tree farms,
that is actually an exemption.
Mr. Bynum: Exempt.
Mr. Hunt: Yes. There is an exemption that applies.
They get market value and then they get the same exemption knocking off the value
for a period up to twenty (20) years.
FED COMMITTEE MEETING 60 JUNE 18, 2014
Ms. Yukimura: Now you have to explain to me and this is a
question, how the interface of agriculture dedication and valuation operates?
Would you please explain that?
Mr. Hunt: The interface, once it is dedicated it does not
interface. It actually is a circuit breaker, if you will and pulls it...bad terminology
because we use circuit breaker elsewhere but it basically does not keep it on market
value, puts it on a agriculture value. So once you get into a dedication that is
approved it is now determining the agriculture value for assessment purposes not
the market value because you could have an ocean front small five (5) acre farm
that may have a two million dollar ($2,000,000) market value and inland you could
have the same size two (2) acre that has a two hundred thousand dollar ($200,000)
value but they both for agriculture purposes have the same value because the soils
are the same, the capacity is the same, what they can produce agriculture does not
change whether it is ocean front or interior so again the dedication process removes
market value and puts it on a dedicated agriculture value.
Ms. Yukimura: It would be interesting to do a market value
within agriculture, the category of agriculture and not according to other
development possibilities.
Mr. Hunt: There were some true, what I call market
value agriculture sales initially at least in Moloa`a when they certified property
regime (CPR) properties into units that were more than the allowable density but
that kind of morphed once the farm worker housing. Then people started looking at
density and values started going back up again but for a while those were
true...they were purchased again on a price per acre based on what they thought
they could farm with.
Ms. Yukimura: Because they were not allowed any density.
Mr. Hunt: Correct.
Ms. Yukimura: Okay, well this is all very interesting and I
think relevant to what we are trying to do here. I think that is all I have at this
point. Councilmember Bynum.
Mr. Bynum: Thank you, Councilmember Yukimura
because it is right here agriculture value that is what I wanted to talk about,
agriculture value. You have described how there is basically two (2) categories with
four (4) rates. How do we determine the agriculture value of research where none of
those things apply? I am looking at the license agreement that the landowner has
with the company and it says "minimum annual license fees will be payable. For
the first year the term the minimum annual allows this fee in the amount of' and it
is redacted. And a quarterly fee will be the minimum license fee will be paid...then
FED COMMITTEE MEETING 61 JUNE 18, 2014
there is a section called research fee. While the primary use of license premises are
for the production of parent seed corn as fully set forth in this other section licensee
may also use a portion of the license premise for seed research crops including the
operation for crops for research nurseries. If the licensee uses a portion of license
premise for seed research crops in contrast to parent seed corn at any time during
the license share a licensee will pay an additional annual fee in the amount of
redacted with respect with such acreage use for seed crop research and round it to
the nearest...shall be (inaudible). Now do we know which pieces are research? Do
we know what the seed companies are paying and does the law not require that
these be disclosed to us?
Mr. Hunt: The lease amounts...I am answering the
question. The lease amounts are not a requirement of the dedication. The
landowner who dedicates can decide to sublet his property or create how many
leases as long as he is meeting what he is stating as his business plan or his
agriculture plan but it is not a requirement to get the leases.
Mr. Bynum: I will follow-up that with the County
Attorney. My question is about the agriculture value part.
Mr. Hunt: Okay.
Mr. Bynum: This is different than anything else you
described that we have researched in the past. Do you agree with that?
Mr. Hunt: Again, I do not get a lot of the leases so I
cannot tell you. We do not typically monitor what the market, ongoing market
rents that landowners are charging. They may change it based on availability to
water, the areas, all of that...we do not get that information and what we do we are
doing a soil rate value, if you will. We are not doing a business plan value, or what
someone is willing to pay for the property.
Mr. Bynum: Let me just say there has never been a
research or study. This is not the same use of the land as diversified agriculture or
ranching where we have set these values. The attorneys picked up on this right
away and said the only way we can value this is on the lease payments because
there is no product being produced, right. So the rules that you just described just
do not apply and defacto do not apply and so anyway how do we determine the
agriculture value and the parcel where no products are being produced or sold? Of
course you cannot answer that because this is a policy level that is above the real
property tax people and that is why the County Attorneys for whatever reason,
failure to provide assistance and coordination and answers the questions is very
troubling because you are sitting up here talking about agriculture value and there
is a fundamental disconnect that just...because the world changed.
FED COMMITTEE MEETING 62 JUNE 18, 2014
Mr. Hunt: Councilmember Bynum, we do not look at
every...if we do get leases we do not ask if this guy is leasing for one hundred
dollars ($100) an acre. This guy is leasing for four hundred dollars ($400) an acre.
They are identical properties. Maybe he was a friend. He got a better deal. We are
going to give him a lower value. We do not do that. We look at the total soil value
of the property on an agregate basis. What it would go island wide not individual.
We do not do an individual lease analysis for each property. Frankly, we do not get
all of the leases.
Mr. Bynum: And you should and so this agriculture value
question, I am just going to ask that our staff and the County Attorneys who are
listening help advise you about it because this is a fundamental problem because all
of that you described, the reports we have done in the past cannot by their nature
apply to this particular use. The fundamental problem here is that these petitions
were received in 2013 and the changes happened in 2010 or 2008. That is the
fundamental problem here but it is layered. This agriculture value question is total
in play right here because of what we have learned that there is no product. This
was based before on like you said all of those factors they do not apply here and that
is like a whole other level. Thank you.
Ms. Yukimura: Thank you. Councilmember Kagawa.
Mr. Kagawa: Steve, I am sure we are not the only one in
the State that taxes the agriculture property in this manner so what other County
are we following or we work closely with in line?
Mr. Hunt: Everyone seems to have their own program.
Mr. Kagawa: It is all different?
Mr. Hunt: I looked a `Oahu's because I have a copy of it.
For one (1) year agriculture dedication, they actually assess the property at three
percent (3%) of its market value. For a five (5) year, I think it goes to a two percent
(2%), and for a ten (10) year, they do a one percent (1%) of market value so it is
much more favorable than what we are actually doing here.
Mr. Kagawa: How much percent of ours is market?
Mr. Hunt: Well it varies because we do it on a unified
basis. It is a price per acre regardless of what the market value so on an oceanfront
one the discount is much higher and on an interior mauka one the discount is much
lower. I believe the Cumberland piece, the Grove Farm piece that sold for between
five thousand dollars ($5,000) and six thousand dollars ($6,000) an acre.
Twenty-seven hundred (2,700) acres for sixteen million dollars ($16,000,000) that is
the market value of agriculture in true market value, if you will, highest and best
FED COMMITTEE MEETING 63 JUNE 18, 2014
use, whatever. They bought it. So the difference between a diversified agriculture
of two thousand dollars (2,000) and five or six thousand dollars ($5,000 or $6,000) is
not as dramatic as it would be if you have urban lands that are dedicated that may
have a ninety-one or ninety-two thousand (91,000 or 92,000) per acre assessment at
market versus a two thousand (2,000) diversified. The discounts vary but the
consistency is what is the agriculture use? Is it diversified or pasture? What can
that land produce? And that is how we value all agriculture lands.
Mr. Kagawa: What about Maui County and Big Island?
Mr. Hunt: They have their own programs. I have not
specifically looked into theirs because I do not have copies of them but I can do that
to see what...Big Island who is certainly heavily into ranching I would suspect
probably have some very favorable terms as well but I would have to research that.
Mr. Kagawa: Okay. I thought we were all somewhat in
line.
Mr. Hunt: We somewhat started all in line when we
were all under the State but everyone has kind of morphed and gone their own
direction specifically with agriculture depending on its importance to the island.
Mr. Kagawa: Okay.
Ms. Yukimura: Thank you. I have a follow-up question to
that. Actually it might be a follow-up to Councilmember Bynum. Do we take lease
rents into account in determining market value for non agriculture land?
Mr. Hunt: For non-agriculture land?
Ms. Yukimura: Yes.
Mr. Hunt: No.
Ms. Yukimura: No, we do not?
Mr. Hunt: No.
Ms. Yukimura: Okay. It is just the willing buyer, willing
seller?
Mr. Hunt: It is highest and best use as fee simple. The
lease creates a leasehold interest and we would be valuing something else than fee
simple. We have that with condominiums that are in leaseholds such as Kiahuna
where they are not buying the entire bundle of rights. They do not own the land.
FED COMMITTEE MEETING 64 JUNE 18, 2014
They have to pay lease rent on the land so I guess we have looked at leases in terms
of trying to convert that to fee but we have also mirrored that with actual
multifamily sales to say what is the price per unit to get that parody but it is taken
into consideration but really not given a lot of weight. Primarily we are based on
market sales which is the comps, the sales that drive valuation.
Ms. Yukimura: So the one (1) place that you do look at lease
rents is in condo leaseholds even though it is not the primary...
Mr. Hunt: It is not the primary source but it is certainly
in absences of any sales you can kind of mirror where if you had sales and the
leases renegotiated during the same timeframe you can kind of mirror those and if
the lease rents go up and you do not have any sales you can kind of obstaculate to
see where that fee simple value might be for that land.
Ms. Yukimura: Okay. Thank you. Any other questions of
Mr. Hunt? Councilmember Hooser.
Mr. Hooser: I think this is my last one since you are here
and you have the Ordinance in front of us it is a great opportunity to...the
Ordinance says "factors that shall be considered to determine whether an owner
intents to obtain a monetary profit from the activities." I think this is
existing...this is existing law.
Mr. Hunt: It is not the Ordinance we are discussing?
The Bill?
Mr. Hooser: It is the Ordinance we are discussing.
Mr. Hunt: The Bill?
Mr. Hooser: Well it is not...it is this here. It is not new
material, I believe. It is existing law on the Ordinance.
Mr. Hunt: Okay. This would be page 4? Okay, got it.
Ms. Yukimura: Page 4 of the Ordinance.
Mr. Hooser: I have it at the top of page 4. Right and this
is the criteria to determine whether it qualifies for agriculture dedication, part of
the criteria, right? It says factors that shall be considered and some of us
appreciate the word shall and may. This says, "factors that shall be considered
include but are not limited to." So to me this says these factors have to be
considered. Which says, "evidence that they have water department agriculture
rates, filed copies from the immediate preceding year of the IRS Schedule "F" forms,
FED COMMITTEE MEETING 65 JUNE 18, 2014
showing profit/loss from farming, copies of fuel tax, and then sales receipts
generated from illicit activities, etc.," so there is a lot of debate about whether...
Mr. Hunt: This is language that I inserted by the way.
This is from the original 741, 742 an in the context this was information that we
wanted to be able to extract from the absence for physical evidence. When you drive
up to the property, for the ease of the agriculture inspector when you drive up to a
property, you do not see any evidence how can we verify. These are things we ask
for to prove that they are doing it not to say on the application you need this.
Mr. Hooser: I understand previously you talked about
this and I understand that what you believe was the intent and the context when
the law was passed. I am just looking at the language that exists at this moment.
The language that exists at this moment says, "these factors shall be considered"
and so my question is, do you request this information from people who request
agriculture dedication?
Mr. Hunt: No.
Mr. Hooser: Even though the Ordinance says these
factors shall be considered you do not ask them for this information?
Mr. Hunt: We ask for the information in the absence of
physical evidence. It is not upon application.
Mr. Hooser: With all due respect I am just reading the
Ordinance. The Ordinance says, "factors that shall be considered include but are
not limited to." Which says to me that the County must consider these items and
we are not doing this you are saying?
Mr. Hunt: It is consider the items to determine whether
there is a monetary profit. Not whether they are doing agriculture.
Mr. Hooser: But to qualify for an agriculture dedication
they have to intend to obtain a monetary profit and to prove that this is that?
Mr. Hunt: Yes and just so you are aware too Schedule
"F" which is the Farm Income Statement, they are not parcel specific. You could
have twenty (20) properties and file one (1) Schedule "F" for all twenty (20)
properties and nineteen (19) of them, you are not farming on so we cannot tie the
property to a Schedule "F".
Mr. Hooser: This list a number of items and my question
is, is the County requesting evidence of these items from people who request
agriculture dedication in the answer is no?
FED COMMITTEE MEETING 66 JUNE 18, 2014
Mr. Hunt: Well I would be putting words in Damion
Ventura's mouth because I do not process these. He would have to speak to that
directly but having written the words in the intent which they were written and
going back to the time that the focus on was gentlemen farming these were factors
that our Committee, Roy Oyama and the group that was involved, put into the
Ordinance to basically have proof and teeth that those that are gentlemen farmers
need to show that they are doing these things. That was the context with this
descript.
Mr. Hooser: And I do not understand why we would not
ask everybody to do this not just gentlemen farmers. The language says "factors
that shall be considered" and we do not have to belabor the topic so maybe I will ask
an opinion or something from.the County Attorney's Office. But it is clear to me
that it says these factors shall be considered including but not limited to.
Regardless of what...and I respect your stroke of knowledge but what we are looking
at are the words on the paper today and someone will look at them ten (10) years
from now when we are gone and it is pretty clear to me and if that is not being done
then that is an issue but thank you. Thank you, Chair.
Ms. Yukimura: Other questions? Okay before we go to
Mr. Bynum we do want to have a question sent to Finance asking if we do so we can
get an official answer. If we do ask for this information. Okay.
Mr. Bynum: I will wait. I am done.
Ms. Yukimura: Any other questions? If not, thank you very
much, Steve. Alright I think we are ready to come back to our meeting.
The meeting was called back to order, and proceeded as follows:
Ms. Yukimura: Chair wants to observe that there is a lot of
work to be done on this Bill. So I assume we will be deferring it but before I accept
a motion to defer, let us have discussion. Councilmember Bynum, even though you
are not a Committee Member, as the introducer of the Bill, why do you not start?
Mr. Bynum: I appreciate that. The part of the law that is
in the law now, this is not new proposal that Mr. Hooser just read along with many
other sections of a complex law and the administrative rules would certainly lead
one to believe that the intention of the law was that you are producing a monetary
profit from the thing that is there. These are the three (3) files that I have been
dying to get all the documents and I found out today that I still do not have all of
them and if I had time I could go through them but basically previous...for many
years the landowners submitted all of those things, GE taxes, this is what products
FED COMMITTEE MEETING 67 JUNE 18, 2014
are being grown, this is the guy, and then they are not there anymore. They are
just not there anymore. I think Steve is a tremendous asset to our County and he
and I have worked together really well in restructuring Finance. I helped managed
those proposals in Finance that came from the Mayor and I really appreciate his
work but Councilmember Hooser is right. The law is what the words that are on
the table and many landowners followed it to the tee and they submitted all of these
documents but Steve is also correct that in practice they have not been asking for
these things. So the nature of agriculture changed under our feet at a high level,
the agriculture valuation does not make sense anymore but that was above our
agriculture inspector's level. It was above our tax people's level. It was at the
Finance Director's level way prior to the time Steve Hunt was in that position. In
terms of this Bill, I have been accused of waiting till the last minute to slip it in. I
hope that everybody has seen today that I have been waiting to get assistance and
help and information and I put it on...now the fact that if this Bill does not pass out
of Committee today, these tax changes will not affect which fiscal year, Steve?
Mr. Hunt: 2016
Mr. Bynum: 2016. So if this does not pass out of
Committee today and it is not going to...it is not going to affect fiscal year 2016. It
will not go into effect till fiscal year 2017 because these things take...tax bills take
way more lead time then other bills. Now we are up against that wall. Clearly the
Bill needs more work but I am going to tell you the sacrifices that we defer today,
we can continue to work on it but it is not going to take affect for a couple of years
because of the lead time. A couple of more years we are going to lose two hundred
fifty thousand dollars ($250,000) on this parcel which I believe is highly
inappropriate.. These documents do not answer the questions that I am posing and
in fairness to Mr. Hunt, he came into the floor while I was doing all of this research
and he has been great about responding appropriately and cautiously as he should
but this is something now that...so this Bill I am reluctantly and sadly going to
agree that we need to defer it to give time to address all of these issues.
Landowners have asked really good questions that we need to clarify but there all
clarify able, they are all manageable and we have started that process today.
Unfortunately this Bill will not affect two (2) tax years but that does not mean that
there are not other elements of it that we can initiate sooner particularly the
reporting. Like I said, I would love to show you these parcels and show you the
concerns and I will ask for a future posting to do that because that is not related to
the Bill directly but this agriculture value question and all of these other questions
about what the law currently says and why we do not have those documents and
why petitions are backdated. I mean came in 2013 for actions that took place in
2008 and 2009. Those question all need to be answered. I have faith in our Mayor
to fulfill his responsibility based on this letter and to give us an action plan very
soon. Thank you.
FED COMMITTEE MEETING 68 JUNE 18, 2014
Ms. Yukimura: Thank you. Other comments?
Councilmember Kagawa.
Mr. Kagawa: Thank you. I am not ready to support this
Bill. As I stated as I began my questioning. My question of the maker as to the
purpose of the Bill and I stated that the County Attorney's opinion was important
for me to make sure that if a Bill like this passes that we will not have to go
through another lawsuit and instead try and work on the Bill further so we can
avoid it. We all know as we had today on the agenda, we have much lawsuits and
our County cannot afford it right now and if we can avoid it we should. I have an
uncle who farms down in Kipu. He does flowers, he does practically everything. It
is very hard work and like Mr. Dyer said I do not think he really makes money but
it is his life. I think he is a successful farmer not in terms of money but he gave
up...he use to tuna fish with a boat and everything and he does not even go
anymore but his heart and soul is in farming. He has raised taro, grows flowers
and he struggles with diseases, with wild pigs and it is just a tough, tough job to
make a profit and to me he is a success because he keeps doing it even though he is
not really making money. I hope if we do change our rates a little bit or a lot that
people like my uncle down there who is really working hard at farming...somehow
at the end gets a better break than somebody who own agriculture and is not really
trying and I think that is one (1) way for me that we would make it more fair and
would actually be promoting the farmers who are actually committed to it. I am not
saying it is easy. I am sure a lot of people tried farming with all of their heart and
soul but it is just tough. I raised some vegetables myself and right in Waimea
Valley by Mr. Kubo there and it is not easy. You go on a trip, you neglect it, things
die, start all over. It is tough. It is hard to make money but you can make money.
We have some good farmers out there and of course Kaua`i people love fresh
produce. I am all for growing more food, I have always said that. Growing more
food, local...look at our farmer's markets it is just packed. If you do not reach there
early enough all of the good vendors are gone. The local people know who grows the
good stuff and they get rewarded with the good vegetables and fruits and whatever
but we just need to make sure that when we put bills before this body that the
County Attorney...I do not know how we are going to force them to get an opinion or
get recommendation as to how to make things better but we need to push them to
get that process through first and I think that will save a lot of grief, getting people
all worked and everything about a bill and perhaps it may be premature. With that
thank you, Chair.
Ms. Yukimura: Other comments. Councilmember Rapozo.
Mr. Rapozo: I think Mr. Hooser wants to go last so I will
go.
Mr. Hooser: She is going last.
FED COMMITTEE MEETING 69 JUNE 18, 2014
Mr. Rapozo: Well we have a caption break coming up.
Ms. Yukimura: Go ahead.
Mr. Rapozo: Thank you. You hear other discussions
today and it is almost déjà vu about when we had the discussions about the
Transient Vacation Rentals (TVRs). It is the same thing. The issue is not the tax
rate. The issue is not the tax rates of agriculture. It is the dedication process. It is
how we process dedications and are we doing it properly? That is the issue. It is
not the rate. This Bill does nothing for the dedication process. What it does it
targets an industry. That is the truth. People may deny it but...and that is why I
think they took out horticulture. I think the attorney took out horticulture so they
can say "no we are not targeting the seed companies. Look we are taking out
horticulture." Who would take out horticulture as an agricultural use? Really, I do
not know who suggested that in the County Attorney's Office nut that is ridiculous.
Horticulture is not a agriculture use? I just think that was the token give away like
"yes we are not just targeting seed companies, look we took out horticulture." It is
ridiculous. October 23, Mr. Hooser you kind of touched on, October 23 when we did
the resolution for a 3.17 investigation on the TVR abuses. It is the same thing.
This Council did not pass it. Council said no we do not want know what is going on.
We want to give them an opportunity to clean up the mess. That is what the
solution is. It is not the...it is the process. It is our dedication process. It is how we
do our agriculture dedications. Are we fulfilling the requirements of the statute? If
not then we need to. Mr. Barca mentioned the fiscal hold that we are in and I am
glad you recognize that because we are deep but the solution is not to continuously
raise taxes and find new areas to go raise taxes and then once we are done with the
biotech then where are we going to next? Are we going to go somewhere else? It is
a balance of cutting expenses and revenue generation but we cannot just continue to
look for ways to raise taxes. That is not the solution because at the end of the day
the consumer will pay if we keep raising taxes.
A few months ago I had a sore knee. My knee kept bothering me and people
told me it was age, arthritis so I decided to go to the doctor and the first thing the
doctor, whatever they call them now, doctor practitioner, or whatever they are
called, not a real doctor but somebody that apparently went enough school to
pretend to be a doctor said just lift up your pants, we will give you a cortisone shot.
That will fix the pain right away. I am not taking no stinking cortisone. I do not
like needles and I do not need to fix it temporarily. I do not need the bandage
approach. I need to find out what is wrong and you know what? She sent me to
physical therapy and the physical therapist worked with me for a while and fixed it
because the problem was not just the pain. The problem was some of the muscles
and ligaments in there needed to be strengthened and that is what physical therapy
did. The reason I bring that up is because it is so easy to sit here and pass a bill.
Just pass a bill. It will fix it. Temporarily it will fix it. It does nothing to the root
problem that we are experiencing on this island. The root problem is not the fact
FED COMMITTEE MEETING 70 JUNE 18, 2014
that the seed companies are not paying enough taxes. That is not what I heard. If
you read the discussion and the testimony we are not concerned about them paying
more taxes. They are concerned about pesticide use. They are concerned about the
impacts to the communities. Things that laws that are already in place that we just
do not enforce. That is the root problem that we need to fix. Passing this bill does
absolutely nothing for pesticide use. And we do not need a study, Councilmember
Yukimura. I disagree we need a study. We do not need another study. What we
have to do is we have to take a look at the ordinances that are out there and we
have to find out why our administration is not able to enforce it. That is how you do
that. You do it either through an audit, you do it through a 3.17 investigation,
which again, when we talk about land use and whether it is vacation rentals or
farmers or whatever it is, how they can circumvent the law we have to figure out
how that is happening and fix it. That is how you fix the problem not just
continuously passing laws and laws and laws that will not get enforced anyway. So
to sit here and pretend like this is going to solve the problem it is not. I am not
going to support the Bill. First of all, I do not think that is how we should do things.
I do not think we go after an industry and charge them more. But I tell you what I
am not satisfied with how we are processing the laws. I think Mr. Dyer, you bring a
very refreshing perspective and I respect what you said. You have done it. I have
never farmed a day in my life except a mango tree that I am trying to grow now. I
am having problems with that. I cannot sit here and tell you what is the right thing
to do for farmers but I know philosophically I have a difficult time just tagging more
people for more taxes just because we cannot run this County efficiently. Look at
the records. When you look at the budget, look at who voted for tax cuts, I mean
expenditures and look who supported tax increases. We cannot continue to do that.
The well is dry. Not just the County's well but the taxpayer's well as well and this
is not the answer. This Bill is not the answer in my opinion. We want to go find out
the root of the problem well I can tell you just from today's discussion, Steve, and I
appreciate you being here, one (1) agriculture inspector for thousands of parcels. I
mean I do not care how good that guy is. It is just like having one (1) guy on
offensive line, it will not work. Quarterback is going to get sacked every single play.
So let us figure out what our priorities are here on the County Council. Mr...I
forgot your name back there...
Mr. Frank: Elijah.
Mr. Rapozo: Yes, the fireman, right? You said it best.
What is the Council's vision for agriculture going forward? That is what we need to
decide and you do that by...the Ordinance as it is written right now without any of
the amendments is fine. It is fine but are we doing the exemptions properly? Are
we getting to the exemptions in a...Mr. Hooser brought up a very good point and if
you read page 4 those factors shall be considered and I understand what the intent
may have been, Steve, and maybe that is where we have to fix regarding the
Schedule "F" because if we are collecting a Schedule "F" that is meaningless then
we should not collect the Schedule "F". Why waste your employee's time looking at
FED COMMITTEE MEETING 71 JUNE 18, 2014
a schedule that is not relevant? But if you look at the very next paragraph it talks
about the physical evidence which you talked about but it says shall also be used so
as I read this Bill, I have to agree with Mr. Hooser that it is both. That we have to
look at all of the documents, we have to look at the tax returns, we have to look at
the fuel tax... all of that has to be looked at in addition...if you are applying for a
dedication for grazing livestock so forth, then you have to look at those additional
things. I think it is something that we have to really encompass the entire process,
work with the administration, figure out what it is you need, and if it is the
County's direction to go out and actively enforce the dedications and exemptions
then we have to be prepared to fund it. But to just pass a Bill to raise taxes on one
(1) and I am just going to disagree with whoever says that is not farming out there.
That is agriculture. It is a different type of agriculture. Whether you agree with it
or not it is still agriculture and I do not see how you separate agriculture from
agriculture. I just do not and somebody talked about the hotel. I think Mr. Hooser
brought up the hotel scenario, analogy. The hotel is not built on agriculture land.
The hotel is'built on a resort parcel. It is zoned, you have the resort so that is a
whole different story. If someone tried to build a hotel on agriculture land I think
we would have some issues, well, I would. But that is not the case here so anyway
thank you Councilmember.
Ms. Yukimura: Thank you. Mr. Hooser.
Mr. Hooser: Yes, I find myself agreeing with just
about...a little bit about what every spoken here and I think it has been a really,
really actually good discussion overall. It has taken some time but I am glad we
took the time to do that. To me it is about equity in our tax structure and it is about
implementing the law fairly and across the board. As Councilmember Kagawa has
said that I feel for the small farmers and small businesses out there busting there
okole trying to make ends meet and pay their tax bill every year and struggling and
then I see these multimillion dollar companies, two hundred fifty million dollars
($250,000,000), five (5) companies and they are paying four thousand dollars
($4,000) a year on four thousand (4,000) acres which is less than many small
businesses in Kapa`a, Koloa and Lihue are paying that barely make it and these are
multimillion dollar companies paying next to nothing and yes, it is just not being
enforced. We do need additional support and I believe that it would pay for itself if
the tax office had additional staff to do the work. We have a perfect history of this
as part of the 2491 process as I looked into the different parcels of land, discovered
that three (3) of these companies had not paid taxes, had been charged for taxes nor
paid them in many years, sometimes back to 2006 the County is only allowed to go
back two (2) years and so we were able to collect at that point one hundred thirty-
one thousand dollars ($131,000) which would pay for a full time person and that is
just me accidentally stumbling upon three (3) of these large companies who had not
been billed for and had not paid their taxes and so there is clear evidence just
without even trying of inequities in our tax structure meanwhile little mom and
pops are struggling to pay their bills and we for whatever reason are not enforcing
FED COMMITTEE MEETING 72 JUNE 18, 2014
existing laws, not doing the research and so we need equity and what
Councilmember Rapozo said I think is a really clear and obvious path. We need to
either do an investigation or do an audit to determine what is going on. Why we
have these missing elements. Why some of these documents apparently are dated
out of sequence. There are a whole number of questions and so I would support that
pathway that Mr. Rapozo laid out in terms of either doing an audit or doing an
investigation to find out. There are millions of dollars potential, I mean millions
without exaggeration of potential income that the County is losing out on,
meanwhile the rest of us are struggling on a regular basis to make ends meet. I
think it is really clear, I want to emphasis that this Bill, it is going to be deferred
and it does need work, there is no question about that, but it does not in and of itself
raise taxes.
What it does if it were passed is close loopholes and Mr. Barca I think nailed
it and we need to close loopholes. Why are we letting large and I do not think it is
targeting. I think if you look at where the violations are, where the questions are, it
is about large landowners and large businesses. That is where the information has
been coming out that the laws are not being enforced and so we need to close those
loopholes and I thank Mr. Barca for bringing that up. Close those loopholes and
then that additional income can perhaps be used to support some of these small
farmers. As we sit here talking I am thinking how do we get more income from the
large multimillion dollar companies and use that income to support agriculture, to
support small farmers, to support water for farms, support pesticide monitoring and
that is where the source of money should come from. We had cattlemen here a
couple of weeks ago begging for land saying that was the answer, nothing else, land,
availability of land and I believe if we enforced our agriculture dedication laws
properly that more and more of that land would be freed up for real farmers like
some of these ranchers that were here. It has been mentioned and sometimes in the
media and letters to the editor that this is going to raise the cost of these
landowners but virtually every lease is written to allow the landowner to past on
the cost of their taxes to the people leasing the property so that includes the State.
The State is a big part of this also. They are leasing about five to six thousand
(5,000 — 6,000) acres. I would like to support the deferral. I think we need to work
on this issue a little bit more. Work on the definitions but I would also like this
Council to consider moving forward the second path that Councilmember Rapozo
suggested of really getting to the bottom of the questions about whether or not the
lack of enforcement and implementation of the agriculture laws so that is enough
for today. I want to close by really thanking Councilmember Bynum. This
gentleman has done a tremendous amount of work. Months and months and
months and without the information he needs to do the job properly but he has done
a great amount of work, lots of research and I just want to commend him for putting
it on the table today. Thank you.
Ms. Yukimura: Thank you. So I have a few words to add. I
think this has been a rich discussion. We all learned a lot today and I want to
thank everyone who participated, those who gave public testimony and raised some
FED COMMITTEE MEETING 73 JUNE 18, 2014
of the questions about impacts, interpretation, etc., those who supported the main
intent and those who have grave concerns. I want to thank Steve Hunt for being
available, a really helpful resource person. I think what we have learned is that it
is true as Councilmember Rapozo said that administration and enforcement of
existing law is an issue at hand. I want to thank Councilmember Bynum who has
as Councilmember Hooser just pointed out been inquiring about this matter for
months or maybe for about a year to try to determine what is going on. Mr. Hunt
has said that he will be responding to Mr. Bynum's letter and I think we need to
give him the courtesy and the time to do that and we need to see what the answers
are from the administration and if there are issues of enforcement of existing law
that does not require any changes to the law then we need to ask the administration
how that is going to be done. So we need to give that some time and if then it
appears that there is no action on that level we can look at some of the powers that
we have as a Council but I think we need to first wait for a response. I think what
is also become evident to me is that we are dealing with a dated law and a law that
has not had much attention and again thank you to Councilmember Bynum for
focusing our attention on the law. I think it is worthwhile to defer this matter and
pursue it in terms of seeing if a new category is useful or merited. I am not clear at
all an agronomics category is the best way to go but I am intrigued by this idea that
there are only two (2) categories under regulation right now, crop and pasture.
Which to me biotech research does not fall under and I would love to understand
better the processes of evaluation of agriculture land so that we can just learn more
and see if there better ways to structure the law. As Councilmember Bynum has
pointed out by deferring the matter we will not make the deadline for the next fiscal
year or fiscal year 2016, which is next fiscal year. But I think we all recognize that
we need to do work on this Bill, if we are not to have unintended consequences or
hurt people, innocent people we have to really take the time to do a good law. I
would like to support deferral and I want to say to the members of the Committee
who might be wanting to vote against the Bill that if it is a two (2) two (2) tie it gets
deferred anyway in Committee and just deferring it to the next Committee meeting
is not going to be useful so I would like to suggest if we can that we do a deliberate
deferral to a later date. I would like to suggest August 6, 2014 because I
understand that staff will not be here on July 16, 2014 and defer to then, let us get
answers to some of the questions that will set forth. I imagine that we will get a
response from the administration as to Councilmember Bynum's letter by then so
we will have more information and have a better sense of how to proceed from then.
I hear there wants to be some input so let us get some input. Councilmember
Kagawa first and then Councilmember Hooser.
Mr. Kagawa: I am not in support of the Bill so I would not
like to deal with it in two (2) weeks. I think it is too short. I would be okay with
going to August 6, 2014 because a two (2) two (2) tie would bring it back in two (2)
weeks.
FED COMMITTEE MEETING 74 JUNE 18, 2014
Ms. Yukimura: So we have to change the tape in five (5)
minutes so let us see if we can finish this discussion. We heard from
Councilmember Kagawa. Councilmember Hooser.
Mr. Hooser: I support deferring it, but to me,
August 6, 2014 is too far away. Two (2) weeks maybe to soon is there some middle
ground?
Ms. Yukimura: What is the rush if we cannot make the
deadline?
Mr. Hooser: I am not prepared to accept the deadline. I
think I would like to look at that closer. I think that is an internal deadline. That
is not law. This is the tax office saying that we need this much time to put all of our
ducks in a row and so it is an internal self imposed deadline by the tax office. It is
not cast in stone. So I would like to be expeditious and...
Ms. Yukimura: Okay, Councilmember Bynum and then we
will make a decision if we can.
Mr. Bynum: I think that I have demonstrated that I have
been extremely patient. I understand and to me it is a huge loss and I agree with
Councilmember Hooser on second thought. These deadlines that I am being told
are kind of not "set in stone" kind of deadlines and so there is still a possibility we
could still make this determination and it is fiscal year 2016 which is two (2) years
off that we are going to miss. Steve can help me with this. I have never gotten the
fiscal stuff. We are in 2014— 2015 now. We will be in...may I ask Steve to just...
Ms. Yukimura: No I am going to call a five (5) minute recess
so we can change the tape and you can talk offline and come back to talk. Let us do
a caption break and a change tape, ten (10) minute recess.
There being no objections, the Committee recessed at 3:49 p.m.
The meeting was called back to order at 4:03 p.m., and proceeded as follows:
Ms. Yukimura: I would like to suspend the rules and have
Mr. Hunt come and speak as to the deadlines.
There being no objections, the rules were suspended.
Ms. Yukimura: If you can state your name.
Mr. Hunt: Sure, Steve Hunt, Director of Finance for the
record.
FED COMMITTEE MEETING 75 JUNE 18, 2014
Ms. Yukimura: Thank you. So some Councilmembers feel
there might be some leeway in the deadline for if this law were to be passed that
would allow it to be applied to the fiscal year 2016 which is our next tax year. Can
you respond?
Mr. Hunt: Sure. Let me elaborate. There are actually
two (2) issues here. One has to deal with the application deadline for dedications.
So any properties that are attempting to agriculture dedicate currently have to be
done before July 1, 2014 for the next which would be effective for fiscal 2016, those
are the dedications. If this Bill were to pass and the properties that were not
intended to be dedicated since we are still processing between July first and October
first it still could have an impact on fiscal 2016 because then some of these
properties would not be allowed to be dedicated. In terms of the deadlines for the
assessment or date of value is October first which means everything we process is
before September 30, 2014 for the fiscal 2016 year. I would caution there may be
some lead time because if you pass it right up close to that date there may be some
issues with implementation in terms of how we are going to assess these creating a
new tax rate/class if that happens. We do have some software lead time too to make
sure any programming issues that need to be done can be accommodated. Ideally if
something of this nature were to pass and regardless of the July first date we would
like something probably towards the end of August at the latest to push this thing
forward.
Ms. Yukimura: Any questions of Steve? Councilmember
Hooser.
Mr. Hooser: Just to be clear then we could have until the
end of August even though you prefer it as soon as possible and still impact 2016?
Mr. Hunt: Yes.
Mr. Hooser: Okay, thank you.
Ms. Yukimura: Councilmember Rapozo.
Mr. Rapozo: Steve, you said that the application deadline
is July Pt.
Mr. Hunt: For dedications.
Mr. Rapozo: Right. So how would...they would not be
able to. I mean if this is not done by July 1st, how could they apply?
Mr. Hunt: That is true but if it passes that means they
cannot apply anyway, right? If the passage of this legislation precludes certain
FED COMMITTEE MEETING 76 JUNE 18, 2014
properties from even applying for dedication or applying and being denied because
they are ineligible for dedication then there could be that window but certainly if
they are eligible for dedication and they apply by July first then we are sort of in
that processing mode. I would be concerned, I guess if anything went out prior to
the passage of this legislation in terms of acknowledgement or approval of those so
we may have some discussions internally about how we hold some of those
applications back until this Bill has been decided.
Mr. Rapozo: That would be a nightmare for your office
though.
Mr. Hunt: Another one, yes.
Mr. Rapozo: Yes, I mean...okay. I just...why would we
even do that, I do not know.
Mr. Hunt: I am just speaking to the logistics of it.
Mr. Rapozo: I know and that is my concern and it is
unrealistic to try to push this through that quick. There are a lot of questions, I
have a lot of questions, anyway and we do not know what the final outcome of the
Bill would be. And just horticulture for example, I mean that could be one (1) that
people could have applied in July and then find out they do not qualify. How does
that work then. I mean how would you tell those guys "sorry" and I am just using
that as an example because that could happen.
Mr. Hunt: That is correct.
Mr. Rapozo: How would you advise those people? Sorry
or would you grandfather them in?
Mr. Hunt: Again, the assessment notice itself which
includes the dedication and the letters, the response that go back we do have some
time because it takes time for our inspector to actually go out and validate, do the
findings of fact so there is some time in between the application and the actual
approval of that but you are right in terms of segregating out this could be
horticulture, may or may not be, this is clearly a seed company we do not thing it
can be. There are going to be some challenges in sort of segregating work product
until this Bill, the outcome is known.
Mr. Rapozo: Thank you.
Ms. Yukimura: Councilmember Hooser.
Mr. Hooser: I would just suggest that because there is an
opportunity that we err on the side of having our discussion earlier rather than
FED COMMITTEE MEETING 77 JUNE 18, 2014
later. It is up to the majority of the Council to decide whether or not to pass it. It is
clear that we are looking at amendments but if we can amend it and a majority of
the Council supports it and it is able to affect the 2016 budget then I think we
should aim toward that if possible. We had a good discussion today so a two (2)
week deferral or a little bit more possibly but I think we should move expeditiously
to see if we could come to grips with this. I think it is an important issue.
Ms. Yukimura: Thank you. Councilmember Bynum.
Mr. Bynum: Thank you for the opportunity as a
non-Committee member. I understand the answer to this question now. The real
drop dead deadline is October first but you need lead time to be reasonable too. I
waited a long time to get this on the agenda. I asked for some of these documents
and then petitions were given in July. I am asking for documents that were
approved in November before the documents were given to me. The point I am
trying to make is a lot of great discussion happened today. I had an amendment
already prepared that I did not introduce today. Councilmember Hooser discussed
them. I cannot think of any obstacle whatsoever to preclude us from going ahead as
our normal process and revisiting this in two (2) weeks and if we discover that there
are no amendments prepared or ready then it can be easily be deferred again but
there is an opportunity to implement at least portions of this prior to fiscal 2016
which starts July 2015, correct?
Mr. Hunt: Correct.
Mr. Bynum: I would encourage the Committee to do a
straight up, normal deferral.
Ms. Yukimura: Okay. Any other questions of Steve? Okay
if there are no more questions of Steve, thank you, Steve, and we are in a discussion
phase then.
The meeting was called back to order, and proceeded as follows:
Mr. Kagawa: Well, I just want to actually call for the
question and make a motion if it is okay.
Ms. Yukimura: Alright.
Upon motion duly made by Councilmember Kagawa, seconded by
Councilmember Rapozo, and carried by a vote of 3:1:1 (Committee Chair
Chock was excused), Bill No. 2546 was deferred to August 20, 2014.
There being no further business, the meeting was adjourned at 4:11 p.m.
FED COMMITTEE MEETING 78 JUNE 18, 2014
Respectfully submitted,
z — 7
Lori L. Marugame
Council Services Assistant I
APPROVED at the Committee Meeting held on August 6, 2014:
MASON K. CHOCK, SR.
CHAIR, FED COMMITTEE