Kaua'i County, HI Valuation of Dedicated Lands

Definitions. As used in this Section:

means products derived from animals or vegetation, including: the cultivation of floriculture, horticulture, viticulture, and aquaculture products; forestry products; tree farm products; nut products; coffee products; dairy products; poultry products; bee products; livestock or animals raised by grazing and pasturing (except horses); and any other farm, agronomic, or plantation products, excluding products (e.g., hay) derived from guinea grass, leucaena (koa haole), panicum, pangola, kikuyu, napier grass, and similar forage crops.

"Agricultural use"

means the active use of the land for the production of agricultural products with the primary purpose of obtaining a monetary profit from income received from the sales of agricultural products. Agricultural use excludes selling, refining, or distributing agricultural products when the vegetation from which such products are derived was not grown on the parcel and when the animals from which such products are derived were not raised on the parcel. Agricultural use includes meat packing or processing operations occurring on the same parcel the animals were raised on, provided that the packing or processing structure will be taxed based on its fair market value.

"Commercial structure"

means a structure used for commercial purposes not pertaining to the dedicated use.

"Dedicated land"

means a parcel or a portion thereof that is in dedicated use pursuant to a petition approved by the Director. To qualify as dedicated land, a parcel: (a) may not be designated as Urban District by the State Land Use Commission, unless pursuant to the County Comprehensive Zoning Ordinance the Use District of the parcel would allow the specific dedicated use; and (b) shall be five acres or greater, provided that a parcel may be less than five acres if it is unimproved and if 100% of the parcel is dedicated at the time of petition and throughout the dedication period, and provided further that an improvement directly ancillary to the specific dedicated use is permissible.

"Dedicated use"

means a petitioned agricultural use that was approved by the Director.

"Disqualifying change"

means, for dedicated land: (a) any reclassification of the parcel by the State Land Use Commission, (b) a change in the County zoning district, (c) a subdivision or creation of a condominium property regime (CPR) of the parcel initiated or authorized by any fee simple owner of the real property, or (d) the addition of a dwelling or commercial structure to an unimproved dedicated parcel of less than five acres.

"Dwelling"

means a building or portion thereof designed or used exclusively for residential occupancy and having all necessary facilities for permanent residency such as living, sleeping, cooking, eating, and sanitation. Dwelling does not include farm worker housing.

"Farm worker housing"

means, as provided in Kaua'i County Code 1987, as amended, Section 8-8.6, the use of a building or portion thereof designed and used exclusively for the housing of farm workers who actively and currently farm on the land upon which the housing is situated. Farm worker housing may also be used to house the immediate family members of the respective farm worker.

"Owner"

means the person or persons who file a petition pursuant to this Article and is at least one of the fee simple owners of the real property, provided that the owner may file a petition on behalf of a tenant.

"Parcel"

means a subdivided lot or an "apartment" created by the submission of land to a condominium property regime pursuant to Hawai'i Revised Statutes Chapter 514A or 514B.

"Petition"

means a petition to dedicate a parcel or a portion thereof for a specific agricultural use.

"Petitioned use"

means the specific agricultural use proposed by a petition.

"Residential homesite area"

means the portion of a parcel used for residential purposes, including land upon which a dwelling or driveway is located and land designated to be the yard space. A residential homesite area may not be dedicated for agricultural use.

"Substantial and continuous dedicated use"

means no less than 75% of the area of the dedicated land is in active, continuous, and revenue-generating petitioned use at the time of petition and dedicated use throughout the five-year dedication period, provided that for dedicated parcels of less than five acres 100% of the dedicated land shall be in active, continuous, and revenue-generating petitioned use at the time of petition and dedicated use throughout the five-year dedication period. Substantial and continuous dedicated use includes necessary and customary growth or fallowing periods.

(b)

Petition and Agricultural Plan. An owner may petition to dedicate a parcel or a portion thereof for a specific agricultural use. Petitions shall be filed with the Director and supported by an accompanying agricultural plan. The Director shall prescribe the form of the petition and agricultural plan. The agricultural plan shall include the following, provided that evidence that an active certification for the same petitioned use and proposed dedicated area has been granted by the United States Department of Agriculture (USDA) Good Agricultural Practices (GAP) individual or GroupGAP Audit Verification Program may serve to fulfill the requirements of (b)(3) and (b)(6):

(1)

The tax map key number.

(2)

A description and map showing the total acreage of the parcel, the acreage and location of each specific petitioned use, and the acreage and location of the residential homesite area, if any.

(3)

A marketing or management plan and a timetable for implementation.

(4)

A declaration that the land shall be used for the petitioned use stated in the petition for the duration of the dedication period.

(5)

A declaration that the owner grants the Director a right-of-entry to the parcel to physically inspect the land for evidence of the:

(A)

Petitioned use, upon petition filing and prior to approval or disapproval of a dedication; and

(B)

Dedicated use, upon approval of a dedication and for the duration of the dedication period.

(6)

Evidence to verify that the land is in agricultural use, provided that if any of the following is not available the owner shall submit a written explanation:

(A)

A valid, current, State of Hawai'i general excise tax license issued for agricultural purposes.

(B)

Documentation showing that the land receives County Department of Water agricultural water rates.

(C)

A copy of the Schedule F form filed with the U.S. Internal Revenue Service in the immediately preceding year.

(D)

A copy of any claim for exemption from federal income taxation filed under U.S. Internal Revenue Code Section 6427(c).

(E)

Sales receipts generated from the activities listed under the definition of the term "agricultural use."

(c)

Petition Process. Petitions shall be filed by July 1 of any calendar year. The Director's review shall proceed as follows:

(1)

Following a petition filing, the Director shall determine whether the land is reasonably well suited for the petitioned use and whether the petition has sufficiently demonstrated potential success for the petitioned use, by considering factors including: land size, use of surrounding similar land, economic feasibility, State and County land use restrictions, and conformity with the County General Plan and applicable Community Plan.

(2)

The Director shall approve the portion of the petition that satisfies all of the following:

(A)

The land is reasonably well suited for the petitioned use.

(B)

The petition has sufficiently demonstrated potential success for the petitioned use.

(C)

The petition has met all requirements of this Section and all additional requirements of any rules adopted by the Director pursuant to HRS Chapter 91.

(3)

The notice of assessment shall serve as notice of full or partial approval or disapproval of the petition. If approved, the reduced assessment pursuant to Section 5A-9.1(d) shall be reflected on the real property tax bill due on August 20 of the following calendar year.

(d)

Dedication Period and Assessment. All approved petitions shall be for a dedication period of five years. Dedicated land shall be assessed at 5% of its fair market value. For government-owned land, if the Director receives a lease, license, or permit agreement restricted to a specific agricultural use, the applicable land shall be assessed at 5% of its fair market value during the term of the tenancy, provided that this assessment shall cease if the lessee, licensee, or permittee experiences any of the occurrences set forth in Section 5A-9.1(f).

(e)

Right-of-Entry and Evidence of Agricultural Use on Request. In addition to the right-of-entry granted by the owner at the time of petition submission pursuant to Section 5A-9.1(b), at any time during the dedication period the Director may require an owner to submit evidence to verify that the land is in substantial and continuous dedicated use, including but not limited to the materials listed in Section 5A-9.1(b)(6)5A-9.1(b)(6).

(f)

Dedication Cancelation. The following provisions apply to dedication cancelation:

(1)

Whenever a dedication is canceled, the Director shall mail to the owner a notice of cancelation that includes the reason for the cancelation and the effective date of the cancelation, which shall be on the following September 30.

(2)

The Director shall cancel a dedication if any of the following occur:

(A)

The Director finds that the dedicated land is not in substantial and continuous dedicated use.

(B)

The death of the owner.

(C)

The owner requests that the dedication be canceled.

(D)

The taking of the dedicated parcel or any portion thereof by a governmental entity, provided that where only a portion of the parcel is taken, the cancelation shall be effective only as to the portion taken.

(E)

Any conveyance or change in ownership subject to state conveyance tax pursuant to Hawai'i Revised Statutes Chapter 247 during the dedication period.

(F)

The property undergoes a disqualifying change.

(3)

Notwithstanding any provision to the contrary in this Section, if the Director adopts rules pursuant to HRS Chapter 91, those rules may amend this Subsection 5A-9.1(f), including adding additional bases for cancelation and providing the Director discretion not to cancel a dedication, including but not limited to if the dedicated land is not in substantial and continuous dedicated use.

(g)

Appeal. An owner may appeal any petition that has been fully or partially disapproved, or any dedication cancelation, to the Board of Review as provided in Article 12. A petition that has been fully or partially disapproved as stated in the annual notice of assessment or the corrected notice of assessment may be appealed pursuant to Section 5A-12.1. A dedication cancelation reflected in the annual notice of assessment or the corrected notice of assessment may be appealed pursuant to Section 5A-12.1.

(h)

General Provisions. The following apply to this Section:

(1)

The Director may adopt any rules pursuant to HRS Chapter 91 that are consistent with the provisions of this Section.

(2)

Provisions of this Section and any corresponding rules adopted by the Director pursuant to HRS Chapter 91 are subject to change and may be disallowed or modified as provided by law.

(3)

When submitting materials to the Director, an owner shall clearly identify any confidential commercial or financial information, including income statements or tax statements, that the owner believes is not subject to disclosure as a government record.

(Ord. No. 394, July 1, 1981; Ord. No. 457, April 25, 1984; Ord. No. 464, August 6, 1984; Ord. No. 520, December 9, 1987; Ord. No. 679, March 28, 1995; Ord. No. 741, September 24, 1999; Ord. No. 781, December 10, 2001; Ord. No. 822, December 30, 2004; Ord. No. 915, November 16, 2011; Ord. No. 916, December 1, 2011; Ord. No. 920, December 14, 2011; Ord. No. 932, September 5, 2012; Ord. No. 1036, July 13, 2018; Ord. No. 1113, May 19, 2022; Ord. No. 1132, September 26, 2022)

(a)

The following definitions shall apply for purposes of this Section:

"Cost of development"

means the actual or estimated costs to improve the land into an operating golf course.

"Golf course"

means property that has been developed for the sport of golf, including its related and incidental activities.

"Golf course use"

means the actual use of property for the sport of golf and its related and incidental activities.

"Rental income"

means land rent based on golf course use.

"Sales price"

means the sale price of a property operated and used as a golf course and land acquired for golf course use.

(b)

Land operated and used as a golf course shall be assessed for property tax purposes on the following basis:

(1)

The value to be assessed by the Director shall be on the basis of its actual use as a golf course rather than on the valuation based on the highest and best use of the land.

(2)

In determining the value of actual use, the factors to be considered shall include, among others, rental income, cost of development, and sales price.

(c)

In order to qualify in having land assessed in valuation as a golf course, the owner of any parcel of land desiring or presently using his or her land for a golf course shall, as a condition precedent, qualify as follows:

(1)

Dedication of Land.

(A)

The owner of any parcel of land for a golf course shall petition the Director and declare in his or her petition that he or she will dedicate his or her parcel of land for a golf course.

(B)

The approval by the Director of the petition to dedicate the land shall constitute a forfeiture on the part of the owner of any right to change the use of the land for a minimum period of 10 years, automatically renewable indefinitely, subject to cancellation by either the owner or the Director upon five years' notice at any time.

(C)

The failure of the owner to observe the restrictions on the use of his or her land to that of a golf course shall cancel the special tax assessment privilege retroactive to the date of the dedication but not more than 10 years prior to the tax year in which the exemption is disallowed; and all differences in the amount of taxes that were paid and those that would have been due from assessment in the higher use shall be payable with a 6% a year penalty from the respective dates that these payments would have been due. Failure to observe the restrictions on the use means failure for a period of over 12 consecutive months to use the land in that manner requested in the petition as a golf course by the overt act of changing the use for any period. Nothing in this Paragraph shall preclude the County from pursuing any other remedy to enforce the covenant on the use of the land as a golf course.

(D)

The Director shall prescribe the form of the petition. The petition shall be filed by July 1st of any calendar year and shall be approved or disapproved by September 15th of such year. If approved, the assessment based upon the use requested in the dedication shall be effective on October 1st.

(E)

The owner may appeal any disapproved petition as in the case of an appeal from an assessment.

(F)

The term "owner," as used in this Section, includes lessees of real property whose lease term extends at least 10 years effective from the date of the petition.

(G)

The amount of additional taxes due and owing where the owner has failed to observe the restriction on the use shall attach to the property as a paramount lien in favor of the County as provided in Sec. 5A-5.1.

(2)

Covenant Not to Engage in Discrimination. The owner shall covenant in his or her petition with the Director that he or she will not discriminate against any individual in the use of the golf course facilities because of the individual's race, sex, religion, color or ancestry.

(Ord. No. 394, July 1, 1981; Ord. No. 521, December 9, 1987; Ord. No. 920, December 14, 2011; Ord. No. 1128, August 22, 2022)