SB 1562: RELATING TO AGRICULTURE.

A BILL FOR AN ACT

RELATING TO AGRICULTURE.

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

     SECTION 1.  The legislature finds that the high cost of agricultural land and housing in Hawaii presents significant barriers to individuals, particularly young and aspiring farmers, seeking to engage in bona fide agricultural activities.  Traditional market dynamics often place land ownership and affordable housing out of reach, thereby hindering efforts to promote local food production and sustainable farming practices.

     The legislature further finds that a combined housing operational agriculture mobilization program, based upon proven strengths of community land trusts, which have successfully provided affordable housing in perpetuity by separating land ownership from housing ownership, can help to address Hawaii's need for housing and agriculture.

     The legislature also finds that offering secure, long-term access to land and affordable housing will:

     (1)  Empower new and young farmers by lowering financial barriers, encouraging a new generation of agricultural entrepreneurs;

     (2)  Promote sustainable agriculture, enabling investment in regenerative practices that enhance environmental stewardship;

     (3)  Strengthen local economies by supporting local food production and creating agricultural employment opportunities; and

     (4)  Ensure perpetual affordability by separating land ownership from housing ownership and implementing resale restrictions.

     This Act is declared a matter of statewide concern to preserve Hawaii's agricultural heritage, promote sustainable development, and ensure the viability of the agricultural sector.

     Accordingly, the purpose of this Act is to establish the combined housing operational agriculture mobilization program to provide both housing and farming opportunities to individuals engaged in bona fide agricultural activities.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to title 11 to be appropriately designated and to read as follows:

"Chapter

COMBINED HOUSING OPERATIONAL AGRICULTURE MOBILIZATION

     §   -1  Definitions.  As used in this chapter:

     "Combined housing operational agriculture mobilization program" means a state-administered program that establishes and manages agricultural land and housing for perpetual affordability and sustainability, designed to support bona fide agricultural activities by individuals or families actively engaged in farming.

     "Department" means the department of agriculture.

     "Farm dwelling unit" means a single-family residence located on agricultural land, occupied by individuals or families who actively engage in bona fide agricultural production as their primary source of income or livelihood.

     "Ground lease" means a long-term lease agreement, renewable for periods of up to ninety-nine years, under which the combined housing operational agriculture mobilization program retains ownership of the land while granting lessees the right to occupy and use the land for agricultural purposes and housing.

     "Primary occupant" means an individual or family residing in a farm dwelling unit who engages in bona fide agricultural activity as their primary occupation.

     "Program" means the combined housing operational agriculture mobilization program established under section    ‑2.

     "Sustainable agriculture" means farming practices that conserve natural resources, enhance soil health, and ensure long-term productivity and profitability.

     §   -2  Combined housing operational agriculture mobilization program; establishment.  (a)  There is established the combined housing operational agriculture mobilization program to address the dual challenges of agricultural land affordability and housing access.  The program shall be a state-administered program that establishes and manages agricultural land and housing for perpetual affordability and sustainability, designed to support bona fide agricultural activities by individuals or families actively engaged in farming.

     (b)  The program shall be administered by the department, which shall oversee the program's implementation, funding allocation, and compliance monitoring.

     (c)  Upon mutual agreement and approval, the department may accept the transfer and management of agricultural lands for affordable leasing to individuals engaged in bona fide agricultural activities under the program.

     (d)  The program shall:

     (1)  Acquire, hold, and manage agricultural lands for affordable leasing to individuals engaged in bona fide agricultural activities;

     (2)  Provide long-term, renewable leases for farm dwelling units and agricultural use, ensuring affordability in perpetuity;

     (3)  Promote sustainable agricultural practices and environmental stewardship among participants;

     (4)  Support the development of agricultural infrastructure, including farmworker housing, irrigation systems, and value-added processing facilities; and

     (5)  Facilitate public-private partnerships to expand program resources and land availability.

     (e)  The department shall determine the duration of leases under the program to best serve the long-term viability of agriculture, while providing opportunities to successive cohorts of beginning producers.  Specifically, the department shall:

     (1)  Determine whether lease terms shall be:

          (A)  Up to ninety-nine years, offering lifetime security for a single cohort; or

          (B)  A shorter duration, such as twenty or thirty years, to allow for transitional opportunities for new farmers over time;

     (2)  Develop guidelines for lease renewals, transfers, or reassignments to ensure that qualifying new and young farmers can continue to benefit from the program; and

     (3)  Balance the need for farmer security, capital investment, and infrastructure development against the objective of supporting multiple generations of beginning farmers.

     (f)  If the department determines that the program shall utilize mid-term leases, the department shall adopt a clear policy for the transfer or buyout of housing and improvements upon the expiration or termination of a lease, ensuring that:

     (1)  Improvements remain perpetually affordable and accessible to the subsequent lessee;

     (2)  Departing farmers are fairly compensated for their equity in structures and improvements; and

     (3)  Future program participants can benefit from established infrastructure and housing.

     §   -3  Lands under the program; limitations.  (a)  Lands designated under the program shall be used exclusively for the following purposes:

     (1)  Agricultural production, including cultivation of crops, livestock farming, aquaculture, and value-added production directly related to farm outputs;

     (2)  Farmworker housing and farm dwelling units for individuals actively engaged in bona fide agricultural activities;

     (3)  Agricultural infrastructure development, including irrigation systems, barns, greenhouses, and shared-use facilities; and

     (4)  Sustainable land use practices, including soil conservation and regenerative farming.

     (b)  Each primary occupant:

     (1)  Shall reside on the land designated under the program; and

     (2)  Actively participate in agricultural production as a primary occupation.

     §   -4  Affordability.  To ensure long-term affordability of combined housing operational agriculture mobilization lands:

     (1)  All combined housing operational agriculture mobilization lands shall be leased under renewable, long-term ground leases of up to ninety-nine years;

     (2)  Resale prices for leasehold interests and improvements shall be determined using a resale formula established by the department; and

     (3)  The program shall prioritize low- to moderate-income participants to ensure accessibility to underrepresented groups.

     §   -5  Conservation easements.  Combined housing operational agriculture mobilization lands shall be encumbered with conservation easements to protect natural resources and prevent unauthorized development.

     §   -6  Participant subsidies.  The board of agriculture shall establish subsidized lease rates and award grants for agricultural improvements to program participants.

     §   -7  Annual inspections.  The department shall conduct annual inspections of combined housing operational agriculture mobilization lands to verify compliance with lease terms and program requirements.

     §   -8  Advisory committee.  (a)  There shall be established an advisory committee within the department.  The advisory committee shall provide guidance and recommend improvements to the program.  The advisory committee, in coordination with the department, shall periodically review and evaluate the program's lease structure and rates to ensure it continues to meet the dual objectives of supporting incumbent farmers' long-term success and creating opportunities for new and young farmers.  The advisory committee shall consult on rulemaking and make recommendations for new land acquisitions.

     (b)  The oversight committee shall consist of eleven members:

     (1)  The chairperson of the board of agriculture, who shall serve as chair;

     (2)  One representative from the department of land and natural resources;

     (3)  One representative from the Hawaii housing finance and development corporation;

     (4)  One representative from each county’s planning department;

     (5)  One representative of a community land trust operating in the State, who shall be invited to participate;

     (6)  One representative of the Hawaii Farmers Union, who shall be invited to participate;

     (7)  One representative of a farmer advocacy or cooperative organization, who shall be invited to participate; and

     (8)  One representative of an environmental conservation group, who shall be invited to participate.

     §   -9  Administrative penalties.  (a)  The department may, after notice and opportunity for hearing, terminate any individual who violates this chapter from participation in the program.

     (b)  The department may, after notice and opportunity for hearing, fine any person who violates this chapter or any rule adopted under this chapter, not more than $           for each violation.  Each day or instance of violation shall constitute a separate violation.  Any action taken to impose or collect the penalty provided for in this subsection shall be considered a civil action.

     §   -10  Rules.  The department shall adopt rules pursuant to chapter 91 necessary for the purposes of this chapter, including but not limited to:

     (1)  Eligibility criteria and documentation requirements for participants;

     (2)  Procedures for setting and adjusting lease rents;

     (3)  A resale formula and restrictions;

     (4)  Standards for sustainable agriculture;

     (5)  Inspection, monitoring, and enforcement protocols;

     (6)  Procedures for removal or termination of participants; and

     (7)  Administrative penalties and appeals.

     §   -11  Annual report.  No later than twenty days prior to the convening of each regular session, the department shall submit a report to the legislature that includes for the prior fiscal year a summary of the program's activities, compliance efforts, and financial performance."

     SECTION 3.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-    Land combined housing operational agriculture mobilization tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

     (b)  The amount of the credit shall be the lesser of:

     (1)  The appraised value of the agricultural lands validly donated for the combined housing operational agriculture mobilization program established under section    -2; or

     (2)  $           in the aggregate for all donated parcels for the combined housing operational agriculture mobilization program established under section    -2 in a single taxable year;

provided that only donations accepted by the department of agriculture shall be considered valid.

     (c)  In determining the amount of the tax credit for land donations, the department of taxation, in consultation with the department of agriculture, shall adopt rules pursuant to chapter 91 to scale the tax credit based on:

     (1)  The land's overall (master) productivity rating, as determined by the land study bureau's detailed land classification; and

     (2)  The presence and condition of existing agricultural infrastructure, including but not limited to irrigation systems, fencing, farm roads, and processing facilities, provided that parcels with higher productivity ratings and substantial existing agricultural infrastructure shall be eligible for higher allowable credits, subject to any applicable cap under subsection (b).

     (d)  The appraised value of the agricultural lands shall be determined by an independent appraiser.

     (e)  The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.  All claims for the credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claims.  Failure to comply with this subsection shall constitute a waiver of the right to claim the credit.

     (f)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be carried forward until exhausted within five years of the filing of the initial claim for the credit under this section.

     (g)  No taxpayer that claims a credit under this section shall claim any other credit or deduction under this chapter for the donation.

     (h)  As used in this section, "net income tax liability" means income tax liability reduced by all other credits allowed under this chapter."

     SECTION 4.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to establish the combined housing operational agriculture mobilization program.

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

     SECTION 5.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 6.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 2050; provided that:

     (1)  Section 3 shall apply to taxable years beginning after December 31, 2025; and

     (2)  Implementation of the combined housing operational agriculture mobilization program under section    -2, Hawaii Revised Statutes, shall commence no later than January 1, 2026.

Report Title:

Department of Agriculture; CHOAM Program; Farming Housing; Tax Credit; Appropriations

Description:

Establishes the Combined Housing Operational Agriculture Mobilization Program to assist bona fide farmers to live and farm on agricultural lands.  For taxable years beginning 1/1/2026, establishes a tax credit for land donated to the Program.  Appropriates funds.  Effective 7/1/2050.  (SD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to agriculture.

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

     SECTION 1.  The legislature finds that the high cost of agricultural land and housing in Hawaii presents significant barriers to individuals, particularly young and aspiring farmers, seeking to engage in bona fide agricultural activities.  Traditional market dynamics often place land ownership and affordable housing out of reach, thereby hindering efforts to promote local food production and sustainable farming practices.

     The legislature further finds that a combined housing operational agriculture mobilization program, based upon proven strengths of community land trusts, which have successfully provided affordable housing in perpetuity by separating land ownership from housing ownership, can help to address Hawaii's need for housing and agriculture.

     The legislature also finds that offering secure, long-term access to land and affordable housing will:

     (1)  Empower new and young farmers by lowering financial barriers, encouraging a new generation of agricultural entrepreneurs;

     (2)  Promote sustainable agriculture, enabling investment in regenerative practices that enhance environmental stewardship;

     (3)  Strengthen local economies by supporting local food production and creating agricultural employment opportunities; and

     (4)  Ensure perpetual affordability by separating land ownership from housing ownership and implementing resale restrictions.

     This Act is declared a matter of statewide concern to preserve Hawaii's agricultural heritage, promote sustainable development, and ensure the viability of the agricultural sector.

     Accordingly, the purpose of this Act is to establish the combined housing operational agriculture mobilization program to provide both housing and farming opportunities to people engaged in bona fide agricultural activities.

     SECTION 2.  The Hawaii Revised Statutes is amended by adding a new chapter to title 11 to be appropriately designated and to read as follows:

"Chapter

COMBINED HOUSING OPERATIONAL AGRICULTURE MOBILIZATION

     §   -1  Definitions.  As used in this chapter, unless the context otherwise requires:

     "Combined housing operational agriculture mobilization program" means a state-administered program that establishes and manages agricultural land and housing for perpetual affordability and sustainability, designed to support bona fide agricultural activities by individuals or families actively engaged in farming.

     "Department" means the department of agriculture.

     "Farm dwelling unit" means a single-family residence located on agricultural land, occupied by individuals or families who actively engage in bona fide agricultural production as their primary source of income or livelihood.

     "Ground lease" means a long-term lease agreement, renewable for periods of up to ninety-nine years, under which the combined housing operational agriculture mobilization program retains ownership of the land while granting lessees the right to occupy and use the land for agricultural purposes and housing.

     "Primary occupant" means an individual or family residing in a farm dwelling unit who engages in bona fide agricultural activity as their primary occupation.

     "Program" means the combined housing operational agriculture mobilization program established under section    ‑2.

     "Sustainable agriculture" means farming practices that conserve natural resources, enhance soil health, and ensure long-term productivity and profitability.

     §   -2  Combined housing operational agriculture mobilization program; established.  (a)  There is established the combined housing operational agriculture mobilization program to address the dual challenges of agricultural land affordability and housing access.

     (b)  The combined housing operational agriculture mobilization program shall be administered by the department, which shall oversee the program's implementation, funding allocation, and compliance monitoring.

     (c)  The combined housing operational agriculture mobilization program shall:

     (1)  Acquire, hold, and manage agricultural lands for affordable leasing to individuals engaged in bona fide agricultural activities;

     (2)  Provide long-term, renewable leases for farm dwelling units and agricultural use, ensuring affordability in perpetuity;

     (3)  Promote sustainable agricultural practices and environmental stewardship among participants;

     (4)  Support the development of agricultural infrastructure, including farmworker housing, irrigation systems, and value-added processing facilities; and

     (5)  Facilitate public-private partnerships to expand program resources and land availability.

     §   -3  Lands under the program; limitations.  (a)  Lands designated under the combined housing operational agriculture mobilization program shall be used exclusively for the following purposes:

     (1)  Agricultural production, including cultivation of crops, livestock farming, aquaculture, and value-added production directly related to farm outputs;

     (2)  Farmworker housing and farm dwelling units for individuals actively engaged in bona fide agricultural activities;

     (3)  Agricultural infrastructure development, including irrigation systems, barns, greenhouses, and shared-use facilities; and

     (4)  Sustainable land use practices, including soil conservation and regenerative farming.

     (b)  Each primary occupant:

     (1)  Shall reside on the land designated under the program; and

     (2)  Actively participate in agricultural production as a primary occupation.

     §   -4  Affordability.  To ensure long-term affordability of combined housing operational agriculture mobilization lands:

     (1)  All combined housing operational agriculture mobilization lands shall be leased under renewable, long-term ground leases of up to ninety-nine years;

     (2)  Resale prices for leasehold interests and improvements shall be determined using a resale formula established by the department of agriculture; and

     (3)  The program shall prioritize low- to moderate-income participants to ensure accessibility to underrepresented groups.

     §   -5  Conservation easements.  Combined housing operational agriculture mobilization lands shall be encumbered with conservation easements to protect natural resources and prevent unauthorized development.

     §   -6  Participant subsidies.  The board of agriculture shall establish subsidized lease rates and award grants for agricultural improvements to program participants.

     §   -7  Annual inspections.  The department shall conduct annual inspections of combined housing operational agriculture mobilization lands to verify compliance with lease terms and program requirements.

     §   -8  Oversight committee.  The chairperson of the board of agriculture shall establish an oversight committee to provide guidance and recommend improvements to the program.

     §   -9  Administrative penalties.  (a)  The department may, after notice and opportunity for hearing, terminate any person who violates this chapter from participation in the program.

     (b)  The department may, after notice and opportunity for hearing, fine any person who violates this chapter or any rule adopted under this chapter, not more than $       for each violation.  Each day or instance of violation shall constitute a separate violation.  Any action taken to impose or collect the penalty provided for in this subsection shall be considered a civil action.

     §   -10  Annual report.  No later than twenty days prior to the convening of each regular session, the department shall submit a report to the legislature that includes for the prior fiscal year a summary of the program's activities, compliance efforts, and financial performance."

     SECTION 3.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-     Land combined housing operational agriculture mobilization tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit which shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

     (b)  The amount of the credit shall be equal to the appraised value of the agricultural lands the taxpayer validly donated to the combined housing operational agriculture mobilization program under section    -2.  Only donations accepted by the department of agriculture shall be considered valid.

     (c)  The appraised value of the agricultural lands shall be determined by an independent appraiser.

     (d)  The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.

     (e)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of credit over liability may be carried forward until exhausted.

     (f)  No taxpayer that claims a credit under this section shall claim any other credit or deduction under this chapter for the donation.

     (g)  As used in this section, "net income tax liability" means income tax liability reduced by all other credits allowed under this chapter."

     SECTION 4.  There is appropriated out of the general revenues of the State of Hawaii the sum of $          or so much thereof as may be necessary for fiscal year 2025-2026 and the same sum or so much thereof as may be necessary for fiscal year 2026-2027 to establish the combined housing operational agriculture mobilization program.

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

     SECTION 5.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 6.  New statutory material is underscored.

     SECTION 7.  This Act shall take effect on July 1, 2025; provided that:

     (1)  Section 3 shall apply to taxable years beginning after December 31, 2024; and

     (2)  Implementation of the combined housing operational agriculture mobilization program under section    -2 shall commence no later than January 1, 2026.

Report Title:

HDOA; CHOAM Program; Farming Housing; Tax Credit

Description:

Establishes the Combined Housing Operational Agriculture Mobilization Program to assist bona fide farmers to live and farm on agricultural lands.  Establishes a tax credit for land donated to the program.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO. 406

Honolulu, Hawaii

RE:    S.B. No. 1562

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committees on Agriculture and Environment and Housing, to which was referred S.B. No. 1562 entitled:

"A BILL FOR AN ACT RELATING TO AGRICULTURE,"

beg leave to report as follows:

     The purpose and intent of this measure is to establish:

     (1)  The Combined Housing Operational Agriculture Mobilization Program (Program) to provide both housing and farming opportunities to people engaged in bona fide agricultural activities; and

     (2)  A Land Combined Housing Operational Agriculture Mobilization Tax Credit (Tax Credit) for taxpayers who donate land to the Program.

     Your Committees received testimony in support of this measure from the Office of the Mayor of the County of Maui and Hawaiʻi Farmers Union United.

     Your Committees received comments on this measure from the Department of Agriculture, Department of the Attorney General, Department of Taxation, Tax Foundation of Hawaii, Hawaiʻi Farm Bureau, and one individual.

     Your Committees find that the lack of agricultural workforce housing is an overlooked and longstanding problem that inhibits the growth of Hawaii's agricultural industry.  This measure offers an innovative approach to address two of the most pressing challenges faced by Hawaii's agricultural community:  access to affordable housing and productive use of agricultural lands.  By establishing a program that allows bona fide farmers to live and work on the land they cultivate and encourages land donations to this program through a tax credit, this measure will help improve local food production and promote long-term access to land and affordable housing while supporting a new generation of farmers.

     According to testimony received by your Committees, although this measure is comprehensive in outlining the structure and intent of the Program, several areas may benefit from further clarification to ensure robust oversight, financial sustainability, and alignment with the intended goals of the Program.  Amendments to this measure are therefore necessary to clarify these provisions.

     Your Committees have amended this measure by:

     (1)  Clarifying the Department of Agriculture's (Department's) authority to acquire agricultural lands under the Program;

     (2)  Requiring the Department to determine the term of the leases to the participants of the Program to serve long‑term viability of agriculture;

     (3)  If the Department determines that the Program shall utilize midterm leases, requiring the Department to specify a process to compensate participants for any improvements on the leased agricultural lands;

     (4)  Clarifying the establishment of an Advisory Committee, rather than an Oversight Committee, to periodically review and evaluate the Program's lease structure and perform other duties;

     (5)  Inserting language that specifies the composition of the Advisory Committee;

     (6)  Requiring the Department of establish certain administrative rules regarding the Program;

     (7)  Inserting language that caps the Tax Credit at the lesser of the appraised value of the agricultural lands validly donated or an unspecified amount in the aggregate for all donated parcels for the Program in a single taxable year;

     (8)  Allowing the Department of Taxation to adopt rules to determine the amount of Tax Credit to be claimed based on the productivity rating on the agricultural land and any existing agricultural infrastructure;

     (9)  Inserting language setting deadlines for which the Tax Credit may be claimed and exhausted;

    (10)  Extending the effective date of the Tax Credit to apply to taxable years beginning January 1, 2026;

    (11)  Inserting an effective date of July 1, 2050, to encourage further discussion; and

    (12)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     Your Committees note that this measure contains an unspecified appropriation amount.  According to testimony from the Department of Agriculture, the initial funding for the first year of this Program is estimated at approximately $750,000 to procure a study of available land that satisfies the intent of this measure and to hire one permanent full-time equivalent (1.0 FTE) property manager V position (SR-24) to oversee the establishment of the Program.  The funding for the second year to procure lands and operational funds to manage the Program is reliant upon the completion of the study procured.  Should your Committee on Ways and Means choose to deliberate on this measure, your Committees respectfully request that it consider inserting an appropriation amount of $750,000 for the first year of the biennium to procure a study of available land that satisfies the intent of this measure and to hire one permanent full-time equivalent (1.0 FTE) property manager V position (SR-24) to oversee the establishment of the Program.

     As affirmed by the records of votes of the members of your Committees on Agriculture and Environment and Housing that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1562, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1562, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Agriculture and Environment and Housing,