Change could hit small farmers hardest
by Rob Parsons
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In
an apparent effort to collect revenues in the face of a lean fiscal
year, the Maui County Real Property Tax (RPT) office sent letters to
thousands of ag owners over the past two months, seeking proof of
farming activities. The notice requires property owners to file a
Request For Agriculture Use Valuation Form within 30 days, or risk
losing their ag use assessment, which, "may result in a substantial
difference in your real property taxes."
While there are a
number of unanswered questions raised by the letter and accompanying
forms linked on the RPT Web site, many owners see the measure as poorly
conceived and draconian. Some say it could expose the County to a
class-action lawsuit.
"This is huge—way bigger than TVRs
[transient vacation rentals]," said a farmer who asked to remain
anonymous. "I could lose the farm over this, but someone with a lot of
money can put up a fence and bring in one cow and they are in
compliance."
Kalbert Young, Director of Finance (which oversees
the RPT office) said the ag verification collection program is intended
to identify compliance with County code. "If you're doing ag," said
Young, "be prepared and submit proof. If you're not doing ag, and can't
validate it, then you shouldn't receive the benefit."
The letter
states, "As part of our ongoing efforts to uniformly and equitably
assess property at fair market value, the Real Property Tax Division is
requiring that you file for the agricultural activity on this parcel."
A three-sentence agricultural use definition is referenced, from the
rules and regulations of the Director of Finance, "relating to
assessment of agricultural lands under Maui County Code Section
3.48.325."
Clicking that link takes the ag owner to a section
titled, "Deferred or roll back tax," and describes a process whereby,
if the property is taken out of ag designation and placed in a higher
use category, a tax may be computed and assessed retroactively,
"provided the retroactive period should not exceed ten years."
I
spoke with an Upcountry farmer who told me he was in the middle of
filling out his paperwork and providing photos. "They're trying to
extract money from a lot of innocent people by raising their taxes 500
percent," said the resident, who claimed more than half of his land was
in fruit and vegetable production. "Marginal users will have a hard
time. The paperwork said if you're growing for your own consumption,
that's not good enough."
Indeed, the letter quotes the Finance
Director's Rules as stating that agricultural use "does not include nor
apply to areas…associated with residential use planted with fruit and
ornamental trees, flowers and vegetables primarily for home use."
Former
Planning Director Mike Foley believes the letter is aimed at "two-acre
parcels with no ag use whatsoever." He proposes developing legitimate
standards to describe ag activities, as there are many variables. "How
suitable is a particular area to ag?" Foley asked. "Does it have
adequate water? Good soil? Gulches?"
An Olinda resident told me
she hadn't received "the letter," but neighbors on both sides of her
had. "The County may be ripe for a lawsuit, maybe a class action case,"
she said. "Who's making the rules? Has there been a community review of
the rules if they are changing?"
Past Mayor and Councilmember
Alan Arakawa concurred. "I'm concerned that this is all being done
administratively," said Arakawa. "There has been no public hearing, and
no public discussion."
Arakawa said when he was on Council, they
began discussions of what constituted agricultural use. After being
elected Mayor, he tasked the Maui County Farm Bureau with arriving at a
definition. After two years of wrestling with specific language, the
farm bureau committee provided a draft, which Arakawa sent to the
Council.
"Council never did anything to finalize and codify
the process," Arakawa said. "Past practices and court decisions haven't
defined farming the way it is being used here. They may find they have
conflicts with the definitions in our state laws.
"Beyond that,"
Arakawa continued, "they are remiss in taking a proactive approach to
helping and encouraging people to do farming."
Responding to a
list of questions I sent, Gery Madriaga of the Real Property Tax office
said approximately 6,800 letters were mailed out. Asked what percentage
of a property would need to be in ag use to qualify, he responded, "The
ordinance is not specific, but previous rules of thumb was at least 50
percent in use. It would be up to the appraiser and field inspection if
not obvious."
One grower told me he intensively farms two acres
of a larger leased parcel, for which he receives an exemption. "Now
they want to limit my exemption to just the two acres," he exclaimed,
"and have me pay a full rate on the rest. I might lose the farm!"
Madriaga said the effort "is part of assessment work we do annually, we just have not had the manpower to maintain [it]."
Both
Madriga and RPT staffer Scott Teruya served on the MCFB committee that
sent the draft definition of ag to Council for discussion. But no
revised standards were set. "The updated valuations will be using the
current ordinances and rules," Madriaga wrote.
William Jacintho
of the Maui Cattleman's Association contacted the office and helped set
up an informational workshop to help the public. Working with Kula
Community Association, Jacintho scheduled the workshop for Monday,
November 9, at 8:30am at the Pukalani Community Center.
"The
goal here," his announcement states, "is to be informed and share your
concerns. The next step would be to see if corrections need to be
addressed and how to go about it."
Jacintho, who also served on the
ag definition committee, said sometimes a one-size-fits-all approach
isn't ideal. "You try to catch some kind of fish, and you catch a lot
of others, too."