SECTION 1. The legislature finds that article XI, section 3, of the Hawaii State Constitution makes the conservation and protection of Hawaii's agricultural lands a priority. It charges the State to "promote diversified agriculture, increase agricultural self-sufficiency and assure the availability of agriculturally suitable lands." This priority is reflected in the state plan as well, which declares self-sufficiency, social and economic mobility, and community well-being as the values guiding the state plan. The legislature finds that securing agricultural lands and promoting agriculture are essential to meet these goals.

The legislature has made attempts to secure agricultural lands by directing the counties to identify important agricultural lands through Act 183, Session Laws of Hawaii 2005, and providing incentives to do so in Act 233, Session Laws of Hawaii 2008. The preservation of important agricultural lands will only be effective if such lands are identified for preservation before large tracts are lost to development. The State has spent thirty years attempting to identify and protect important agricultural lands, but has failed to do so, and no county council has taken up the issue since 2008.

One of the goals of the state plan is to achieve a strong, viable economy characterized by stability, diversity, and growth. This goal includes, among other things, objectives of increased and diversified employment opportunities, encouraging entrepreneurship, assuring basic needs of Hawaii's people in the event of overseas transportation disruptions, and encouraging economically satisfying labor-intensive employment for upward mobility. The legislature further finds that all of these objectives can be accomplished through expanded agriculture throughout the islands. Such an expansion would improve the amount of locally grown food, diversify the industries upon which the economy is built, and provide an expanded job market for labor and science.

These goals can only be met if large parcels of agricultural lands are preserved. Commercially viable agriculture requires large contiguous parcels for operation. Livestock operations also require large contiguous parcels for pasture, operations, and buffers. The approval of a dairy on the south shore of Kauai has sparked friction with neighboring land owners -- particularly with the nearest hotel, which has concerns about possible runoff, odors, and water pollution that could be produced by the dairy. This clash of interests proves that buffers must be included between agricultural lands and non-agricultural operations in order to mitigate the concerns produced by large-scale agricultural operations. The need for buffers bolsters the need to maintain large, contiguous parcels of agricultural land.

The legislature finds that laws allowing the subdivision of agricultural lands, including through condominium property regimes and other means, must be scrutinized. In Kauai alone, 431 agricultural parcels, representing 17,000 acres, have been divided under condominium property regimes since 1993. The intent of this Act is to fill loopholes that have allowed developers to maneuver land use restrictions, rather than following proper channels to rezone, resulting in the urbanization of agricultural lands. Agricultural lands must be protected from such subdivision in order to prevent the fractionalization of agricultural parcels and promote the conservation of large agricultural tracts.

The purpose of this Act is to prevent the loss of large-scale agricultural parcels and to ensure that future use of agricultural lands are for bona fide agricultural operations.

SECTION 2. Chapter 205, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§205‑ Subdivision of certain agricultural lands; restrictions, application. (a) No application for subdivision of land within the agricultural district greater than one hundred acres shall be made unless:

(1) The owner is a commercial farmer with a record of annual income from sales of agricultural products, of which not more than 50 per cent is generated from accessory agricultural uses, to third parties in the amount of $35,000 or greater for at least three of the five years immediately preceding the application for subdivision of property;

(2) 51 per cent or more of the owner's annual gross income is revenue from agricultural products, of which not more than 50 per cent is generated from accessory agricultural uses, in each of the two years immediately preceding the application for subdivision of property; or

(3) The owner has operated an agricultural enterprise that has cultivated or operated on agricultural lands of ten acres or greater to produce farm products for sale to third parties for each of the two years immediately preceding the application for subdivision of property.

(b) Any owner eligible to submit an application for subdivision under subsection (a) shall submit a farm plan depicting the agricultural purposes for which the divided lots shall be dedicated. Plans shall demonstrate that the majority of the new legal lots of record, if approved, shall be dedicated to meet one of the following commercial agricultural production goals:

(1) Annual revenue from the sale of agricultural products, of which not more than 50 per cent is generated from accessory agricultural uses, of $35,000 or greater within five years of property division;

(2) Sale of agricultural products, of which not more than 50 per cent is generated from accessory agricultural uses, accounts for at least 51 per cent of the owner's gross income within five years of property division; or

(3) At least 51 per cent of the new legal lots of record are dedicated to cultivation or production of agricultural products for sale to third parties within five years of property division.

The farm plan submitted pursuant to subsection as part of the subdivision application shall be part of the subdivision record, and approval shall be contingent upon implementation of the farm plan.

(c) Any owner whose application for subdivision is approved shall be restricted from building any house on any of the subsequent lots until the proposed farm plan or an amended farm plan approved by the initial authority has been implemented for a period of at least five consecutive years, and until the owner can demonstrate that the majority of divided lots meet one or more of the production goals enumerated in subsection (b).

(d) For purposes of this section:

"Accessory agricultural uses" includes any use of agricultural lands incidental to agricultural production, including for recreation and tourism.

"Agricultural products" include floricultural, horticultural, viticultural, forestry, nut, coffee, dairy, livestock, poultry, bee, animal, and any other farm, agronomic, or plantation products.

"Subdivision" means any land that is divided or is proposed to be divided for the purpose of disposition into two or more lots, parcels, units, or interests and may be accomplished through a condominium property regime, subdivision, or any other division of land.

(e) This section shall supersede all inconsistent county ordinances or rules relating to the use, zoning, planning, and development of land."

SECTION 3. Section 205-4.5, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"[[](f)[]] Notwithstanding any other law to the contrary, agricultural lands may be subdivided and leased for the agricultural uses or activities permitted in subsection (a); provided that:

(1) The principal use of the leased land is agriculture;

(2) No permanent or temporary dwellings or farm dwellings, including trailers and campers, are constructed on the leased area. This restriction shall not prohibit the construction of storage sheds, equipment sheds, or other structures appropriate to the agricultural activity carried on within the lot; [~~and~~]

(3) The lease term for a subdivided lot shall be for at least as long as the greater of:

(A) The minimum real property tax agricultural dedication period of the county in which the subdivided lot is located; or

(B) Five years[.]; and

(4) Agricultural land exceeding one hundred acres in size shall be subject to section 205- .

Lots created and leased pursuant to this section shall be legal lots of record for mortgage lending purposes and shall be exempt from county subdivision standards."

SECTION 4. Section 514B-52, Hawaii Revised Statutes, is amended to read as follows:

"§514B-52 Application for registration. (a) An application for registration of a project shall:

(1) Be accompanied by nonrefundable fees as provided in rules adopted by the director of commerce and consumer affairs pursuant to chapter 91; and

(2) Contain the documents and information concerning the project and the condominium property regime as required by sections 514B‑54, 514B‑83, and 514B‑84, as applicable, and as otherwise may be specified by the commission.

(b) An application for registration of a project in the agricultural district classified pursuant to chapter 205 shall include a verified statement, signed by an appropriate county official, that the project as described and set forth in the project's declaration, condominium map, bylaws, and house rules does not include any restrictions limiting or prohibiting agricultural uses or activities, in compliance with section 205‑4.6. The commission shall not accept the registration of a project where a county official has not signed a verified statement.

(c) No application for registration of a project in the agricultural district classified pursuant to section 205- shall be made unless:

(d) Any owner eligible to submit an application for registration under subsection (c)(1) shall submit a farm plan depicting the agricultural purposes for which the condominium property regime shall be dedicated. Plans shall demonstrate that the majority of the condominium property regime, if approved, shall be dedicated to meet one of the following commercial agricultural production goals:

(3) At least 51 per cent of the new legal lots of record are dedicated to cultivation or production of agricultural products for sale to third parties within five years of project development.

The farm plan submitted pursuant to this subsection as part of the application for registration shall be part of the project record, and approval shall be contingent upon implementation of the farm plan.

(e) As used in this section:

"Accessory agricultural uses" has the same meaning as in section 205- .

"Agricultural products" has the same meaning as in section 205- .

[~~(c)~~] (f) The commission need not process any incomplete application and may return an incomplete application to the developer and require that the developer submit a new application, including nonrefundable fees. If an incomplete application is not completed within six months of the date of the original submission, it shall be deemed abandoned and registration of the project shall require the submission of a new application, including nonrefundable fees.

[~~(d)~~] (g) A developer shall promptly file amendments to report either any actual or expected pertinent or material change, or both, in any document or information contained in the application."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1164
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII