How to get a short-term farm tax break

(a) A special land reserve is established to enable the owner of any parcel of land, or lessee of a recorded agricultural lease with a minimum of three years remaining on the lease at time of petition, to dedicate the land for a specific short-term commercial agricultural use, and to have the value of the land assessed in such use for a period of three years, or in the case of a recorded agricultural lease the term of the lease up to three years, provided: (1) The land dedicated for commercial activity must be used on a continuous and regular basis for intensive agriculture, orchards, feed crops and fast rotation forestry, pasture and slow rotation forestry, or diversified agriculture and have a minimum lot size per farm operation as determined by the minimum lot size schedule for that dedicated category of commercial activity as provided for in the administrative rules and regulations of the department, except where the dedication petition indicates a commercially viable agricultural operation on a smaller lot; (2) The land dedicated for short-term commercial agriculture use for intensive agriculture, orchards, or diversified agriculture is fallow for no more than one out of every three years of the dedication period, except when greater fallow periods are necessary as described in the dedication petition; (3) The land dedicated for short-term commercial agricultural use for intensive agriculture, orchards, or diversified agriculture shall not grow any crops identified by the State department of agriculture as a noxious weed; and (4) The land is within a County zoned district of agricultural, residential and agricultural, family agricultural, intensive agricultural, agricultural project district, or any other County zoned district meeting with the approval of the director of planning. UNOFFICIAL ADVANCE SHEET – Updated on August 5, 2026. Contains sec(s) affected since publication of Supp. 20 (7-2026). Official revision to be published in a subsequent republication of the County Code. REAL PROPERTY TAXES § 19-61 (b) Determining agricultural use value. (1) In determining the value of lands which are classified and used for short-term commercial agriculture use, consideration shall be given to rent, productivity, nature of actual commercial agricultural use, the advantage or disadvantage of factors such as location, accessibility, transportation facilities, size, shape, topography, water privileges, availability of water and its cost, easements and appurtenances, and to the opinions of persons who may be considered to have special knowledge of land values. (2) The five general agricultural categories in section 19-60 (c)(2) shall be used in determining the value of lands which are dedicated for short-term commercial agriculture use. (3) Lands classified as tree farm property pursuant to chapter 186, Hawai‘i Revised Statutes, shall be considered for classification and valuation as agricultural. (4) The portion of land that is not dedicated for short-term commercial agriculture use shall be assessed based on the proportional market value of the total property. (5) A farm dwelling site shall be assessed at the highest commercial agricultural use value, provided that the maximum farm dwelling site area to be assessed at the highest commercial agriculture use value shall not exceed one-fourth acre. (6) Lands dedicated for short-term commercial agricultural use shall be assessed at two times the value of lands dedicated for long-term commercial agricultural use. (c) Short-term commercial agricultural use dedication petition. (1) If any owner desires to dedicate the owner’s land for a short-term commercial agricultural use and to have the land taxed at its assessed value in this use, the owner shall so petition the director of finance and declare in the petition that the land can best be used for the purpose for which the owner requests permission and that if the petition is approved the land will be used for this purpose. The director shall require evidence of short-term commercial agricultural use in such form and at such times as provided for in the administrative rules and regulations of the department. (2) The director shall prescribe the form of the petition that shall include at least one of the following: (A) A farm plan; (B) Documentation of organic certification from the U.S. Department of Agriculture; (C) A plan from the U.S. Department of Agriculture, Natural Resources Conservation Service; (D) Documentation of food safety certification from the U.S. Department of Agriculture; or 19-47.2 SUPP. 15 (1-2024) (E) Receipts demonstrating an investment of a minimum of $10,000 in farm equipment, fertilizers, or soil amendments for use on the subject property. (3) The petition shall be filed with the director of finance by September 1 of any calendar year and shall be approved or disapproved by December 15. If approved, dedication shall be effective on July 1 of the following tax year. (4) The petition for short-term commercial agricultural use dedication must be signed by all owners of the land being dedicated. (5) Action by director on petition. (A) Upon receipt of a petition as provided above, the director shall make a finding of fact as to whether the land in the petition area is reasonably well suited for the intended use. The finding shall include and be based upon the productivity ratings of the land in those uses for which it is best suited, a study of the ownership, size of operating unit, the present use of surrounding similar lands and other criteria as may be appropriate. (B) The director shall also make a finding of fact as to whether the intended use is in conflict with the general plan and any applicable community development plan of the County; provided that, with respect to lands in County zoning districts other than agricultural, residential and agricultural, family agricultural, intensive agricultural, or agricultural project district, the director shall make further findings respecting the economic feasibility of the intended use of the land. (C) If all findings are favorable, the director shall approve the petition and declare the land to be dedicated. (d) Approval by the director of the petition to dedicate shall constitute a forfeiture on the part of the owner of any right to change the use of the land to a use other than short-term commercial agriculture for a minimum period of three years, unless otherwise provided by this chapter, subject to cancellation or renewal as follows: (1) At least one hundred eighty days prior to any cancellation or termination, the department of finance shall notify the owner by mail of such cancellation or termination. The owner shall reapply for renewal of the dedication by filing an application with the director on or before September 1 of the last year of dedication. The renewal petition shall, in all respects, be processed similarly to an original petition. Upon approval by the director of succeeding dedications, the property shall continue to be assessed in accordance with the provisions of the dedication. (2) In the case of a change in zoning not as a result of a petition by any property owner or lessee such that the owner’s land is placed within any zoned district other than a County zoned district of agricultural, residential and agricultural, family agricultural, intensive agricultural, or agricultural project district, the dedication may be cancelled within sixty days of the change by the owner. (3) Upon any conveyance or any change in ownership during the period of dedication, the land shall no longer continue to be subject to the terms and conditions of the dedication. SUPP. 15 (1-2024) 19-47.3 REAL PROPERTY TAXES § 19-61 (e) Changing between commercial agricultural categories. (1) If the owner desires to change from a specific commercial agricultural category to another commercial agricultural category, the owner shall so petition the director of finance and declare in the petition that: (A) The owner’s land can best be used for a commercial agricultural activity other than that for which the petition was originally approved; and (B) The owner will use the land for that new commercial agricultural activity if the petition is approved. (2) If an owner is permitted to change the use as provided in this subsection, the owner shall be allowed up to twelve months from the effective date of the petition to convert to the new commercial agricultural category. This conversion must be completed prior to the end of the dedication period. (3) The petitioner shall submit progress reports of the petitioner’s efforts in converting from one commercial agricultural category to another commercial agricultural category to the director of finance by the anniversary date of the petition approval and yearly, thereafter, as long as such conversion period remains. (4) If the owner fails to make the conversion within the specified time limit, the owner will be subject to the taxes and penalties provided herein. (5) Any other provision to the contrary notwithstanding, an approved change in use as provided herein shall not alter the original dedication period. (f) Breach of dedication; deferred or rollback taxes; penalties and interest. (1) A deferred or rollback tax shall be imposed on the owner of short-term commercial agricultural use dedicated lands upon failure of the owner to observe any restriction, condition, or provision on the use of the land. (2) The deferred or rollback tax shall commence from the date the failure to observe the restriction, condition, or provision, retroactive to the date the assessment was made but for not more than three years. (A) Failure to observe the restrictions on the use means failure for a period of six consecutive months to use the land in the manner requested in the petition or the overt act of changing the use for any period; provided that the petition by the owner for a change in use as provided in subsection (f), and the owner’s subsequent change in use of such dedicated lands, shall not be deemed to constitute a failure of the owner to observe the restrictions on the use. (B) Any other provisions to the contrary notwithstanding, when a portion of the dedicated land is subsequently applied to a use other than the use set forth in the original petition, only such portion as is withdrawn from the dedicated use and applied to a use other than the commercial agricultural category shall be taxed as provided by this subsection. 19-47.4 SUPP. 15 (1-2024) (3) Calculating deferred or rollback taxes. (A) The deferred or rollback tax shall be based on the difference between the assessed market value at highest and best use and the short-term commercial agricultural use of the land at the rate applicable for the respective years. (B) 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 due and payable with a ten percent penalty. (C) If the owner of dedicated land breaches a condition of the dedication before its completion, deferred or rollback taxes shall be imposed on the subject parcel, retroactive from the end of the tax year in which the breach occurs. (D) In any case in which deferred or rollback taxes are imposed after successful completion of an agricultural dedication period, the deferred or rollback taxes shall be retroactive only to the end of the completed dedication period, and shall not be imposed for any time covered by a successfully completed agricultural dedication period. (E) In cases involving a breach of a three-year dedication, rollback taxes shall be assessed to the date of the dedication. (4) The additional taxes and penalties due and owing shall be a paramount lien upon the property as provided for by this chapter. (g) The director may cancel a dedication without rollback taxes or penalties in the event of any of the following: (1) A recognized natural disaster beyond the farmer’s control; (2) The land can no longer be used for the dedicated agricultural use; or (3) The death or severe disability of the principal farmer such that the farm operation cannot continue. Corporations and partnerships are not eligible for this death or severe disability exemption. (h) Applications for the short-term commercial agricultural use dedication shall be accepted beginning September 2, 2024, and approved applications under this dedication shall take effect no sooner than the 2026 tax year. (2023, ord 23-55, sec 6; am 2024, ord 24-73, sec 5.)19-60 Division 4. ‘Āina Kūpuna Dedication.