The Hawaiʻi County Council has approved a measure aimed at preventing sharp property tax increases for some longtime agricultural landowners when their property moves into the homeowner tax category.
Bill 103, introduced by Councilwoman Heather Kimball, who represents District 1, and Councilman James Hustace, who represents District 9, passed unanimously on second and final reading Jan. 7. The bill changes the county’s real property tax rules to limit how much property values can rise each year for a narrow group of homeowners whose land was previously taxed under agricultural programs.
The ordinance applies to owner-occupied homes that were taxed at agricultural value for at least 10 of the past 15 years and that qualify for a senior homeowner exemption. For those properties, the land value will remain at its last agricultural assessment when it moves into the homeowner category. After that, the total assessed value of the property may increase by no more than 3% per year.
The bill follows changes the council made in 2024 to the agricultural tax dedication program. Kimball told Aloha State Daily those changes were prompted by an audit that found insufficient controls.
Kimball said the measure was intended to tighten oversight of agricultural tax programs and curb misuse.
“We wanted to ensure that folks that were getting the tax breaks for farming, for doing agriculture, were actually doing farming and agriculture,” Kimball told ASD. “It also has a larger intent, to make sure that we don’t have speculation happening on agricultural land, which is one of the things that drives prices up.”
Councilmembers also raised concerns that some land was receiving agricultural tax breaks without being actively farmed and that speculation on agricultural land was driving up prices.
As part of those changes, the council voted to end the county’s nondedicated agricultural program in September 2026. Landowners currently in that program will need to choose either a three-year or 10-year dedicated agricultural program to keep their agricultural tax status.
Kimball said the council learned that when land leaves an agricultural program, its assessed value can jump immediately to market value, leading to large tax increases for some homeowners.
“That can have an annual increase of 700%,” Kimball said. She added that the shift often translates to about $1,300 to $1,500 more each year in property taxes.
She said many of the affected landowners are seniors on fixed incomes and that the sudden increase creates what she described as a “fiscal cliff.”
Kimball said the 10- to 15-year lookback period was included to account for landowners who temporarily left an agricultural program, including during the COVID-19 pandemic.
The ordinance applies only to primary residences and does not apply to vacant land. Any new construction or improvements will continue to be taxed at market value.
The bill does not provide refunds or tax relief for past years and will expire Dec. 31, 2029.
Landowners currently in an agricultural program do not need to act. Those who previously left a dedicated program will need to apply with the county’s Real Property Tax Division.
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