The Hawaii County General Plan states that “agricultural land values have risen beyond their value for agricultural purposes.” The General Plan also identifies increasing land values as a major impediment to the expansion of agriculture, even as expansion of agriculture is also given as a goal of that Plan.
To achieve the goal of expansion of agriculture, County policy and subsequent action must not continue to contribute to agricultural land prices rising beyond the value of the land for agricultural purposes.
Significant in the determination of price for any land are expectations regarding potential future benefits to be derived from that land such as monetary reward, aesthetic appreciation, or lifestyle satisfaction.
Research in the past decade has analyzed how prices of agricultural land are impacted by agricultural returns and zoning of agricultural land. The research has provided strong evidence that agricultural “land prices reflect not only the uses of land, but the potential uses,” specifically the value of the option of future income “from [non-agricultural] land development.”
This research demonstrates that when there appears to be an option or opportunity in the future to sell agricultural land for irreversible land conversion, the value of agricultural land is inflated beyond the returns achievable through agricultural use. A broad implication of the research is that non-agricultural factors, rather than farm income, have been the primary cause of farmland conversion.
The dramatic increase in the price of agricultural land in Hawaii County in recent years has been due to expectations of benefits unrelated to agricultural production on the land.
Creation of expectations about an option or opportunity in the future to sell agricultural land for irreversible land conversion is what has happened in this county, as speculative investors have observed that irreversible land conversion is so easily done by rezoning. Agricultural land prices in Hawaii County have been inflated by a de facto policy revealed through the practice of indiscriminate rezoning.
So long as non-agriculture speculation continues to determine market price of agricultural land, that price will continue to be higher than local agriculture can pay.
Needed, sooner rather than later, is unambiguous zoning and subdivision policy that, in print and in practice, halts and no longer abides arbitrary irreversible conversion of agricultural land. When proactively and consistently implemented, this policy must change expectations regarding land use options so as to create a clear differentiation between the market price of land to be used for agricultural purposes and the market price of land to be used for non-agricultural purposes. This differentiation will in turn make agricultural land more affordable for farming and contribute to the expansion of agriculture in the County.
Key References
“Farmland Conversion: Perceptions and Evidence,” Nicolai V Kuminoff and Daniel A. Sumner. 2001. American Agricultural Economics Association, Chicago.
“Modeling Farmland Conversion with New GIS Data,” Nicolai V Kuminoff and Daniel A. Sumner. 2001. American Agricultural Economics Association, Chicago.
“Agricultural, Land Values and the Value of Rights to Future Land Development” in Land Economics, 77(1), pp.56-67. 2001. A.J.Plantinga and D.J. Miller.
James,
are you suggesting that if it is zoned as Ag. land then it must remain as Ag. land and never ever re-zoned for any commercial reason?
The Lack
http://tomlackey.wordpress.com/
Lack,
“never ever” is in never-never land.
Never say never.
For example, it may be necessary to rezone agricultural land to non-agricultural uses in the case of public services and affordable housing, when it is demonstrated that no other site is available in the same community on non-agricultural land of comparable value for money.
However, the way it stands now, zoning is changed as though it is no big deal; and that is the problem.
So, Deep Pockets, Inc of NYC or Hong Kong or wherever buys large chunks of land zoned agriculture, knowing they can subdivide it, get it rezoned for residential and commercial; and this drives up the price of farm land in the process.
James, I have never worked with Ag. land and not being a farmer or in that walk of life. I have been under the impression that if you “qualified” for Ag. land here in Hawaii it was a lease deal, that you got from the state. Say 49 to 99 year lease for a nominal amount of monies. How can this Ag land be thrown in the hopper so commercial developers can prostitute it for re-zoning?
Now if you buy into Ag land, that is what you purchased, end of story if you want to go big then start a big farm, nursery, or what ever.
I know that I’m showing my stupidity about Ag zoning and how it can change into a commercial enterprise. My up take is if it has been zoned an Ag piece leave it Ag. develop the property around the Ag stuff or don’t develop at all, or am I being just another islander that don’t get it?
The Lack
Lease? In the days of yore I too heard about the long-term leases. Bishop Estate has done several; and the State Ag Parks have some land to lease.
When the sugar companies flopped, that changed things. In Puna some, and in Hamakua and Ka’u more so, that sugar land has been rezoned and rezoned and substantially taken out of the reach of someone wanting to produce food.
As it stands now, the County Council changes zoning of land from agriculture to non-agriculture almost every month and sometimes on many parcels…nibble, nibble.
Almost never is there any testimony or opposition to this. In the 2008-2010 Council there is rarely a ‘NO’ vote by any Council member.
So if the sugar industry tanked the state must have picked up the land for back taxes, or was it auctioned off for tax sales? I could be wrong but I don’t remember seeing tax sales for old sugar lands.
The Lack
It should also be noted that AG lands are taxed at a higher rate then residentially zoned land.
This puts many or most of Puna residents in a higher bracket than most of Hilo… another method by which Puna is mined for money to be benefit of Hilo.
The CoH played a major and cooperative role in creating the large AG zoned subdivisions. The ongoing claim that Puna is too demanding of public services is slim cover for what has been ongoing since 1960.
I would suggest that a process for either lowering AG zone tax rates (which would be effective for supporting agriculture) or creating a new AR zone designation recognizing the creating of residential subdivisions as AG should be studied.
To allow property owners to choose AG, AR or R zoning as a designation in Puna subdivisions would seem appropriate and serve the interest of all parties.
It should also be noted that vast sections of Puna AG zoning lands are zoned AG1. This is a set up for future subdivision creation which perfectly served the large landowners decades ago but does not serve the interests of this island or the Puna District into the future.
The Puna Community Development Plan contained proposals for down-zoning large AG parcels and minimizing potential for future destruction of our AG potentials.
There are now lower AG rates available for long-term dedication to agriculture — that is indeed effective for expanding agriculture.