March 11, 2026, 8:30 a.m.
Historic County Building
To: Kaua’i County Council
Mel Rapozo, Chair
KipuKai Kuali’i, Vice Chair
From: Grassroot Institute of Hawaii
Jonathan Helton, Policy Analyst
RE: Bill 2987 — RELATING TO REAL PROPERTY TAX
Aloha Chair Rapozo, Vice Chair Kuali’i and other members of the Council,
The Grassroot Institute of Hawaii supports Bill 2987, which would amend the definitions of “agricultural use” and “commercial structure” to broaden eligibility for the county’s real property tax agricultural-use dedication and allow separate taxation of commercial structures in certain situations.
Specifically, the bill would allow farmers and ranchers to sell, refine, process and distribute agricultural products on lands dedicated for agricultural use, so long as at least 50% were grown on a dedicated parcel owned or leased by the same farmer or rancher.
The bill would also require that any commercial structure used for such refining, processing or distributing agricultural products must be assessed and classified based on its use as a commercial structure.
This legislation would help island farmers and ranchers expand their businesses. Right now, a farmer or rancher cannot access the substantial tax benefits associated with the agricultural-use dedication if they use a portion of the parcel to sell, refine or distribute any produce grown or raised off site.
The current code makes it challenging for farming or ranching operations to construct any sort of processing facilities on their land. They can do so — but only with food grown on the dedicated land.
The opportunities from such a change are significant. Under the bill, Kauai farmers and ranchers would be able to more easily make and sell value-added products on their ag lands.
The state already imports 85-90% of its food supply,[1] so any ways in which the county can reduce barriers to producing more local food are welcome.
Grassroot would like to offer one minor amendment to section 3 of the bill. This would be to delete the word “dedicated” that is bolded below.
“‘Agricultural use’ means the active use of the land for the production of agricultural products with the primary purpose of obtaining a monetary profit from income received from the sales of agricultural products. Agricultural use [excludes] includes selling, refining, processing, or distributing agricultural products [when] on the dedicated parcel provided that greater than fifty percent (50%) of the vegetation [from which such products are derived was not grown on the parcel and when the] or animals from which such products are derived [were not] were grown or raised on the [parcel.] dedicated parcel or another dedicated parcel of the same owner or tenant. Agricultural use also includes meat packing or processing operations [occurring on the same parcel the animals were raised on,], provided that the packing or processing structure will be assessed and taxed based on its fair market value.”
This amendment would ensure that a farmer or rancher who owns both dedicated and non-dedicated land could use a commercial structure on the dedicated land to sell, refine, process or distribute products grown on their non-dedicated land.
Thank you again for the opportunity to testify.
Jonathan Helton
Policy Analyst
Grassroot Institute of Hawaii
Footnotes
- Hannah Leto, Jordan Mitkowski and Katie Hogan et al., “Agricultural Labor on Hawaiʻi Island,” Swette Center for Sustainable Food Systems at Arizona State University, May 2025, p. 1. ↑
