Owners of prime agricultural land could convert 15 percent of their acreage into new housing developments, under a bill awaiting Gov. Linda Lingle's signature.

Concerned parties on both sides have been turning up the heat on Lingle as she weighs the merits of the bill, which would require the landowners to devote the other 85 percent of their property to farm use more or less in perpetuity.

The governor hasn't indicated what she will do, but has until Monday to publish a list of bills she may veto.

Proponents say the bill will help preserve ag land that is being diverted to housing under current land use laws.

"We're losing prime agriculture lands without this bill," said Alan Takemoto, executive director of the Hawaii Farm Bureau Federation, representing 1,600 farm and ranch members in the state.

Opponents say the bill will speed the loss of farmland.

"True farmland protection doesn't come from giving away the farm," the Sierra Club Hawai'i Chapter said on its Web site, asking people to urge Lingle to veto the bill.

In the past 30 years, close to 50,000 acres of Hawai'i farmland have been lost, largely as sugar and pineapple production shrank and urban areas expanded.

Roughly 1.9 million acres of agricultural land remain, with about 1.3 million acres used by about 5,500 farm operations that employ roughly 39,000 people and add $2.4 billion to the state's $50 billion economy.

"There's a lot of concerns on both sides regarding this bill," said Lingle spokesman Russell Pang.

Senate Bill 2646 provides $7.5 million in tax credits for investments in agriculture facilities, establishes a $2.5 million loan guarantee program, expedites ag processing facility permits and allows construction of employee housing for projects on prime ag land. These incentives received largely favorable testimony as the bill advanced.

But the land conversion trade-off was inserted in the bill by House conference committee negotiators in the waning days of the legislative session after the close of public debate. Opposition to the bill has grown since its passage.

The land conversion incentive would allow a landowner to petition the state Land Use Commission to lock up high-quality agricultural land for near-perpetual farm use in return for allowing urban or rural use of other ag land equivalent to 15 percent of the area preserved.

To qualify, the land for protection and conversion has to be in the same county. Also, the land for preservation would have to be certified as prime farmland by the state Department of Agriculture.

Any conversion for urban or rural use would ultimately have to obtain a County Council zoning change before nonagricultural use, including residential development, could take place.

'IT'S NOT RIGHT'

Opponents of the provision, including Earthjustice, Life of the Land and some farmers, are concerned that the bill will expedite conversion of farmland for development and lead to a proliferation of rural residential subdivisions that contribute to suburban sprawl.

Lynn DeCoite, owner of a third-generation family sweet potato farm on Moloka'i, said the bill could lead to the development of rural residential subdivisions next to her farm or next to other farmers that could inflate property values and produce incompatible neighbors that threaten to displace farming.

"This is like a classic bill for developers," she said. "It's not right."

Many bill opponents also warn that normal Land Use Commission considerations for approving or rejecting reclassification of land from agricultural use to rural or urban use — such as how property conforms with neighboring uses, and whether there are cultural or environmental issues tied to the land — become irrelevant under the conversion process in SB 2646.

The only criteria for reclassifying land under SB 2646 becomes whether prime ag land will be preserved.

Proponents of the bill, including the Hawaii Farm Bureau and large landowners, said the trade-off is needed to get landowners to lock up agricultural property that may, in the long term, be converted to urban use through normal land-use laws.

Takemoto of the Farm Bureau believes that the incentive to convert 15 percent of prime ag lands will lead to more land being dedicated to agriculture than if there were no incentive to lock up 85 percent of prime ag lands.

"That is a huge commitment by the landowners," he said.

Some bill opponents argue that up to 300,000 acres (15 percent of all ag land in the state, which is roughly three times the size of urban Honolulu) could be converted out of ag. But bill proponents say that not all 1.9 million acres of ag land would be eligible under the bill as prime, and that not all owners of prime land would apply for reclassification or be successful rezoning land through the county.

Under SB 2646, prime ag land preservation wouldn't necessarily be in perpetuity. A landowner could seek to undo the preservation under certain provisions that include water becoming unavailable, government actions or causes beyond the "reasonable control" of a landowner. However, a landowner would need two-thirds approval by the Legislature to remove the protection.

NARROW PASSAGE

Takemoto said SB 2646 should be viewed as a comprehensive economic stimulus package that will help keep land in agriculture and keep farmers on the land. "If we can ensure that there are farmers being viable, we can ensure our lands will remain in productive agriculture," he said.

Part of what has fueled heated debate on the bill after passage by the Legislature is that it was narrowly passed by the Senate in a 14-10 vote after members of the House threatened to kill a Senate bill that would require new homes built after 2009 to have solar water heaters.

Earlier in the legislative session, members of the Senate rejected a similar ag land conversion/protection proposal as part of House Bill 2807.

A provision in that bill that called for an 80-20 trade-off of ag land preservation/conversion was opposed by the state Department of Agriculture and the state Office of Planning.

Alan Murakami, an attorney with the Native Hawaiian Legal Corp., called the trade-off a transparent attempt to sidestep state land-use law.

"The coupling of 20 percent of one's land for reclassification to urban or rural with the designation of important agricultural land is no more than a gift to speculative investments in what will likely be luxury residential housing and urban or suburban sprawl across this state," he said in written testimony.

The trade-off provision was an idea introduced by the Farm Bureau in partnership with the Land Use Research Foundation, a research and trade organization representing large landowners and developers.

Also testifying in support of HB 2807 were large landowners Alexander & Baldwin Inc. and Kamehameha Schools. Castle & Cooke Hawai'i and Dole Food Co. also supported the bill and advocated for a 70-30 incentive.

Under a 2005 law, known as Act 183, landowners can apply to designate their land as "important agricultural lands" in return for benefits. The Legislature introduced many bills last year intended to establish benefits that included tax exemptions, tax credits, loan guarantees and a program to pay owners of prime ag land to give up rights to develop their property. The land reclassification trade-off wasn't among benefits debated by lawmakers last year.

Still, last year's package of proposed benefits amounted to a bold plan with an estimated taxpayer cost for the tax incentives and loan guarantees alone at $300 million over an initial six years. No benefits were passed last year.

The attempt again this year to establish benefits resulted in SB 2646 passing.

If the bill is vetoed and not overridden, lawmakers could try again to pass incentives next year.