A Hawaii County Council committee unanimously approved legislation Tuesday that would establish a new property tax dedication known as “Aina Kupuna,” allowing local families who’ve owned generational lands for at least a century to pay minimum taxes and avoid being priced out of their ancestral homes.

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A Hawaii County Council committee unanimously approved legislation Tuesday that would establish a new property tax dedication known as “Aina Kupuna,” allowing local families who’ve owned generational lands for at least a century to pay minimum taxes and avoid being priced out of their ancestral homes.

The Committee on Finance voted 8-0 to send Bill 163 to the full council with a favorable recommendation, with Kona Councilwoman Rebecca Villegas absent and excused.

The proposed measure would allow select landowners to dedicate their properties as “Aina Kupuna” (ancestral land) for a period of 10 years, during which time they’d pay the county’s minimum tax rate — currently $200 per year.

To be eligible, a property must be 20 acres or less in size, be family-owned since before Jan. 1, 1926, and subject to more than $10,000 in property taxes over the previous 10 years. One of its owners must live in Hawaii County, and the property cannot be sold to a nonlineal descendant until the dedication expires.

Approved properties would also be exempt from penalties or interest accrued during the two years preceding dedication due to tax delinquency.

According to the bill, once designated as Aina Kupuna, lands cannot be used for commercial purposes except agriculture. Lots used as residential rentals with less than six-month leases would also forfeit the benefit.

The legislation also spells out penalties for breaking these rules. Failure to comply would result in benefit termination retroactive to the date of a property’s initial dedication or date of its most recent renewal.

According to the bill, “all differences in the amount of taxes that were paid and those that would have otherwise been due from assessment, absent the dedication, will be due and payable with a ten percent penalty.” These back-taxes and penalties owed resulting from termination would take the form of a “paramount lien upon the property.”

To claim the benefit during the program’s inaugural year, landowners would need to petition the county director of finance by Dec. 31. After that, petitions would need to be filed before Sep. 1 preceding the first tax year in which the dedication would be applied. They’ll need to sign paperwork agreeing to all conditions and restrictions of the program, after which the director may require the applicant to verify ownership, descendancy and general eligibility by producing documents such as deeds, court orders, wills, trusts, birth certificates, death certificates and genealogical verification by the Office of Hawaiian Affairs.

The program is similar to the “Kuleana Land” tax exemption with one major difference. Where a Kuleana Land designation requires an original 1850 Kuleana Act title or proof of Native Hawaiian ancestry, Bill 163 instead functions as a “generational relief program” not tied to ethnicity. The annual Kuleana flat tax rate is $200 in Hawaii County, $300 in the City and County of Honolulu, and $150 in Kauai County.

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In Maui County, Kuleana Lands are generally eligible for a 100% tax exemption, meaning no annual property tax bill at all. Both programs are administered by the Real Property Tax Divisions belonging to the counties where lands are located.

The Aina Kupuna measure was authored by Kohala Councilman James Hustace, who introduced it during a committee hearing on June 2 saying it’s a necessary push to protect longtime locals from losing their inherited lands due to financial strain.

“Really, the core of this bill is about preserving generational family lands and helping local families navigate our rising cost of living,” Hustace said at that meeting earlier this month. “Across island many of our families continue to care for lands that have been passed down through the generations. These properties are often more than financial assets — they’re places of history, culture, identity, genealogy, and community connection.

“As property values and taxes increase and assessments increase,” he added, “some families face this growing difficulty of holding on to these passed-down inherited lands. In some cases, these pressures contribute to the loss of these properties that remained in their families for generations. Once these lands leave, the culture, history, familial connections tied to them can be difficult to re-obtain and sometimes impossible to restore.”

During Tuesday’s committee meeting, Hustace echoed his previous comments, saying tax relief is needed in order to ensure that such lands continue to stay in the family.

“The intent is to explore whether targeted property tax relief can help qualifying families retain generational lands and maintain connections to properties that have often remained in family ownership for decades,” Hustace said. “Preservation of ancestral lands is not solely an economic issue, but one that also involves family history, culture, genealogy and community continuity.”

Hilo Councilwoman Jenn Kagiwada expressed support for the measure, but said it’s still unclear to what extent the proposed program could sap badly needed tax revenue from county coffers. This is especially concerning, she said, considering what she described at the previous committee meeting as the county’s “escalating financial obligations” over the next decade. These include a $1 billion mandate for wastewater infrastructure upgrades, substantial debt servicing, public employee salary and benefit increases, and labor settlements involving pandemic-era hazard pay.

“Right now, we don’t know what this is going to cost as far as reduced revenues,” Kagiwada said. “We know it’s important, I think, and we want to do it, but we do need to get a handle on that just so we look at that when we come to budget season next year and (we’re) looking at our revenue and expenses.”

Puna Councilman Matt Kaneali’i-Kleinfelder praised the bill’s author for tailoring the legislation to benefit working class homesteaders and small-scale farmers while omitting major landowners.

“The one piece that I really did like, Mr. Hustace, was the not more than 20 acres,” Kaneali’i-Kleinfelder said. “Because if we went past 20 acres there’s some very interesting components that could apply to our large landholders here who’ve been around for a long time but own some very substantial land holdings that would have a fairly large impact on our tax base this year in Hawaii County. So, thank you for reigning that in a little bit and focusing on our residents who have smaller properties.”

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Email Stefan Verbano at [email protected].