A last-minute debate has flared up in recent weeks over one of five proposed constitutional amendments on the general election ballot.
Amendment 2, if approved by voters, would authorize the state “to issue special purpose revenue bonds and use the proceeds from the bonds to assist agricultural enterprises on any type of land.”
Special purpose revenue bonds are a type of municipal bond supported by income earned by the project receiving the funding, and not by the general credit of the state or its taxpayers. These special bonds carry lower interest rates and generally are seen as given borrowers a financial boost.
A similar constitutional amendment was approved by a 63.7 percent to 36.3 percent margin in 2006, but it only applied to agricultural operations on lands legally designated as “important agricultural lands.” It was seen at the time as an incentive to encourage landowners to set aside the best ag lands for farming in perpetuity as a means of fulfilling Hawaii’s constitutional mandate to “conserve and protect agricultural lands [and] … assure the availability of agriculturally suitable lands.”
But it hasn’t worked. Landowners have been reluctant to permanently lock their land into farming, despite the bond incentive.
This year’s amendment appears simple. It would simply eliminate the “important agricultural lands” restriction and allow most agricultural businesses to make use of the bonds.
It’s the sort of question that typically prompts yawns, but at least in some circles it has become a hot topic of debate.
Proponents, led by a political committee called the Local Food Coalition, say it will increase local food production by opening up a new source of financing for infrastructure projects like irrigation.
Those questioning the amendment argue that it is most likely to benefit large agricultural corporations rather than small farmers, and that it will not actually do anything for small producers struggling for financial survival.
And they say the financial muscle behind the “Yes on 2” campaign comes from a single source, prompting questions of the extent to which this really represents special interest legislation.
The amendment began life in January 2013 as House Bill 748. It was passed out of the House Agriculture Committee with support from Alexander & Baldwin, Inc., Hawaii Bioenergy, LLC, Hawaii Farm Bureau Federation, Land Use Research Foundation of Hawaii, Ulupono Initiative and Hawaii Cattlemen’s Council, but further action was deferred by the House Judiciary Committee.
The bill resurfaced during the 2014 legislative session with new backing from the Local Food Coalition, and passed easily without a dissenting vote in either the House or Senate, legislative records show.
The late debate appears to have started with a blog post by Senator Laura Thielen, a Democrat who represents the 25th Senate District which wraps around the east end of Oahu from Kailua to Portlock. Thielen is a former director of the Department of Land and Natural Resources, and sites on key committees, including Agriculture, Water and Land, and Ways and Means.
Although Thielen voted for passage of the HB748, she took to her blog to voice her opposition to the amendment, in part because it eliminates the incentive for landowners to protect their lands as “important agricultural lands.”
“We have way too much privately held agricultural land that is fallow because it’s essentially being ‘banked’ for future development,” Thielen wrote. “I don’t want to see landowners putting in improvements that later serve a different purpose when the land is developed.”
Thielen returned to the topic in another blog post 10 days later, noting that the issue had generated “more emails, calls and office visits from people on this topic than on any other (with the exception of the multiple posts on the recent HPD incidents).”
This time around, she paraphrased the position of an unidentified advocate.
“If we want an agricultural economy in Hawaii, we need agricultural infrastructure,” they argued. “We need to fix irrigation systems. We need to build food processing facilities, cold storage, transportation, etc., etc. The state isn’t funding this. We have to figure out a way to do this ourselves.”
After weighing the arguments, Thielen still opposes the amendment, saying it “opens the door to a broad variety of developments that may or may not meet the intended goal.”
“When I weigh the risks between the hoped-for projects and the possibility of unintended consequences,” Thielen wrote, “I come down on the side of ‘no.’”
Several other critics have emerged, arguing their case in online comments left on several sites. One of the most methodical has been progressive activist Bart Dame, who has spelled out his case on his own Facebook page.
Last week, for example, Dame criticized a mailer sent out by the Local Food Coalition as “extremely misleading.” The coalition has been the primary public advocate for Amendment 2 on agricultural bonds.
“While some organizations are spinning a tale that this amendment would benefit ‘small’ and ‘local’ ‘farmers’ producing ‘food,’ I am sorry, but that is grossly inaccurate and evasive,” Dame wrote. “It will benefit ‘agricultural operations’ in Hawaii. They do not have to be owned by ‘local’ people. Nor do they have to be ‘small.’ Nor do they have to be producing ‘food’ in order to qualify.”
Who is the Local Food Coalition?
The Local Food Coalition registered as a ballot issue committee on Sept. 9, 2014. According to the organizational report filed with the Campaign Spending Commission, its three officers all work for Ulupono Initiative, a private investment company created and solely funded by eBay founder and Civil Beat publisher Pierre Omidyar.
In fact, its hard to tell the coalition apart from Ulupono.
Coalition chair Brandon Lee became Ulupono’s first staff member in 2009, and now identifies himself as an Investment Associate. Coalition treasurer Murray Clay is managing partner of Ulupono, and deputy treasurer Kyle Datta is a founding partner. State business registration records also list Datta as a managing partner of Hawaii Bioenergy LLC, which was one of those early backers of HB748.
The Local Food Coalition’s finances tell a similar story. In its pre-election disclosure report filed on Monday, the coalition reported raising $505,250 since it was formed. Of that amount, $500,000, or 99 percent of the total, came from Ulupono Initiative.
While critics generally acknowledge Ulupono’s good intentions, they also note that it’s a private investment firm with its own special interests, which deserve to be publicly acknowledged and assessed.
Dame and other critics point to other examples of laws or policies touted as protecting agriculture which were warped in practice to benefit non-farming special interests, such as the developers of so-called “gentleman farms” who create private estates for the wealthy on agricultural land by growing only crops. They fear that similar unintended consequences will result from this constitutional amendment.
And closer to home, critics have also noted that while Civil Beat has analyzed at least two of the other constitutional amendments on the ballot, it has steered clear of Amendment 2, raising concerns of its editorial independence on a sensitive local issue.
But Civil Beat Editor Patti Epler said she had been unaware of the coalition’s ties to Omidyar.
“Until I read your column, I had no idea of Ulupono’s involvement in this ballot measure,” Epler said Tuesday.
She said that although the amendment had been previously mentioned in passing, “it looked like kind of a mundane agriculture measure that didn’t catch our attention.”
More generally, she said, “Pierre doesn’t get involved in Civil Beat.”
It’s a shame this debate has arisen so late in the election campaign. The issue could certainly have used a more thorough airing, as the current back-and-forth demonstrates.
Now, for good or ill, it’s up to the voters.