The Journey of KLRF: Building a Cooperative Farming Community in Hawaii

Humble Beginnings

The Kunia Loa Ridge Farmlands (KLRF) is a Farmer’s Community cooperation that was formed on 27 October 2009, the first of its kind in the state of Hawaii. The duration period of KLRF is perpetual. It is incorporated under CH 414, Hawaii, revised non-profit laws and it is organized and operates similarly to CH 4211, Hawaii’s housing cooperative cooperation revised statutes. As such, KLRF is exempt from certain federal income tax under section 528 of the Internal Revenue Code. Having such tax-exempt status gives KLRF the authority to function as a “Homeowners Association.”

KLRF Purpose

The core mission of KLRF is to maintain and operate a farming community on a cooperative basis for the benefit of its members. The goals are multifaceted:

Cooperative Community: To own, maintain, and operate a farming community on a mutual or cooperative basis for the use and benefit of its members.
Promoting Agricultural Advancement: Operate the project for the advancement of the agricultural farmer’s community association.
Maintaining Agricultural Character: To provide for the continuity in the agricultural character for use and occupancy of lots owned by KLRF and lots leased to members by way of Proprietary Lot Leases (PPL’s).

KLRF Authority

The governance of KLRF lies in the hands of its Board of Directors, vested with the fullest extent of power permitted by the laws of the State of Hawaii. The board is responsible for:

The Board of Directors shall have general charge of the affairs, funds, and property of the KLRF.
The Board of Directors shall have full power, and it shall be their duty to enforce the Declaration of Covenants, Conditions, Restrictions, and Reservation of Easements (DCCR’s), Articles of Incorporation, and Bylaws.
It shall be the duty of the Board of Directors to conduct, manage, and control the affairs and business of KLRF and to promulgate and enforce rules and regulations not inconsistent with law, the Articles of Incorporation, or the Bylaws of the Corporation.

KLRF Limitations

KLRF adheres to strict limitations to ensure the integrity and focus of its operations:

Non-Distribution of Earnings: No part of KLRF’s net earnings is distributed to directors, officers, members, or other private persons, except as reasonable compensation for services rendered.
Compliance with IRS 528: KLRF does not engage in activities prohibited under its tax-exempt status.
Political Neutrality: KLRF does not participate in political activities or influence governmental actions beyond its project site boundaries.

Membership Rights

Members of KLRF enjoy several exclusive rights, including:

Exclusive Lot Use: Members have the right to occupy and use a lot in the subdivision by virtue of ownership of a membership interest in KLRF by way of a Proprietary Lot Lease. (PLL)
Transparency: Members can audit or inspect KLRF’s books, records, and minutes, provided such requests are made in writing and conducted during normal business hours without interfering with operations of the Manager or KLRF.
Participatory Governance: Members can vote to repeal or change farming rules.
Security of Membership:No membership shall be terminated or forfeited and no member shall be expelled, except upon voluntary or involuntary including by way of lien and foreclosure of their membership and PPL interest.
Member’s Fee Simple Status: Members Proprietary Lot Leases are inextricably connected with members interest.

Members' Obligations

To maintain a harmonious and functional community, members must:

All Lots shall be improved and used solely for agricultural use, including animal husbandry.
No Lot may be improved except with a building or structure designed to support the agricultural activities as approved by the County.
Members MUST comply with and follow KLRF rules and regulations.
Members MUST pay all mandatory monthly/annual fees and fines on time.
Pay all assessments on time in order to cover costs of upkeep.
Comply with KLRF rules and regulations in order to foster a healthy environment.
Provide or update contact information to include, Lot LLC Name , Lot#, Phone and Email Address by contacting KLRF Aloha Team at 808-427-0826 or text 808-646-2936. You may also visit the office and give your information to our Office Manager.
Use section 19.1 in the DCCR’s to resolve any disputes (excluding any action for delinquent assessments or which relate to the Project Site).

KLRF Pros and Cons

KLRF is made up of volunteers lot owners and not professionals. A bad one can mismanage the community, misspend money, or even worse, abuse their power. Thus, KLRF members must be very selective on who we elect to serve or provide services. Such individuals must have unyielding dedication, loyalty, and strong moral fiber and leadership in order to make just and tough decisions to bolster KLRF’s reputation and maintain the integrity of the community. With that said, KLRF structure does have its advantages and disadvantages, or better put, the pros and cons:

Pros:

Access to affordable land on Oahu that some people may not be able to afford on their own otherwise.
Excellent location, in such a close proximity to city and county services.
Provides many accessible features.
Reduces responsibilities for lot owners.
Keeps up the appearance of the common areas.
Creates higher resale property value (KLRF rules are designed to prevent property neglect, comply with state, city, and county policies, and maintain the property values for lot owners and the community overall).

CONS:

Monthly fees and or fines.
Property taxes twice yearly.
Many covenants, rules, bureaucracy, and restrictions throughout KLRF. (Most rules are necessary, however, some should be reviewed and modified as needed).
High possibility of poor management throughout the community.
Risk of lien and foreclosure and many fines.
If KLRF (Fee Simple) is lacking in money or anything, the whole community is on the same line. We are all one, so we all hold that responsibility if our management messes up.

Afterword

KLRF is built on the foundation of cooperation. To thrive as a community, members must care for one another and work together. Success is rooted in unity and mutual support, embodying the true spirit of cooperation that KLRF stands for.

Embracing the cooperative model, KLRF continues to foster a thriving agricultural community in Hawaii, balancing the benefits of shared resources and responsibilities with the challenges of collective management. Together, the members of KLRF are cultivating not just the land, but a legacy of cooperation and mutual support.