A state agency with special powers to expand diversified agriculture could be nearing a brink of perhaps its biggest accomplishment in 27 years, or disbandment.

The Agribusiness Development Corp. hasn’t been a terribly active agency for most of its existence despite lofty expectations of lawmakers who created the entity in 1994 partly to improve infrastructure of closed sugar and pineapple plantations for new diversified farming endeavors.

This year the agency, which owns irrigation ditch systems on Oahu and Kauai along with 22,535 acres of farmland mainly on the same islands, has come under fire at the Legislature following a searing performance audit published last month.

On Thursday the House Finance Committee unanimously passed House Bill 1271, which would abolish ADC and transfer its staff to the state Department of Agriculture with the exception of ADC boss Jimmy Nakatani, a former watercress farmer who once led the Department of Agriculture.

HB 1271 has elicited a bumper crop of testimony — 197 pages submitted for a Feb. 17 hearing by the House Agriculture Committee, which advanced the measure in a 7-1 vote.

Most testifiers endorsed abolishing ADC, which can issue bonds to acquire land and invest in agricultural enterprises.

Support for the bill outweighed opposition by a 5-1 margin.

Many bill supporters argued that ADC has mismanaged its roughly 18,000 acres on Kauai by largely leasing the land to seed corn companies, which employ genetic modification technology, instead of more food producers.

“The ADC with so much power and so much control over all this aina has failed,” Josh Mori, a Kauai organic vegetable farmer, said in written testimony. “They have failed our communities by supporting the companies that have poisoned our waterways and poisoned our air.”

Some ADC critics also cited the audit and litigation over stormwater runoff on Kauai that ADC contends was due to shifting Environmental Protection Agency regulations.

Kauai farmer Fletcher Parker said water and land on the Garden Isle have been poisoned under ADC management.

“The fact that we have between 85%-90% of our food on the island imported from off island is baffling to me,” Parker said in written testimony. “The land needs to be managed properly and resources need to be used for feeding the people of Kauai and possibly the other islands as well.”

Opponents of the bill include the Department of Agriculture, the Hawaii Farm Bureau and a farm co-op that manages the Kauai land for ADC.

Department of Agriculture Director Phyllis Shima­bu­kuro-Geiser said ADC can convert fallow plantation-era farmland faster and more effectively than her department but that long-term management of land and water assets would be better suited to her agency.

“The Department believes that the ADC continues to have an important role in the growth and development of diversified agriculture in Hawaii,” she said in written testimony.

Umi Martin, a tropical fruit farmer leasing ADC land on Kauai, said in written testimony that abolishing ADC won’t result in better public farmland management or allow more farmers to use such land faster.

Martin, a Native Hawaiian born and raised on Kauai, said that after ADC received the Kauai lands in the early 2000s in the wake of Kekaha and Lihue sugar plantation closures, seed companies moved in because there was no demand from diversified farmers.

Martin added that ADC isn’t perfect, but he said the agency can serve the growing diversified farming community in emerging opportunities.

“Abolishing ADC will stop the momentum and we will find ourselves even more frustrated with the lack of progress,” he said.

Some of this momentum began building between 2012 and 2018 when ADC acquired, at the direction of the Legislature, 3,848 acres of Oahu farmland mostly once used for Del Monte and Dole pineapple production near Wahiawa.

Nakatani told the House Agriculture Committee at a special briefing Friday that ADC has been working to develop irrigation infrastructure, including wells and reservoirs along with roads and other things, to allow more diversified farming on the land.

A few farmers, including big local diversified farm operator Larry Jefts, use about half the land and have produced crops in recent years with limited water.

Nakatani said another 1,200 acres should be ready this spring for farmers who can apply under a process that ranks applications based on criteria including business plans and experience.

Another ADC plan is to develop a crop-processing facility, research greenhouse, storage warehouse, office space, worker housing, farmers market and visitors center on 34 acres near Wahiawa to support diversified farm tenants.

ADC also is preparing 1,500 acres on Kauai for diversified farm use in the next one to three years, Nakatani told the committee.

Nakatani acknowledged that ADC, which he has led since 2013, has operational issues brought into glaring light by the audit, though he disagreed with the report’s conclusion that ADC has done little to fill a void left by plantations.

ADC deficiencies cited in the 56-page report by state Auditor Les Kondo included a lack of statutorily required market research, no meaningful agribusiness plan, informal tenant arrangements, state procurement rule violations, records in disarray and poor board oversight.

“After almost 30 years, we found that ADC has done little — if anything — to facilitate the development of agricultural enter­prises,” the audit said. “The COVID-19 pandemic has highlighted the necessity for a strong and diversified agriculture sector, one that could provide for much of the state’s food needs while producing crops for export. Unfortunately, thanks in part to ADC’s past inaction and its continued lack of direction, focus, and competence, this dream remains as elusive as it was nearly 30 years ago.”

Kondo’s report said Jefts has done site work benefiting ADC in return for rent credit without any paperwork, and that ADC ignored a car chop-shop operation established on the Wahiawa property before the agency’s acquisition.

The audit also said a separate financial audit was called off because ADC hasn’t kept financial records since its inception.

In a formal response to a draft of the audit, ADC didn’t dispute many issues, but said the audit reflects a rudimentary understanding of what it takes to expand commercial agriculture in Hawaii. ADC’s response did refute the auditor’s contention that ADC ignored criminal activity.

ADC said it has worked with law enforcement to root out the chop shops, chicken fighting, over 150 abandoned vehicles, the homeless and drug activities on its Wahiawa land.

Ken Nakamura, an ADC staff member, said at Friday’s briefing that criminals in the overgrown fields had heavy equipment to destroy ADC barriers and weapons to threaten eviction efforts.

“We were literally outgunned,” he said. “It became so dangerous that even the law enforcement officers did not want to go into the area.”

Nakatani said carrying out ADC’s mission has been difficult with a lack of funding and a staff of 11, of which seven are dedicated to a 27-mile system of tunnels, pumps and ditches transporting water from Windward to Leeward Oahu that ADC received in 1999 as its initial enterprise.

“We talk about we want to move agriculture, but not much money is given to agriculture,” he said.

Nakatani also said ADC will focus on carrying out audit recommendations.

“It’s not like we turn a blind eye to that,” he said. “We take it seriously. … We’re under pressure to move agriculture, and we’re trying our best to move it.”

If the full House approves HB 1271, the bill would advance to the Senate where a bill is under consideration to have ADC lease at least half its land to local food producers by the beginning of next year.