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Owner Exemption Overview <br />RPT does not always have the leverage to negotiate with taxpayers who are non-committal. We <br />reviewed the Maui County Tax Code and found: <br /> <br /> Section 3.48.450 (G) of Maui County Tax Code states, “No homeowner exemption <br /> is allowed if taxes on the property are delinquent for more than one year.” <br /> <br />Hawaiʻi County has no equivalent language in its tax code. We interviewed the Maui County Real <br />Property Tax Administrator, who attested to the effectiveness of the policy. Properties become <br />delinquent after one year, and homeowner exemptions are removed one year after delinquency. <br />This is commensurate with a 3-year foreclosure timeline. There are downsides to the Maui policy <br />as written. A challenge noted is the prospect of increasing tax significantly by removing <br />exemptions on those already delinquent. While very clear, the all-or-none language in the code <br />is also inflexible. <br /> <br />Previously, RPTʻs foreclosure timeline was based on three years. More accounts qualify for <br />foreclosure than RPT can process. The more restrictive timeline adds pressure to a process that <br />is already impossible for RPT to comply with, given current constraints. <br /> <br />Cause and Condition <br />RPT lacks language in code to incentivize participation early in the delinquency cycle. <br /> <br />Effect <br />Some taxpayers ignore initial notifications, prolonging collections and satisfaction of the debt. <br /> <br />Recommendation 3 <br /> <br />Owner Exemptions <br />We recommend RPT amend Hawaiʻi County Code Chapter 19, to include language that suspends <br />homeowner exemptions when a parcel is delinquent for more than one year, except where: <br /> <br /> a. An agreed-upon payment arrangement has been established. <br /> <br /> -or in rare cases- <br /> <br /> b. When the Director of Finance has reviewed a case and granted an exception. <br /> <br />Exceptions should include a process of significant review, oversight, and transparency to ensure <br />the equity of exceptions granted. RPT should evaluate its historical three and current two-year <br />foreclosure timelines to determine if the addition of a gradual incentive structure is more <br />conducive under a longer timeframe to working with distressed taxpayers than the current two- <br />year timeline. <br /> <br />31 Page