2006-03-16 Cost of Government Commission Minutes

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Ms. Kaetsu asked if the assessed value was based on property tax records, and Ms. Crawford answered yes, that the values are low because they're not based on the appraised value. The values probably do not represent current market values. Ms. Kaetsu asked Ms. Crawford to talk about the two Kona properties, as those were a different situation. Ms. Crawford explained that the County acquired two properties in Kona that are small, less than one acre of usable area. However, these properties have unique requirements, and the Council wants whoever buys them to provide amenities to people, as access is unusual. Bill Takaba of the Finance Department is working on doing a negotiated sale to meet everyone's requirements. One of the parcels is a small triangular piece on Henry Street, with a stone wall and drainage issues. Both properties are prime commercial properties. They are also thinking about swapping them for properties that would be more useful to the County, such as property suitable for a police substation. Ms. Cushnie asked whether the sale of land of people delinquent in paying their property tax balances out the amount those people generally owe. Ms. Crawford said that type of land sale is handled through a separate mechanism, via auctions held at least twice a year. The upset price of the lands at an auction is the unpaid taxes, unpaid penalties and interest, and the County's portion of the cost to sell (title reports, advertising, etc). Sometimes the County is not able to sell the land for the upset price or higher, and these have gone unsold at auction. A lot of the property the County has gotten this way is vacant land in Puna or Hawaiian Ocean View Estates, where property values used to be very low and people weren't interested enough to keep up with the taxes. Since the market turned, the County has been able to sell all of those lands at auction. However, the County does not make money on this. If a parcel is sold for more than the cost to the County, the extra goes back to the owner. Ms. Cushnie questioned whether this was an efficient use of government property and employees, especially when the market is bad. Ms. Kaetsu said she wanted to respond to this. She has been with the County 28 years, 22 of which have been with the Finance Department. The list of land Ms. Crawford brought shows the only time the County accepted property in lieu of the taxes. The list is the result of a huge bankruptcy case and lawsuit and was the only way the County could realize anything on the delinquent taxes. The County does not take title to the delinquent parcels. It has a lien, a default, and holds a public auction to recover its costs. The other costs go to the people who were in default. This process is established by law and is the County's legal recourse to collect on delinquent property taxes. The lands the County owns in Hamakua are not typical — they are separate from other property tax delinquencies. Ms. Cushnie commented that this is a new adventure for the County then, and asked whether it was to continue or has a beginning and an end. Ms. Kaetsu said she hopes it has a beginning and an end. Ms. Cushnie asked whether it was efficient, and Ms. Kaetsu answered that the County felt it was more efficient than other things they might do with the property, such as leasing it. Doing so would create property management issues, which should not be a 5