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HomeMy WebLinkAboutCOM 0027.000 2020-2022OF yq Deanna S. Sako Harry Kim ��:��'' Finance Director Mayor Steven A. Hunt Deputy Director OF H County of Hawaii Aupuni Center 101 Pauahi Street • Suite No. 4 • Hilo, Hawaii 96720 Fax (808) 961-8415 West Hawaii Civic Center • 74-5044 Ane Keohokalole Hwy. • Bldg. D, 2nd Flr. • Kailua Kona, Hawaii 96740 December 1, 2020 The Honorable Harry Kim, Mayor County of Hawaii 25 Aupuni Street Hilo, Hawaii 96720 The Honorable Aaron Chung and Members of the County Council County of Hawaii 25 Aupuni Street Hilo, Hawaii 96720- Dear 6720- Dear Mayor Kim, Chairman Chung and Members of the County Council: Pursuant to Chapter 19 of the Hawaii County Code, enclosed please find the 2020 Annual Report of the Real Property Tax Board of Review. Thank you for your time. Respectfully submitted, Michael Hughes Chairman /enclosure cc: Deanna Sako, Director of Finance Lisa Miura, Real Property Tax Administrator r Comm. No. Ref. To: lief. Date OU 0 9 227t Deanna S. Sako Finance Director Harry Kim +'Al Mayor_ Steven A. Hunt Deputy Director P tY County of Hawaii Aupuni Center 101 Pauahi Street • Suite No. 4 • Hilo, Hawaii 96720 Fax (808) 961-8415 West Hawaii Civic Center • 74-5044 Ane Keohokalole Hwy. • Bldg. D, 2nd Flr. • Kailua Kona, Hawaii 96740 REAL PROPERTY TAX BOARD OF REVIEW 2020 ANNUAL REPORT December 1, 2020 Introduction Pursuant to the provisions of Chapter 19, Article 12, Section 19-97(e), Hawaii County Code as amended, the members of the Real Property Tax Board of Review submit the following report of activities and recommendations for the 2020-2021 tax year. The recommendations relate to both legislative and administrative matters. Board Membership The following is a list of the officers and members of the Board and when their term ends: Board Members Term Ends — December 31 Em race Grace Reinhard, Vice -Chairperson 2020 Michael Hughes, Chairperson 2021 Nelson Harano 2022 V. Diane Blancett-Maddock 2023 confirmed July 28, 2020 Michael Okumoto 2024 confirmed July 9, 2020 Activities Organizational Meeting The annual organizational meeting of the Board was held on March 4, 2020 at the Real Property Tax Conference Room in Hilo for the purpose of electing officers and establishing a tentative appeal hearing schedule for hearings to be held in both Hilo and Kona. Michael Hughes was elected as Chairperson and Emygrace Reinhard as Vice -Chairperson. The annual workshop date and place was set and there was a brief discussion of topics to address at that meeting. Real Property Tax Administrator Lisa Miura was also in attendance and provided comments as well as providing that there were no current state bills pending relating to assessments. Ms. Miura also added that no action was taken by Administration and County Council on the recommendations the Real Property Tax Board of Review made in the 2019 Annual Report. Hawai `i County is an Equal Opportunity Provider and Employer 2020 Annual Report I Real Property Tax Board of Review 2020 Board of Review Statewide Conference Due to the coronavirus impact on the State of Hawaii, the Honolulu City and County Real Property Assessment Division has cancelled this year's statewide conference. The conference has proven to be very beneficial to all attendees and the Oahu staff has done a great job in organizing the event throughout the years. This Board supports this statewide conference and hope that it continues to be offered in the future. Workshop A workshop was held on June 22, 2020-, at the Aupuni Center Conference Room in Hilo with Board Members, Real Property Tax Office Administration, Appraisal Supervisor, Appraiser V (Commercial Appraisers), Valuation Analysts and support staff in attendance. Also present were Finance Director Deanna Sako and Deputies Corporation Counsel Craig Masuda and J Yoshimoto. Opening remarks were provided by the Finance Director and Lisa Miura, Tax Administrator. Mr. Yoshimoto did a presentation on the Role of the Board of Review. Various Real Property Tax staff presented information on the sales ratio analysis, legislative changes, update on high-end property, short term vacation rentals and rollbacks, COVID-19 market impacts, non -dedicated ag and other various programs offered by the division. The Board was provided the opportunity to present questions to the tax office personnel and administration. The workshop continues to be a very beneficial and worthwhile session to the Board. Appeal Hearings Seven hundred fifty (750) appeals, which included, 407 from East Hawaii and 343 from West Hawaii, including appeals from amended assessment notices, were scheduled for hearing this tax year for a combined total of $660,704,600 disputed. This is an increase from 355 cases in the previous tax year. There were four (4) sessions held in East Hawaii (July 7,,8; September 8, 9) and six (6) sessions held in West Hawaii (July 14, 15; August 11, 12, 25, 26). Complaint Hearing As required by Chapter 19-97(e), a notice was published on August 30, 2020, specifying a period (September 1 — 14, 2020) within which complaints may be filed by a taxpayer. Two complaints were filed this year. The Board The first Notice of Complaint received on July complainant was not present. held, its complaint hearing on October 15, 2020. 29, '2020 is attached hereto as Exhibit A. The The second complaint was received on September 9, 2020. The complainant was present and was reminded that the Board could not change any assessment during the process. The reason for the complaint was due to a comparison used at the hearing not being the same that was discussed between the appraiser and the appellant prior to the hearing. The complainant provided documents to the Board and presented their grievances. The Notice of Complaint form and additional documents submitted by the complainant are attached hereto as Exhibit B. Hawai `i County is an Equal Opportunity Provider and Employer 2 2020 Annual Report I Real Property Tax Board of Review Comments and Recommendations Administrative Matters 1. Potential appointees should be apprised of the demands of their time that service on this Board entails before their names are submitted to the County Council for confirmation hearings. All members are expected to attend all meetings. Meetings in' Hilo or Kona occur from July through December with two nights away from home or the office. 2. The procedure of rendering an immediate decision in open session upon the completion of the presentation of each appeal case continues to differentiate this Board from other Counties within the State of Hawaii and is found to be an acceptable practice to all parties. 3. The workshop, which included the Real Property Tax staff and Board Members held prior to the start of this year's appeal hearings, was very informative and productive for the Members. The continuation of the annual workshop is highly recommended as it allows the administrative staff to present a broad array of relevant tax matters and information for the Members. 4. The presence of Corporation Counsel at each meeting/hearing has proven itself to be essential and is recommended to continue. The Board has relied upon Corporation Counsel in many instances for clarification and interpretation of rules and/or laws. 5. The presence of the Real Property Administrator and/or Assistant Administrator at each meeting/hearing has proven itself to be essential and is recommended to continue. The Board has relied upon the administration in many instances for information on office policies and procedures before rendering decisions. 6. The Board recommends continued funding to allow the Board and support staff to attend the statewide conference as it provides multiple benefits to all participants. 7. The Board recommends that they be accompanied by both Corporation Counsel and the Board Clerk to all conferences, workshops, meetings, and other related matters. 8. The Board appreciates the impromptu training sessions conducted by Corporation Counsel and the Real Property Tax division. These sessions provided the Board with information and insight on various issues, topics, programs, etc. The Board recommends that these training sessions continue to be offered. 9. The Board recommends that additional one-on-one training be provided by the division and Corporation Counsel for the newest appointed member. This training session should include basic information on programs, appeal procedures and the specifications of their role as a member. 10. The public has a misconception that the Real Property Tax division sets the tax rates, and the Board recommends that the County continue to provide outreach interaction to dispel this. Hawai `i County is an Equal Opportunity Provider and Employer 3 2020 Annual Report I Real Property Tax Board of Review 11. The Board recommends informing the public on the various programs and exemptions real property tax has to offer, e.g., Short -Term Vacation Rental, Agricultural Use Benefit programs. One suggestion is to provide more avenues where information can be obtained/provided so that taxpayers can educate themselves. 12.The Board commends the division for their effort to review the enforcement of the exemption program by expanding their options to verify the claimant's eligibility and to understand the owner's possible financial consequences of the disallowance of an exemption, especially one in the homeowner's classification with the three percent (3%) growth cap. 13. The Board appreciates the effort by the administrative and appraisal staff in settling 44% of the appeals that were filed which reduced the hearing time of each scheduled day. It is recommended that each of the settlements be reviewed for next year's assessment to determine what effect, if any, the settlement has to similar properties within the appealed parcel's neighborhood. 14. The Board recommends that the settlement agreement letters between the County and the appellant be included in the board packets when reviewing the settlements. This was found to be very helpful in understanding the circumstances of the settlement. 15. The Board was thoroughly impressed with how well-prepared the appraisers were this year and appreciates their efforts to address all the Board's inquiries. The appeal data worksheet that is provided for the Board to review prior to hearing the cases has been a vital tool and continues to reduce the amount of time spent on each case. 16. The Board appreciates how efficient and effortless the appeal hearings were executed this year by the Real Property Tax Division and how well they were supported by the Tax Appeals Board Clerk, Sherlyn Aronce and Corporation Counsel, J. Yoshimoto. Legislative Matters 1. The Board emphasizes this year marks the 8t" year this request has been included in the report with no progress in repealing the Non -Speculative Residential Program. The Board discussed Communication 645.1 which contained the Report to Hawaii County Council from the Real Property Tax Review Working Group, and Agricultural Committee dated March 16, 2018 (Review Group). The Board continues to strongly support the recommendation made by the Review Group that the Non -Speculative Residential Program be repealed. The recommendation states: "Repeal the Non -Speculative Residential Program. This would require a change to the Hawaii County Code. Recommended steps include informing all owners currently with parcels in this program or repeal for tax year 2019, allow all parcels currently in this program to automatically convert these parcels to the Homeowners Exemption program (by virtue of the program they already technically are part of the Homeowner class) at the 2019 frozen value and explain the 3% CAP would then be applied to the tax year 2020 (first year they would see the increase). This has been a recommendation the Real Property Tax Board of Review has reported for several Hawai `i County is an Equal Opportunity Provider and Employer 4 2020 Annual Report I Real Property Tax Board of Review years as this program does not allow new applicants into this program therefore is not considered to be fair and equitable. It is our understanding when the County Council approved the 3% CAP and additional 20% homeowner; exemption (up to $805.000) there was discussion to have this program completely repealed however it ended up being an "optional out" for those in the program. There are currently 483 parcels in this program. The impact to the real property tax revenue in tax year 2020 based on the current frozen non spec values would be $23,000 total. In addition, the County will save approximately $4,400 per year in staff time which was allocated to the administering of this program. " The Board further discussed that many of the homeowners that are currently in this program are elderly and have a greater chance of breaching the conditions of the program which results in a significant rollback amount being owed. A breach of the program results in a retroactive assessment and is define as 1.) "the amount that should have been owed without the dedication less the amount actually paid back to the date of renewal, plus 10% penalty. 2.) "if sold by conveyance, the retroactive assessment (for the last year) is the higher of either the sale price or the market value." The Board believes the Non -Speculative Residential Program should no longer exist because the homeowners class, exemptions and other programs have taken its place. At the very least, any changes in the Hawaii County Code should include a provision whereby the frozen base value of each affected parcel for the first year be the lowest of: a. the frozen value; b. the market value; c. the 2004 market value times three percent (3%) a year until present if the property had the same owner since 2004; or d. the market value of the property at the time of purchase after 2004 times three percent (3%) per year until the present. 2. The Board strongly recommends that the Hawaii County Code be amended to change the $50.00 appeal fee to be non-refundable. Close Chairperson's Comments I first would like to thank Board Member, Emygrace (Grace) Reinhard, whose term expires at the end of this year, for her 4 -years of dedication and service on the Real Property Tax Board of Review. Her professionalism and knowledgeable contributions at every meeting will be greatly missed. We wish her all the best. As I reflect on this year as Chairperson of the Board, it is clear how imperative continuous education and training provided to the Board is, especially for newer members, in order to make informed decisions at the hearings. I have been on the Board for three years now and still find the Workshop session held annually just before the start of the appeal season to be very informative and beneficial to me and my fellow board members and would welcome additional educational sessions throughout the year. Hawai `i County is an Equal Opportunity Provider and Employer 5 Y 2020 Annual Report I Real Property Tax Board of Review Thank you to the Mayor's office for filling the two vacant board member seats halfway through the appeal season. The newest members have been a great addition to the Board and have executed their role with ease largely due to the incredible training that was provided by the administrators of the Real Property Tax Division in such short time. It has been wonderful operating with a full five -member board. Thank you to the Real Property Tax Division and Corporation Counsel for their professional demeanor and willingness to further the Board's knowledge in real property tax and understand the appeal process. Lastly, thank you to my fellow Board Members for their service to our community and volunteering their time to be on the Real Property Tax Board of Review. Submitted by Members of the Real Property Tax Board of Review: 0 Michael Hughes Emygrace Reinhard Chairperson Vice -Chairperson Ne on Harano Member ?1)1t, �,/� e5� l.Lz Michael Okumoto Member i WA V. Diane Blancett-Maddock Member Hawai `i County is an Equal Opportunity Provider and Employer 6