HomeMy WebLinkAboutCOM 0813.000 1998-2000
Stephen K. Yamashiro Richard Wurdeman
Mayor Corporation Counsel
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OFFICE OF THE CORPORATION COUNSEL
101 Aupuni Street, Suite 325 • Hilo, Hawaii 96720.4262 • (808) 961.8251 • Fax (808) 961-8622
June 9, 2000
Chairman James Y. Arakaki
and Council Members
Hawaii County Council
25 Aupuni Street
Hilo, Hawaii 96720
Dear Chairman Arakaki and Council Members:
Re: Proposed Ordinance For Taxation of Real Property Tax
As you and the Council are aware, the County of Hawaii has taken the position that the
public utilities are subject to real property taxes. Indeed, it has been presumed that a portion of
the public service tax collected pursuant to Chapter 239, Hawaii Revised Statutes, was collected
in lieu of real property tax.
The Council had supported this position with the repeal of the real property tax exemption
granted by the County pursuant to Section 19-89, Hawaii County Code, with the passage of
Ordinance No. 99-159, which repealed the real property exemption granted pursuant to
Chapter 239, Hawaii Revised Statutes.
The County filed suit against the State, Civil No. 99-194, to seek a portion of those taxes
collected pursuant to Chapter 239. The County, along with the utilities, also proposed legislation
to amend Chapter 239 to pay the counties their fair share of the public service company tax. With
the help of the utilities, the other counties and the Council Chair, the bill passed the House and
Senate before dying in the final conference committee.
The County's lawsuit was also dismissed with final judgment entered on May 5, 2000.
The court upheld the position of the State that the references to real property taxes in the public
service company tax were repealed by implication with the passage of the Constitutional
amendments. Thus, the court held that since the County had made no attempt to tax the utilities,
our case against the State was premature and there was no case or controversy until we attempt
to tax the utilities and are denied.
Comm. No.
He No. ---O C C KET
Ref. To: FC
Ref. Date JUN 1 4 2000
Chairman James Y. Arakaki
and Council Members
Page -2-
June 9, 2000
Therefore, we are now left in the position of having to go forward and tax the real
properties of the utilities. This will generate a new set of appeals before the Tax Appeal Court. It
is my understanding that the utilities are also paying their public service company tax "under
protest" to the State in order to bring all the parties into one case to hopefully resolve this matter.
While it is our opinion that the definition of property as set forth in Section 19-2(3),
Hawaii County Code, which states:
(3) "Property" or "real property" means and includes all land and
appurtenances thereof and the buildings, structures, fences, and
improvements erected on or affixed to the same, and any fixture which is
erected on or affixed to such land, building, structures, fences, and
improvements, including all machinery and other mechanical or other allied
equipment and the foundations thereof, whose use thereof is necessary to
the utility of such land, buildings, structures, fences, and improvements, or
whose removal therefrom cannot be accomplished without substantial
damage to such land, buildings, structures, fences, and improvements,
excluding, however, any growing crops.
is adequate, if necessary, for the taxation of the public utilities' properties. The goal of this
legislation is to hopefully better define what "property" is in the context of a public utility and to
allow for the use of the public utilities' filings with the Public Utilities Commission to establish a
fair market assessment of the public utilities' properties.
I will return from military leave on June 26, 2000 and will be available to answer any
questions that you may have after that date.
Sincerely Yours,
Je~---
AI-D TAKASE
Deputy Corporation Counsel
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