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HomeMy WebLinkAboutRES 146 Draft 02 2000-2002 COUl®T'TY Off' I-iA~I`I ~~T~ O~ I3r~~V~.I`I I~SOLiJTI010T 1®10. ra t RESOLUTION TO AUTHORIZE THE DIRECTOR OF FINANCE TO COMPROMISE PENALTIES AND INTEREST PORTION OF REAL PROPERTY TAXES ASSESSED AGAINST HAWAIIAN HOME LANDS HOMESTEAD LESSEES IN EXCHANGE FOR THE DEPARTMENT OF HAWAIIAN HOME LANDS MAKING PAYMENT OF REAL PROPERTY TAXES OWED HY HAWAIIAN HOME LANDS HOMESTEAD LESSEES WHEREAS, the Congress of the United States in the Hawaiian Homes Commission Act of 1920 and the State of Hawaii by Section 4~ of the Admission Act and Article XII, Section 3 of the State Constitution, which adopted the Hawaiian Homes Commission Act as a compact with the United States, have recognized areas to be set aside as Hawaiian Home Lands for the benefit of native Hawaiians; and WI-IEREAS, the administration of these Hawaiian Home Lands was placed with the Department of Hawaiian Home Lands (hereinafter referred to as "DHHL"), pursuant to Section 202, Hawaiian Homes Commission Act; and WHEREAS, Section 207 of the Hawaiian Homes Commission Act, authorizes DHHL to lease to native Hawaiians the right to use and occupy these lands as homestead; and WHEREAS, Section 208(7) of the Hawaiian Homes Commission Act, places as a condition of the lease that the lessee shall pay all taxes assessed upon the tract, and improvements thereon, after the initial seven years of the commencement of the lease; and WHEREAS, Section 19-89, Hawaii County Code, affirms its recognition of the Hawaiian Homes Commission Act of 1920; and WHEREAS, Section 19-89, Hawaii County Code, states that DHHL lands used for homestead shall be exempt from real property tax except for the minimum tax after the seven-year limitation of Section 208, Hawaiian Homes Commission Act; and WHEREAS, Section 19-89, Hawaii County Code, states that improvements upon homestead leases shall be taxed and that it will qualify and receive other personal exemptions that are timely filed; and WHEREAS, numerous lessees on Hawaiian Home Lands Homesteads in Hawaii County are delinquent on payment of real property taxes, penalties, and interests; and WHEREAS, in the Hawaii State Supreme Court case of In re Ainoa, 60 Haw. 487 (1979), in affirming County's right to levy real property tax on Hawaiian Home Lands, the Court recognized that it is the value of the underlying fee interest that is being assessed, and not the leasehold. The Court further held that the improvements upon the lease is also taxable; and WHEREAS, while the right to levy real property tax on Hawaiian Home Lands has been recognized by the Hawaii State Supreme Court, the enforcement of that levy is not as clear. Section 4 of the Admission Act provides that "the encumbrances authorized to be placed on Hawaiian Home Lands by officers other than those charged with the administration of said Act, shall not be increased, except with the consent of the United States". The Hawaiian Homes Commission Act did not authorize the State or local government to apply tax liens to Hawaiian Home Lands. To the extent that a real property tax lien is an encumbrance on the property created by non-administrators of DHHL, an act of Congress would be required to attach it to Hawaiian Home Lands. fine disposition of Hawaiian Home Lands by County tax sale would seem to be in contravention of this intent where Section 19-37 states that the tax lien is upon "the property assessed"; and WHEREAS, pursuant to Hawaiian Homes Commission Act, Section 210, DHHL can cancel the lease for nonpayment of taxes. Then, pursuant to Section 216(d) of the Hawaiian Homes Commission Act, it is DHHL, not the County, which has the primary tax collection/enforcement authority under the Hawaiian Homes Commission Act and has a first lien against the lessee's interest for taxes and other expenses paid by DHHL; and WHEREAS, foreclosure attempts on the improvements would also pose practical problems in that the leases can only be given to qualified Native Hawaiians, according to priority determined by DHHL; and WHEREAS, DHHL, pursuant to Section 208(7), Hawaiian Homes Commission Act, may pay the real property taxes owed by the homestead lessees and DHHL imposes a lien on that lease, pursuant to Hawaiian Homes Commission Act, Section 216; and WHEREAS, in 1994 the County Council of the County of Hawaii Committee on Finance adopted Communication No. 449 authorizing the Director of Finance to compromise the penalties and interests portion of real property taxes owed by lessees of Hawaiian Home Lands Homestead in exchange for DHHL paying the real property tax of these lessees and the delinquent real property tax was paid; and _ _ _ WHEREAS, DHHL and the County of Hawaii in 1999 did enter into negotiations for a Memorandum of Agreement to compromise the penalties and interest portions of real property taxes owed by Hawaiian Homestead lessees in exchange for DHHL paying the taxes owed by the lessees, but the parties could not resolve mismatching records of amount owed; and WHEREAS, the DHHL has recently proffered full payment of real property taxes owed by all individual lessees of Hawaiian Home Lands Homestead whose delinquency is in excess of $500 as of December 31, 2001 in exchange for the penalty and interest portions of those delinquencies being compromised; and WHEREAS, Section 19-3, Hawaii County Code, gives the Director of Finance the authority to compromise any claim exceeding $500 with the approval of Council with the provisions that there shall be placed on file and in the Department of Finance office a statement of (A) the amount of tax assessed, or proposed to be assessed, (B) the amount of penalties and interest imposed, or proposed to be assessed, (C) the amount of penalties and interest imposed or which could have been imposed by law with respect to item (A), as computed by the director, (D) the total amount of liability as determined by the terms of the compromise, and the actual payments thereon with the dates thereof, and (E) the reasons for the compromise; and WHEREAS, the Director of Finance, having complied with the provisions of Section 19-3, seeks authorization and approval of the Council to compromise the amount in penalties and interest owed by individual lessees of Hawaiian Home Lands Homestead. NOW, THEREFORE, BE IT RESOLVED BY THE COUNTY COUNCIL OF THE COUNTY OF HAWAII, that in accordance with Section 208(7), Hawaiian Homes Commission Act, Sections 19-3(12) and 19-89, Hawaii County Code, the Director of Finance is authorized to compromise the penalties and interest owed by lessees of Hawaiian Home Lands Homestead whose tax delinquencies exceed $500 by December 31, 2001. BE IT FURTHER RESOLVED that the County Clerk shall forward copies of this Resolution to (I) the State of Hawaii, Department of Hawaiian Home Lands; and (2) William Takaba, Director of Finance, County of Hawaii. DATED: Hilo, Hawaii, INTRODUCED BY: ~ ~ ~ ~ COUNCIL MEMBER, COUNT AWAI`I s:resolutions\dhhltaxcompromise\CTMmkk:10-01 COUNTY COUNCIL ROLL CALL VOTE County of Hawal`i AYES NOES ABS EX H110, HaWal`1 ARAKAKI CHUNG 1 hereby certify that the foregoing RESOLUTION was by ELARIONOFF the vote indicated to the right hereof adopted by the COUNCIL of the JACOBSON County of Hawaii on LEITHEAD-TODD ATTEST: PISICCHIO SAFARIK TYLER YAGONG COUNTY CLERK CHAIRMAN & PRESIDING OFFICER Reference: C- 416 1 /P-FC RESOLUTION NO. (Draft: 2 )