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Home My WebLink AboutCOM 0223.000 2002-2004 Tr or AL KONISHI ~ CONSTAN,CE1R KIRIU Depulr (Tun/r C7erA County of Hawaii Office of the County Gerk ?5: hepuni Sh~rrl llih>. llnuvi ~i 96720 Telrphone- 18081 9G1-838(> Piirsimile 1808/ 9<7-,Y~" April 23.2003 IY): James Y. Arakaki. Chair And Council Members FROM: Constance R. Kiriex"(~~ Legislative Auditor RE: Donation of Lava Land and Other Land phis is to transmit a bill establishing a clear process for accepting land (including lava land) and a "Donation of Land and Lava land Taxing Policy Paper" dated April 23, 2003. The bill and paper are products of several meetings held with the administration on the current taxing policy of certain lands and the desire by some landowners to donate their land because of the taxes due to the County . The paper provides a status report of the lands to be donated, real property tax data relating lands inundated or surrounded by the Kilauea lava flow, and a chronology of the work performed on the subject matter. After much discussion that considered balancing fairness. setting precedence and providing a solution that considers employee workload, we concluded there should be no change to the current taxing policy. In September 2002, an Ad 1 toe Committee composed of Council Members Gary Safarik_ .Iulie Jacobson and .l. Curtis I yler was formed to discuss the issue. The intent would be to refer this communication and bill to the Ad Hoc Committee. Should you have any questions or request more information, please feel free to contact me. Att. No. Z_ Z~ Ref. Toe Ref. Date APR - 32 7M3 _ DONATION OF LAND AND LAVA LAND TAXING POLICY PAPER Apri123, 2003 Office of the Legislative Auditor Status of Donated Land Requests Kilauea Volcano has been erupting since 1983 and now, twenty years later, no one knows when the eruption will stop. In the Puna area, large tracts of land have been covered or surrounded by lava prompting a few landowners to donate land to the County. As the land value and demand decreased, owners either stopped paying property taxes or waited to donate their land to the County in order to eliminate growing liabilities. Some owners mistakenly believed that by abandoning their land the ownership would automatically revert to the County. The Hawaii County Charter, Section 13-12, provides that the Council may accept gitts which include the dedication of land on behalf of the County of Hawaii. In the past, as depicted in Table 1. from July 29, 1993 through December 18, 1996, the County accepted nineteen lava- inundated or lava-surrounded parcels by resolution. Thereafter, the Council questioned the County's policy of accepting donated properties without any prior inspection of the properties. The council learned that there was no policy in place that required a donated property be inspected before the County accepted it. This policy void coupled with concern over liability suspended decision-making. Currently, there are six more parcels whose status is pending-four of them inundated or surrounded by lava. Lava Land Properties: Real Properiy Tax Data The data presented in Table 2 is based on information provided by the Real Property Tax Division staff through June 30, 2002 or the end of the past fiscal year. The data provides us with some interesting information: ~ Total number of lava inundated lots as a result of Kilauea Volcano: I ,952 lots. u Total number of lava inundated lots delinquent in real property taxes: 664. I ? Total number of lava inundated lots current in real property taxes: 1,288. ? In terms of dollars, delinyuent properties have a negative balance of ($630,580), including penalties and interest. ~ In terms of dollars, current properties have a positive balance of $32,000. In terms of percentage: 34% are delinquent and 66°/u are current. ? [n terms of percentage, the number of lots donated to the County versus the number of lots inundated by lava: 23/192 = L 18°i~,. Chronolopy: Involvement of the Legislative Auditor's Office The Legislative Auditor's Oftice has been involved with the issue of donated lands, oft and on, since 1997. 1997: Council Member John Santangelo transmitted (on April 30, 1997) a request for information on a minimum tax payment waiver on unusable land because of Kilauea Volcano to the Real Property Tax Division. Appraiser Mike McCall, after consulting with other Real Property staff members, responded with thoughts and comments in an October 20, 1997 memorandum. 1998: Council Member Santangelo requested a study (talking paper) to provide a basis for preliminary discussions on lava land problems. In a memorandum dated June 15, 1998, Council Member Santangelo transmitted the study and requested comments from the Finance Director and the Deputy Finance Director. The intent was to place the issue on the Finance Committee agenda for discussion during the August 4, 1998 meeting. There was no response. Thereafter, the issue languished because Council Member Santangelo did not return for another council tcnn. 1999: At the request of Council Member Curtis Tyler, I[l, a bill was prepared to provide tax waivers for landowners whose properties became unusable because of volcanic activity in the Kilauea rift zone. On July 6, 1999, Council Member Tyler transmitted this draft bill to the Finance Director, Real Property Tax Administrator, Director of Civil Defense, and the Deputy Director of Public Works. To our knowledge, no comments were received. August 21, 2002: A meeting was held on with the following people in attendance: 2 Finance Director William Takaba; Deputy Finance Director Nancy Crawford; Assistant Corporation Counsel Gerald Takase; Property Management Specialist Stanley Iwamoto; Budget Administrator Gary Takamura; Legislative Auditor Connie Kiriu; and Finance Committee Clerk Susan Caseria. Although there was some clarification on some procedural matters, there were still some unresolved issues that could only he resolved after further discussions with the mayor and/or council. September l0, 200Z: The Finance Committee met and discussed Communication No.713, which is a request to donate lava inundated land to Hawaii County. After Committee discussion, including comments by Finance Director, Bill Takaba, and Legislative Auditor Connie Kiriu, it was decided to setup an informal or ad hoc committee, composed of Council Members Gary Safarik, Julie Jacobson and any other interested Council Member. Although a procedure was already in place to address possible land donations, it was decided to clarify this procedure further by specifying how a request for land donations would be processed. September 24. 2002: A memorandum providing background information was sent to tinance and legal counsel of the administration and to council ad hoc committee members Gary Safarik, Julie Jacobson, and J. Curtis Tyler, lll. September 27, 2002-October 9, 2002: During this period, the Legislative Auditor's proposed draft of the above bill was circulated and comments noted. On October 9, 2002 a tinal version, incorporating the reviews and comments, of the bill was sent to administration staff. October 28, 2002: An informal meeting was held with Finance Director Bill Takaba, Real Property Tax Appraiser Francis Ouye, Assistant Corporation Counsel Gerald Takase, Deputy Corporation Counsel Ivan Torigoe, Property Management Specialist Stanley Iwamoto, and several members of the Legislative Auditor's Office. It was revealed that the total number of requests to donate lava-inundated land totaled 23 out ofa total of 1,952 lava-inundated properties or a mere L l8%. Moreover, the County does not foreclose or place liens on delinquent lava inundated properties because an inordinate amount of time and money is spent with little or no return. The benefits of holding on to 19 County properties as a public policy was also discussed and it was thought that creative disposition for example, selling the properties through the Internet was possible. 3 Present-Conclusion: Given the foregoing, it was decided to forward the bill and forego trying to set criteria for the acceptance of donated lands. The proposed bill addresses the main problem the County has been having with the donated land issue: namely, no clear and consistent step-by-step procedure in place to respond to landowner requests to donate lands to the County. The attached bill lays out an orderly process for reviewing donated land proposals. Once the proposed bill is passed. the County will have the mechanism to deal with the remaining six properties by at least letting the property owners know that a process has been established and, therefore, a decision about their requests would be forthcoming. Att. 4