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Home My WebLink AboutCOM 0175.001 2002-2004 AARON S. Y. CHUNG °"'vw Tel: 808 961-8396 Councilmember ~ Fax: (808) 961-8912 ..~~M'+ COUNTY COUNCIL County of Hawai 7 Hawaii County Building 25 Aupuni Streer Hrlo. Hawaii 967?0 May 5, 2003 MEMORANDUM TO: James Y. Arakaki, Chair, and Council Mem rs FROM: Aaron S. Y- Chung, Chair, Finance Commi tee • SUBJECT: Summary Report: Properh~ lax Rei~enues~-om Premnim Resort-Residential Ilomc.c and Condominiums rrt West /lax~ar'i The attached report, titled /'roperfi 7a_c ItevcnuesJi-om Premium Resor!-Residentia/Homes and Condominiums rrr West lfa:rai'i was prepared by Dc Bruce S. Plasch, president of Decision Analysts Hawaii, fnc. tier the Hawxi`i Leeward Planning Conference (HLPC). As a summary analysis, it offers valuable insight into both current property tax collections and forecasted (2008) revenue derived from West Hawaii resort-residential projech:. The report also provides estimates for County-funded services and economic impacts associated with these projects. At tomorrow's Finance Committee meeting, Dr. Plasch and John Ray, president of HLPC, will offer a presentation based on the findings of their report. Their report illuminates the implications of recent construction and sales activity in West Hawaii and its prospectus in coming years. f commend it for your thoughtful reading, reflection, and policy-making analysis. AC/rf cc: Mayor Harry Kim Dixie Kaetsu, Managing ~IreClOr William Takaba, Finance Director Attachment 'j~ r.xenr~q ~ Ref. o: Ref. Uate MA._.- Y PROPERTY T,9X REVENUES FROM PREMIUM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WEST HAWAI ~I Decision Analysts Hawaii, Inc. PROPERTY TAX REVENUES FROM PREMIUM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WEST HAWAI ~I PKCPARl7 ~ !Y)K: Hawaii Leeward Planning Conference ~~xi i~nxrn HY: Decision Analysts Hawaii, Inc. May 2003 CONTENTS 1. INTRODUCTION 1 a Content and Purpose I b. Resort-Residential Projects I c. Types of Units 1 d. Methodology 1 e. Organization 2 2. NUMBER OFRESORT-RESIDENTIAL UNITS, BY TYPE 2 a. Existing Units, 2003 3 b. Planned Units, 2003 to 2008 3 3. AVERAGE PER-UNIT TAX ASSESSMENTS AND PROPERTY TAXES 3 a. Homes and Home Lols 3 b. Condominiums and Lfnbuilt Condominium Units 4 c. Typical Homeowner 4 4. TOTAL PROPERTY TAXRF;VENUES ....................4 5. ECONOMIC BENEFITS OFRESORT-RESIDENTIALDEVELOPMENT 5 a. Property Tax Revenues versus Support Costs 5 b. Contribution to Economic Development 6 c. Additional State and County Revenues 8 6. RISK OF LOSING RESORT-RESIDENTIAL TAX REVENUES AND PLANNED DEVELOPMEN~i 9 a. Risk of Losing Tax Revenues Because of Lower Income Tax Rates........ 9 b. Risk of Losing Planned Resort-Residential Development Due to High Property Tax Rates 10 7. SUMMARY 10 8. REFERENCES 10 ii FIGURES 1. Number of Premium Resort-Residential Units in West Hawaii, >,y Type of Unit: Existing (2003) and Planned (2003 to 2008) Units 2. Average Annual Property Tax Revenues, by Type of Premium Resort- Residential Unit in West Hawaii: Existing (2003) and Planned (2003 to 2008) Units 3. Total Annual Property Tax Revenues from Premium Resort-Residential Homes and Condominiums in West Hawaii: Existing (2003) and Planned (2008) Units TaBLES I. Rea] Property Taa Rates, by County: 2003 2. Existing (2003) Premium Resort-Residential Housing Units in West Hawaii: Property Tax Assessments and Revenues 3. Planned (2003 to 2008) Premium Resort-Residential Housing Units in West Hawaii: Property Tax Assessments and Revenues 4. Economic Impacts of Premium Resort-Residential Development in West Hawaii: Existng (2003) and Planned (2003 to 2008) iii PROPERTY TAX REVENUES FROM PREMIUM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WEST HAWAhI 1. INTRODUCTION a. Content and Purpose This report summarizes current (2003) and planned (2003 to 2008) property tax revenues derived from premium resort-residential homes and condomini- ums in West Hawaii. Estimates are also provided for the cost of County sup- port services, and for the economic impacts of resort-residential development. The purpose of the report is to illustrate the tax and economic benefits that accrue to the County of Hawaii from these projects. b. Resort-Residential Projects The resort-residential projects include single-family homes and condomini- ums associated with the following developments in West Hawaii: the Mauna Kea Resort, Mauna Lani Resort, Waikaloa Beach Resort, Puako Beach Lots, Kau- palehu, Hualalai Resort, Kukio, and Hokulia. c. Types of Units The projects include six types of resort-residential units: single-family homes occupied by homeowners (owner-occupied homes), vacation homes and second homes, lots for sngle-family homes, owner-occupied condominiums, vacation condominiums and second condominiums, and condominium units that have been platted but are not yet constructed. d. Methodology Pro~ertv-Tax Revenues Estimates of 2003 property tax revenues are based on preliminary assess- ments from the County of Hawaii. Since the assessments are preliminary, the results of the analysis are subject to small changes that could occur from chal- lenges to assessed values and/or correction of possible errors. Projected tax revenues are based on (1) the number of units planned by developers over the next 5 years; (2) assessed property values of comparable projects, with no adjustment made for inFlation; (3) the 2003 average for the per- centage of built owner-occupied units; (4) the 2003 average exemption for 1 PROPEKTY TAX REVENUES FROM PREMIUM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WEST HAWAII 2 homeowners; (5) applicable property tax rates; and (6) adjustments for property taxes paid on unimproved land. Property throughout Hawaii is assessed at the estimated market value. The net taxable value of the property is the assessed value less exemptions. For property owners who occupy their unit (owner-occupants), the "homeowner exemption" is $40,000 for individuals up to age 60, $80,000 for ages 60 to 69, and $100,000 for ages 70 and older. Other exemptions are available for individuals who are blind, for Hansen's disease patients, and for totally disabled veterans. Homeowner exemptions are available to owner-occupants only. Table 1 shows property tax rates per $1,000 in net taxable value for all coun- ties and for various classes of property. The "hotel and resort" class is included in the table since it includes some resort-residential projects. Cost of County Services Estimates of the cost of County services are based on (1) the estimated num- ber of occupants of resort-residential units and (2) the average cost of provided County services to all residents and visitors. The estimate is high since owners of resort-residential units do not require many of the County services provided to typical residents (see Section 5.a). Economic Impacts Estimates of economic impacts are based on (])the estimated annual expen- ditures for construction, (2) the estimated annual expenditures by occupants of built units, (3) economic multipliers from the State's input-output model, and (4) discounting of indirect impacts by 25~~ to account for the fact that some goods and services come from Oahu. e. Organization The results of the analysis are summarized in three figures, four tables, and accompanying text. Figure 1 summarizes the amount of existing (2003) and planned (2003 to 2008) premium resort-residential development in West Hawaii. Figure 2 summarizes the average annual property tax revenues for each type of existing and planned unit. Figure 3 summarizes the total amount of property tax revenues derived from the resort-residential projects in 2003, and the projected revenues for 2008. Property tax rates are summarized in Table 1. Supporting data for the fig- ures are provided in Tables 2 and 3. Table 2 gives information on the existing (2003) amount of premium resort-residential property in West Hawaii, and the assessed properh values and property taxes. Table 3 provides similar informa- tion for projects planned over the next 5 years. Table 4 summarizes the eco- nomic impacts of resort-residential development. PROPERTY TAX REVENUES FROM I NEMIUM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WEST HAWAI'[ 3 2. NUMBER OFRESORT-RESfDENTIAL UNITS, BY TYPE The number of existing and planned premium resort-residential units in West Hawaii is summarized in Figure ] by type of unit; further detail is pro- vided in Tables 2 and 3. a. Existing Units, 2003 In 2003, the listed West Hawaii projects contained about 2,280 existing or platted resort-residential homes, condominiums, and lots, of which: - about 41%~ were homes or lots for homes, and 59~4~ were condomini- ums or platted but unbuilt condominium units; and - about 3% were owner-occupied units, 51% were vacation homes or second homes (mduding both single-family and condominiums), and 47%, were vacant lots or unbuilt condominium units. Of the built units, about l0io of the homes and 4% of the condominiums are owner-occupied. b. Planned Units, 2003 to 2008 From 2003 to 2008, an additional 1,550 resort-residential units are planned-an increase that will bring the total count to about 3,830 units, or 68`%, more than in 2003. Built units will increase by an estimated 1,400 units, which will bring the total count to about 2,615 units or 115% more than in 2003. Of the planned units, about 45% will be homes and 55 Jo will be condomini- ums. Also, about 6% will be owner-occupied, 84% will be for vacation or second-home use, and 10~b will be vacant lots or unbuilt condominium units. 3. AVERAGE PER-UNIT TAX ASSESSMENTS AND PROPERTY TAXES For each type of resort-residential unit, the current and projected average property-tax revenues are summarized in Figure 2; further detail is provided in Tables 2 and 3. a. Homes and Home Lots In 2003, resort-residential owner-occupied homes have an average assessed value of about $2.5 million; the average homeowner exemption is about $61,600; and the average property tax is about $]3,300 per year. Second homes and vacation homes have an average assessed value of about $2.9 million, and the average property tax is about $27,800 per year. Improved lots have an average value of about $1.2 million on which owners pay an average of about $12,100 per year in property taxes. PKUPEKTY TAX REVENUES FKUM PKEMIUM RESORT-RESIDENTIAL HOMESAND CONDUMI NIUMSIN WEST HAW AI~1 4 Based on project plans, new units will have higher average values and own- ers will pay higher property taxes. b. Condominiums and Unbuilt Condominium Units In 2003, resort-residential owner-occupied condominiums have mi average assessed value of about $790,100; the average homeowner exemption is about $77,200; and the average property tax is about $4,000 per year. Second condo- miniums and vacation condominiums have an average assessed value of about $806,100, and the average property tax is about $7,900 per year. Platted but unbuilt condominium units have an average value of about $61,400 on which owners pay an average of about $600 per year in property taxes. Based on protect plans, new units will have higher average values and own- ers will pay higher property taxes. c. Typical Homeowner As indicated at the bottom of Figure 2, a typical owner-occupant of asingle- family home on the Big lsland pays less than $900 per year in property taxes. This is based on an assessed value of about $200,000, a homeowner exemption of $40,000, and the "homeowner" tax rate of $5.55 per $1,000 in net taxable value. 4. TOTAL PROPERTY TAX REVENUES Total property-tax revenues for the premium resort-residential housing units in West Hawaii are summarized in Figure 2 for 2003 and 2008; Further detail is provided in Tables 2 and 3. In 2003, total property tax revenues derived from premium resort-residen- tial units in West Hawaii amount to about $22.3 million per year, or about 21% of all property tax revenues on the Big Island. In comparison, the premium- quality hotels and associated commercial areas and golf courses in West Hawaii pay about $S million per year in property taxes. Thus, the premium resorts in West Hawaii and associated developments pay more than $30 million per year in property taxes ($22.3 million + $8 million). By 2008, property tax revenues from resort-residential developments are projected to grow to about $55.5 million per year. Excluding current property taxes from existing projects and from unimproved land for planned projects, the 5-year increase in annual property tax revenues from new resort-residential development is estimated at about $26.7 million. PRUPEKTY TAXBEVENUES FROM PREMIUM RESORT-RESIDENTIAL f TOMES AND CONDPMI NIUMS IN WES9' HAWAII 5 5. ECONOMIC BENEFITS OFRESORT-RESIDENTIALDEVELOPMF,NT As discussed below, resort-residential development provides substantial economic benefits to the County, including but not limited to high property tax revenues. a. Property Tax Revenues versus Support Costs As shown in Figure 3, existing and projected total property tax revenues from resort-residential properties are substantial: $22.3 million per year in 2003, plus an additional $26.7 million per year by 2008. The total revenues are sub- stantial because of: - the large number of existing and projected resort-residential units (see Figure 1); - very high property values for most units (see Tables 2 and 3); - the low percentage of homeowners who qualify for homeowner exemptions (about '10~, of the built homes and about 4`fo of the built condominiums, with an exemption of $40,000 to $100,000, depending upon age); - the high property tax rate for properties that are not occupied by homeowners ($9.10 or $9.85 per $1,000 of taxable value versus $5.55 for homeowners); and - the resulting high average property tax for each type of unit (see Fig- ure 2). A further advantage of resort-residential development is that they provide a steady and predictable stream of property tax revenues to the County. This contrasts with revenues from State excise taxes, income taxes, transient accom- modations taxes, and many other taxes which decline during recessions. The offsetting costs to the County to support resort-residential development are small in comparison to the costs for typical residential developments on the Big Island. These lower County costs are due to the following: - Resort-residential developers fund most or all of the building costs for (1) infrastructure improvements (roads, water systems, wastewa- ter systems, etc.), and (2) many recreational facilities (golf courses, tennis courts, spas, fitness centers, swimming pools, picnic areas, etc.). - Resort-residential community association dues cover the cost of (1) maintaining local roads; (2) operating and maintaining waste-water systems; (3) operating and maintaining recreational facilities; and (4) providing on-site security. PKOPERTY TAX REVENUES FROM PREMNM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WEST HAWAY~ - The comparatively low occupancy rates result in a lower demand for County services, especially for second homes that are used only occa- sionally. - Most residents are comparatively wealthy, so require little govern- ment assistance. - Most occupants are retirees and visitors who are less likely to travel offsite during heavy rush-hour traffic periods, and so are less likely to add to the demand for additional road capacity. - No government services are required for the many empty lots and unbuilt condominium units. A high estimate of County expenditures to support resort-residential units is $1.4 million per year for existing projects (about 6% of property-tax revenues), and about $19 million per year for planned projects (about 6J of revenues). These cost-estimates are based on (1) 35% and 60% average occupancy for built homes and condominiums, respectively; (2) 3.5 and 2 people per occupied unit for homes and condominiums, respectively; and (3) and County support expen- ditures of $1,133 per person, which is a high estimate based on the County aver- age for all residents and visitors. Thus, property-tax revenues from resort-residential projects exceed support expenditures by $20.8 million per year for existing projects ($22.2 milhon - $1.4 million) and $25 million per year for planned projects ($26.7 million - $17 mil- lion). In effect, resort-residential projects provide substantial tax revenues to subsidize support services to other Big lsland residents and visitors. b. Contribution to Economic Activity As explained below and summarized in Table 4, construction and operation of resort-residential units contribute greatly to expanded economic activity on the Big Island. Construction Activity Between 2003 and 2008, the construction of resort-residential homes and condominiums is projected to average about 280 units per year (derived from Pigure 1 and Table 3). Assuming construction costs that average about $1.2 mil- lion for homes and $700,000 for condominiums, and based on economic multi- pliers from The Hawaii Input-Output Study, the resulting economic activity on the Big Island between 2003 and 2008 is projected to average about: - $255 million per year in construction activity, - $184 million per year in indirect sales of goods and services in sup- PROPERTY TAX REVENUES FROM PREMIUM RESORT-RESIDENTIAL. HOMES AND CONDOMINIUMS IN WEST HAWAI ] 7 port of construction activity and construction workers, - 2,300 construction jobs, - 2,000 in indirect jobs in support of construction activity and construc- tion workers, and - $191 million per year in payroll. A further advantage of resort-residential development is that the construc- tion of a great many individual units and projects supports construction activity that is steadier over time than are projects involving a small number of large hotels. Furthermore, resort-residential homes are generally built by smaller Big Island contractors; while major hotels are often built by larger off-island contrac- tors. Operations Once constructed, resort-residential units are generally occupied by retirees and visitors who purchase goods and services that contribute to Big lsland sales, employment and wages. Expenditures cover: home maintenance, home improvement and repair; yard maintenance; utilities; home furniture and equip- ment; housekeeping supplies; food and beverages; restaurants; clothing; per- sonal services; vehicle purchases; fuel; vehicle services; medical services; legal services; accounting services; insurance; entertainment; charity contributions; eta In turn, the stores and workers who provide these goods and services pur- chase goods and services that contribute to additional Big Island sales, employment and wages. Thus, the resulting jobs are scattered throughout the Big [sland economy, and range from entry-level to highly paid positions. As shown in 'Table 4, estimates of economic activity generated on the Big lsland by occupied resort-residential units are: - $107 million per year in expenditures by occupants in 2003, i~nereasing by an additional $124 million per year by 2008; - $59 million per year in indirect sales of goods and services, increasing by an additional $67 million per year by 2008; - 1,700 jobs, increasing by an additional 2,000 jobs by 2008 ;and - $49 million per year in payroll in 2003, increasing by an additional $56 million per year by 2008. These estimates are based on (7) 35%, and 60% average occupancy for built homes and condominiums, respectively; (2) 3.5 and 2 people per occupied unit for homes and condominiums, respectively; (3) expenditures of $200 per person per day; and (4) economic multipliers from The Hawaii Input-Output Study. PROPERTY TAX REVENUES FROM PKEMNM RESORT-RESIDENTIAL HOMES AND CONDOMINNMS IN WEST HAWAII $ The economic contribution provided by the expenditures of resort-residen- tial occupants is similar to that provided by the expenditures of visitors who stay in hotels. However, their economic contribution is likely to be more stable than that from hotel visitors, since owners of resort-residential units are likely to occupy their units even during economic downturns. ~ Potential for New Economic Opportunities Many of the owners of resort-residential units are entrepreneurs, investors, members of the high-technology business community, etc. Accordingly, they have access to other leaders in their field, others in the business community, and to investment capital. Their entrepreneurial spirit, knowledge, and busi- ness connections offer a potential for significant economic development on the Big Island in fields that can help diversify the economy. c. Additional State and County Revenues In addition to the property taxes paid by owners of premium resort-residen- tial units, additional taxes and other revenues are generated by a variety of taxes and fees applicable to the expansion of economic activity generated by the construction of resort-residential units and by the expenditures of the occupants of these units. These taxes and fees include the following: - State • General Excise Tax on gross sales income • Use T ax on the value of imported goods • Personal Income Tax on net income of individuals • Corporate Income Tax on net income of corporations • Visitor Accommodations Tax on gross income from short-term rents • Publ is Service Companies Tax on gross income of utility companies • Bank and Other Financial Corporations Tax on net income of financial companies • Insurance Premiums Tax on gross premiums • Fuel Tax on gallons sold • Environmental Response Tax on quantity of petroleum product sold to retail dealer or end user • Motor Vehicle Weight Tax on the weight of a vehicle • Rental Motor Vehicle and Tour Vehicle Surcharge Tax based on passenger days of rental for cars and monthly tax for buses PROPERTY TAX REVENUES FROM PREMIUM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WEST HAWAII 9 • Liquor Tax on quantity sold • Tobacco Tax on quantity sold • Estate and Transfer Tax on shares of net estates • Conveyance Tax on the value of property transferred • Charges for various licenses, permits, and services - County • The County share of the State Visitor Accommodations Tax • The County share of Public Service Companies Tax • Public Utility Franchise Tax on gross operating income of certain utilities (electric and gas companies) • Puel Tax on quantity sold • Motor Vehicle Weight Tax on the weight of the vehicle • Charges for carious licenses, permits, and services 6. RISK OF LOSING RESORT-RESIDENTIAL TAX REVENUES AND PLANNED DEVELOPMENT a. Risk of Losing Tax Revenues Because of Lower Income Tax Rates As noted in Section 5.a, relatively few owners of resort-residential units (about 10°Jo of the built homes and about 4°~ of the built condominiums) qualify for homeowner exemptions. As a result, most owners do not benefit from the $40,000 to $100,000 homeowner exemption. Also, these owners are subject to higher property tax rates: $9.10 or $9.85 per $1,000 of taxable value versus $5.55 for homeowners (Table 1). Many of these property owners may deliberately choose to declare a home in another state us their primary residence because the individual income tax rates are lower. Even though they may pay higher property taxes in Hawaii because of the declaration, they pay lower state income taxes in their home state. In these cases, the County benefits from Hawai'i's comparatively high State income tax rates. However, if the State were to lower the income tax rates, this could result in more property owners declaring their home in Hawaii as their primary resi- dence. In turn, this could cause a reduction in property tax revenues for the County from resort-residential homes and condominiums. PROPERTY TAX REVENUES FROM PREMIUM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WEST HAW AI'L l0 b. Risk of Losing Planned Resort-Residential Development Due to High Property Tax Rates As shown in fable 1, non-homeowner tax rates are significantly higher for Hawaii County i ompared to the other counties. This largely reFlects the fact that residential homes and condominiums on the Big Island have lower values than do similar properties on the other islands. Thus, higher tax rates are required on the Big island in order to generate the same tax revenues from simi- lar homes and condominiums on other islands. However, the higher Big Island tax rates could cause some potential buyers of high-value resort-residential properties to favor other islands that have lower property tax rates. For example, the property tax on a $3 million resort-residen- tial home is more than $12,000 per year higher on the Big island than it is on Kauai or Maui; over 10 years, the difference in property tax amounts to over $120,000 (about d% of the $3 million home value). While many buyers of $3 million homes may consider this additional tax to be affordable, some may avoid the additional cost by choosing to buy on another island. 7. SUMMARY Premium resort-residential homes and condominiums in West Hawaii pro- vide substantial economic benefits to the the Big Island. In particular, high property taxes far exceed support services. Also, construction activity and expenditures by occupants of the units contribute to economic growth and employment. S. REFERENCES DBEDT. l~he Statr of Hazuai'i Data Rook. Annual. Department of Business, Economic Development and Tourism (DBEDT), State of Hawaii. 1'he Hazoai'i Input-(>utput Study: 7997 RenehmarkKeport. March 2002. Department of Finance, County of Hawaii. "Summary of Revenues and Appropriations by Funds." Annual. Department of Finance, County of Hawaii. Property-tax data. Tax Foundation of Hawaii. "Taxes in Hawai'i." Annual. I~he Hallstrom Group. "Summary Economic Impact Analysis and Public Costs/Benefits Assessment Associated with Development of 2,000 Luxury PRUPEKTY TAX REVENUES FROM PREMIUM RESORT-RESIDENTIAL HOMES AND CONDOMINIUMS IN WES"C HAWACI 11 Homes in Hawai'i." Findings, Nov. 14, 2001. West Hawaii resort-residential developers. Proprietary development plans. Figure 1. Number of Premium Resort~Residential Housing Units in West Hawaii, by Type of Unit: Existing (2003) and Planned (2003 to 2008) Units i I Owner-occupied single- 19 III family homes ' 6 I 1~3 Vacation and second homes 527 ~I 758 I Lots for single-family homes 102 III ICI I Owner-occupied ~ ~ ~ condominiums 32 I I I' I I I Vaation and second 992 condominium homes ~ - - ' 1178 I I 306 ' Unbuiltcondominiumunits 5 - 100 200 300 400 500 600 700 000 900 1,000 1,100 ?__Existing Units, 2003 ? Planned Units, 2003 to 2008 Figure 2. Average Annual Property Tax Revenues, by Type of Premium Resort•Residential Housing Unit in West Hawaii: Existing (2003) and Planned (2003 to 2008) Units Owner-occupied single-family f1 ,347 homes •~:'„^f,r`=~~~~~.'~°~,~, ~`~,ar,~r 816,44 $27,803 Vacation and second homes # r''' : a-.: .t , $9,817 I $12,0 Z II Lota for single-family homes ~I a`,,"~, ~ry.,• ~r~~,,:.-.~>„~~a~s,~.°~~~~f'.r .r,¢p.~` S 8694 a' . i I Owner-occupied $3,957 ' condominiums r,r," $4,665 li - i i Vacation and second $7,40 condominium homes = ~.,~~e;:~',..°'~'r':~~ 9.098 r i I I I $605 li Unbuilt condominium units r I Typical residential home $888 ~I, occupied by homeowner S- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 ? Existing Units, 2003 ? Planned Units, 2003 to 2008 'i Figure 3. Total Annual Property Tax Revenues from Premium Resort•Residential Housing Units in West Hawaii: Existing (2003) and Planned (2008) Units 5 million per year 560 555.5 Current, Unimproved 56.6 Land 550 Comment: County support services for premium resort-residential units amount to about 6%of property tex revenues from these properties. Sao - - New f26;7 530 - - _ _ - 520 - Current, Resort- 510 522.2 _ _ Residential 522.2 (2f%oTtotal property tax revenues for the Counyl 5- - 2003 2008 Table 1. Real Property Tax Rates, by County: 2003 (Tax rate per $1,000 of net taxable value) Hawaii Honolulu Maui Kauai Class Land Building Homeowner (Owner-0ccupied unit) $ 5.55 As below $ 3.63 As below As below N_o_n-Homeowner Improved Residential $ 9.10 $ 3.65 $ 4.93 $ 4.50 $ 5.49 or Single-Family Residential - Unimproved Residential $ 9.85 $ 4.66 $ 4.93 n.a n a. - - - - Apartment $ 9.85 $ 3.93 $ 4.93 $ 8.15 $ 8.55 Hotel and Resort $ 9.85 $ 9.96 $ 8.30 $ 8.15 $ 8.55 n.a. Not applicable. Table 2. Existing (2003) Premium Resort-Residential Housing Units in West Hawaii: Property Tax Assessments and Revenues Owner- Vacation and Lots for Homes Occupied Second and Unbuilt Item Homes and Homes and Condominium TOTAL Condominiums Condominiums Units Number of Units Homes 19 163 758 940 41° Condominiums 43 992 306 1,341 59° Total Units 62 1,155 1,064 2,281 3% 51% 47% Average par Home or Home Lot Assessed Value $ 2,466,447 $ 2,876,478 $ 1,233 517 Less Exemption $ (61,579) $ - $ - Net Taxable Value $ 2,404,868 $ 2,876,478 $ 1,233,517 Property Tax $ 13,347 $ 27,803 $ 12 072 Averageper Condominium o_ r Unit Assessed Value $ 790,123 $ 806,110 $ 61,371 Less Exemption $ (77,209) $ - $ - NetTaxableValue $ 712,914 $ 806,110 $ 61,371 Pro erty Tax $ 3,957 $ 7,940 $ 605 Total _ Assessed Value _ _ _ $ 80,837,800 $ 1,268,527,200 $ 953,785,100 $ 2,303,150,100 Less Exemptions _ _ _ $ (4 490,000) $ - $ - $ (4,490,000) Net Taxable Value $ 76,347,800 $ 1,268,527,200 $ 953,785,100 $ 2,298,660,100 Property Tax Revenues $ 423,7.30 $ 12,408,516 $ 9,335,529 $ 22,167,775 Share of Total Property 21% Tax Revenues for Coun Table 3. Planned (2003 to 2008) Premium Resort-Residential Housing Units in West Hawaii: Property Tax Assessments and Revenues Owner- Vacation and Occupied Second Lots for Item Homes and Homes and Homea and TOTAL Condominiums Condominiums Condominiums Number of Units _ Single-family Homes. Existing Lats _ _ 36 _ 292 (328) - 0°/ Single-family Homes,_Ne_w Lots 25 235 430 690 45°/ _ _ Condominiums. Existing Projects 12 294 (306) - 0°/ Condominiums, New Projects 20 484 _ 356 860 55° Total Units 93 1,305 152 1,550 - 6°k 84°k t0% Average per Single-Family Home Assessed Value $ 3,032,854 $ 2,930,215 $ 1,897,907 _ Less-Exemption_ $ (70,656) $ - $ - NetTaxableValue $ 2,962,198 $ 2,930,215 $ _ 1,897,907 Property Tax $ 16.440 $ 28,617 $ 18,694 Average per Condominium Assessed Value _ $ 912,188 $ 923,612 $ 70000 _ Less Exemption _ $ _ (71,719) $ - $ - Net Taxable Value _ $ _ _ _840,469 $ 923,612 $ _ 70.000 _ _ _ _ _ Property Tax $ 4,665 $ 9,098 $ 690 Total Assessed Value' $ 214,194,065 $ 2,262,793,251 $ 1,007.206,373 $ 3,484,193,689 _ Less Exemptions _ _ _ _ $ (6,605,000) $ - $ - $ (6,605.000) Net Taxable Value' _ $ 207,589,065 $ 2,262,793,251 $ 1,007,206,373 $ 3,477,588689 Property Tax Revenues' $ 1,152,119 $ 22,158,873 $ 9.920,983 $ 33,231,975 Less Existing Property Tax Revenues _ $ (661,368) _(5,696,893) $ (203.678) $ (6,561,939) Net Increase in Property Tax Revenues' $ 490,751 $ 16,461,980 $ 9,717,304 $ 26,670,035 'Includes anticipated adjustment to 2003 property values and taxes. In 2003., 359 lots were assessed at half value because of litigation. Table 4. Economic Impacts of Premium Resort-Residential Development in West Hawaii: Existing (2003) and Planned (2003 to 2008) Annual Item Existing Increase Average TOTAL (2003) (2003 to 2008) (2003 to 2008) (2008) Construction Sales - - Construction Expenditures $254,520,000 Indirect Sales, Bi Island $184,312,800 Total Sales, Big Island $ 438,8.32,800 Employment Construction Jobs _ 2,320 Indirect Jobs,Bi Island 1,984 _ Tota_ I Jobs, Big Island 4,304 Payroll - - - - Construction Jobs _ _ $135,485,937 Indirect Jobs,Bi Island $ 55,724,051 Total Jobs, Big Island $191,209,987 OperaGon_s _ Sales Expenditures _ $ 1.06,941,350 $123,537,900 $ 230,479,250 Indirect Sales, Bi Island $ 59,352,449 $ 68,563,535 $127,915,984 Total Sales, Big Island 166_,2.9_3,799 192,101,435 358,395,234 Jobs, Big Island 1,745 2,016 3,761 Payroll, Big Island $ 48,713,013 $ 56,272,932 $ 104,985,945 DECISION ANALYSTS HAWAII, INC. Economic and Financial Consultancy Specialty DAHI is an economic and financial consultancy that is committed to delivering high-qualit}, objecti~'e analysis to its clients established in 197), the firm specializes in the economies of E lawaii and the Pacific basin. Services • Economic Development: community, regional and island dcvclopmall; compara- tive advantages of economic activities; exports, import substitution, support activi- ties; tourism, recreation, ocean activities, agriculture, Ibrestry, ayuaculture, energy, commercial and industrial activities; infrastructure requirements; government sup- port services and incentives; economic models and forecasts. • Land and Housing Economics: development forces and patterns, forecasts, calves and rents. • Resource and Environmental Economics: resource pricing, incentives and disin- ccnticcs, valuation of externalities, and carrying capacity studies. • Market Assessments: market forces, market potential, prices, absorption races. • Project Feasibility: profitability, project financing, cash-flow anal}sis. • Valuations: leaves, businesses, contracts, lost earnings. • Economic Benefits and Impacts: employment, community benefits, demographic impacts, government revenues and expenditures • Policy Analyses: planning reports, position papers, analysis. • Expert Witness Testimony: government commissions, legislative bodies, amtest- ed-case hcanngs. court trials. Dr. Bruce S. Plasch, President • Education: - Ph.D. (1971) and '~1.5. (I966), Isnginecring-l;conomic Systems, Stanli~rd Pniversity, specializing in economics, finance, and quantilativc analysis - 13.S. (1965) i`nicctsit}~ of California, supplemented with an additional vicar of liberal arts. • Professional Experience: 13awaii-based economic and financial consultant since 1971. Contact • Mailing Address: 1f,5$ hamole Street, llonolulu, III 96831. • Office: (808) 373-936-1 Fax: (808) 3730590 E-mail: hplaschChawaii.n~.com