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COUNTY OF HAWAII w : ~ ~ STATE OF HAWAII
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BILL NO. 1~6
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ORDINANCE NO.
AN ORDINANCE AMENDING CHAPTER 19 OF THE HAWAII COUNTY CODE 1983
(1995 EDITION), REAL PROPERTY TAXES, RELATING TO NONSPECULATIVE
RESIDENTIAL USE ASSESSMENT.
BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII:
SECTION 1. The purpose of this measure is to amend section 19-58.1, certain lands
dedicated to nonspeculative residential use.
SECTION 2. Chapter 19, article 7, section 19-58.1, of the Hawaii County Code 1983
(1995 edition), is amended to read as follows:
Section 19-58.1. Certain lands dedicated to nonspeculative residential use.
(a) The term "owner" as used in this section shall mean the fee owner or the lessee of real
property with an unexpired lease term of not less than [ten] five years from the effective
date of the dedication.
(b) Any owner of property who qualifies under sections 19-71 and 19-72 for home
exemption and uses the property exclusively for residential use may dedicate said
property in its entirety to nonspeculative residential use and have that pazcel assessed in
the manner provided by section 19-58.2, except that a husband and wife, although living
sepazate and apart, shall be entitled to dedicate only one parcel to the nonspeculative
residential use.
Exclusive residential use as used in this section shall not permit the owner to
conduct any commercial activities on the property. Those owners who have dedicated
their property to agricultural use or receive the benefit of the agricultural use or native
forest dedication shall not be eligible for this nonspeculative residential use dedication.
(c) Any owner who desires to dedicate property to nonspeculative residential use and to have
the property assessed in the manner established by section 19-58.2, shall so petition the
director. Upon receipt of any such petition, the director shall make a finding of fact as to
whether or not the property described in the petition is qualified for a home exemption
pursuant to the terms and conditions of sections 19-71 and 19-72. If the finding is
favorable to the owner, the director shall approve the petition and declare the property to
be dedicated to nonspeculative residential use. In order to place prospective buyers on
notice of the dedicated status and the retroactive tax liability, the petitioner shall within
sixty days of the notice of approval of the petition record the notice of dedication in
accordance with the procedures established by the bureau of conveyances. The petitioner
shall furnish the director with a copy of the recorded notice. Nonrecordation of the
notice, within the prescribed period, shall be grounds for disallowance of the dedication.
(d) Each petition for dedication shall be for [ten-year] five-vear periods. At least one
hundred eighty days prior to the cancellation, the department of finance shall notify the
owners by mail of such cancellation. The owner shall reapply for renewal of the
dedication by filing an application with the director on or before September 1 of the
[tenth] fifth yeaz. The renewal petition shall, in all respects, be processed similarly to an
original petition. Upon approval by the director of succeeding dedications, the assessed
valuation shall continue to be assessed in accordance with the provisions of the
nonspeculative residential use dedication.
(e) In the case of a renewal which immediately follows an expiring term, the assessment base
for the new five-vear dedication term shall be the dedicated value on the expiration date
plus fifty percent of the amount of increase between the dedicated value and the market
valuation as of January 1, [following] preceding the termination of the dedication term.
(f) If, during any period of dedication, any breach of the dedication requirements should
occur, the special nonspeculative residential use assessment privilege shall be canceled
and retroactive taxes shall be imposed. Breach of the dedication shall include the failure
to maintain the home exemption status of the property, violating the exclusive residential
use provision, dedicating the property to agricultural use or receiving the benefit of the
agricultural use assessment, subdivision of the property into separate pazcels, or the
declaration of a condominium property regime, or the sale of the dedicated property or
any portion thereof sold by way of a conveyance which is subject to conveyance tax
under the terms of chapter 247, Hawaii Revised Statutes. Retroactive taxes due and
owing as a result of the breach shall be a paramount lien on the property.
(1) Provided, that the nonspeculative residential use dedication shall not be breached
if the dedicated property meets the criteria as listed below:
The following also includes provisions that are not subject to the
conveyance tax under the terms of chapter 247, Hawaii Revised Statutes, and are
included for further clarification.
(A) Transferred to the owner's heirs by testacy or intestacy,
(B) Jointly owned by spouses and upon the death of one spouse ownership is
transferred to the surviving spouse,
(C) Transferred to a spouse or former spouse in connection with a property
settlement agreement or decree of dissolution of a marriage or legal
separation,
(D) Transferred to a trustee for the beneficial use of a spouse, or the surviving
spouse of a deceased transferor, or by a trustee of such a trust to the
spouse of the trustor,
(E) Subject to a title change between spouses and said change does not result
in a loss of the home exemption status,
(F) And the heirs, surviving spouse, divorced spouse, or trustee, within sixty
days after receiving title to the property, petitions the director, in writing,
to continue the dedication and the property continues to qualify for the
home exemption as defined in sections 19-71 and 19-72,
(G) The dedication shall not be cancelled if the lessee purchases the leased fee
interest from the lessor.
(2) Provided further that, except as provided herein, retroactive taxes shall not be
assessed when:
(A) A person receives title to property dedicated to nonspeculative residential
use by ways of testacy or intestacy and does not petition the director to
continue the dedication as provided in section 19-58.1(f)(1)(A).
(B) The dedicated property is jointly owned by spouses and upon the death of
one spouse, ownership is transferred to the surviving spouse, and the
surviving spouse does not petition the director to continue the dedication
as provided in section 19-58.1(f)(1)(B).
(C) The property is wholly or partially destroyed or damaged as a result of
fire, seismic or tidal wave, volcanic eruption, earthquake, flood waters and
wind or rain storm.
The owner may cancel the dedication for the reasons enumerated in
paragraph (2)(C) by submitting written notice of the cancellation within sixty days of the
damage or destruction. Cancellations shall become effective July 1 of the next tax year,
and the property shall be assessed in accordance with section 19-53(a).
(g) The director shall prescribe the form of the petition. The petition shall be filed with the
director by September 1 of any calendar year and shall be approved or disapproved
December 15 of that year.
(h) Upon approval, the dedication shall become effective July 1 of the following tax year. In
determining the assessed value, the market value shall be determined as required in
section 19-53(a). The owner may appeal any disapproved petition or cancellation of
dedication as in the case of an appeal from an assessment.
ii) Those parcels which are presently under a ten year dedication period will continue their
existin¢ dedications unless a new application for the five year dedication is made
pursuant to this section and received by the director by September 1 of the year following
enactment.
SECTION 3. Material to be repealed is bracketed. New material is underscored. In
printing this ordinance, the brackets, bracketed material and underscoring need not be included.
SECTION 4. If any provision of this ordinance, or the application thereof to any person
or circumstance, is held invalid, such invalidity shall not affect other provisions or applications
of the ordinance which can be given effect without the invalid provision or application, and to
this end, the provisions of this ordinance are declared to be severable.
SECTION 5. This ordinance shall take effect upon its approval.
INTR U BY:
COUNCIL MEMBE , COUNTI~ O HAWAII
Hilo, Hawaii
Date of Introduction:
Date of 1st Reading:
Date of 2nd Reading:
Effective Date:
REfERENCF: Comm. 394.1