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Home My WebLink AboutCOM 0469.002 1996-1998 JNS V OF ry,~ 4~.' ~p j, " A~~~~at. A Stephen K. Yamashiro ~ Harry A. Takahashi May„r Director i f1,F Or•N~~' Cnnixixf~r u£' ~ttfuttii ` DEPARTMENT OF FINANCE-REAL PROPERTY TAX 865 Piilani Street Hilo, Hawaii 96720-4679 Fax (808) 96L8415 C'= i ~ Appraisers BOB) 961-8354 Clerical (808) 961-8201 Collections (808) 961.8282 - F-• - t September 12, 1997 To: County Clerk Thru: Francis Ouye, Acting R.P. Tax Administrator From: Wes Takai, Real Property Appraiser V Could you please include the enclosed correspondence to Comm. 469.01 which is on the Finance Committee's agenda for September 16, 199'7. encl cc: Harry Takahashi, Director of Finance Kalani Schutte, Deputy Director of Finance PSJs N~ ReC. 2n1 Pr__ e~ e~~ fed=~--~. P,cf. i3xae_ ~ 1 6 1997 r Msr or M~ b%,•~ Harr- A. Takahashi Stephen K. Yamashiro Mayor ~ ~ Director ai4:.. ` p . •ra ai-$~'tt ~IIllltfkT II~ ~M~tT2IiT DEPARTMENT OF FINANCE-REAL PROPERTY TAX 865 Piilani Srreer Hilo, Hawaii 96720.4679 Fax (808) 961.8415 Appraisers (808) 961.8354 Clerial (808) 96t-8201 - Colleaiona (808) 961.8282 September 5, 1997 To: Curtis Tyler, Councilmember Hawaii County Council Thru: S. Kalani Schutte, Deputy Finance Director From: Michael B. McCall, Acting Real Property Tax Administrator Re: Classification of Bed and Breakfasts Thank you for allowing us to respond to the letter by the Bed and Breakfast (B & B) Association. The classification of active B & B's as Hotel and Resort property was done solely to account for the activity of providing rooms for transients. We also included vacation rentals in this category. Due to the limited number of classifications available within our system, this was chosen as the most appropriate. Their first option was to be in the Homeowner's classification. Pursuant to Chapter 19, Section 19-53 (d)(2)(A), this would be impossible. This section states that the property must not be used for commercial or income producing purposes, or for any other purpose except as the owner's principal residence. Secondly they asked that a possible solution would be that only the B & B portion of tha parcel be shown as Hotel and Resort, with the rest as Homeowner. This is a possibility, if we were able to create multi-pitt parcels for them. With our current computer system this would be extremely cumbersome. It is something we definitely will be looking into when, or if, we up-grade, or change, our system. Currently we aze restricted because the system is owned and operated by the City and County of Honolulu. The next proposal asks that we tax them on an income basis. This is impossible because the County is restricted by State laws as to the types of taxation. Also it should be noted that the State assesses with additional transient taxes because of their operations. This is the same tax paid by the hotels. Finally, I would like to add that we do not increase their assessed valuations because of their B & B operation. The only change is in the classification. Based on this, only if the County zoning is residential would the actual tax rate on the land increase from $8.50 to $10.00 per thousand. I hope this explains what and why we are treating the B & B's this way. If you need any further information, please contact us. 4oJ~~V or y,K~, J. CUitTIS TYLER, III ~ 1,6rM Tel: (808) 961-8273 Councilrncmbe* Fax: (80S) 969-3291 • or~w~ COUNTY COUNCIL County of Hawaii Hawaii Country Building 25 Aupuni Street Hilo, Hawaii 96720 September 3, 1997 TO: GARY KIYOTA, Director Real Property Taz Division FROM: CURTIS TYLER, Councilmember Hawaii County Council RE: Letter from Hawaii Island B ssociation i have enclosed the attached letter from Hawaii Island B&B Association. Please provide me with your written comments and response. Thank you for your attention to this matter. "-r. ,oo Nalani tit., tiiiite 1-A Kailua-Kona, Hawaii 96740 Kona Telephone (SOS) 326-5654 Pay: B(15) ,36-;6e; HAW. fSLAND B&B ASSOCIATION PO Boz 1890 $onokaa, P.awad 96727 r. hibbaQa alohanet August 22, 1997 '97 SEP 2 Pfl 2 23 CouncilpersonTyler CC'.1;~~ CotmtyofI3awaii COUV1' u.= !i;~Vd!; 25 Aupuni St. Ht1o, HI 9672a Dear Curtis Tyler, The Hawaii Island B&B Association (li1BBA) wishes to address the recent decision made by the Property Tax Department to reclassify retidences which operate a bed and breakfast from a "homeowner" class to that of "hotel and resort". HIBBA membetahip and Board would hlce to contest this classification and be a part of the disc»ssioa in the sohrtioa of a rsc1AQ~~~h~a. The hotel and resort classification changes the tax rate for residential from 54.45 per thousand to $8.50 per thousand for budding value and 510.00 per thousand for land value. The hotel and resort classification changes agrictrhtaal land value considerably. 'This can be more than a hundred percent increase. Furthermore, there is some question as to whether the reclassification itself also causes the assessed value of the property to be viewed as more vahrable since it is now a "hotel and resort". Our concern is not just the fear of a doubling tax rate. We feel that the "hotel and resort " classification is not as appropriate label for the following reasons: Bed and Breakiasts are not hotels by County ordinance and the etrtize pernoitting process; B&Bs are primarily is areas caned resideatiat or agricultural; and some neighbors of Bbi:Bs have expressed conceits that the new classification could lead to the poss'btiity of hotels and resorts being established where they would not be appropriate. The Tax Department is working to do its job, which is to maximize tax revenues. The Planning Department and the County Codes are working to assure that in running a B&B the property is fnst and foremost a fiill-time, private residence. There is a conflict hem with the "hotel and resort" classification. We are carefiilly checked by the Planning Department to assure that the B&B activities do tmt alter or change the character of the area or the meat of the zo~rg ]avvs. Unltlce other businesses, we are unable to expand and grow. We are locked kto operating a one to five mom BBtB only. The number of moms granted is determined by the owner, permitting process and the Plarming Commission. The majority of B&Bs is our association are small, with one to three rooms. A B&B cannot Copt with a large tax increase by simply pressing another room into service. Given such circtmrstances it seems unfair to tax an entire property at a "hotel and resort" rate when we ate legally unable to utrlize it as such. A permitted B&B is unable to sell their properly as a `~wtel or resort" and can only sell it as a residence which has permission to operate a B~:B with a specific ntanber ofmoms. We feel that we have fallen between the cracks of two agencies. We would lice to help bridge the gap so that it is fair to all parties concerned. Listed below are options that would allow us to explore different ways for this problem to be solved. 1. Allow residences who operate a BdcB with all county permits to remain in the homeowners classification. . . HAWc_ 'BLAND B&B ASSOCIATION j PO Boz 1890 ' Hooolcsa, Hawaii 96727 hibba(a3alohaaet Limited research done by HIBBA members as to how Oregon, Washington and other Hawaiian counties handle this reveals that Hawaii and Oahu are the only places that have the "hotel and resort" classification. Precedent for considering the homeowners classification may ahnady exist in the Tax Code. Article 7 section 19-53(2) states that "In assigning land to one of the general classes the director of finance shall give major consideration to the districting established by land use commission... and the districting established by the county in its general plan and coning ordinance, use classifications established in the general plan of the state and such other factors wr'Il infltten<x highest and best use.. " 2. Consider evaluating residential properties with B&Bs and taxing them according to portions of the building actually used for the B&B. It seems um'air to tax the entire land as a hotel end resort The fixletai and state government does not allow land to be wnsidered for a B6i:B tax deduction. The majority of the lead in association with a BBi:B operation is used for residential purposes. Section 19-53 suggests that condos maybe evaluated in such a way. property subdivided into condominium units.... shall be classified upon consideration of its actual use lino one of the general classes in the same manner as land except that amts which have been aIlowed a home exemption for the tax year be classified as homeowner." Please note that the residences which use part of their home as a BBB are allowed a home exemption too, but under this new classification are not allowed to be classified as hotaeowner, unh'ke a condo. The idea of evaluating a property in accordance with its actual uses is also done m the case of historic residential property. Sections 19-89(c) states that "the director of finance shall determine what portion or portion9 of the real property shall be exempted from real taxes." Similar evaluations could he used to tax the homeowner, B&B property. 3. Consider using the same guidelines of taxation that the federal and state tax agencies use. Bed and Breakfasts, as small businesses, add to the local economy with guests going to local restaurants, shops and attractions. The U.S. Guest Study found that the average BBtB guest spends 533.32 a day on food and 533.11 a day on incidentals (not lodging) bringing much needed economic support to other businesses especially economically depressed areas. BBcBs ahoald be encouraged by the offflcialt of this coanty and shonW not be given a disincentive of much higher fazes if they are open, aboveboard and officially approved by the Planning Commission. We present these views in keeping wBh the General Plan, to "provide residents with opportunities to improve their quality of life" and to "give diversity and stability in its economic system", and to `provide as economic environment which allows new, expanded > or improved economic opportuffiies that are compatible with the county's natural and social envavnmem.". Mahalo for your attention. Piper McICern at 9348855 or Diane Shriner at 328-2335 are your HIBBA contacts on this issue. We look forward to hearing from you. Warm Regards,