HomeMy WebLinkAboutBIL 323 Draft 03 2006-2008COUNTY OF HAWAII
STATE OF HAWAII
BILL NO. ~~~
(DRAFT 3)
ORDINANCE NO.
AN ORDINANCE AMENDING CHAPTER 19, ARTICLE 7, SECTIONS 19-53, 19-58.1 AND
19-58.2, HAWAII COUNTY CODE 1983 (2005 EDITION, AS AMENDED), RELATING TO
REAL PROPERTY TAXES-NONSPECULATIVE RESIDENTIAL USE.
BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAI`L•
SECTION 1. Purpose. The council finds that the nonspeculative residential use program is
no longer needed due to the following: (1) the current three percent cap on assessed valuation in the
homeowner class, (2) the surge in real property valuation upon renewal, and (3) its very limited
usage. The surge in real property valuation has caused the nonspeculative residential use dedicated
assessment value to increase substantially even though it would still be below market value. The
intent of the nonspeculative residential use program is to protect the homeowner from excessive real
property valuation increases if they agreed not to sell their property during their dedicated period.
The nonspeculative residential use homeowner would be allowed to convert into the homeowner
class program without penalty through September 1, 2009; however, for those who choose to remain
in the nonspeculative residential use program, renewal petitions will continue to be accepted subject
to section 19-58.1(c). When the final nonspeculative residential use participant has been converted,
the nonspeculative residential use program will be repealed.
SECTION 2. Chapter 19, article 7, subsection 19-53(g), Hawaii County Code 1983 (2005
Edition, as amended), is amended to read as follows:
"(g) Limitation on homeowner assessment.
(1) For properties in the homeowner class as of January 1, 2004
and not dedicated to nonspeculative residential use, the
assessed value of the property shall not increase more than
three percent per tax year tax until the parcel is sold or any
portion thereof sold by way of conveyance which is subject to
conveyance tax under terms of chapter 247, Hawaii Revised
Statutes, at which time the property will be assessed at market
value. In addition to the three percent limit of this subsection
any improvements undertaken on the property within the tax
year shall be assessed at market value. All parcels entering this
class after January 1, 2004 shall have the assessed value as of
January 1 of the following year and be subject to the above
provisions.
(2) Those properties dedicated to nonspeculative residential use as
of January 1, 2004 may [^^~o==ti==~:~] terminate the dedication
without imposition of retroactive taxes upon filing and
approval of petition for such termination with the director of
finance by September 1, 2009 [^F'''° °°°~ F^"^•°~~^ ° °^'•~°~'
^r~-a"ns-sew=] Upon termination of the dedication these
properties shall be assessed at the market value and subject to
section 19-53(g)(1).
(3) Those properties dedicated to nonspeculative residential use as
of January 1, 2004 may continue the dedication and upon
termination of the dedication period the parcel shall be
assessed at the market value and the year following the
termination be subject to section 19-53(g)(1) unless the
dedication is renewed as provided in section 19-58.1.
~4) Those properties dedicated to nonspeculative residential use as
of the effective date of this ordinance may terminate the
dedication without the imposition of retroactive taxes upon
filing and approval of petition for termination of dedication
with the director of finance by September 1, 2009.
For properties with an effective date of dedication
prior to July 1, 2005, or renewals after July 1, 2005, the
assessed value shall be the market value at Januarv 1, 2004
and increased compounded annually three percent; and for
properties with an effective date of dedication afrer.July 1,
2005, the assessed value shall be the market value at the
effective date of dedication and increased compounded
annuals by three percent as set in the table below rounded to
the nearest hundred dollars of assessed value:
Effective Date of Market Value at Assessed Value
Dedication Multiplier
Prior to July_l, 2005 Januarv 1, 2004 1.1941
Julv 1, 2005 Januarv 1, 2005 1.1593
July 1, 2006 Januarv 1, 2006 1.1255
Julv 1, 2007 Januarv 1, 2007 1.0927
July 1, 2008 Januarv 1, 2008 1.0609
(51 Paragr~hs 19-53(Q)(2), (3), (41 and (5) shall be repealed upon
the final participant in the nonspeculative residential use
program being converted as provided above."
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SECTION 3. Chapter 19, article 7, sections 19-58.1 and 19-58.2, Hawaii County Code
1983 (2005 Edition, as amended), are amended to read as follows:
"Section 19-58.1. Certain lands dedicated to nonspeculative residential
use. Only renewal petitions will be accepted.
(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
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 parcel assessed in the manner provided by
section 19-58.2, except that a husband and wife, although living
separate 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, except
as otherwise permitted in sections 19-71(a) and (b). 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.
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(t~]~ In the case of a renewal which immediately follows an expiring term,
the assessment base for the new five- or ten-year 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 mazket
valuation as of January 1, 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 termination of the
dedication after September 1, 2009 or other unauthorized termination,
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 parcels, 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,
or
(G) The dedication shall not be cancelled if the lessee
purchases the leased fee interest from the lessor.
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(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 [(#)]~d,)(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 [(~]~(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. [for,
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(fl Only renewal petitions will be accepted. Section 19-58.1 shall be
repealed upon the final participant in the nonspeculative residential use
program being converted as provided in subsection 19-53(g).
Section 19-58.2. Nonspeculative residential use assessment.
Properties approved by the director for dedication to nonspeculative
residential use shall be assessed for real property tax purposes in the following
manner:
(a) Property, approved for nonspeculative residential use dedication, shall
be assessed for real property tax valuation purposes on its market
value as of the assessment date January 1 of the calendar yeaz
following the petition approval. This assessment shall be frozen for the
dedicationperiod, except for adjustments as provided for in this
section.
(b) Upon approval by the director of succeeding dedications by the owner
of the same property, the assessed valuation shall continue to be
assessed in accordance with the provisions of section 19-58.2(a).
(c) If any improvements are undertaken on the dedicated property, and
such improvements increase the market value of the dedicated
property, the assessment shall be increased based on the market value
of the improvements undertaken, however, the assessed valuation for
ensuing tax years shall be determined in accordance with the
provisions of section 19-58.2(a).
(d) If any improvements are undertaken on the dedicated property, the
owner shall obtain the required building permit for the construction of
new or additional improvements or renovations of the dedicated
property. Violation of this reporting requirement will result in
cancellation of the dedication and activate payment of retroactive taxes
and penalties.
(e) In the case where additional dwelling units are constructed or a single-
family dwelling unit is renovated or converted into a two or more
family dwelling unit all in accordance with article 6, chapter 25,
Hawaii County Code of 1983, as amended, the dedication shall not be
cancelled provided the owners within sixty days of the change submit
a written [aggkcatiee] etp ition to continue the dedication and file the
claim for home exemption and the owners would continue to be
eligible for the home exemption. If the owner fails to submit the
written [applieatiee] etition in a timely manner or uses the additional
dwelling units or renovated areas for rental orincome-producing
purposes the dedication shall be cancelled and the retroactive taxes
imposed.
(f) If the dedicated property loses the home exemption under which it was
dedicated, or if the dedicated property or any portion thereof is sold by
way of a conveyance which is subject to conveyance tax under the
terms of chapter 247, Hawaii Revised Statutes, the dedication shall be
deemed breached. Occupancy of a separate living unit by an
immediate family member is permissible under this section and is not
considered a breach of dedication provided all other provisions are
met. For the purpose of this section immediate family is defined as:
parents, brothers, sisters, spouses, children, parents-in-law,
grandparents, and grandchildren.
(g) Retroactive assessments shall be imposed upon the breach of the
dedication. The retroactive assessment shall be calculated as the
cumulative difference between the amount that should have been owed
without the dedication less the amount actually paid for each of the
years deemed to be in breach plus penalty at a rate often percent. If
the dedicated property is sold, the retroactive assessment for that year
shall be calculated as the difference between the dedicated value and
the higher of either the actual selling price or the value of the property
at its actual use. In the case of properties dedicated to nonspeculative
use, notice of assessment as prepared under section 19-27 shall
delineate the dedicated value and market value, beginning tax year
1993-94.
(h) Section 19-58.2 shall be repealed upon the final participant in the
nonspeculative residential use program being converted as provided in
subsection 19-53(¢1."
SECTION 4. Severability. If any provision of this ordinance, or the application thereof to
any person or circumstance is held invalid, the 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. Material to be repealed is bracketed and stricken. New material is
underscored. In printing this ordinance, the brackets, bracketed material, and underscoring need not
be included.
SECTION 6. This ordinance shall take effect upon its approval.
INTRODUCED BY:
~~
CO L MEMBER, COUNTY OF HAWAII
Hawaii
Date of Introduction:
Date of 1st Reading:
Date of 2nd Reading:
Effective Date:
REFEftcNCE: Carvn. 1326,7
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