HomeMy WebLinkAboutORD 2000-110 1998-2000
COUNTY OF HAWAII STATE OF HAWAII
-~s_=r
BILL NO. 2 ~ 6
(Draft 3)
ORDINANCE NO.~~ 1~~
AN ORDINANCE AMENDING CHAPTER 19, OF THE HAWAII COUNTY CODF, 1983
(1995 EDITION), RELATING TO REAL PROPERTY TAXES.
BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII:
SECTION 1. The County Council deleted the public utilities tax exemptions in
Ordinance No. 99-159. The County has been pursuing revenues from the State that are collected
by the State through the public service company tax, a portion of which is collected based on the
language of the statute, collected in lieu of real property taxes. The State's position is that the
real property tax portions of the public service company tax are repealed and the County had no
standing since it had never attempted to tax the utilities. In order to tax the utilities in an orderly
and equitable fashion, the following method of valuation should be followed. In addition, the
State, County and utilities are poised to settle this matter and turn the taxing power of the public
utilities over to the County. In order to expedite an orderly assessment and collection process
while facilitating those settlement discussions, a percentage of the public utilities' gross income
as set forth in subsection (d)(1) below may be paid in the alternative by the utilities in lieu of the
assessment method as set forth in subsections (a), (b) and (c) below.
SECTION 2. Chapter 19, article 7, of the Hawai' i County Code 1983 (1995 Edition), is
amended by adding a new section to read as follows:
"Section 19-53.1. Valuation of public utilities.
Notwithstanding anv section to the contrary, the director of finance, in determining the
market value assessment of the pronertv of thepublic utilities, may use the values for real
~ronertv as set forth in the annual financial reports of the public utilities as filed with the
Public Utilities Commission~,pursuant to chapter 269, Hawaii Revised Statutes, as the
basis for the director's assessment, which shall be deemed prima facie correct. Due to the
unique nature of the public utility and its equipment, assignment of values to individual
tax map kevs is not required.
b~ For the ~umoses of this section the following definitions are also adopted:
Public utilities. Public utilities aze as defined in section 269-1, Hawai i Revised
Statutes.
l~ Outside plant. Outside plant is public utility real property predominantly
production, transmission, collection, switching, and distribution facilities, that
may consist of one or more of the following:
Units that have Qhvsical and functional characteristics that aze so similar
that they aze accounted for as a group or class and aze eg
nerally installed
on easements.
Transmission cable, wire or pipes, including support or conduit structures.
f,C~ Substation equipment.
Measuring and regulating equipment.
Generation equipment.
~ Storage equipment.
Switching equipment.
Plant, Structures. Public utility real proroertv improvements that aze not outside
plant such as buildings generating stations production plants ag s compressor
stations boilers switching_plants, dams and reservoirs, circuit equipment, radio
systems terminals, satellite facilities, storage, wells, pumping facilities, and
including those items which are included in the outside plant definition above.
u Property Property is the same as defined in section 19-53 Hawaii County Code.
~ Valuations are determined as follows:
Land Land values are determined by the mazket value approach in accordance
with section 19-53. Hawaii County Code.
Public utility real pronertv generally classed as outside plant, as set forth in
section 19-53 1(b~(21 including but not limited to, production, transmission,
collection switching or distribution substation equipment or measuring,
regulating generation, storage or switching equipment or improved roroperty is
arororaised on the basis of its r~roduction cost new less allowances for physical
depreciation functional obsolescence and economic obsolescence, if any. The
reproduction cost new is determined by multipl iYne reported inventory original
cost by anrorororiateprice indices and/or by multinlving_phvsical inventories by
appropriate unit prices The rate of depreciation is a function of the appraised
propertxs age estimated service life and salvage factor. Such determinations and
assessments of fair market value shall be made, to the extent possible, in
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accordance with the annual financial reports as filed with the Public Utilities
Commission pursuant to chapter 269, Hawaii Revised Statutes, which shall be
deemed prima facie correct. For all lands of public utilities not categorized by
section 19-53(al, Hawaii County Code, said improvements shall be taxed at a rate
assivned to the industrial classification.
Plant. Structure. The value of improvements that are plant or structure as set
forth in section 19-53.1(bl(31, includinv but not limited to, buildings, venerating
stations, vas compressor stations, switching_plants, dams and reservoirs, circuit
equipment, radio systems, terminals, satellite facilities, storaye, wells, and
pumping stations, is determined using the same methodology as is used in
appraisinv outside plant properties.
For the purpose of liens and foreclosure, any outside plant property shall be
considered a part of any system or plant to which it is a part of and to which a tax
map key_has been assiyned.
In lieu of the assessment method as set forth in subsections (al, (bl and (cl above.
a public utility except airlines, motor carriers, common carriers by water or
contract carvers taxed by section 239-6, Hawaii Revised Statutes, may_pav the
County a real property tax of such rate per cent of its gross income each year from
its public utility business as shall be determined in the manner hereinafter
provided The tax imposed by this section is a means of taxing the real property
owned b} thepublic utility or leased to it by a lease under which the public utility
is required to pay the taxes upon the property. For the purposes of this section,
vross income and net income shall have the respective meaninys given those
terms in Hawaii Revised Statutes chapter 239: provided that such vross income
and net income is from gublic utility business within the County of Hawai i.
The rate of the tax upon the gross income of the public utility shall be determined
as follows:
If the ratio of the net income of the company to its gross income is fifteen
gercent or less the rate of the tax on vross income shall be 1.885 percent:
for all companies haviny net income in excess of fifteen percent of the
gross the rate of the tax on gross income shall increase continuously in
proportion to the increase in ratio of net income to gross, at such rate that
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for each increase of one percent in the ratio of net income to @ross. there
shall be an increase of .2675 percent in the rate of the tax.
The following formula maybe used to determine the rate, in which formula the
term "R" is the ratio of net income to Bross income, and "X" is the required rate of
the tax on Bross income for the utility in question:
X=(26.75R - 2.12751%;
provided that in no case governed by the formula shall "X" be less than 1.885
percent or more than 4 2 percent Provided further that in no case shall the
application of the above rate or formula by the County, when added to the amount
of real property tax levied and assessed by the other counties usinG the same
formula in their county ordinances, result in a combined statewide real property
tax liability which is Greater than that portion of the tax liability that would have
been pa ay
ble by the public utility under Hawaii Revised Statutes chapter 239 (as
codified on August 1.20001 in excess of 4%.
The public utilities may elect to utilize the method of assessment under subsection
(dl(11 rather than the method of assessment under subsections (al. (bl and (cl by
filinG a notice of such election on or before December 31 of the year immediately
precedinG when the tax would be due with the director of finance; provided.
however that for the first tax year after the effective date of this ordinance, the
public utilities may file such notice on or before May 31, 2001. If the State of
Hawaii amends Hawaii Revised Statutes chapter 239 to decrease the tax levied
thereunder to a maximum rate of four~ercent (4%), the director of finance shall
utilize the method of assessment under subsection (d)(11 rather than the method of
assessment under subsections (al. (bl and (c) without a request from the public
utilities to do so.
l~ As the basis for calculatingthe public utility's Gross income and net income, the
County shall accept the public utility's filinn for Gross income and net income
from public utility business within the Countv of Hawaii as made to the State of
Hawaii pursuant to charoter 239 Hawai i Revised Statutes. If a public utilit} has
not allocated its Gross income and net income on a countL-bv-county basis, the
counties together with that public utility shall aeree upon a method by which
such income can be allocated amongst the counties."
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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 aze declared to be severable.
SECTION 5. This ordinance shall be effective January 1, 2001.
INTRODUCED BY:
CIL MEMBER, COUNTY O HAWAII
Hilo, Hawaii
Date of Introduction: August 23, 2000
Date oflstReading: August 23, 2000
Date of 2nd Reading: September 20, 2000
Effective Date: January 1, 2001
REFERENCE: C.omrn. 813.015
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OFFICE OF THE COUNTY CLERK
County of Hawaii
Eilo ,Hawaii
(Draft 2)
ROLL Cg1LL VOTE
AYES NOE$ ABS EX
Introduced By: Aaron S . Y . Chung Arakaki : , x I ~ i; 1
Date Introduced: August 23, 2000 Chwrg X
First Reading: August 23, 2000 Elarionoff X
Published: August 31 & September 4, 2000 ]acobson X
Leithead-Todd X
REAff1Rl:5':
Pisicchio X
Smith X
Tvlcr X
Yagong X
7 2 0 0
(Draft 3)
Second Reading: September 20, 2000
ROLL CALL VOTE:
To Mayor: September 20 2000
September 21, 2000 AYES NOES ABS EX
Returned:
January 1 2001 Arakaki X
Effective:
Published: October 2. 2000 Chung X
Elarionoff X
REdL4Rl~,S: 09/07/00 - Deferred Jacobson X
Leithead-Todd X
Pisicchio X
Smith X
Tyler X
Yagong X
7 1 1 0
I DO HEREBY ('ER7IFY that the foregoing BILL was adopted by the ('ormly Cornrci] published as
indicated above.
APP~RjOV/END AS TO
i
DE TY CORPORATION COUNSEL
COUNTY OF HAWA~II^ C ~;tli['ti~ c'/L17R1L4,V
Date 9~0/d~~ ~ ~ ,l ~
I
t'or;,v~r czr_R,~
Approredi'/B/n~nrpprr++~+ee~ this day
'20~ BiIINo.: 276(Draft 3)
GG~ G Reference: C-813.011/FC-313
YOR, COU Oh'HAWAII Ord.No.: ~1~