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Home My WebLink AboutCOM 0024.021 2012-2014Margaret Wille Council Member District 9 - North and South Kohala Hawaii County Building 25 Aupuni Street Hilo, Hawaii 96720 HAWAII COUNTY COUNCIL County of Hawai `i Holomua Center 64 -1067 Mamalahoa Highway, Suite C -5 Waimea, Hawaii 96743 Phone No. Hilo: (808) 961 -8027 Phone No. Waimea: (808) 887 -2043 Fax No.: (808) 887 -2072 E -Mail: mwille @co.hawaii.hi.us West Hawaii Civic Center Bldg. A 74 -5044 Ane Keohokalole Hwy. Kailua -Kona, Hawai'i ,96740 ca C-) - 2 TO: J Yoshimoto, Council Chair and Members of the Hawaii Coun Council FROM. Margaret Wille, Council Membe j DATE: October 30, 2014 N -- N SUBJECT: Real Property Tax Stakeholders Task Force Report I request 30 minutes to discuss the attached Real Property Tax Stakeholders Task Force Report. Please place this matter on the appropriate November 18, 2014 Committee agenda. If there are any questions please call me or my staff at (808) 887 -2043. Thank you. MW /dh att. Serving the Interests of the People of Our Island Hawai `i County Is An Equal Opportunity Provider And Employer Comm. No. °14"W Ref. To: r G Ref. Date � 2014 Margaret Wille Council Member District 9 - ,vorth and South Kohala Phone No. Hilo: (808) 961 -8027 Phone No. Waimea: (808) 887 -2043 Fax No.: (808) 887 -2072 E -Mail: mwille @co.hawaii.hi.us o n HAWAII COUNTY COUNCIL ID County of 'Hawai `i —' pw -. Hawaii County Building Holomua Center West Hawaii Civic Center Bldg. ;4 25. iupuni Street 64 -1067 Vamalahoa Highway, Suite C -5 74-5044 rine KeohMlole Hwu. -= ttilo, Hawaii 96720 lfaimea, Hawaii 96713 Koilua -Kona, llawai'i ,967747 ; N -- STATUS REPORT FROM THE REAL PROPERTY TAX STAKEHOLDERS TASK FORCE October 30, 2014 The Real Property Tax Stakeholders' Task Force met a total of 13 times with Co- Chairs Council Member Margaret Wille and Council Member Dennis "Fresh" Onishi and 3 members from the general public, Robert Price, Stewart Hussey and Al Inoue. The Task Force worked in collaboration with the Finance Department. The Task Force adopted a Statement of Task Force Goals, a copy of which is attached to this report. The focus of the Task Force was review and selective implementation of the International Association of Assessing Officers (IAAO) recommendations with an emphasis on addressing the most prominent loopholes in the County's current real property tax program. The Task Force also considered legislation referred by the Council as well as a Task Force Member initiated consideration for a real property tax program to support startup businesses. Legislation reviewed and recommended: Reviewed and amended Bill 71 regarding real property taxes, liens, foreclosures, and notice. Bill No. 71 proposes to reduce the number of years required to foreclose on a property for delinquent real property taxes from three years to two years. To provide the Administration with some flexibility on the timing of the disposition of foreclosed properties, the Task force suggested an amendment to change Section 19 -38(a) to say that properties "may" be sold rather than "shall" be sold by way of foreclosure. The Task Force supports Bill No. 71 with amendments. Bill 71, Draft 2 passed first reading at Council on 10- 15 -14. Reviewed and amended Bill 103 regarding the real property tax exemption for persons who are blind, deaf, and /or totally disabled. To be consistent with other language related to exemptions for homeowners, the Task Force suggested amending the bill to specify that the owner "is qualified for the homeowner exemption ", rather than refer only to the owner's "principle home ". The Task Force supports Bill No. 103 with the proposed changes. Bill 103, Draft 2 passed first reading at Council on 10- 15 -14. Reviewed Bill 185 regarding the addition of a "certified organic operations" agricultural classification to the list of agricultural activities in the commercial agricultural use dedication program and the non - dedicated agricultural use assessment program. While there was recognition that certified organic farming carries with it added production costs, concern was expressed that the Serving the Interests of the People of'Our Island Hawaii County Is An Equal Opportunity Provider And Employer October 30, 2014 Page 2 of 3 valuation, as proposed, would not be based on the same methodology as currently used for all other crop valuations. There was also concern the Administration would have difficulty verifying and enforcing operations comprised of both organic and non - organic farming operations. The Task Force does not support Bill No. 185. Bill 185 was withdrawn by the introducer on 9- 30 -14. Drafted and introduced Bill 256 which added the income approach as consideration in the valuation of commercial properties. Bill 256 passed second and final Council reading on 7 -2 -14. Drafted and introduced Bill 292 regarding eligibility to claim property as a principal home. Bill 292 adds an additional requirement that a Hawaii State Income Tax return be filed to qualify for the homeowners exemption, subject to exceptions for these who just recently moved to Hawaii and have not yet filed a state income tax return and for those whose income is below the minimum required to trigger the filing of a state income tax return. Bill 292 was amended to Draft 2 and passed first reading at Council on 10- 15 -14. Drafted and introduced Bill 293 regarding the filing of a claim for a home exemption from real property tax. Bill 293 intent was to increase the efficiency of the real property tax division by eliminating the one -half year application of the home exemption. Bill 293 failed to pass first Council reading on 10- 15 -14. Drafted and introduced Bill 294. Bill 294 would have increased the base property tax exemption for real property owned and occupied as a principal home by increasing the principal home exemption from $40,000 to $60,000. The finance department and Council Members voiced concern over the County's current financial situation and Bill 294 failed to pass first Council reading on 10- 15 -14. Drafted a proposed Bill regarding exemptions from real property tax by way of dedication of land to agricultural use. The Bill phases out the nondedicated agricultural use assessment program and replaces it with a short -term dedicated agricultural use assessment program. Recommendation Concerning Continuation of the Real Property Task Force: The Task Force recommends: (1) That the Task Force efforts be continued in order to address additional IAAO's recommendations, address related legislation proposed by Council members, and related Real Property Tax matters; (2) Consideration of a tax break program to encourage preservation of open space on a permanent basis, not necessarily based on agricultural activities; (3) Consideration of the State's enterprise zone program which affords real property tax relief, but which may no longer be in sync with county real property tax exemption policies; and (4) Consideration of a real property tax exemption program for startup businesses but with consideration of how the county permitting system works and how other tax programs affect start up small business. Respectfully submitted, Margaret Wille, Co -Chair Real Property "Tax Stakeholders' Task Force M W /dh Att. October 30, 2014 Page 3 of') Real Property Tax (RPT) Task Force Statement of Goals Our task force is drafting and submitting recommendations to the County Council and Finance Department on or before November 30, 2014 in order to be considered for passage prior to December 31, 2014. The recommendations are based upon the IAAO Report of March 12, 2012, priorities outlined in the Council's 2012 -2013 Ad Hoc Real Property Tax Stakeholders Task Force Committee, Council Member proposed bills and resolutions, as well as on -going public input. Our recommendations will be aimed at: y Increasing the fairness of the County's Real Property Tax program by seeking to eliminate significant tax loopholes; Identifying and recommending best property tax administrative practices currently not provided for in the County code (e.g., use of the Income Approach for commercial properties); Propose additional tax breaks as appropriate in light of savings resulting from closing tax loopholes; ➢ Identifying and recommending opportunities to enhance the cost - effectiveness and efficiency of the Real Property Tax Division; y Addressing bills and resolutions referred to the Task Force by the current County Council; and Y Developing suggestions for priorities to be addressed in 2015.