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Home My WebLink AboutCOM 0645.001 2016-2018 Harry Kim •';?!..os •H ;, Deanna S. Sako � �� 4 Mayor ., 41,1747s Director - -- Nancy Crawford +r�r M:owr`` Deputy Director or to" County of Hawai Finance Department.:. 25 Aupuni Street,Suite 2103 • Hilo,Hawai`i96720 (808)961-8234 • Fax(808)961-8569 TO: Valerie T. Poindexter, Council Chair a ,5- a02 _ ER FROM: Deanna Sako, Finance Director DATE: April 20, 2018 "nn SUBJECT: Real,Property Tax Review-Working Group and Ag Committee ,*7 Attached is our second Real Property Tax Review Working Group and Ag Committee report. Recommended changes to.the CountyCode will be transmitted at a later date. If there are any questions,please contact Lisa Miura at (808) 961-8260. • Comm. No. 1/5... Ref. To:- FC_ Ref. Dote APR 2 3 2018 Hawaii County is an Equal Opportunity Employer and Provider r Nahua Guilloz, Parker Ranch (South Kohala, North Kohala, Hamakua, Kona) Riley Smith,Lanihau Properties (South Kohala,Kona) Shannon Matson, Hot Yoga Hilo (Hilo,Puna) Stephanie Donoho,Kohala Coast Resort Association(South Kohala,Hamakua) Peggy Farias, W.H. Shipman(Puna,Hilo) Jaime Ortiz-Nava, Ortiz Hawaii Real Estate Solutions LLC (Islandwide) Members from the County of Hawai`i: Deanna Sako, Finance Director Nancy Crawford, Deputy Finance Director Lisa Miura, Assistant Real Property Tax Administrator Keita Jo, Appraisal Supervisor The Agricultural committee members for the Real Property Tax Review Working Group are: Members from the general public: Mary Begier, Mary Begier Realty(Hamakua,Hilo) Chris English,Ponoholo Ranch (South Kohala,North Kohala, Hilo, Puna) William Moore, William L Moore Planning (Islandwide) Marissa Harman, Kamehameha Schools (Islandwide) Nahua Guilloz, Parker Ranch (South Kohala, North Kohala, Hamakua, Kona) Riley Smith, Lanihau Properties (South Kohala, Kona) Peggy Farias, W.H. Shipman (Puna,Hilo) Jaime Ortiz-Nava, Ortiz Hawaii Real Estate Solutions LLC (Islandwide) Members from the County of Hawai`i: Deanna Sako, Finance Director Nancy Crawford, Deputy Finance Director Glenn Sako, Research&Development Ag Specialist Lisa Miura, Assistant Real Property Tax Administrator Keita Jo, Appraisal Supervisor Brandon Cain, Valuation Analyst Sincerely, Real Property Tax Review Working Group and Agricultural Committee Harry Kim :�� 4/,: Deanna S.Sako Mayor •'� • Finance Director • • County of Hawai`i Nancy Crawford Deputy Finance Director DEPARTMENT OF FINANCE-REAL PROPERTY TAX Aupuni Center • 101 Pauahi Street • Suite No.4 • Hilo,Hawaii 96720 • Fax(808)961-8415 Appraisers(808)961-8354 • Clerical(808)961-8201 • Collections(808)961-8282 West Hawaii Civic Center • 74-5044 Ane Keohokalole Hwy. • Bldg.D,2nd Flr. • Kailua Kona,Hawai`i 96740 Fax(808)327-3538 • Appraisers(808)323-4881 • Clerical(808)323-4880 REPORT TO HAWAII COUNTY COUNCIL FROM THE REAL PROPERTY TAX REVIEW WORKING GROUP, AND AGRICULTURAL COMMITTEE March 16, 2018 This is the second report to the Hawaii County Council from the Real Property Tax Review Working Group (Review Group) which includes the Agricultural Committee (Ag Committee). The Review Group held eight meetings and the Ag Committee held seven meetings. The agricultural portion of the Real Property Tax code is a substantial portion, therefore, a dedicated meeting time is set for review of the Agriculture code. The focus of the Review Group and Ag Committee is to review and give policy driven recommendations as needed on the following: Hawaii County Code Chapter 19, Finance Director Rules and Regulations as it pertains to Real Property Tax, Agricultural Rates/Values, 2011 IAAO Audit and review proposed changes or legislation which affects the Real Property Tax Office that is referred by the Council or County. In addition the Real Property Tax Office has been providing the Review Group and Ag Committee with complaints and concerns the office receives. The group has been meeting since August 2017, and has agreed to meet for a minimum of two years. Reports will be filed to provide County Council with updates of the group's progress. The goals were collectively agreed upon: • Increase the fairness of the County's Real Property Tax program • Identify and incorporate best property tax administrative practices • Propose additional tax programs as appropriate • Identify public policy goals and incorporating them into the County's Real Property tax program Since the last report which was submitted at the end of November 2017, the Review Group has reviewed in detail the Veterans Disability exemption, Non Speculative program, Real Property Tax Board of Review report and the Affordable Rental Housing program. The Review Group is recommending to the Hawai`i County Council and the County of Hawai`i Administration the following: 1. The Veterans Disability annual real property tax be $0. This would require a change to the Hawai`i County Code. Recommendation is to change for tax year 2018, however, it may be more realistic to have this done for tax year 2019 due to Hawai`i County is an Equal Opportunity Provider and Employer budget deadlines. To receive this benefit, the current program requires the veteran be 100% disabled due to a service related injury and the property needs to be the Veteran's primary residence. This program currently has 609 parcels and at the current $200 minimum tax, the County receives $121,800 in revenue annually. There was much discussion regarding the value of the properties in this category, the potential increase in properties that could end up qualifying for this substantial discount and the concern with the loss of revenue during a time when the County is having difficulty balancing the budget.The consensus is these are 100%disabled veterans due to a service related injury and they have already paid the ultimate price. 2. Repeal the Non Speculative Residential program. This would require a change to the Hawai`i County Code. Recommended steps include informing all owners currently with parcels in this program of the repeal for tax year 2019, allow all parcels currently in this program to automatically convert these parcels to the Homeowner Exemption program(by virtue of the program they already technically are part of the Homeowner class) at the 2019 frozen value and explain the 3%CAP would then be applied to the tax year 2020 (first year they would see the increase). This has been a recommendation the Real Property Tax Board of Review has reported for several years as this program does not allow new applicants into this program therefore it is not considered to be fair and equitable. It is our understanding when the County Council approved the 3% CAP and the additional 20% homeowner exemption (up to $80,000) there was discussion to have this program completely repealed however it ended up being an"optional out"for those in the program. There are currently 483 parcels in this program. The impact to the real property tax revenue in tax year 2020 based on the current frozen non spec values would be $23,000 total. In addition, the County will save approximately $4,400 per year in staff time which was allocated to the administering of this program. In addition to the above recommendations,the Review Group is currently having ongoing discussions pertaining to the Residential and Agricultural tax classifications. The Ag Committee is looking at all the current and proposed Agricultural programs in great detail.Any changes or recommendations to the Agricultural program will not have an impact on real property tax revenues until tax year 2020. As there are many parts to this program, the Ag Committee is not making any recommendations at this time,however,we are looking at programmatic and interim recommendations/guidelines on how to improve the application of this program. The current committee members for the Real Property Tax Review Working Group are: Members from the general public: Mary Begier, Mary Begier Realty(Hamakua, Hilo) William Moore, William L Moore Planning (Islandwide) Marissa Harman, Kamehameha Schools (Islandwide)