HomeMy WebLinkAboutCOM 0090.000 2018-2020 Harry Kim "o "'h
cts L` '''. Director
Mayor-` y _„ y,�I d�
County of Hawaii
Finance Department
25 Aupuni Street,Suite 2103 • Hilo,Hawaii 96720
(808)961-8234 • Fax(808)961-8569 `"(
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TO: Aaron Chung, Council Chair : W
FROM: Deanna Sako, Director
DATE: January 3, 2019
SUBJECT: .Real Property Tax Review Working Group and Ag Committee
Attached is our third Real Property Tax Review Working Group and Ag Committee report.
Recommended changes to the County Code will be transmitted at a later date.
If there are any questions, please contact Lisa Miura at 961-8260.
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Ref. Dote 111.8 11-Or%
Hawaii County is an Equal Opportunity Employer and Provider
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Harry Kim �/:•: Deanna S.Sako
Mayor Finance Director
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• County of Hawai`i
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 Hawai`i Civic Center • 74-5044 Ane Keohokalole Hwy. • Bldg.D,2nd Flr. • Kailua Kona,Hawaii 96740
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REPORT TO HAWAII COUNTY COUNCIL
FROM THE REAL PROPERTY TAX REVIEW WORKING GROUP,
AND AGRICULTURAL COMMITTEE
October 19, 2018
This is the third report to the Hawai`iCounty Council from the Real Property Tax Review
Working Group (Review Group) which includes the Agricultural Committee (Ag
Committee). The Review Group held twelve meetings and the Ag Committee held eleven
meetings. The June meeting was cancelled due to Real Property Tax and Finance
Administration staff being tied up with the lava event and the meeting in August was
cancelled due to Hurricane Lane.
The focus of the Review Group and Ag Committee is to review and give.policy driven
recommendations as needed on the following: Hawai`i 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
The Review Group is recommending to the Hawai`i County Council and the County of
Hawai`i Administration the following:
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1. Repeal Solar Water Heater Tax Credit. This would require a change to the
Hawai`i County Code.Recommendation is to completely repeal Section 19-104 of
the Hawai`i County Code. In 2008 when this credit was established,the County of
Hawai`i building code did not require solar water heaters, however, since 2012 it
has been a requirement" for all new construction. The group researched the
Hawai`i County is an Equal Opportunity Provider and Employer
possibility of creating a photo/voltaiccredit. As the Real Property Tax office does
not assess for solar and photo voltaic for residential use, there is no
recommendation to create another program in theplace of endingthe solar water
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heater tax credit.
2. Repeal the Non Speculative Residential program. We are again recommending
Administration or County Council look into an ordinance to change 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.
3. Procedural change to Real.Property.Tax classification. This would not require
a change to the Hawai`i County code,however,the group was approached by Real
Property Tax for guidance regarding a portion of the county code that was not
consistently applied on the island. There are properties under one acre of land that
have been receiving the agricultural class tax rate when the highest and best use is
residential. Three meetings were held regarding discussion of what would be the
most fair and equitable way to tax these parcels as the underlying zoning is
agricultural which included reviewing properties up to five acres in size. The
recommendation to Real Property Tax Division is all properties less than one acre
in size which are not part of an agricultural use or dedicated agricultural programs
should.be taxed at the residential class tax rate to be consistent with the county code
island wide. This is consistent with State Land Use Commission statutes which
provide for the construction of single-family dwellings on lots existing before June
4, 1976.
There are currently 19,604 parcels which will experience a tax class rate change.
6,665 will experience an increase in taxes with the remaining parcels not anticipated
to be impacted by the recommendation. The impact to the real property tax revenue
in tax year 2019 based on the current assessed values and tax rates would be an
estimated $1.3 million increase.
In addition to the above recommendations,the Review Group would like to thank the Hawai`i
County Council for reviewing and amending the Veterans Disability exemption. We
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understand there was a great amount of discussion in regards to reviewing the fairness and
equity of the real property tax programs.
The Ag Committee continues to look 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.
Interim recommendations made by the group to Real Property Tax Division included a
presentation to the entire group and a range and pasture management class which is done by
the University of Hawai`i,CTAHR(College of Tropical Agriculture and Human Resources)
program. Five staff from Real Property Division participated in the class to gain a better
understanding of the complexities of pasture guidelines which included minimum size,
resource management and carrying capacity. As the group is looking at making
recommendations to the Native Forest program,input from experts in this field have occurred
to facilitate future discussion.
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)
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 Hawai`i Real Estate Solutions LLC (Islandwide)
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 Hawai`i Real Estate Solutions LLC (Islandwide)
The following members from the County of Hawai`i support the efforts of the Real Property
Tax Review Working Group and the Agricultural Committee.:
Deanna Sako, Finance Director
Nancy Crawford, Deputy Finance Director
Glenn Sako,Research&•Development Ag Specialist*
Lisa Miura,Real Property Tax Administrator
Keita Jo,Acting Assistant Real Property Tax Administrator
Brandon Cain,Valuation Analyst
*Agricultural Committee only
Sincerely,
Real Property Tax Review Working Group and Agricultural Committee