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Home My WebLink AboutCOM 0926.027 2018-2020 } %A IL r 4 I i May 12, 2020 i Honorable Aaron S. Y. Chung TY CLERK Chair, Hawaii County Council court Count of Hawaii COUNTY O� HA Aa _ County RECEIVED 25 Aupuni Street Time � r4 Hilo, Hawai'i 96720 RF,: Bill 169 Communication No. 926 Dear Chairman Chung and Members of the Hawai'i County Council: Thank you for allowing me to provide testimony in strong opposition to Bill 169. As the General Manager of the Kuki'o Golf and Beach Club, and representative of the Kuki'o Community Association, Inc. (collectively "Kuki'o"),which comprises over 200 homes and their owners, including Hawaii County residents, it is important the Council know the negative impact and unintended consequences Bill 169 will create in our island community. I. The truth about Kuki'o Contrary to recent media reports and illusory public perception, Kuki'o employs over 200 full time staff members. These are our relatives,neighbors and friends, all residents of the County of Hawaii. Despite the recent economic devastation the pandemic has brought to the world, our country, and our State and County, Kuki'o has provided full pay to each of its employees, continues to do so, and is committed to continuing this into the future. In addition to our hundreds of local employees, Kuki'o supports over 1,000 local contractors and independent operators who work daily on its grounds. This is further support for our local families, something Kuki'o believes is important to support our Big Island community. This is not to mention the hundreds of businesses such as Hawai'i Planing Mill (HPM), Aiona Car Rentals, Ferguson Plumbing, Big Island Mechanical, Aloha Plantscapes, and `Ghana Taxi, that provide services and commerce to communities like Kuki'o. These local businesses would not thrive, and their existence would in fact be threatened, if communities like Kuki'o could not continue to support them. Finally, Kuki'o's support of our local hotels,restaurants, and numerous other businesses throughout the year is well documented and known. Kuki'o's community fund donates well over$600,000 annually to local non-profits. The continuity of this funding will be either decreased or eliminated if the operating cost of owners is forced upward by Bill 169's contemplated"luxury tax." Comm. o. 26233430 Ref.To: _ R _ef. paleA 1 2020 %—A [I. Chapter 19, Article 6, Hawaii County Code 1983 (2016 Ed.) Bill 169 seeks to amend the Hawai'i County Code 1983 (2016 Ed.) ("County Code"), by effectively creating a new"tier" of taxable entities, focusing on what may best be described by media and public perception as "luxury second homes." Bill 169s introduction before this Council represents the first time in 23 years that our County's real property tax code's substantive portions have been amended. -No doubt tic understan-dAe'hysteria of C'OVID-19's detrimental economic impact has motivated some within our County,to introduce such legislation. With the loss of the County's share of the transient accommodation tax, there appears a"kneejerk"need to make up the difference somehow. The least politically detrimental route is to "pick the low hanging fruit" of taxing what is believed to me non-resident"luxury homeowners" who do not vote in our County elections. This politically motivated logic is flawed for many reasons. Those perceived as non-resident "luxury homeowners" are the very ones who already contribute an inordinate share of money into our local economy (through the existing tax rate, as well as what was revealed and described above), and not burdening our State and County by use of its services and resources. Kuki'o residents have already contributed well over $12 million of property taxes in the County for a single year, far beyond what is expected of ANY other group in our community. Not to mention this approximate $12 million in tax revenue to our County was generated from a relatively small community; along the order of approximately 200 homes. Bill 169 creates an arbitrary and capricious designation of$2 million as the "threshold" for defining what a"luxury home"will be defined as in the County of Ilawai'i. It seems what occurred was the County picked a target number of tax revenue that was needed to meet the shortfall, selected the "luxury homeowners" as the target, then set a tax rate that would make the math work. Under this proposed plan, Kuki'o homeowners alone would be responsible for approximately$2.4 million in a tax increase, above and beyond the approximate $12 million per year they already contribute. '['here was no discussion of more prudent measures such as (1) reducing government spending, (2) Furloughing of County employees, or(3) a more equitable distribution of tax liability among all tax classes, especially since these other classes are consumers of State and County services and resources. As politically unpalatable as those more sensible and fair options may be, prudent leadership dictates they be considered, explored, and the community being told exactly why they cannot be deployed, and why a tax increase of a targeted group was the resulting option, 11I.Surnmary and Conclusion Bill 169 has unintended consequences that will hurt our County of Hawaii community. The media and illusory public impression fail to recognize Kuki'o as an important economic driver in our Big Island community, one that generates jobs and stimulates our economy, while Kuki'o's benefactors do not consume State and County services and resources. Do not let Bill 169 cut off the hand that already feeds our County so well. 26233,43vi { %-A r ♦ � IL In sum: j I • Kuki'o alone already contributes over$12 million annually to the County's real property tax base. This by a community comprised of just approximately 200 homes. • The oft-cited sentiment when lawmakers increase taxes of, "Well, 1-fawai'i has one of the lowest real property taxes in the nation" is misguided. If so, then increase the tax rate in all classes to share the load proportionately. Do not single out and target one class,just because they are viewed as "non-voters," and that they are "able to afford it." • A dramatic increase of$3,5 per thousand of value above $2 million would incentivize the homeowners to seek legal redress in the courts, since any expected litigation fees and expenses would then be warranted due to the County's action in legislating such a huge and costly increase. Thank you for this opportunity to provide input on behalf of the homeowners of our Kuki'o community, who Bill 169 directly and disproportionately impacts. We appreciate you considering and reflecting upon the unintended consequences of Bill 169, by considering the bigger picture. We are confident you will find upon careful examination that hasty"crisis management"of our County budget through manipulation of the tax code yields greater harm and cost to our County residents, now and for the future of our County and economy. Very truly yours, Scott Nair General Manager Kuki'o Golf and Beach Club Please understand this is NOT a threat of litigation, but another unintended consequence of action that may be considered by the homeowners. The"Oahu case"that was resolved in favor of the City and County of l lonolulu as reported in an earlier media account failed to point out that case was heard before the Tax Court of Appeals in Honolulu, and NOT in the First Circuit Court,and certainly did not proceed to yield an appellate court decision that Could be cited as binding legal precedent, To the contrary,we are trying to encourage the County to pursue more sensible and fair solutions for balancing the budget that would not invite litigation due to arbitrary and capricious decision-making. 2623343v1