HomeMy WebLinkAboutCOM 0962.015 2018-2020 June 3, 2020 COUNTY CLERK
COUNTY OF HAWAIII
Mr. Aaron Chung, Chair RECEIVED
Hawai'i County Council Tias II'tl
Hawaii County Building Date 2
25 Aupuni Street
Hilo, HI 96720
RE:Concerns on Resolution 658-20
Dear Chair Chung and Members of the Hawaii County Council,
On behalf of the Kohanaiki Community Association ("KCA"),we would like to share some concerns we have
with proposed Resolution 658-20. Our understanding,for at least part of the recent push to increase property
tax rates, is Hawaii County's projected$14MM+j-budget shortfall due to unplanned lost revenues because of
Hawai'i and Hawai'i Island's appropriate safety precautions taken to respond to COVID-19 (refer to Hawaii
Tribune-May 11-Special Council Meeting). We are of the opinion there will be negative consequences should
the Council vote to adopt and implement what the Administration has proposed in Resolution 658-20,
including putting in jeopardy the continuation of many positive contributions from the Residential Tier Two
property owners currently benefitting Hawaii County residents,non-profits and other community
organizations.
On May 12, 2020 we shared some concerns regarding Bill 169 on a call with KCA's Council representative
Karen Eoff,who stated that this Bill was only to establish the two tier tax system, not adopt and implement an
increased tax rate.This sounded reasonable and put us at ease at that time. We understand Bill 169 was
passed by the Council Members on May 20, 2020. Our concerns have been elevated after learning that only
fifteen days after the Council passed Bill 169 you are now taking Resolution 658-20 to a vote on June 4, 2020.
Based upon the numbers and information available to the public,Resolution 658-20 would represent a
significant and material increase upon the so-called Residential Tier Two property owners,who by our
estimates contribute upwards of 40%of the average Net Property Tax Revenues annually. It also appears as if
Residential Tier Two property owners may not have been appropriately informed about this proposed
Resolution.
What has the Council found to be the most effective way to communicate with the public on important issues
such as these?And what communication methods were used to inform and solicit feedback from the
Residential Tier Two property owners about Bill 169 and Resolution 658-20? To our surprise,we noticed there
are only 15 entries for the June 3, 2020 public Hearing Testimony on Real Property Tax Rates(refer to Hawaii
County Council-June 3 2020 Agenda).
Historical Tax Increases and Additional Tax Burden
In 2009 the property tax rate for the Residential classification was$7.10.Since 2009 there have been 3
increases,the last adopted and implemented in 2018.A 2020 increase to the Residential properties would be
the 41h increase in the last 10 years. This would be the first time since 2010 where tax rates have not been
increased across all classifications and 205%more than the rate paid in 2009.The adoption and
implementation of higher tax rates for the Residential Tier Two property owners will affect at least 72°%of
KCA's homes and lots today, and over 80°%of the homes and lots when the community is fully built out.
Comm. No.
ef. o:==.,
Ref. (Date JUN - 202O
Actual Actual Actual Actual A CtUll; .A(t_Ual Actual Actual Actual Actual Actual Priaposeqd %increase
2449 2019 2011 2012 2013 4914 2015 2016 'o2Ci, 7 2019 2019 2020 2021 since 2009
Building
A. Residential(Tier One) 7.101 9.10 9.10 9.10 10.05 10.05 10.05, 10.05 I4.Q5 11.10 11.10 11.10 UAG 156.345e,
Residential(TierTwo) 7.10 5.10 9.10 9.10 10.65- 1005 10.05 -10.05- 10,.0.5 11.10 11.10 11.10 205,63%
E. AffordabIle Rental 5.55 155 5.55 5.55 6.15 6,15 6.15 6.15 5.15 6.15 6A5 6.15 6.15 110.81%
C. Apartment 8.10 9.85 SM 9.85 10.85 10.85 10.85 10.85 10.85 11.70 11.70 11.70 11.70 144,44%
0, Hotel and Resort 9.00 9.85 9.85 9.55 10.85 10.85 10.85 10.85 10.85 11.55 I1.55 11.55 11.55 126,33%
E. Commercial 9.00 9.10 9.10 9A0 10.05 10.05 10.05 10.05 10.05 10.70 10.70 10.70 10.70 118.890/.
t. industrial 9.0,0 9,10 9.10 9.16 10.05 10.05 10.05 10.05 10.05 10.70 10,.70 101.70 10.70 118.99%
G. Agricultural 635 8,.35 8.35 8.35 9.25 9.25 9.25 9.25 9.25 9,.35 9.35 9.35 91.35 144244%
EI. Conservation 9.55 5.85 9.85 9.85 10.85 10.85 10.35 10.85 10.85 11.55 11.55 11.55 11.55 135.099
11. Homeowner 5.55 5.55 5_55 5.55 6.15 6.15 6.15 6.15 6.15 5.15 6.15 6.15 6.15 110,811%
Land
A. Residential(Tier One) 8.10 9.10 9.10 MG 10.05 10.05 10.05 10.05 16.05 11.10 11.10 11.10 11.10, 137.04%
Residential(Tleffivo) 8,.10 9.10 9J6 9.10 10.05 10,65 10.05 10.05 10.05 11.10 11-10 11-10 Arlt,filp_ IFO-2-9%
B Affordable Rental 5.55 5.55 5-55 5-55 6.15 6.15 5.15 6.15 6.15 6.15 6.15 6.15 6.15 110.81%
C Apartment 3.10 185 9.85 9.85 10.95 10.85 10.85 10.85 10.85 11.70 11.70 11.70 11.70 144.44%
D. Hotel and Resort 9.00 9.8.5 9.85 9.85 10.95 10.85 10.85 10.85 10.85 11.5,5 11.55 11.55 11.55 128.33%
E. Cornmerrial 9.00 9.10 9.1.0 9J0 10.05 10.05 10.05 10,05 10.05 1030 10.70 10.70 10.70 118.899
E industrial 9.605,10, 9.10 9.10 10.05 10.05 10.05 10.05 10.05 10.70 10.70 10.70 10.70 112.99%
G. Agriculltural 835 8.35 8.35 9.25 9.25 9.25 9.25 9.25 31.35 9.35 9.35 9.35 111.98%
K Conservation 8,55 9.95 9.85 9.85 10.85 10.85 10.85 10.85 10.95 11.55 11.55 11.55 11.55 135,09%
L Homeowner 5.55 5.55 5.55 5.55 6.15 6.15 6.15 5.15 6.15 5.15 6.15 6.15 6.15 110.81%
Highlighted number represents an increase in the taxnatLfrom theprioryear
Years excluded are thesame as the prioryear
• At the current tax structure, KCA is projected to contribute$8.3 million in property taxes for FY 2020-21.
• The Residential Tier Two tax structure would add an additional $1.2MM of carrying costs in the form of
property taxes paid from KCA for FY 2020-21, a material increase of 15%.
• There is an additional $13.5MM annually in new property tax revenue projected to be generated by KCA
when the community is completed.
• Upon community completion, KCA is expected to generate at least$21.8MM in property tax revenue as a
primarily second-home community.This Residential Tier Two tax structure would add an additional
$3.4MM annual tax burden for the KCA owners.
While it may be argued there will be minimal impact on future property sales because Hawai'i island is unique
in its features and people,this may be a misguided sentiment which could add false security. Current and
future owners in luxury resort communities, like KCA and others along the Kona-Kohala coast,have numerous
options for where they can invest and spend.Adding an additional tax to the top tier of luxury properties may
in fact dissuade them from choosing or maintaining ownership on Hawai'i island.
Since Residential classifications are primarily not given a home exemption, Bill 169 and Resolution 658-20 at
face value unfairly targets Residential Tier Two property owners of Hawai'i County(who are unable to vote),
resulting in unintended negative fiscal consequences for the County of Hawai'i.
Additional Community Contributions
Finally,we would like to highlight some of the contributions that KCA property owners are making to the
community of Hawai'i.
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• KCA continues to be supportive of the County of Hawaii government and the continued tri-party
partnership as stewards of the Kohanaiki Beach Park. I
• KCA has ensured that their association dues structure incorporates fees which go towards costs of I
maintaining our one-third maintenance of the Kohanaiki Beach Park responsibility.
• The Kohanaiki Foundation,formed in 2013, has raised over$625,000 since its inception.The Foundation
raised$200,000 most recently in 2019 and has been working during this COVID-19 period with the Hawaii
Community foundation to identify and disburse$150,000 of these funds to deserving Hawai'i Island
Charities to further support science, education and recreation for our keiki.The monies contributed to the
foundation primarily come from Residential property owners within KCA who very much enjoy supporting
our community.
• The community of Kohanaiki is a significant contributor to the West Hawaii economy, and provides
employment to over 500 employees and contractors.
In closing,we believe any decision by the Council to support and approve Resolution 658-20 will have negative
consequences for the County of Hawai'i, and we respectfully implore the Council to go back to the
Administration and work with them to identify other ways to resolve the projected budget shortfall.
Thank you for taking the time to hear our concerns regarding Bill 169 and Resolution 658-20.We appreciate all
the Council does for the County of Hawai'i.
Sincerely,
The Kohanaiki Community Association
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