HomeMy WebLinkAboutCOM 0962.016 2018-2020 I
HD Beach Properties,LLC
Micheal Warsaysky,Manager
16134 Ventura Blvd.,Suite 324,Encino GA 91436
(818)991-2240
rnwarsaysky@wrwco-oom COUNTY CLERK
June 2,2020 COUNTY OF HAWAI1I
To:Honorable Members of the Council of the County of 1-lawai i RECEIVED
TiZej2-'41P0J By
Via email:counciltestimony(�,@hawaiicounty.gov f
Dat JUN 0 2 2020
Ire:Ordinance No.20-39
Dear Council Members:
Please accept this entail as testimony against the proposed Ordinance No.20-39 which is
designed to balance a budget by imposing a substantial tax increase on single family
residential properties valued at over$2,000,000. 1 am writing as manager of JT17 Beach
Properties,LLC,an entity which owns a single-family residential home located at 72-164
Karnukehu Street, Kona. III 96740_ The entity purchased the property in 2009 and
substantially unproved the property several years ago. The property is not rented.
At the outset, I acknowledge that your job as elected officials is difficult under normal
circumstances but is extremely challenging at this particular time. The task of creating a
balanced budget is a difficult task due to the speed at which all economic units have had
to react to the chanties thrust upon us by the COVVID 1.9 global pandemic. The challenges
of local govermnent are particularly difficult given the substantial. fixed costs contained
in the responsibility to deliver the essential services to members of the community.
Having said that, I strongly believe that the underpinnings of Ordinance No. 20-39 are
misguided. Essentially,it places substantially all of the burden of the forecasted revenue
shortfall,after trying to reduce and defer some costs,on the owners of properties valued
over $2-0 million. This approach is flawed for a number of reasons which I articulate
below.
Before the rationale„ I thought that you should understand the actual effects on the
property I am responsible for. For the 2019 Fiscal Fear,we paid approximately$180,000
in real estate taxes. Under the Proposed Ordinance,our taxes would go to approximately
$237,000, an increase of almost 32%1 By the nature of this one case, the proposed
ordinance is extremely confiscatory and capricious.
Among the reasons I believe that the proposed ordinance is misguided include:
Lack of proper comment period. The notice for this substantial change was
provided on May 28`s,2020. The comments are due June 2,2020. Phis gave 5-
days* notice, atbest, to try to think about this change. Such a short period is
unfair and unlikely to actually produce an acceptable methodology for a sustained
plan for County revenues.
.Allocation to expensive homes is not how services are deployed, The proposed
ordinance will tax nor)-resident owners at a substantially higher rate(no
homeowners rage unless a resident)when likely,the bulb of your budget is for the
benefit of resident homeowners. Non-resident homeowners likely use
substantially less services which is the bulk of the County budget. The allocation
of a budget shortfall to more expensive homes;therefore,is not a just allocation.
Services provided should be borne by those individuals who use the services.
The beneficial owners of this property are in the residence less than 30 days per
year. The proposed tax would be over$8,000 per day of occupancy. There seems
to be no logic to the allocation methodology of the proposed ordinance_
e Destruction of Property Values. Not only is the allocation patently unfair, the
creation of a tax rate on higher valued properties that is not progressive will
depress property values and potentially destroy the tax base of property in the Q
County. Investments in property are traditionally valued on net cash flow. The Comm. o.
proposed ordinance will reduce the expected cash flow from these investment
properties and, as a direct result, substantially lower the value individuals are Ref.To:
willing to pay for property in your County, Ref. Date JUN 2020
Legal Challenges- The proposed ordinance will likely be subject to constitutional
legal challenges. While we have not had time to research these potential
arguments,we fully expect that taxation without representation will categorically
apply to this proposal. We expect that many of the homes in the proposed new
class will not have voting rights to elect the officials who control this tax increase.
This', frankly, is one of the tenants of the United States; avoiding taxation
withoutrepresenta.66n-
gi Targets of the tax increase may,not be able to afford it. You should be aware that
just as the County has experienced a precipitous reduction in its revenues,many
of the owners of these homes in the new class may be business owners who have
experienced a complete loss of revenue in the business that provide the financial
capabilities to be able to own such homes. For the above reasons and others, I
respectfully request that the Council reconsider the proper allocation of the
needed, tax increase so that it is borne by those using the services the County
provides,
Thank you in advance for your consideration of these points.
Sincerely,
A7
Nfichael Warsaysky