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Home My WebLink AboutComm No 0036 - Transmit CA-19Douglass Shipman Adams Chairperson Jennifer Leilani Zelko-Schlueter Vice Chairperson 2018-2020 HAWAII COUNTY CHARTER COMMISSION Date: February 7, 2019 To: Members of the Hawai`i County Charter Commission From: Douglass Shipman Adams, Chair Hawai`i County Charter Commission William Carthage Bergin Michelle Galimba Paul K. Hamano Kevin D. Hopkins Bobby Jean Akane Leithead Todd Sarah H. Rice Christopher John Imiloa Roehrig Marcia A.K. Saquing Donna Mae Springer RE: Transmitting CA -19; Proposed Amendment to Add a New Section to Article X Relating to a Prohibition on a Minimum Real Property Tax; Submitted by Commissioner Hopkins Please find attached CA -19, which proposes to add a new section to Article X (Financial Procedures) of the Hawai`i County Charter (2018 Edition), that would prohibit the County from applying a minimum real property tax rate, and require instead that real property taxes, unless otherwise provided for by ordinance, be levied based on the assessed value of the parcel and any improvements thereto. CA -19 will be placed on the next available meeting agenda for its initial consideration and approval prior to first reading. Should you have any questions, please contact our Commission Analyst, Jon Henricks. DSA/jdh Hawai`i County is an Equal Opportunity Provider and Employer Comm. No. 36 CA -19 PROPOSAL NO. (For Commission Use Only) 2018-2020 HAWAII COUNTY CHARTER COMMISSION CHARTER AMENDMENT PROPOSAL FORM 1. GENERAL INFORMATION Name of Commission Member: Kevin Hopkins 2. If applicable, list the Section number(s) of the charter provision(s) to be deleted or amended: Add a new Section to Article X — Financial Procedures 3. Provide a brief description of the purpose of the proposed charter amendment; include a description of the issue the proposal would address: To reduce the inequity in the current taxation system used by the County, property taxes will be based on value, with minimum taxes being prohinited. 4. If the proposal is based on a provision(s) in the charter or law of another jurisdiction, name the jurisdiction and, if possible, attach a copy of the relevant provision(s). Not applicable 5. If the proposal is based on any written materials you have, please attach a copy with a citation to its source. See attached documentation See reverse side Form CA -1 Revised 8/29/18 1 of 5 6. Attach the text of the proposed charter amendment in Ramseyer format (see below). Ramseyer Format, if proposing: Amendments to Existing Charter Provisions Any language being proposed to be added to the Charter shall be underscored. Any language being proposed to be deleted from the Charter shall be [bracketed and stricken] . Replacing Existing Charter Provisions in their Entirety Clearly indicate the article(s), chapter(s), and/or section(s) of the Charter to be proposed to be deleted, and provide the text of any provisions proposed to replace the deleted material. New Charter Provisions Provide the text of the new provision(s) and, if possible, indicate where in the Charter the new material should be inserted. Form CA -1 Revised 8/29/18 2 of 5 Hawaii County Charter Proposal—text "Section 10- . Real Property Tax Rates; Minimum Tax Rate Prohibited. The council may not establish by ordinance, and the county may not establish by any other means, a minimum real property tax rate to be levied on taxable parcels of real property. Unless otherwise provided for by ordinance, any levy of real property taxes shall be based on the assessed value of the parcel of real property and any improvements thereto." Form CA -1 Revised 8/29/18 3 of 5 Justification for CA Title: A proposal to lessen inequality in property taxation Current Situation: The County of Hawaii property tax system, developed to benefit plantations, large estates, and ranches, has allowed large land owners to minimize their property tax burden by use of agriculture dedications and assessments even when their agricultural activities are minimal because the required evidence of agricultural use is ill-defined /undefined. This has led to extreme inequalities of treatment of taxpayers (i.e., the wealthy pay a much lower of market value in taxes than do poor and middle-class taxpayers). The $200 per parcel per annum minimum property has exacerbated these inequalities. This proposal only concerns minimum tax, not the larger issue. Three tables are provided on the next page comparing a randomly selected large (1400+ acre) parcel in Hamakua and an 8,000 ft2 lot which I inherited in Nanawale. The numbers are from the Tax Office website. TMKs can be provided. Here are some are the conclusions: • Based on assessed value, Nanawale land owners pay 5% of their land value per year in minimum property tax • The Hamakua parcel pays only 0.935% of its assessed value in minimum tax • If % of market price is the basis, the Nanawale taxpayer pays 66 times as much as the Hamakua land owner. • The Nanawale taxpayer pays $1,083 per acre vs $0.68 per acre for the Hamakua land -owner, a difference of 1548 times. • A land -owner in dedicating 292 acres of land to pasture will pay the same $200 as the farmer growing vegetables on an 8,000 ft2 lot in Nanawale. • Note that this only effects parcels valued at less than about $18,018 to $21,390 depending on the zoning. • I realize that this will reduce tax revenues slightly but which land -owner has more money? The poorer landowners are now subsidizing the m illionaires. Form CA -1 Revised 8/29/18 4 of 5 Comparison of Two Parcels Location 66 Hamakua Ranch 5 Nanawale Lot Acres Rate 1412 9.35 0.1846 Market Value $ 1,380,100.00 $ $ 4,300.00 Assessed Value $ 103,300.00 $ 4,300.00 Assessed Value ($/acre) $ 73.16 $ 23,293.61 Tax Rate ($/$1000 assessed value) $ 9.35 $ 11.10 Taxes - Total $ 965.86 $ 200.00 Taxes - $/acre $ 0.68 $ 1,083.42 Taxes - % of market value 0.070% 5% Taxes - % of assessed value 0.935% 5% Ratio - Nanawale/Hamakua % of market value 66 % of assessed value 5 $ per acre 1584 Simulation of Equivalency at minimum Minimum tax per parcel $ 200.00 $ 200.00 Rate $ 9.35 Assessed value $ 21,390.37 $ 4,300.00 Acres @ Assessed 292.38 0.1846 Form CA -1 Revised 8/29/18 5 of 5