Expand Lahaina tax relief beyond just homeowners

from Grassroot Institute of Hawaii, October 18, 2023

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Maui County Council on Oct. 20, 2023.
_____________

October 20, 2023 9 a.m.
Maui County Council Chamber

To: Maui County Council
      Alice Lee, Chair
      Yuki Lei K. Sugimura, Vice Chair

From: Grassroot Institute of Hawaii
           Joe Kent, Executive Vice President 

RE: Bill 95 (2023) — Relating to the August 2023 Fires Disaster Exemption

Comments Only

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on Bill 95 (2023), which would exempt from the property tax all residential real property in Lahaina and other residential real property that was damaged or destroyed by the fires in Kihei and Upcountry. 

It would also provide tax relief to hotel and short-term rental owners who use their properties to provide shelter to residents displaced by the fires. These exemptions and relief programs would cover the tax years 2024 and 2025. 

Grassroot believes providing property tax relief to residents affected by the wildfires is a good way to help residents recover. 

Without tax relief, residents whose houses were destroyed and who do not have sources of income could lose their homes to county foreclosure. Instead, they should be allowed time to complete their insurance claims and assess whether they can or want to rebuild before being threatened with property tax payments. 

Grassroot welcomes this bill, and would like to suggest an amendment: The bill should also extend to Lahaina’s commercial, industrial, agricultural and other properties in the Lahaina tax map zone. Owners of these properties also risk losing their lands to foreclosure as they wait to rebuild. This concern might be much greater because the tax rates on businesses tend to be higher than on residences. 

Overall, we believe this measure would be beneficial to those affected by the tragic fires. 

Thank you for the opportunity to testify.

Sincerely,

Joe Kent
Executive Vice President
Grassroot Institute of Hawaii

  *   *   *   *   *

Maui can afford to extend tax break to fire victims

from Grassroot Institute of Hawaii, October 18, 2023

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Maui County Council on Oct. 20, 2023.
_____________

October 20, 2023 9 a.m.
Maui County Council Chamber

To: Maui County Council
      Alice Lee, Chair
      Yuki Lei K. Sugimura, Vice Chair

From: Grassroot Institute of Hawaii
           Joe Kent, Executive Vice President

RE: Bill 102 (2023) — To Establish an August 2023 Maui Wildfires Exemption from Real Property Taxation

Comments Only

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on Bill 102 (2023), which would exempt from the real property tax all real property damaged or destroyed by the August 2023 wildfires and deemed uninhabitable or unsafe.

This exemption would run from January 1, 2024 through January 1, 2027 and would apply to delinquent taxes and penalties as well as actual property tax bills. The property tax waiver would terminate if the property were to be sold between the bill’s enactment and its expiration.

The Grassroot Institute believes this measure would be a good way to provide relief to property owners affected by the wildfires.

Many of the homeowners and businesses that would be affected by this bill will not have significant earnings for the foreseeable future, so they will be unable to afford their property tax payments. People in this tragic situation should not face the possibility of losing their properties to foreclosure because they could not pay their taxes.

The County would stand to lose several million in revenues, but this would not handicap its ability to perform core functions. For example, Mayor Richard Bissen’s waiver of fiscal 2024 property taxes for improved structures destroyed in Lahaina, Upcountry and Kihei will deprive the County of $19 million — less than 2% of its $1.07 billion budget for the same year.[1]

Further, whatever revenue loss this bill might cause might be offset by federal and state disaster assistance given to the County.

However, regardless of the revenue implications, the County should help people keep their properties as they wait for cleanup and insurance payments to allow rebuilding.

The Grassroot Institute recommends that the Council adopt policies to determine which “damaged” properties qualify for this exemption and what “uninhabitable or unsafe to conduct business in” means. Clarifying these terms could help deter fraud, which might occur as ineligible owners seek to avoid paying property taxes.

While there is a risk of fraud, it can be mitigated. This bill should move forward. It’s one of many concrete actions the county can take to assist struggling residents.

Thank you for the opportunity to testify.

Sincerely,

Joe Kent
Executive Vice President
Grassroot Institute of Hawaii
_____________

[1] Christine Wilson, “Maui mayor details budget cuts to offset revenue shortfall,” Honolulu Star-Advertiser, Oct. 7, 2023; and  Melissa Tanji, “Council gives final approval to $1.07 billion budget,” The Maui News, June 7, 2023.