HomeMy WebLinkAbout01-22-2009-Doc15849 (2)
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1VIINUTE S
BUDGET & FINANCE CONIlVIITTEE
January 22, 2009
A meeting of the Budget & Finance Committee of the Council of the County
of Kaua`i, State of Hawai`i, was called to order by Councilmember Daryl W.
Kaneshiro, Chair, at the Historic County Building, Room 201, Lihu`e, Kaua`i, on
Thursday, January 22, 2009, at 9:07 a.m., after which the following members
answered the call of the roll:
Honorable Bill "Kaipo" Asing
Honorable Dickie Chang
Honorable Jay Furfaro
Honorable Daryl W. Kaneshiro
EXCUSED: Honorable Tim Bynum
Honorable Lani T. Kawahara
Honorable Derek S. K. Kawakami
Minutes of the January 7, 2009 Budget & Finance Committee Meeting.
Upon motion duly made by Councilmember Chang, seconded by
Councilmember Furfaro, and urianimously carried, the Minutes of the
January 7, 2009 Budget & Finance Committee Meeting was approved.
The Committee proceeded on its agenda items as follows and as shown in the
following Committee report which is incorporated herein by reference:
Bill No. 2292 A BILL FOR AN ORDINANCE AMENDING CHAPTER
5A, KAUA`I COUNTY CODE 1987, AS AMENDED,
RELATING TO REAL PROPERTY TAX APPEALS
[This item was deferred.]
DARYL W. KANESHIRO, BUDGET & FINANCE CHAIR: Thank you. What
we're going to do is we will be deferring this bill again for another committee
meeting. I believe we had some...some of my committee members are working on
amendments...that amendments probably were expressed by some of the people
that spoke on this bill. So because of that and before I take a motion to defer, is
there anyone here that wanted to speak on this bill today or to add any other
comments to this bill? Please come up.
There being no objections, the rules were suspended.
MIKE DYER: Good morning, Mr. Chairman, committee members.
Thank you for this opportunity to speak again on this issue since I've driven all the
way down from the north shore. I'll take the opportunity to say that I...Mike Dyer
for the record, sorry. I still support 2292, the idea that we reduce the threshold for
tax appeals from 20% to 10%. I think it's important to support the taxpayer as
much as possible. The bill that's before you for reforming the property tax bill in
total was written, of course, by the Finance Department, in my opinion primarily for
the Finance Department. This change from 20% to 10% is one small thing that we
can do in this bill to support the taxpayer. The process of assessing the thousands
and thousands of properties that the tax assessor has to do is a very inexact science
and the property owner should have the ability to appeal because the dollar
amounts involved, the difference between 20% and 10%, is a significant amount of
money in a lot of cases. So thank you for this opportunity to speak.
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Mr. Kaneshiro: Thank you, Mike. Any questions? Mr. Furfaro, go
ahead.
JAY FURFAR,O: Yes, Mike, thank you very much for coming down
from the north shore today to give testimony on this proposal and I do want to say
that I've been able to meet with the Finance Department in-between the committee
meetings here and have talked to them in terms of, you know, perhaps one of the
other alternatives on this and we'll be looking at an amendment as such that
Councilman Kaneshiro had spoken about, dealing with perhaps looking at the
makeup of the Appeals Board and perhaps having someone from farming on that
board, you know similar to what we do with our Planning Commission. We have
two from labor, two from business, two from environmental and one at large. I was
thinking in terms of an insurance person, farm activity or agriculture, CPA, real
estate assessor, you know some composition of people that bring specific skills to the
Appeal Board. Have you any comments on that?
Mr. Dyer: Well...yeah, I know pretty well a couple of people
that are on the Appeal Board and my assumption, if I just stood back and knew who
they were and you know friends of mine, I would say they would be the type of
people you're talking about that would give a reasonable judgment on what's being
appealed on property tax issues. My experience, however, for some reason has been
different. I don't know how the Appeal Board is instructed, why it is that they rule
in favor of the assessor 95% of the time. It's always puzzled me and I...it's...to me
it's sort of like the case that if you went into a civil trial and the defendant...let's
say the defendant would be analogous to the department...the assessor's
department, that the defendant gets to pick the jury. The Finance Department, I
assume, picks the jury in one way or other, in this case in the Appeal Board, and
they do what you might expect they would do. They almost always rule for the
department. I don't know why that is. Maybe picking somebody from the
agricultural community, you know as you're proposing might change things, but
there's something that I don't understand as a guy who appeals fairly often that you
can go in with a very strong case and almost always lose anyway. I don't know why
that happens, but it does. So, if you can come up with some way to change that. As
you know I've been in support of having an impartial outside-the-department
arbiter replace the review panel. The board is now suggesting by the year 2011 to
increase the fees for appealing to $100 per appeal. That means a significant
amount of money is going to be coming in and I, you know, assume you pay the
Appeal Board people, but it's probably a little per diem and travel and meals kind of
a deal. But the typical appeal day that I've gone in for there's, you know,
10-15 appeals going on. That means once you...you know a few years down the road
when you have $100 per appeal coming in, you know if that figure stands up, there's
a lot of money there and you can afford, in my opinion, to have a professional
arbiter who's completely impartial come in. That's my personal opinion. If you can
come up with something that gets us an Appeal Board that gets the taxpayer a fair
hearing, I'm all for that. My experience has been it hasn't been that way.
Mr. Furfaro: Well you know I think in the kind of a...the
dashboard of indicators here, if we look at the proposed tax bill and one of the
things that is concerning there is the possibility of removing the cap that ;
Councilmember Kaneshiro and I initiated or removing the circuit breaker that the i
Chair initiated. But I reviewed the appeals and with the cap, the appeals dropped
from about 209 to less than a dozen and a hal£ Why is that? Because we have the ;
cap. I mean it's a very significant piece and therefore, what I'm saying, if we get to !
some future point that we entertain that idea again, the fact of the matter is in
today's economic system if we don't have a reduction in the amount you can appeal,
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I think the County will be better to have a permanent appeal person over in
Honolulu and I'll tell you why. Because here is something I'll read from and this
drove the indication, Hawai`i home prices predicted to fall 30%. Okay? And this
is...this was in the Advertiser by Andrew Gomes. No relation to Gomes, our Gomes,
just want to point that out. But the National Economic Research Firm says
Honolulu's housing market is set for one of the biggest falls by 2011. And that's
why this bill is talking about being enacted in 2010 based on some of this
information. Moody's Economic Forecast and we are aware of them, you can get
information off Moodyeconomy.com. It says that the medium prices of Honolulu
homes will bottom out in early 2011 after a 30.1% drop is predicted in the second
quarter. The forecast for the County that included the island of O`ahu, the greater
metropolitan area of Honolulu, Honolulu was the 13 worst out of 381 markets that
were surveyed, just behind Phoenix, Las Vegas and Miami, all resort community
types. It says, buckle up. We need to make sure that as these possibilities occur,
you know there's going to be a flood of appeals because that certainly exceeds the
20% in the market right now. But if we don't improve, and I think the Chairman
talked in terms of...nothing...the people that are there are very effective volunteers,
but perhaps we need people with more specific criteria behind them and formal
training to understand the moving parts and maybe upgrading the board and
having an appeal process that is defendable is something that we should prepare for
especially if we remove the cap. That is...that's what's driving my thinking here,
Mike.
Mr. Dyer: No, I agree, yeah. When you remove...
Mr. Furfaro: I mean strategically we have to be prepared and I
think it's really important that we revisit this tax piece.
Mr. Dyer: Yes, I agree. You know I think an argument could
be made that you know we've already had a significantly greater drop in prices than
are showing up in our assessments and that I read that article also and, you know,
the future is really unknown, but our recent history indicates that we're certainly
heading in that direction. And again, maybe upgrading the board would make the
appropriate change, but you know Reggie Gage is on that board. I've know Reg for
30 years. He's , you know, a highly competent appraiser, realtor. Laverne Bessert
is on that board. You know, that's why I...
Mr. Furfaro: But these are people that make up some of the
skilled training that I am suggesting.
Mr. Dyer: Yeah..
Mr. Furfaro: Realtors, appraisers...
Mr. Dyer: Right, what...again, my experience has been the
board almost invariably votes however many are there, 4-0, 5-0. It's usually three
of them are there, 3-0. There doesn't seem to be much discussion. You know,
nothing happens. So, you know...I don't know why it happens the way it does, but
it does. I agree that if the 2% cap comes off, it'll change from the situation that we
have right now, which is the people that are appealing and people that are
extremely unhappy and disappointed with what goes on in the appeal process are
many times second homeowners who are coming in all the way from the mainland,
a lot of cases hiring an appraiser to verify their valuation, paying all this money to
try to get fair treatment and still losing 95% of the time and these people are
extremely unhappy when this happens. If you take that cap off and you get
residents coming in because remember with releasing that cap all of a sudden all
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the reality that's been going on underneath for the last what five years or
something like that is going to spring into reality and this is going to be a big shock
to a lot of folks that are probably...
Mr. Furfaro: Well I...you know and that's why I wanted to
review the data and the fact of the matter is that it is another benefit for primary
homeowners. They're not going in for these appeals because they have the cap.
Whether the cap is 2%, it's tied to the consumer price index, or a new number that
we come up with, the reality is it's predictable and it's staying within, you know,
reasonable cost for them to keep their homes and that was the intent. I also think if
this article from Moody is in fact halfway correct, we're going to have a number of
absentee owners that are going to flood the appeal process as we find the economy
continuing to slip. This is only the beginning, I believe, of the economy slipping, so.
Mr. Dyer: I agree. One interesting thing for me has
been...yeah, I was...I've been involved in the property tax issue for quite a while
because of the task force I was on. Walter Lewis, my friend Walter Lewis who came
from the `ohana side was one of the few guys that I know of who came in and has
appealed a homesteaded property. Walter is paying close attention and even
though it doesn't make any difference in his taxes, he's one of those guys who knows
that, you know, my tax assessment has been going up. The department has still
been keeping track of his market value on his property and he was watching it and
he knew if that cap ever came off that his taxes were going to explode on him and he
went in and appealed and lost, like almost everybody else does, and that's one of the
reasons why Walter is in this fight right now on this side.
Mr. Kaneshiro: Okay, thank you. Any other questions for Mike,
committee members? If not, thank you, Mike. Thank you for your input. Anyone
else wanted to speak on this? Mr. Mickens.
GLENN MICKENS: Good morning. Thank you, Daryl. For the record
Glenn Mickens. I just want to say that I do support Mike's proposal 100%. I think
that the rate for the appeals from the public should be as low as possible to make it
conducive for them to get their rates lowered. I presume that's what they're there
for. I also think as Mike said that we need an arbitrator and not an appeals board.
I believe an experienced arbitrator could have a far better understanding of the
appeal than a board who may or may not have the experience that the arbitrator
has. In fact, Jay, I guess you could answer that question of who does pick the board.
Is that chosen by the mayor that picks...
Mr. Furfaro: Well and confirmation comes by the Council.
Mr. Mickens: By the Council, but the mayor is the one that picks
it. Is that right?
Mr. Furfaro: Yes, correct.
Mr. Mickens: And as Mike pointed out, it seems like almost 100%
of the time you go there for the appeal and the board's already...I don't know ;
they...it sounds and I've never had to appeal any, but it sounds as though the board
has their mind made up the way they're going to vote. They aren't listening to
actually the facts of it. Where I think that...again, I think that they...an
'experienced arbitrator, somebody gifted in the tax department, real estate and
everything would have a far better idea of what's going on. And lastly, I do believe i
that the 2% cap should...I heard your arguments, Jay, and you make some valid '
point, but I do believe that the 2% cap should stay on. I think the...
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Mr. Kaneshiro: Glenn, we're not going to go there right now.
Mr. Mickens: Oh okay, okay.
Mr. Kaneshiro: That's not the subject matter.
Mr. Furfaro: I just want to clarify one thing.
Mr. Kaneshiro: Yes.
Mr. Furfaro: I'm quite the opposite. I'm not promoting its
removal.
Mr. Kaneshiro: Right. What he used was an example.
Mr. Furfaro: Example if they do.
Mr. Mickens: Right, right.
Mr. Kaneshiro: So, we're not promoting that the 2% be cut off or it's
still going to be ongoing. So I don't want to, as chair of this committee, get into
those discussions, just to let you know.
Mr. Mickens: Right, right.
Mr. Furfaro: Thank you, Mr. Chair.
Mr. Mickens: Thank you, Daryl.
Mr. Kaneshiro: Because what this could lead to is as you know
from history, that this could probably be on the front page as a proposal even
though, you know, he used it as an example. So, I want to make it clear that I had
allowed Mr. Furfaro to talk on the particular subject using that as an example for
reasons of appeal and so forth.
Mr. Mickens: Yes, yes.
Mr. Kaneshiro: But that I'm...
Mr. Mickens: But I find his point was well...his point was well
taken and I didn't mean to go into that direction, okay.
Mr. Kaneshiro: I just want to be clear as chair of this committee
that...it's not a debate of whether it's going to be or not to be.
Mr. Mickens: Right, I got you.
Mr. Kaneshiro: Anything else you wanted to ask, Mr. Mickens?
Mr. Mickens: No, that's all, thank you.
Mr. Kaneshiro: Thank you. Any questions for Glenn? If not, thank
you very much. Anyone else here wanted to speak on this item. If not, I'll call the
meeting back to order.
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There being no one else wishing to testify, the meeting was called back to order.
Mr. Kaneshiro: Any comments by our committee members before I
call for a motion to defer? Anyone wanted to make any comments on this tax appeal
process?
BILL "KAIPO" ASING: I just wanted to make a few comments.
Mr. Kaneshiro: Okay, sure, go ahead, Mr. Chair.
Mr. Asing: You know comments on possibly the makeup of the
Board, you know, putting some expertise on the board. You know, all boards and
commissions were not intended with that purpose in mind. All boards and
commissions were intended as members of the public who participate and get their
information from staffing. That's where the information comes from. So, in this
case the information comes from the tax appraiser. That's where all the
information comes from. Now the board members, yeah, would be taking that
information and the information from the person that is appealing and that member
would take the information on both sides and make a judgnnent. So, that's the
intent. The intent of boards and commissions was not to put experts on these
boards in different areas. These are normal lay people but the information is
already supplied and therefore, you need another panel of people and that's where
the boards and commissions were. As an example, even in the Planning
Commission, you don't need the experts. All of the information is there. If
additional information is not available because they are not presented, then board
members should ask for additional information and then the information is given
and that's how the board is set up. So that's our system. That's the system that we
have set up. I'd also like to stress the process in this particular case, I'm talking
about the appeals case, is you go to this board first and if you do not agree, there is
the next process, which is the courts, so you go to the tax court. So, it's a system
and a process that has been set in place and I think it's a reasonable process that's
been set in place. So, I just wanted to, you know, mention those comments. Thank
you.
Mr. Kaneshiro: Thank you. Any other comments? Mr. Furfaro, go
ahead.
Mr. Furfaro: Yes, I do appreciate the Chair's sharing with the
public the process, but you know what we are hearing is the fact that many, many
appeals don't seem to get satisfaction and the fact of the matter is in also looking at
statistical information, I do know that many people in the past found themselves
not going to the Appeals Board and I'm not talking about a number of people, I'm
talking about a handful, but they'll go to the next step directly to the court with
their appeal. And I have great faith in many of those individuals that do
participate in volunteer work and they do have those particular skills. But I
thought it was good in just this committee and as I offer this amendment when we
have a full group, as you pointed out Committee Chair, I just thought it was a good
time to have dialogue about those particular options and concerns. What I do want
to reiterate and thank you, the only reason I brought up the current caps is
government needs to think in terms of strategies that occur. If we do remove a cap
as recommended by the Finance and Tax Office in their bill, we need to make sure
that we understand what the potential impacts are. And that is why I brought that
up and I think many people know that I was a supporter of the cap, but that's the
consequence.
Mr. Kaneshiro: Right.
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Mr. Furfaro: That's all I was trying to bring up and thank you
for bringing us back to the main mission here on the appeals process.
Mr. Kaneshiro: Thank you, thank you. And as additional comment
I just wanted to give an example that in 2008 we had, excuse me, roughly 208 tax
appeals and out of that, half of it...half of the tax was refunded. So, it's not about
100% or anything like that. I just wanted to point that out that we do have a
system that is working, but not to the satisfactory of everyone. So, with that, can I
have a motion to defer?
Upon motion duly made by Councilmember Furfaro, seconded by
Councilmember Chang, and unanimously carried, Bill No. 2292 was deferred.
CR-B&F 2009-01: on Bill No. 2297 A BILL FOR AN ORDINANCE AMENDING
CHAPTER 5A, KAUA`I COUNTY CODE
1987, AS AMENDED, RELATING TO
KULEANA LAND
[Approved.]
There being no further business, the meeting was adjourned at 9:35 a.m.
Respectfully submitted,
~g(by(A' Ak~~
. Wilma Akiona
Secretary
APPROVED at the Committee Meeting held on February 4, 2009:
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C-A L 33
DAR, W. ES RO
Chair, Budget & Fin ce Committee
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