HomeMy WebLinkAbout01/16/2020 Public hearing minutes on BILL 2767 PUBLIC HEARING
JANUARY 16, 2020
A public hearing of the Council of the County of Kaua`i was called to order by
Luke Evslin, Chair, Finance & Economic Development Committee, on Thursday,
January 16, 2020, at 1:36 p.m., at the Council Chambers, 4396 Rice Street, Suite 201,
Historic County Building, Lihu`e, and the presence of the following was noted:
Honorable Arthur Brun
Honorable Mason K. Chock
Honorable Felicia Cowden
Honorable Luke A. Evslin
Honorable KipuKai Kuali`i
Honorable Arryl Kaneshiro
Excused: Honorable Ross Kagawa
The Clerk read the notice of the public hearing on the following:
"Bill No. 2767 — A BILL FOR AN ORDINANCE AMENDING
CHAPTER 5A, KAUAI COUNTY CODE 1987, AS AMENDED, RELATING
TO REAL PROPERTY TAXES,"
which was ordered to print by the Council of the County of Kaua`i on
December 4, 2019, and published in The Garden Island newspaper on
December 13, 2019.
The following communications were received for the record:
1. 4157136617, dated January 7, 2020
2. Bonte, Melissa, dated January 8, 2020
3. Carroll, Brennan, dated January 6, 2020
4. Diamond, Caren, dated December 4, 2019
5. Dillberg, Dustin, dated January 14, 2020
6. Fischer, Gary, dated December 16, 2019
7. Freeman, Elizabeth, dated January 14, 2020
8. Garrison, Diane, dated January 14, 2020
9. Imparato, Carl, dated January 15, 2020
10.Joshi, Rakesh, dated January 5, 2020
11.Kaaumoana, Makaala, dated January 16, 2020
12.Newman, Doug and Anne, dated December 23, 2019
13.Ono, Karen, dated January 13, 2020
14.Ono, Karen, dated January 15, 2020
15.Perriello, Mark, dated January 14, 2020
16.Sedgwich, Steve, dated January 13, 2020
PUBLIC HEARING 2 JANUARY 16, 2020
BILL NO. 2767
The hearing proceeded as follows:
SCOTT K. SATO, Deputy County Clerk: We received sixteen (16) pieces
of written testimony; five (5) in support, six (6) opposed, and five (5) providing
comments, and have seven (7) registered speakers. The first registered speaker is
Joan Levy, followed by Judy Mahon.
Committee Chair Evslin: Thank you, Joan, you can come up. To clarify
for everyone in the audience today a public hearing is just an opportunity for us to
hear from you folks. There will be no deliberation on our end. In fact, our rules
prohibit us for making opinions or even asking questions. This is our opportunity to
listen to you. Everyone will have three (3) minutes to testify. If you have more than
that to say at the end, after everyone was given an opportunity to speak for their first
three (3) minutes, you can come back and have another three (3) minutes. Joan, can
you state your name for the record?
JOAN LEVY: Joan Levy. I came home from a month of
medical treatments in Mexico to find a letter from the County saying that my house
was changed from Homestead Residential to Commercial Use, which tripled my tax,
because I sometimes participate in home exchange. I was shocked and I am appalled
at how I see the County overstepping their region to what I consider my personal
choices, which do not affect anyone else...so much so that even if though Kaua`i has
been my home for twenty-six (26)years, I have been considering selling my house and
leaving Kaua`i. I am just so shocked at how I am being treated. To categorize home
exchange where I trade houses with another person who lives somewhere else with
no money exchanged on the occasional trip...and lately my case for medical treatment
reasons, for a week or so at a time while I continue living most of the rest of the year
alone in my house with no rentals of any kind, as the vacation rental businesses is
neither right nor just. How can the County justify asking me to pay the same
commercial tax rate as people who run a profit making vacation rental business all
year long? This is beyond the beyond. For my personal occasional income less home
exchanges—how can it adversely affect my neighborhood when I am off-island and
someone else is in my home for a week or so? How can this unjust demand on me
possibly improve the problems we have with Kaua`i's dire lack of affordable housing?
I understand it is a real problem and I understand that you are also trying to address
that, which I appreciate. The person who comes into my home on a home exchange,
one thing that makes it really nice is that they are committed to taking care of my
house, because I am committed to taking care of their house. It is a very personal
exchange, it is not like a business and it is a membership organization. This is just
plain wrong and I ask the Council to do what you can to right this wrong. Please
remove home exchanges from any kind of vacation rental taxation or commercial real
estate tax status. Please return my home and anyone else on-island who happens to
be participating in home exchanges to residential homestead tax status. Thank you.
Mr. Sato: The next speaker is Judy Mahon, followed by
Julie Simeona-Chong.
PUBLIC HEARING 3 JANUARY 16, 2020
BILL NO. 2767
JUDY MAHON: Aloha, Councilmembers. For the record, my
name is Judy Mahon. I am speaking today to voice my displeasure of the pending
Bill No. 2767. The Bill seeks to adjust tax classification for commercialized home use
and to exclude properties used for vacation rentals from the assessment cap for the
home exemption property. The stated purposes is to equitably distributed that cost of
County infrastructure...I am the homeowner and operator of a property that is my
primary full-time residence and legally permitted and zoned Homestay. The
Planning Department initiated the application process, which mandated a zoning
classification change and nonconforming use permit. A public hearing to obtain the
Planning Commission permit approval was held and our application passed the
process to obtain the appropriate permit. To operate a homestay was extremely
difficult and costly. It also resulted in an increase in our tax for our property. As
conditional of the approval, we are required to maintain a Homestay exemption on
our property. We have complied with every stipulation of the permit and continue to
do so. Bill No. 2767 strips us of the Homestay exemption rendering the Planning
Department requirement null and void. It also renders our approval permit null and
void and this is not an equitable situation. We do not use our permit to the allowed
capacity and have never had a complaint of noise or neighborhood interruption of any
sort. We maintain our property meticulously and have served as a home for visiting
local families from other islands, as well as for small inter-island businesses to housed
employees while on Kaua`i. A small legally permitted homestay operation like ours is
not contributing to infrastructure deterioration any more than a family of four (4)
might. The main difference is that our guests are not here every day of the year, we
provide off-street parking for our guests, we need only to look at some recent projects
to determine that a much higher impact of infrastructure is without question caused
by massive development, which you can find on our south side. Certainly have much
matched any definition of affordable housing. As stated in numerous County opinions
that homestay operations reduce housing for local families—why then are the
approved projects targeted at absentee ownership and speculation for immediate
entry into the vacation rental market. Hundreds of new units all priced beyond reach
of many local families are being built, many of them rent it at a much higher capacity
and occupancy rate than the simple home; one-bedroom homestay. I would like to just
say illegally rented properties are far more detrimental to the quality of life and to
deteriorate our infrastructure simply because they do not pay their fair share of taxes.
Targeting legally permitted properties zoned Homestay properties such as ours
places an unfair, inequitable tax burden on your island residents that choose to
operate incompliance with the rules agreed to by the County when the applications
were approved.
Committee Chair Evslin: Ms. Mahon, you can come back.
Ms. Mahon: I just want to say, for this reason, I am against
this Bill and I thank you for your time.
Mr. Sato: Next speaker is Julie Simeona-Chong,
followed by Amy Frazier.
JULIE SIMEONA-CHONG: Aloha, Councilmembers. My name is Julie
Simeona-Chong. I am here to offer feedback for Bill No. 2767 as it applies to our
PUBLIC HEARING 4 JANUARY 16, 2020
BILL NO. 2767
homestay permit issued in 2015. The primary concern I have and correct me if I am
wrong but the Bill proposes to remove the assessment cap essentially taking away a
homeowners exemption or the value of it for any real properties offering vacation
rental or hotel uses. A homeowner's exemption is one of the requirements and
conditions of our homestay permit issued in 2015 and this Bill would directly
contradict that permit. The County's website lists four hundred forty-one (441)
permitted vacation rentals outside the visitor designation area (VDA). Of those four
hundred forty-one (441) properties, only fifteen (15) are permitted homestays,
meaning they are primary residences with owner home exemption deductions. It
appears that this Bill is singling out fifteen (15) properties out of all the hotel rooms,
vacation rentals in the VDA, and transient vacation rentals (TVRs), not to mention
vacation rentals that are not permitted to address the island's need to help cover a
yearly budget for infrastructure. I recognize the need for funds to operate our
infrastructure, but to do so in a way that is equitable and fair. One (1) out of every
three (3) people on Kaua`i is a visitor according to recent statistics in 2018, so this
implies that a third of the infrastructure costs can be allotted to tourism, while two-
third to our local population. Can we find a way to divide that budget across the board,
because visitors and residents alike enjoy those public services and conveniences?
Thank you.
Mr. Sato: The next speaker is Amy Frazier, followed by
Smoky Bayless.
AMY FRAZIER: I am Amy Frazier, I spoke previously about
the Bill, and shared our story how this is going to impact us. This is a recap, we are
owner-occupants, we have a one-bedroom detached TVR on our property, and to be
clear, we do not have a TVR, nor do we rent our owner-occupant home, which is the
majority of our property. My concern is just the very basic concern, which is we are
going to be charged at a TVR rate for a home that we are not allowed to rent, nor do
we rent. That to me is basic unfairness. I will happily pay the TVR rate on the TVR
portion of our property, but I think as every other owner-occupant on the island, I am
afforded the owner-occupant rate. The whole reason we had the Commercialized
Home Use rate is because when our County switched to a use tax system there was
not a way within our software to proportion it out the tax bill. The previous County
Council created Commercialized Home Use because we did not have the resources to
properly define usage, even though we are on a usage tax system. They created this
as a place as a compromise. We have been bounced around since we bought our home
ten (10) years ago from our initial rate to the TVR rate to having a cap to not having
a cap to being thrown into commercialized home use and then to be thrown back in
the TVR rate. Our taxes have already gone up four hundred percent (400%) and this
will take us up to six hundred fifty percent (650%) for an owner-occupant majority
situation. I read this article the other day, I thought it was interesting...I do not
know if I am going to run out of time, but they ranked all fifty (50) States in Hawai`i
from the lowest to the highest property taxes. Hawai`i has the lowest. Average
homeowner in Hawai`i pays about one thousand dollars ($1,000) a year. New Jersey
has the highest at a per capita rate of three thousand dollars ($3,000) per year in the
Nation. I already exceed that in the Commercialized Home Use rate. I already exceed
the national average for owner-occupant situation. To me, it is just basic fair and go
back to the problem, which is the Finance Department does not have the right tools
PUBLIC HEARING 5 JANUARY 16, 2020
BILL NO. 2767
to appropriately charge use based on use, but we have a use tax-based system. That
is the big problem here.
Mr. Sato: Next speaker is Smoky Bayless, followed by
Diane Garrison.
SMOKY BAYLESS: Good afternoon. Thank you in advance for
listening to the comments. As you all know being those in charge for making
improvements and trying to see the big picture and effect positive change is always
going to be unintended consequences to any action within a closed system like this
beautiful island of Kaua`i. I listened to my wife, she spoke on December 4th to you all
and two (2) things I got out of the transcriptions from that meeting was that you all
are trying to make the classification of taxation equitable amongst those that have
TVRs; and number two, you wanted to fairly and/or equitably distribute the County
cost of services that those TVRs may cost the County. Let us talk first about equity.
We have two hundred eighteen (218) people who are going to be affected by this Bill
and if we actually go back to the basics of property taxation, for the reason that is our
family is paying...for all intent and purposes, fifty (50) times more than the average
Homestead rate on this island. If we count the transient accommodation clients or
renters that come in and stay on our property, we are essentially the wear and tear
factor of a family of five (5). For a family of five (5) in our town versus a family
of five (5) in a different part of Kaua`i, are we actually getting fifty (50) times more
services or are we actually causing fifty (50) times more wear and tear? If this Bill
passes we will be at about one hundred times the average for the Homestead and
clearly that is not fair. That would not be fair to anyone in this room. That is one
unintended consequences of this Bill if it were to pass. As all TVR people that have a
permit, we pay seven hundred fifty dollars ($750) a year to the County—that is over
fifty percent (50%) of what the average Homestead property tax payment that an
average family on Kaua`i pays. We pay that. We also pass-through the transient
accommodation tax and the General Excise Tax (GET) tax, we pay the Hawai`i State
taxes on every penny that we make. We provide directly and indirectly to the County
of Kaua`i through those four (4) means to support the programs and to support the
infrastructure costs. This Bill would take it to a level that we would no longer be able
to afford to stay on the island. Thank you so much for your attention. I do really
appreciate this and I understand the difficulty of your position and I would not want
to have your jobs. Thank you.
Mr. Sato: The next speaker is Diane Garrison, followed
by Carol Peacock-Williams.
DIANE GARRISON: Good afternoon. My name is Diane Garrison.
I am here to voice the affect this Bill will have on my husband and I. We are residents
of Kaua`i since I retired fifteen (15)years ago and have had an association with Kaua`i
since we were newlyweds. We are in our home nine (9) months a year. We took our
home out of full-time vacation rental by the previous owner and rent only two (2)
months a year. This is a benefit for an island over used by tourists. Perhaps
commercialized home use is the best description of our tax class despite the TVR
license. Being outside the Vacation Designated Areas (VDA), we do not have full
control of our land. Our NCU permit requires that we use the land for agricultural
PUBLIC HEARING 6 JANUARY 16, 2020
BILL NO. 2767
purposes, rather than for having permission to build a swimming pool to enhance our
vacation market ability. We are in complete agreement with this restriction. Being
here full time we can produce and share food crops. This is a benefit for an island
without sufficient emergency food supply. Perhaps the land should not be classified
as TVR, but should be in a hybrid tax classification. Our permit is grandfathered, so
we cannot give it up and later reapply. Perhaps it would give us more options if we
were able to temporarily suspend our permit, but have it remained registered as a
valuable addition to our land. Putting everyone who has a TVR license into a TVR
tax classification is easy to administer, but far from fair. It is not a uniformed tax
class. Owners who vacation renting full-time are not overly concerned about property
taxes, as they can be deducted from rental income and also offset other income the
investor has. In our case, removal of the cap and increase of the tax rate will quickly
cause expenses to exceed rental income eventually forcing out of our home. There are
possible remedies offered by the sponsors of the Bill, but they do not make economic
sense in our case. We would sell our house and downsize. The buyer would almost
certainly be an off-island investor who would vacation rent full-time. The
replacement home we buy would be a moderately priced home, which might have
otherwise gone to an other island family. I am guessing and so far there is proof that
we are not the only residents in the similar situation and that there are unintended
consequences to this Bill. Thank you.
Mr. Sato: Next speaker is Carol Peacock-Williams,
followed by Bill Cowern.
CAROL PEACOCK-WILLIAMS: Hi, my name is Carol Peacock-
Williams. My husband Joe Williams and I are both retired and we live full-time in
Lihu`e. We built our energy efficient home, our house, to be as affordable as possible
fifteen (15) years ago. The two (2) of us are not a resort. If we decide to swap our
house or do a home exchange with another couple once or twice a year...we started
doing home exchanges when our daughter was highly encouraged by her school and
counselor to go and visit as many colleges on the mainland as we could, ten (10) of
them. We scheduled a summer to go and visit as many colleges as we could. The only
way we could afford to do this was with home exchanging and that is when we joined
home exchange. Now we do home exchanges to visit our daughter in California, which
is the only way we can afford to do this. House swapping or home exchange points are
not rent money. Points cost nothing. We are given these points on home exchange.
By the way because of this possible bill passing and our Homestead exemption being
taken away, we have ended our membership with HomeExchange.com as of
December 30th and I have a printout proving that of December 31St, but yes, we are
still in the commercial category, which is higher than Homestead. If this Bill passes,
it would put us in the highest resort tax category according to the tax office here. Our
house would go up so much, it would be unaffordable for us. We are retired, keep this
in mind. We do not work. We collect social security, that is it. I do not even collect it
yet,just my husband does. I actually read to children on-island and promote literacy.
I would hate to have to leave and stop doing that on Read Across Kaua`i Day. Kauai
is not Honolulu and it should not be taxing homeowners in the same way. I know
Honolulu has done this, but we should not. If this Bill passes it could run existing
homeowners off of Kaua`i, just as ourselves. This is not good for the economy. My
husband is already talking about wanting to move, but I do not. Also, with so many
PUBLIC HEARING 7 JANUARY 16, 2020
BILL NO. 2767
homeowners affected by the way most of them do not even know about this, I just
heard about this meeting this morning...this could go into a class action lawsuit very
easily. Is that what the County of Kaua`i wants? Thank you.
Mr. Sato: Our last registered speaker is Bill Cowern.
BILL COWERN: I am Bill Cowern, from Lawa`i. I must admit
that I did not expect to see you folks again, but here we are. For history, we opened
our units in 1992. We are still operating exactly the same way we did then...we were
not causing infrastructure problems back then. I cannot believe we are contributing
a whole lot more today. I do not understand the infrastructure issue, but since then
we probably went and tried to get a permit four (4) or five (5) times. Between 1992
and 2008 when the TVR law was passed, we came in again and tried to get a permit,
and they said, "No, you are exempt from the TVR law; you are not a TVR, you are a
bed and breakfast. You not only need a permit, but we do not have anything to give
you." We went away. 2015 rolls around. Out of the blue we get a cease-and-desist,
get fined, get maliciously prosecuted in State Court—all of which was thrown out,
because they were charging us for violating the TVR law, which they obviously clearly
exempted us from. Now it seems to me that we are being thrown right back in again,
"Now when we want to tax you,you are a TVR,"right?I do not think this is reasonable
at all. We do not add to infrastructure, we got two (2) people who stay home every
day instead of going to work, right? I got maybe two (2) or three (3) kind that might
leave each day. Other people who run home businesses have far more impact on the
traffic on this island. People who are hair dressers or people who are attorneys, or
people who are CPAs; there are a number of home businesses with people arriving to
their house ten (10) or twelve (12) times a day. That is far more than we ever see
happening from our property. I just believe that this needs to be looked at a little
harder.
Committee Chair Evslin: Is there anyone else in the audience wishing
to testify who has not sign up? Is there anyone who wants to testify for a second
time? Seeing no further public testimony, this public hearing is adjourned.
There being no further testimony, the public hearing adjourned at 2:01 p.m.
Respectfully submitted,
t7\42
S OTT K. SATO
Deputy County Clerk
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