The Kaua’i County Council yesterday looked at two property tax relief measures yesterday – one proposing credit or refunds to help property owners remain in their homes as valuations spiral and another to help churches obtain tax exemptions earlier.
But the council, meeting at the historic County Building, decided to refer to a public hearing on Dec. 12 the tax relief bill for residents because the measure had changed substantially from an earlier one.
County attorney Hartwell Blake noted the contents of the two bills were “like night and day.”
The revision, introduced by council chair Ron Kouchi, appears to more narrow in its focus, helping mostly homeowners who have an exemption and live in their homes.
Kouchi initially introduced a bill proposing to roll back property assessments at least two years, as a way to help long-time residents stay on their land. That bill applied to more tax categories – single-family, residential, agricultural and homestead.
The bills were generated in response to a significant increase in property sales to mainland buyers over the past four years.
The revised bill, if passed into law, would provide relief to the homestead class by amending a circuit breaker law, Kouchi said.
It would limit the taxes in the homestead classes to a percentage of the adjusted gross income of the household. The provision applies to a homeowner and a spouse who live in their home and qualify for a tax exemption.
The amendment proposes a homeowner will be entitled to a credit or refund “in the amount that the real property tax assessment on the homeowner’s property exceeds three percent of the household.”
The credit will not apply if taxes on the property are delinquent.
No credit or refund shall be granted unless the homeowner submits an application to the county’s finance department.
Because the matter is going to public hearing, the council took no testimony. However, Hanalei resident Ray Chuan was ready to submit written testimony outlining what he considered to be shortcomings in the bill.
– The tax is based on income and a percentage of a household income. The county, however, has no authority to levy an income tax.
– The bill “unduly” burdens young folks and will benefit more wealthy people.
– Wealthy people will have more deductions, hence they will end up paying a smaller fraction of what they are paying now in property taxes.
– The issue is complicated and should be analyzed and taken up by the new council.
During a public hearing on the other tax relief measure, clergymen from Kaua’i voiced support for an exemption that would take effect after a church or non-profit group files for a county or state land use permit, zoning permit or building permit.
Approval of the bill would help church and non-profit to better time the use of construction funds and allow them to continue to provide services to communities, the clergymen said.
Bob Hallman, pastor at Calvary Chapel Kauai in Kapa’a, said adoption of the bill provision would mean a church would be elegible for property exemptions once they acquire vacant land.
Currently, exemptions only kick in when the church is completed “and the doors are open,” said Hallman, whose church has acquired 66 acres for a new church site.
Passage of the bill also would be timely because, through a new law to be enacted Jan.1 tied to agricultural dedications affecting non-profit groups and churches, a church, for instance, would be taxed for land that is not yet developed and not being used for nonprofit purposes, Hallman said.
For instance, if a church develops only three acres of a 10-acre parcel it owns, the church will be taxed on the other seven acres, Hallman said.
What do with land owned by churches or non-profit groups that has not been developed has created challenges for his staffers, said Les Brown, real property tax manager for the county.
His staffers would visit sites, point out specific uses and note that the balance of the land not developed is taxable, he said.
“So if we can get the exemption over the entire parcel, that they can’t subdivide or sell, that would be a very important factor,” Brown said.
Other clergymen said churches usually don’t have a lot of construction funds and any savings derived from exemptions would help them to continue to provide community services.
One man said churches and nonprofit groups provide a safe haven to young folks who could get into trouble because they have no other place to go.
The impact of the bill, if implemented, would be “essentially be minimal because all it is doing is backing up the time when the exemption would start,” Brown said.
Brown said he personally would like to see exemptions kick in “when there are building permits.”
However, he said the pastors “have brought up a good point frequently. It takes them a long period of time to get the funds to be able to do something and having to pay (property) taxes in the interim, which can be very detrimental.”
The only critic of the proposed bill amendment, Andy Parx said “A lot of people believe this, and I know it is not going to affect your decision…I believe we should tax the churches.”
The county should not financially subsidize the churches through the exemptions, Parx contended.
The criticism didn’t appear to bother the clergymen, and one supporter of the bill responded by saying Parx was entitled to his opinion, adding “its free speech.”