Business whammy

The reaction to County Council Member Mike White’s call to hold the line on property tax rates was quite interesting.

In short, nobody who spoke up wants to do it. That’s because none of the other councilors apparently has run a business with property attached to it.

Currently, many businesses in Maui County are being hit by a double whammy – vastly increased property assessments AND increased property tax rates. As it was explained to us, if some developer in your neighborhood pays through the nose for a piece of property, the assessed value of your land is going to jump up.

It doesn’t matter if your company is an established business with little or no growth – if somebody is foolish enough to cough up big bucks for land near you, your assessment is going along for the ride. Even if there is absolutely no demand for your land.

We have been a bit surprised by the aggressive assessments because there are high vacancy rates among commercial properties, including retail. Last summer, Collier’s International reported that Maui’s vacant retail space was the highest in 13 years. As for office space, in 2012 Collier’s reported that Maui had just finished a third straight year of “negative net absorption.”

Collier’s report last July said:

“Collier’s forecasts that Maui’s office market will likely remain at or near its current levels for the next year. Typically, office-using industries are among the last sectors to show a recovery after an economic downturn. Additionally, job growth needs to be sustained over a period of time before employers actually seek to expand and secure additional office space for their workforce.”

Now, we would interpret the Collier’s report to mean less demand for commercial space. So why are assessments skyrocketing?

And our council and mayor want to compound the cost for businesses by increasing the tax rates, too.

We’d say they should listen to Mike White.

* Editorials reflect the opinion of the publisher.