Council OKs higher property tax rates for most

Hotels, short-term rentals see greatest increase over 2018

WAILUKU — The Maui County Council on Friday approved property tax rates for the next fiscal year, which includes near across-the-board increases for property owners with hotels and resorts seeing the highest increase.

With councilors saying that the public is asking for more services and noting deadlines to move the tax rate proposal through, members voted 8 to 1 to approve a resolution for the rates, which will be effective July 1. Council Member Riki Hokama was the lone opposing vote.

The rates approved Friday will bring in about 5 percent, or $17.7 million, more than Mayor Michael Victorino’s property tax proposal, which mirrors current rates. The council rates are expected to garner $355.7 million in revenues, compared to $338.1 million in Victorino’s plan.

The highest rate hikes came for hotels and resorts, which will see an increase from $9.37 to $11 (17 percent more), along with short-term rentals, which will see an increase from $9.28 to $10.75 (16 percent more).

Homeowners will see a bump from $2.85 to $2.90.

All rates are based on $1,000 of net taxable assessed value. The rates are just one component of property tax bills, the other is assessed value, which is expected to be up this year.

In comparison, Victorino wanted to keep homeowner rates at their current level and proposed an increase to the hotels and resorts rate to $9.60 (a 2.5 percent hike from current levels) and short-term rentals to $9.55 (3 percent).

Council Member Mike Molina said that “nobody in their right mind” would want to raise taxes. “(But) we got to get the money from somewhere,” he said in explaining his affirmative vote and how the public is asking for more county services.

Molina said he especially didn’t want to raise taxes on homeowners.

He noted that the initial proposed tax rate for hotels that members wrestled with was “much higher” than the current $11 that was settled on. He admitted he wanted a little lower rate for hotels and resorts, but it was a compromise.

For those uneasy with the rates, Molina said “this is not the end-all.” If issues arise, remedies can be sought next budget session.

Council Member Tamara Paltin, whose residency district include resort area West Maui, also supported the rates. She pointed out that if rates were changed now, the council would have to “start the whole thing over” with the public hearings process.

That could push the council budget process past its June 10 deadline. If the council does not pass its version of the budget by that date, the mayor’s plan will become law.

About a dozen testifiers in a public hearing Friday before the vote were mostly from the hotel and resort industry and spoke against the increase to hotel rates. They said the rate hike could lead to loss of jobs, increased cost for visitors that may deter return visits and make it more difficult on an industry that is seeing less visitor spending.

Hawaii Lodging and Tourism Association President and CEO Mufi Hannemann told council members that “there is fat in every budget,” speaking from his experiences as a former Honolulu mayor and council member.

Hannemann noted that while visitors still are coming to the islands, spending is down and pointed out that illegal transient vacation rentals and short-term rentals in general are hurting the hotels and resorts as well.

Gregg Nelson, general manager of the Napili Kai Beach Resort, thanked council members for bringing down the initial proposed hotel and resort rates, which were more than $15, but added that he hoped they could bring it down further.

He said the increase in property tax rates and an increase in property valuation means he will probably “need to try and figure out” how to cover around $175,000 extra for next fiscal year for his smaller resort.

Heather Heath, with Maui Land Broker, a small real estate and property management firm, asked members to tax short-term rentals “to the highest level.” She said short-term rentals reduce long-term rentals for locals.

And a condominium complex she has worked with has had a drastic transition over the past several years where long-term rentals are now short-term rentals with owners just concerned about profits and revenues.

Health said not all short-term rental owners are solely in it for profits and some are nice, but added that there is a “new style of owner” on Maui.

Short-term rental owner Bob Hansen opposed the property tax increases, saying that with even with just valuations up, the county already will collect more taxes. (The county has said that valuations countywide in total will be up about 5 percent in the upcoming fiscal year.)

He estimated that with the new rates he would be underwater for the next fiscal year. He also was concerned about tax rates going up for visitor accommodations in general.

“Maui is so tied to tourism,” he added.

* Melissa Tanji can be reached at mtanji@mauinews.com.

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Property tax proposals

Shown are current property tax rates and proposals by Mayor Michael Victorino and the Maui County Council budget committee on Friday. Rates are for fiscal 2020, which begins July 1, and are per $1,000 of net taxable assessed value:

• Homeowner. $2.85, $2.85, $2.90.

• Commercial residential. $4.55, $4.55, $4.60.

• Residential. $5.52, $5.52, $5.60.

• Agricultural. $6, $6, $5.94.

• Apartment. $6.31, $6.31, $6.31.

• Conservation. $6.35, $6.35, $6.43.

• Commercial. $7.25, $7.39, $7.39.

• Industrial. $7.45, $7.48, $7.48.

• Short-term rental. $9.28, $9.55, $10.75.

• Hotel/resort. $9.37, $9.60, $11.

• Timeshare. $15.41, $13.93, $14.40.

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