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Homeowner taxes could be lower, hotel rates could go up

Budget committee lays out proposed property taxes

Visitor accommodations could see an increase in taxes under a Maui County Council committee’s current budget proposal. Committee members are raising taxes in hopes of generating more money for affordable housing. The Maui News / MATTHEW THAYER photo

High-priced homes and visitor accommodations could see property tax hikes, while owners of more affordable homes could experience some relief under a proposal by the Maui County Council’s budget committee.

An increase in taxes for hotels and resorts, short-term rentals and timeshares, as well as for properties worth more than $1.5 million could provide more funding for affordable housing, said committee members, who are hammering out tax rates as they near the end of their review of Mayor Michael Victorino’s proposed fiscal year 2022 budget. The highest-tier categories also have the means to pay more, they added.

Other members, however, said the increase in taxes was unnecessary — especially with no specific project in mind to fund — and that bond funds could be used instead to start the infrastructure work for affordable housing.

The Budget, Finance and Economic Development Committee, which voted 5-3 on Thursday in favor of the proposed rates, will send its proposal to the full Maui County Council, which is scheduled to make a decision on May 14 following a public hearing.

Under the proposal, hotels and resorts could see their current rate of $10.70 per $1,000 of net taxable assessed value jump to $11.75. Timeshares could see rates go from $14.40 to $14.60.

Proposed property taxes for fiscal year 2022 would offer some relief for homeowners in the lowest-tier categories while raising rates on visitor accommodations. The Maui County Council’s budget committee voted 5-3 on Thursday to recommend the proposed taxes for consideration by the full council. The Maui News / MATTHEW THAYER photo

Short-term rentals that have assessed value less than $800,000 could see rates go from $11.08 to $11.11, while rentals in the second tier from $800,001 to $1.5 million would see a jump from $11.08 to $11.15 and those in the third tier worth $1.5 million and above would see an increase from $11.08 to $11.20.

Victorino had kept tax rates the same for the hotel and resort and timeshare categories in his proposal to the council, while decreasing tax rates in each tier of the short-term rental category. The mayor had cited COVID-19 impacts in his decisions, with the visitor industry among the hardest hit when travel slowed and hotels shuttered.

Both Victorino and the budget committee, however, aim to lower tax rates for owner-occupied homes in the first tier of $800,000 and below, going from the current rate of $2.51 to $2.41. Both have also proposed a slightly lower rate for the second tier of owner-occupied homes worth $800,001 to $1.5 million, from the current tax rate of $2.56 to $2.51. While Victorino sought to keep rates flat for the third tier of owner-occupied homes over $1.5 million, the budget committee is seeking an increase from $2.61 to $2.71.

Rates for the most expensive homes not occupied by the owner would also go up under the budget committee proposal. While both Victorino and the committee are seeking to keep the current rates the same for the first two tiers of the non-owner-occupied category, Victorino proposed an increase from $6.90 to $7.50 for homes valued over $1.5 million and the committee upped it to $8.

Real property taxes are typically the largest source of income from the county. Victorino’s proposed rates would bring in $373.6 million, while the committee’s rates would net $383.2 million, about $9.6 million more, according to committee documents.

For now, there are no concrete plans for the extra funds that would be generated by the increase in taxes.

Voting in favor of the proposed rates were committee Chairwoman Keani Rawlins-Fernandez and Council Members Tamara Paltin, Kelly King, Shane Sinenci and Mike Molina.

Rawlins-Fernandez said she was “not really stoked about raising property taxes” and that there is more than one way to address the affordable housing crisis. However, she said she would vote with the majority to move the item along and pointed out that the committee added in safeguards to protect residents.

Council Chairwoman Alice Lee and Council Members Yuki-Lei Sugimura and Gabe Johnson were opposed to the tax rates.

Lee said she disagreed with some rates, noting that the “actual intent of raising taxes in here is to accumulate monies for infrastructure.”

“And that is not my priority at this point, because we don’t have a project and we don’t have a plan,” she said. “I wouldn’t mind, if anything, raising some money to help local families that are trapped by the high appreciation of homes around them. That’s something I think we need to address, either now or in the future, the near future.”

“But this is a pressing need as opposed to raising funds to bank and to park for when some project comes along,” she added.

Johnson voted against the proposed rates because he wanted higher taxes for hotels and resorts.

“I disagree with the body and that’s O.K. We are adults, I don’t think we tried hard enough,” he said. “You know (affordable housing is) a crisis, and it’s time to act. I say it all the time, ‘if your hair is on fire, you got to act like it.'”

Testifiers at a virtual real property tax public hearing on Wednesday night called for most rates to stay the same, while others wanted to see higher rates for visitor accommodations.

Maui Chamber of Commerce President Pamela Tumpap said that although businesses are still reeling from the pandemic, they understand the need to fund the county’s priorities and asked asked that property tax rates remain flat for apartment, agriculture, conservation, industrial, hotel and resort, timeshare, commercial and commercialized residential categories.

She also asked the council to accommodate the higher median home prices that residents are facing and extend tier one in the owner-occupied category to include homes with values assessed up to $1 million, to include as many residents as possible.

The chamber also supported Victorino’s proposal for the short-term rental rates.

Dr. Genesis Young said property tax rates should be raised for hotels and other visitor accommodations, so if the properties do increase their rates in turn, it would garner “higher quality” visitors and maybe fewer overall. Young who was testifying on his own behalf and as chairman of the Sustainable Tourism Subcommittee of the Climate Action and Advisory Citizens Group, said he recommended a $16.41 rate for hotels and resorts along with timeshares and short-term rentals.

He reminded the committee that the full council passed a resolution in February stressing “quality over quantity” when it came to Maui County visitors.

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

Proposed property tax rates for fiscal year 2022

As the Maui County Council continues its review of the budget, members are hashing out the proposed property tax rates for the upcoming fiscal year. The following is a list of the current property tax rates, Mayor Michael Victorino’s proposed rates and the council budget committee’s proposals:

Owner-Occupied:

Tier 1: Up to $800,000; $2.51 (current); $2.41 (mayor); $2.41 (council).

Tier 2: $800,001 to $1.5 million; $2.56; $2.51; $2.51.

Tier 3: More than $1.5 million; $2.61; $2.61; $2.71.

Non-Owner-Occupied:

Tier 1: Up to $800,000; $5.45 (current and proposed).

Tier 2: $800,001 to $1.5 million; $6.05 (current and proposed).

Tier 3: More than $1.5 million; $6.90; $7.50; $8.

• Apartment, $5.55 (current and proposed).

• Hotel/Resort, $10.70; $10.70; $11.75.

• Timeshare, $14.40; $14.40; $14.60.

Short-Term Rental:

Tier 1: Up to $800,000; $11.08; $10.70; $11.11.

Tier 2: $800,0001 to $1.5 million; $11.08; $10.85; $11.15.

Tier 3: More than $1.5 million; $11.08; $11; $11.20.

• Agricultural: $5.94 (current and proposed).

• Conservation: $6.43 (current and proposed).

• Commercial: $6.29 (current and proposed).

• Industrial: $7.20 (current and proposed).

• Commercialized Residential: $4.40 (current and proposed).

All rates are based on $1,000 of net taxable assessed value.

The full council is expected to vote on the rates on May 14 following a public hearing. Fiscal 2022 begins July 1 and runs through June 30, 2022.

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