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County to take in extra $7.8M from property taxes

Council sets higher rates for transient accommodations, lower ones for some homeowners

Wailea hotels seen in this June 2019 photo will face higher property tax rates next fiscal year. The Maui County Council Friday approved fiscal 2022 property tax rates which included hikes for visitor accommodations. — The Maui News / MATTHEW THAYER photo

The Maui County Council on Friday set property tax rates that will net about $7.8 million more in county revenues than the prior fiscal year.

The county is forecast to raise $383.2 million in fiscal 2022 from real property taxes, its largest income generator. The new fiscal year begins July 1.

For the current fiscal year, ending June 30, expected revenue from property taxes is approximately $375.4 million, according to the Office of Council Services.

Setting higher rates for visitor accommodations and lower ones for many homeowners, a resolution adopting real property tax rates for fiscal 2022 was approved Friday by a 7-1 vote.

Council Chairwoman Alice Lee was opposed and Council Member Tasha Kama was excused. 

Revenues from property tax rate increases for hotels, including these in Kaanapali, will go toward affordable housing infrastructure and helping residents, some Maui County Council members said. This photo was taken in 2019. — The Maui News / MATTHEW THAYER photo

Mayor Michael Victorino on Friday evening said the decision to raise taxes as the county faces the road to recovery is disappointing.

“As we begin our economic recovery from the pandemic, I am disappointed to see any increased taxes,” he said in a statement. “However, I will reserve further comment until passage of the budget.”

Citing COVID-19 impacts on the visitor industry, which came to a standstill after travel stopped and hotels shuttered, Victorino had proposed keeping tax rates flat for hotel, resort and timeshare categories, while decreasing tax rates in each tier of the short-term rental category.

With Friday’s decision, hotels and resorts will instead see their current rate of $10.70 per $1,000 of net taxable assessed value jump to $11.75. Timeshares will go from $14.40 to $14.60.

Short-term rentals that have assessed value less than $800,000 will go from $11.08 to $11.11; short-term rentals from $800,001 to $1.5 million will go from $11.08 to $11.15; and short-term rentals worth $1.5 million and above will go from $11.08 to $11.20.

Opponents of the tax hike on visitor accommodations argued that hotels, resorts, timeshares and short-term rentals are key contributors to the local economy and have been hard hit by the pandemic.

Supporters said the increases on visitor accommodations could provide funding for affordable housing infrastructure. They also said that if hikes are passed from properties to customers, Maui would attract higher-paying tourists. 

Lee said her vote Friday was consistent with her opposition to raising rates on visitor accommodations during Budget, Finance and Economic Development Committee talks.

“I felt that these businesses contribute over one-third of our revenues, so if we raise their rates, there needed to be a stronger justification than merely raising rates for infrastructure and no specific project,” she said after the meeting. “In this type of economic environment to me it’s not the time to raise rates, especially when there is no specific need. If there was a shovel-ready project, that would be a different story. But we have no shovel-ready project that I’m aware of.”

Both Victorino and the budget committee, however, agreed on 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 agreed on 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 council increased it from $2.61 to $2.71.

Victorino and the committee aligned on keeping current rates the same for the first two tiers of the non-owner-occupied category, but Victorino proposed an increase from $6.90 to $7.50 for homes valued over $1.5 million and the council upped it to $8.

Budget, Finance and Economic Development Committee Chairwoman Keani Rawlins-Fernandez before the council vote Friday praised members for long hours spent determining the rates.

“I would like to thank the committee members, the BFED committee members, who worked late into the night to come up with some kind of compromise and middle ground on determining these rates together,” she said. “The members worked really hard, chair, and I’m proud to support this resolution today.” 

Fiscal 2022 property tax rates per $1,000 of net taxable assessed valuation are as follows:

• Owner-occupied. $2.41 for Tier 1 (up to $800,000); $2.51 for Tier 2 ($800,001 to $1.5 million); $2.71 for Tier 3 (more than $1.5 million).

• Nonowner occupied. $5.45 for Tier 1 (up to $800,000); $6.05 for Tier 2 ($800,001 to $1.5 million); $8 for Tier 3 (more than $1.5 million).

• Apartment. $5.55.

• Hotel and Resort. $11.75

• Timeshare. $14.60

• Short-term rental. $11.11 for Tier 1 (up to $800,000); $11.15 for Tier 2 ($800,001 to $1.5 million); $11.20 for Tier 3 (more than $1.5 million).

• Agricultural. $5.94.

• Conservation. $6.43.

• Commercial. $6.29.

• Industrial. $7.20.

• Commercialized residential. $4.40.

The council on Friday will hold a public hearing on its version of the fiscal 2022 budget, which is also scheduled for first reading that day at the council’s regular meeting. Both are scheduled for 9 a.m.

* Kehaulani Cerizo can be reached at kcerizo@mauinews.com.

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