Ka Wai Ola - Office of Hawaiian Affairs, Volume 9, Number 8, 1 August 1992 — Real-property tax exemptions on the way for Hawaiʻi island homesteaders [ARTICLE]

Real-property tax exemptions on the way for Hawaiʻi island homesteaders

by Jeff Clark Recognizing that Hawaiian homesteaders do not enjoy many of the benefits that customarily go with land ownership, the Hawai'i County Council has passed a resolution asking Hawai'i Mayor Lorraine Inouye to consider exempting homestead lessees ffom paying county real property tax.

Homesteaders do not own their land and are unable to sell or transfer their property, use it as collateral in seeking loans, or benefit from any increase in property values. Therefore, the Council felt, lands covered by the Hawaiian Homes Act

of 1921 as amended should be exempt from county real property tax assessments if used for houselots, farmlots and pastoral lot purposes. The full Council passed the resolution on July 1, with its sponsor, Kalani Schutte, abstaining from the vote. He cited a conflict of interest, because he is a homesteader, as the reason for his abstention.

It appears the county administration supports the tax relief. When Mayor Lorraine Inouye submitted her budget for fiscal year 1992-93 she had announced that she would support an exemption for residential lots. However, "in reviewing the matter further, she is leaning toward also

exempting the pasture lands and farmlots," according to Hawai'i County Finance Director William Takaba. Takaba said he is waiting to get information ffom the Department of Hawaiian Homelands on what impact the exemptions would have on the county's finances. The county would lose about $300,000 per year by exempting just the residential lots, he

said. He has received preliminary figures ffom DHHL on revenue generated by pastoral and farmlots but is waiting for a more detailed breakdown. Takaba said the mayor was willing to exempt residential lots regardless continued on page 14

Tax exemptions from page 7

of the impact, but needed to assess the impact of the other exemptions before making a commitment.

"It looks like the mayor is in favor of it," Takaba said. "I don't see a problem with it but we just need to see how it will affect us before we make a final decision.

"It doesn't seem like the impact will be that dramatic, so based on that, it looks like she will go ahead and provide real property tax exemptions for pastoral and farmlots as well." Takaba said any changes to the county's tax laws would take effect by July 1, 1993. Abraham Aiona, vice chair of the Office of Hawaiian Affairs Board of Trustees and chair of the Budget, Finance, Policy and Planning Committee, testified on June 23 in

favor of the Council's Resolution 47092. "OHA endorses this exemption as: one, consistent with the purposes of the Hawaiian Homes Act as amended; and two, a needed acknowledgment of the distinction between the property values and equity awarded native Hawaiians," he said.

OHA Trustee Kamaki Kanahele, chair of the State Council of Hawaiian Homestead Associations (SCHAA), also testified in favor of the resolution. The Hawai'i Council's resolution comes on the heels of Maui County granting real property tax relief to lessees of residential homesteads last April. Meanwhile, Councilmember John DeSoto has introduced a similar mea-

sure for consideration by the Honolulu City Council. Bill number 53 would amend a section of the Revised Ordinances of Honolulu so that homestead lessees would not have to pay real property taxes beyond the seven years of relief provided by the Hawaiian Homes Commission Act of 1920. "The Council finds that it is inequitable to the homestead lessees to assess and tax homestead land in the same manner as other leasehold property because of the specific limitations placed upon such lands by the Act," the bill reads.

Bill 53 passed first reading April 15 and was referred to the Budget and Finance Committee, whieh hadn't considered it prior to the four-week recess that began July 8. The next meeting of the committee is scheduled for Aug. 12. Hawai'i Councilmember Schutte told Ka Wai Ola that now that the res-

olution has passed and the Council's support has been confirnted, he is preparing to "inU"oduce the ordinance that makes it happen." He has drafted an ordinance, patterned after the one written by DeSoto, that would enact the exemption by changing the Hawai'i County law.

But Schutte said he wants to arm himself with more information before he introduces the ordinance. He is looking at how other aboriginal peoples such as Eskimos and American Indians have been treated elsewhere in the U.S. He feels that being able to show precedence in the treatment of other native peoples will help his case. "I don't want to get on the floor to debate tfiis until I have more information than what I have now," he said.

Schutte said he hopes to introduce his legislation soon, possibly decking the ordinance for committee in the first week of August.