The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Maui County Council Budget, Finance and Economic Development Commitee on Oct. 29, 2024.
_____________
Oct. 29, 2024, 9 a.m.
Council Chamber, Kalana O Maui Building
To: Maui County Council Budget, Finance and Economic Development Committee
Yuki Lei Sugimura, Chair
Tasha Kama, Vice-Chair
From: Jonathan Helton, Policy Researcher
Grassroot Institute of Hawaii
RE: BILL 147 — RELATING TO AUGUST 2023 MAUI WILDFIRES REAL PROPERTY TAX RELIEF
Aloha Chair Sugimura, Vice-Chair Kama and other members of the Committee,
The Grassroot Institute of Hawaii supports Bill 147 (2024), which makes a number of changes to property tax exemptions for properties affected by the 2023 wildfires and for those renting to people displaced by the fires.
First, it would extend until 2026 the real property tax exemption for properties that were completely destroyed or were in the red or yellow Lahaina burn zone as of January 1, 2024. Currently, these exemptions are slated to expire after fiscal 2025.
Mayor Richard Bissen waived property taxes for Lahaina, Upcountry and Kihei properties completely destroyed by the wildfires,[1] and the Council followed that action by passing legislation to waive property taxes on properties in the red and yellow burn zones.[2]
The Maui County Department of Finance estimates that these actions saved owners about $21.2 million in the current tax year, and would save about the same for fiscal 2026.[3]
Bill 147 (2024) would also extend property tax relief granted to those who are renting to displaced residents until the end of fiscal 2026. Right now, property owners can receive different levels of relief depending on whether they lease for between six and eleven months or for one year or more.
Rentals of six to eleven months can receive a $300,000 exemption on the taxable value of their home. The bill would allow new potential rental owners to apply for this exemption by Jan. 1, 2025.
Meanwhile, rentals of one year or more are fully exempt from the property tax for fiscal 2025. The bill proposes to give these rentals a $200,000 exemption on the taxable value of their property for fiscal 2026. More than 1,300 rental owners received this incentive in fiscal 2025,[4] saving about $12.3 million.[5]
Grassroot thanks the Committee and Mayor Richard Bissen for proactively introducing this legislation.
It is critical that the County protect Lahaina’s businesses and homeowners from the threat of property tax payments as they navigate insurance claims, permitting barriers and rebuilding logistics.
In Hawaii, land often constitutes 75% or more of a property’s value — and thus its property tax bill. Therefore, any business or homeowner hit with property taxes would be paying very close to what they paid before the wildfires. For anyone struggling to reopen a business or afford a rebuild, tax payments could be a major setback.
Thank you for the opportunity to testify.
Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii
_____________
[1] “Fiscal Year 2023-24 Real Property Tax Waiver for Improved Properties Completely Destroyed by the Maui Wildfire Disaster,” letter from Maui County director of finance Scott Teruya to Mayor Richard Bissen, Oct. 10, 2023, p. 1.
[2] “April 9 is deadline to appeal 2024 Real Property Assessment,” Maui County, March 20, 2024.
[3] “A Proposed Bill for an Ordinance Amending Chapter 3.48, Maui County Code, Relating to August 2023 Maul Wildfires Real Property Tax Relief,” letter from Marcy Martin to Alice Lee, Oct. 16, 2024.
[4] “Number and Amount of Exemption by Type And County for Tax Year 2024-2025,” Technical Branch, Real Property Assessment Division, Honolulu Department of Budget and Fiscal Services, August 2024.
[5] “A Proposed Bill for an Ordinance Amending Chapter 3.48, Maui County Code, Relating to August 2023 Maul Wildfires Real Property Tax Relief,” letter from Marcy Martin to Alice Lee, Oct. 16, 2024.
