The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Maui County Council on Nov. 15, 2024.
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Nov. 15, 2024, 9 a.m.
Council Chamber, Kalana O Maui Building
To: Maui County Council
Alice Lee, Chair
Yuki Lei Sugimura, 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 Lee, Vice-Chair Sugimura and other members of the Council,
The Grassroot Institute of Hawaii supports Bill 147 (2024), CD1, which would make 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.
Grassroot supports this bill because in Hawaii, land often constitutes 75% or more of a property’s value, which is reflected in the owner’s property tax bill. For anyone struggling to reopen a business or afford a rebuild, tax payments could be a major setback.
Thus, enactment of Bill 147 (2024) would be a positive contribution to the recovery of Lahaina and other areas affected by the 2023 wildfires, and Grassroot thanks the Committee and Mayor Richard Bissen for introducing this legislation.
As for the context, Mayor Richard Bissen waived via an emergency proclamation 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] This was commendable, but those exemptions are slated to expire at the end of this fiscal year.
Bill 147 (2024) would extend those exemptions through fiscal 2026 for properties that were completely destroyed or were in the red or yellow Lahaina burn zone as of Jan. 1, 2024.
The Maui County Department of Finance has estimated that the exemptions 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 until the end of fiscal 2026 property tax relief granted to those who are renting to displaced residents. Right now, property owners can receive different levels of relief depending on whether they rent out their homes for between six and 11 months or for one year or more.
The bill would move all of these properties into the long-term rental tax class, which entails a lower rate than the non-owner-occupied or short-term rental tax classes.
Further, owners of properties rented out for six to 11 months at a time can receive a $300,000 exemption on the taxable value of their home. The bill would allow potential rental owners to apply for this exemption by Jan. 1, 2025.
Properties rented out for one year or more are currently fully exempt from the property tax for fiscal 2025, which for that year[4] affected more than 1,300 rental owners who saved about $12.3 million.[5]
For fiscal 2026, Bill 147 (2024) would give those owners a $200,000 exemption on each of their properties, which wouldn’t be as generous and supportive as for fiscal 2025, but it still would help.
Thank you for the opportunity to testify.
Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii
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[1] “Fiscal Year 2023-24 Real Property Tax Waiver for Improved Properties Completely Destroyed by the Maui Wildfire Disaster,” letter from Maui Deputy Director of Finance Steve Tesoro to Mayor Richard Bissen, Oct. 10, 2023, p. 1.
[2] “April 9 is deadline to appeal 2024 Real Property Assessment,” County of Maui, 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 Maui Director of Finance Marcy Martin to Maui County Council Chair 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.
