Wednesday, September 10, 2014

Musings: Death and Taxes

As the Kauai County Council considers a slew of property tax reform measures today, one proposal in particular is an eyebrow-raiser: Councilman Gary Hooser's bill to subsidize the taxes of vacation rental owners.

His proposed draft Bill 2559 would allow a property with multiple uses to be taxed on the percentage dedicated to each use. It was prompted, in part, by complaints from Toni Martin, the owner of the Tiki Hut TVR in Haena, who said her entire property was being taxed as a vacation rental, though she lives in the main house and only rents out a guest house.

But this can holds a tangle of worms. In its online ads, Tiki Hut promotes the entire property and its amenities — garden, hot tub, hammock on the lawn — as well as its location. So why shouldn't the entire property be taxed? What's more, a guest house isn't supposed to have a kitchen, but Tiki Hut does. It's also a ground-floor rental in the flood zone. 

By permitting a multi-use tax structure, the Council is effectively condoning a multiple use designation for a single TMK, which conflicts with both the North Shore Development Plan and the county zoning ordinance. Additionally, by giving commercial TVR owners tax breaks, the Council would be removing the incentive to return these properties back to a residential use.

Furthermore, a review of the property tax history for this parcel shows that it went from a high of $8,738.34 in 2008 down to $4,153.74 in 2012 then back up to $7,170.40 in 2013. The 2014 taxes were $7,208.96 — an amount that could be earned with just 27 days of rentals. So why is the owner complaining and expecting others to subsidize her taxes? 

It's an odd state of affairs when you have Gary advocating higher taxes for ag land, but lower taxes for resorts in residential neighborhoods. Unless, of course, you consider his affiliation with the high-end real estate industry.

Better to provide relief for those who really need it, as Mayor Berard Carvalho proposed with Bill 2554, which would give residential and homestead class owners a credit if their taxes increased by more than $500, provided they meet specific qualifications.

The Garden Island does a good job today of laying out the different proposals in what has become a highly politicized issue in this election year.

Also on today's Council agenda is an item dealing with the now-moot proposed beach access through the Kahuaina Plantation property at Waipake. It was recently sold to a buyer who does not plan to develop the land and will be relinquishing the subdivision, which triggered the access requirement.

It will be interesting to see whether certain Council members — Gary, Tim Bynum, Mason Chock and JoAnn Yukimura — try to exert pressure for an access when the new owner has already done the good deed of abandoning the development entitlements.

Update: In a classic example of spin, Rayne Regush of the Sierra Club, Kauai Chapter, blamed the failure to secure the access on Falko, claiming they had requested numerous delays as a "stall tactic." In fact, the Council repeatedly delayed it. In her testimony to the Council today, Rayne then went on to say "thank goodness the proposed access is off the table" because the ala loa (historic trail) is better. What she didn't mention is that the existence and/or route of the ala loa has never been determined, and may never be because the state isn't interested in pursuing it. So in essence, she was saying two birds in the bush are worth one in the hand. Uh, sure, whatever you say, Rayne.

Though some commenters like to claim that I “hate rich people,” this sale gives me a chance to lay that falsehood to rest. First, I don't hate anyone. Second, I'm fully aware that some rich people do very good things, like giving up development rights to keep the Waipake land open. Or Larry Bowman selling it to someone who was willing to keep it open, even though he could've made more by selling it to a developer.

And let's not forget the $3 million that Bowman's Falko Properties gave to school computer labs, youth sports, the Kauai Humane Society, the Hawaii Foodbank, Special Olympics, NOAA for its monk seal work and other grassroots efforts.

No, I have nothing against the rich per se. It's only the greedy ones who give nothing back that irk me.

Meanwhile, looking to the bigger world, the climate change news is grim, especially for an  island state.

Ocean acidification is increasing at a rate not seen in 300 million years. As carbon dioxide from all our fossil fuel emissions is absorbed by the seas, it turns into carbonic acid, which decreases the water's pH level. This, in turn, harms coral reefs, mollusks and other marine life. Combine that with other stressors, like over-fishing and pollution, and the ramifications aren't pretty.

What's more, even if carbon emissions are radically reduced, which seems highly unlikely, the acidification will continue as the seas process their stored carbon dioxide.

Jan TenBruggencate has done an excellent job of covering this topic on his Raising Islands blog. You can do a search on the site to find his numerous posts on the subject.

Climate change is also likely to severely impact bird populations, according to a new report by the Audubon Society, pushing many species toward extinction. In areas like Hawaii, where the native bird populations are already small and fragile, it may be especially difficult to survive as habitats shrink and mosquitoes bring avian malaria to higher elevations.

It brings to mind a passage written by the author, journalist and environmentalist Charles Bowden, who died Aug. 30:

We are at the crucial moment in the commission of a crime. Our hand is on the knife, the knife is at the victim's throat. We are trained to kill. We are trained to turn the earth to account and make money off it. To take it for granted. Logically, we will never be able to reverse this part of our culture in enough time to stop that knife in our hand. But that is the task at hand — to cease this act of violence.”


Anonymous said...

It is nice to know you agree with me somewhat. Not all rich people are bad. In fact the ratio, as I argued before is the same or even less than the general populous.

Anonymous said...

If you look at the Tiki Hut property tax history and click on the individual years, you;ll find the owner' trust received a basket of generous tax credits. In 2008, credits and adjustments effectively eliminated all but $25 of the $8376 in taxes assessed. It's truly hard to see that someone treated so well has a legitimate beef compared to the rest of us doofusses. The lavishness subsided a bit as taxes did thereafter but not a lot. But maybe there's a backstory.

2008-1 Combat Zone Credit -357.06
2008-1 Permanent Home Use Credit -3,794.62
2008-2 Combat Zone Credit -357.05
2008-2 Permanent Home Use Credit -3,794.61
Total: -8,303.34

Anonymous said...

Combat zone?

Anonymous said...

The Haena TVR Green Zone- very dangerous.

Anonymous said...

Combat zone refers to the destruction of the cottage when the towering Norfolk or cook pines fell on the cottage and destroyed it? So how did it get a vacation rental permit if it was destroyed in 2008?
Lucky no tourists were staying there when it happened .
Should the council feel sorry for her anyway and reduce her taxes, she's really needy and greedy.

Anonymous said...

I thought guest houses were not allowed to have kitchens? Anything goes in the TVR green zone?
Enforcement seems more apropos than a tax reduction.

Anonymous said...

Give me your rich, your vacation renters and your huddled realtors.

Anonymous said...

I thought the GMO Big Bosses were all from the mainland, pulling in giga watt sized wages, and prolly owned a lot of land all over the place. Guess its better to work for someone like that then a family run operation that just farms healthy food for a living. Yeah who would wanna work for them ew. Give me a mainland funded corporation with megabucks that will use outside labor for three months rotate out use local labor for three months and rotate back out to out of country labor every time. Those are the kinda folks I want to work for.

And at Christmas time, we get a big huge back of GMO foods to eat, and then later they take us into little rooms and give us shishi and koko tests to see how much we have inside of us.

If we walk in breathing and standing upright, they mark their study as "No Side Effects".

Yeap Thats the kind of company I wanna support. So don't ever say anything bad about GMO's They are saints, and saving Kauai.


Suuuuuuuuuure they are, kapaa grrrrrrrrl. LOL

Anonymous said...

Rotating labs --- Isn't that how the organic guys run their farms? With young mainland woofers cycling through?