Council OKs Condominium tax rates bill

 As expected, the Maui County Council approved Friday a compromise bill aimed at getting condominium owners to pay the correct tax rate on their units.Council Member Jo Anne Johnson voted against the measure and reiterated her opposition, saying it’s “a very divisive thing” that would not get the outcome sought by the county.

Bill 53, passed with a 7-1 vote Friday, requires condominium associations to file an annual report listing how owners are using their units – whether as a personal residence or a long- or short-term rental. Originally, the bill would have required condo owners to pay taxes according to the “highest and best use” of their properties, based on zoning, as other landowners do now.

After owners complained and condo associations offered up a compromise to file the required annual lists with reports of how units are used, the revised bill was drafted. The measure will be sent to Mayor Charmaine Tavares for final action.

On Friday, the only testimony provided on the condominium tax issue came from Francis Michael Patrick Lydon, the owner of a condo unit at Maalaea Banyans on Hauoli Street.

Lydon provided written testimony on 13 reasons he opposed the bill. In oral testimony, he expressed his concern that the measure would cause a “logistical nightmare” for condo associations and “destroy the willingness” of residents to serve on boards of directors.

“They will view the added burden this law imposes as ‘ratting out owners,’ some being longtime friends,” he said. “Owners will view this as snooping or spying.”

As for filing reports, Lydon said Maalaea Banyans would have logistical problems in providing information. According to Lydon, some of the 79 Maalaea Banyans units are owned by huis with three, four, six and even 12 different owners. Additionally, many of the units are not rented by the same renters or for the same rental periods year to year.

Lydon unsuccessfully appealed to council members to defer their vote until more information could be sought on the consequences of the bill.

As amended, Bill 53 states that after receiving reports from condo associations, the county finance director “may, after investigation, reclassify and reassess any unit in a condominium association to be in violation of the owner’s certification of actual use.”

Johnson said she continued to believe the county would be overreaching its authority in obtaining such reports from condo associations. A condo owner herself, Johnson said she’s been receiving feedback that various condo boards may not be able to obtain the information required in the bill and even if the boards did, some members of the condo boards have expressed reservations about giving out the data.

Council Member Bill Medeiros, who stepped out of the Council Chambers at the time of the vote, was excused Friday. Those voting in favor of the measure were Council Chairman Danny Mateo, Vice Chairman Mike Molina and council members Gladys Baisa, Sol Kaho’ohalahala, Wayne Nishiki, Joe Pontanilla and Mike Victorino.

The bill, when drafted, was meant to close a loophole that allows condo owners to declare how their property should be classified for tax purposes. All other county landowners automatically pay taxes according to the highest use allowed under their respective property’s zoning.

But condo owners complained that units in areas zoned as hotel unfairly would be paying higher rates of taxation.

The bill also consolidates the current “improved residential” and “unimproved residential” property tax categories into a single “residential rate.”

In previous public meetings, council members supporting the bill had said they believed the bill would ensure as much as possible that the correct condo taxes would be paid.

County Finance Director Kalbert Young reported that the county would have generated approximately $8.5 million in real property tax revenue if all condo units were assessed at their highest and best use.

In other council action, members approved:

Granting Janice Welsh a conditional-permit time extension for an office in the residential district at 2241 Vineyard St. in Wailuku.

Amending the Paia-Haiku Community Plan and land-use map from single-family to public/quasi-public for the expansion of the Doris Todd Memorial Christian School in Paia. A bill to amend the state land use classification from agricultural to urban and an ordinance to establish public/quasi-public district zoning also were approved.

The council also gave initial approval for:

Habitat for Humanity Maui’s Kahawai Project to receive $693,000 from the county’s Affordable Housing Fund. The money is earmarked to build 16 one- and two-bedroom condominium units in Wailuku.

The county to issue Hana Community Plan road-improvement bonds totaling $1.8 million: $700,000 for the Kaholopoo Bridge replacement project, and $1.1 million for the Papahawahawa Bridge replacement project.