After gleaning expert insight during a workshop on a proposed package to reform the property tax system, the Kaua‘i County Council broke an hour early for lunch when concerns arose over a possible Sunshine Law violation yesterday at the Historic County Building.
Although Council Chair Jay Furfaro said the meeting’s agenda accorded with the session’s posting, he yielded to Councilwoman Shaylene Iseri-Carvalho’s claim that the council would breach the state statute regulating open meetings if it discussed several amendments to the bill that were not specifically listed in the public notice.
The posting for the session states: “Non-decision-making workshop to discuss the recommendations of the administration as contained in Bill No. 2274 … including, but not limited to, possible amendments relating to kuleana, agriculture production, etc.”
“Anytime that you have an agenda that uses ‘etc.’ is a violation of the spirit and letter of the law because it gives one a license to talk about anything under the sun,” Iseri-Carvalho said after the workshop. “Clearly the standard is: Would a reasonable person have notice of the subject matter to offer intelligent testimony on the subject? In this case, clearly not.”
The workshop was slated to open with two hours of consultation with economists and key representatives from the visitor and agriculture industries before shifting into a period to discuss and circulate proposed draft floor amendments.
Furfaro, whose position was backed by Council members Tim Bynum and JoAnn Yukimura, said the impetus for discussing the amendments during the workshop was to provide the public and council members more time to learn about the possible changes to the bill before decision-making in committee.
The chair called on the county attorney to come to the meeting to provide legal advice on the situation but no one from the office came before his decision to recess.
“If there’s the slightest chance of a Sunshine violation … we’ll circulate (the amendments) tomorrow,” he said. “This is a significant bill about the financial responsibility of this county going forward.”
Councilman Mel Rapozo supported Iseri-Carvalho’s argument, saying he would leave the meeting if there was to be discussion on any amendments.
Rapozo said he wanted to take advantage of the experts who were on hand to provide forecasts and explain the potential impacts of the proposed reform package, not do committee work.
The bill has sat with the Committee of the Whole since Aug. 20. The committee — which consists of all seven council members and is chaired by Councilman Ron Kouchi, who was absent yesterday — deferred the proposed legislation at its last two meetings.
The committee’s next meeting is at 9 a.m., today, in Council Chambers. The tax bill is expected to be heard first on the agenda.
The late Mayor Bryan Baptiste’s administration, which submitted the bill to the council in May, had set an Aug. 27 deadline for the council to approve the legislation if the reform measures are to affect next year’s tax roll. That deadline was extended, but no new date was set.
The administration has proposed cutting the number of tax rate classifications from eight to four, creating a system that taxes based on use instead of zoning and implementing a three-to-one ratio of taxing buildings versus land.
The effect, under the administration’s proposed rates, would drop taxes on the residential category 31 percent while raising taxes on the resort category 24 percent. The general category would see a 5 percent increase on average and resource lands would drop 65 percent.
A county document distributed at the workshop shows descriptions of 11 amendments under consideration by the council. Council Services said copies of those amendments will be made available to the public after they are introduced in committee.
County Clerk Peter Nakamura cautioned the council, saying too much change could alter the legislation’s original intent.
If the amendments change a bill’s original purpose, Iseri-Carvalho said, they cannot be introduced because it breaks council rules.
Before the concerns over a possible Sunshine Law violation were aired, the council in a semi-rushed fashion quizzed experts on the future outlook of various sectors in the state and on Kaua‘i.
Furfaro said the workshop was pulled together in four days, but he understood residents’ and some council members’ desire to have spent more time asking the experts questions.
State Department of Business, Economic Development and Tourism economist Bob Shore said construction jobs are declining, but the job situation on Kaua‘i is stable.
“You’re showing job gains,” he said. “We don’t know how long that will last.”
Shore said Kaua‘i’s visitor statistics were “not good at all,” but was unsure how that would specifically impact the county.
Furfaro underscored the state’s projected $906 million shortfall over the next three years and being down 6.7 percent in visitor occupancy. He said at some point, Kaua‘i will see a smaller portion from the state pool of transient accommodation taxes.
If the trends were useful, Yukimura said, government should have done something a long time ago about the predicted peak oil crisis.
“We knew this thing was going to come at some time and we never prepared for it,” she said.
Shore said he was surprised there has not been a more serious economic meltdown given the soaring price of oil over the past few years.
Murray Towill, president of the Hawai‘i Hotel and Lodging Association, said the economic downturn has financial as well as psychological effects.
He noted the fragile nature of the local economy because travel and tourism is discretionary spending. He said it is critical to keep hotels full and the airline industry viable.
Visitor arrivals are down this summer, Towill said, particularly on Neighbor Islands.
He said the reinvestment in Waikiki, which has created “a better product,” is a major reason why more people are flocking there.
Furfaro plans to introduce an amendment that would encourage Kaua‘i hotels and condos to “keep their plants fresh.”
It is critical for the council to find a level of taxing the resort industry that is not detrimental to its health, Towill said, but he did not specify that threshold.
Jerry Ornellas said the Kaua‘i Farm Bureau supports the bill with Councilman Daryl Kaneshiro’s proposed amendment to create a fifth tax rate category called production agriculture. He also supported the council acting with haste.
“We’d rather ride a horse,” he said, “but if we have to ride a camel …”
Ornellas said ag production on Kaua‘i “is not low, it’s dismal.”
The bureau envisions a “truly diversified agriculture,” he said, and property tax relief will help.
Ag land is currently taxed at the same rate as commercial and industrial classifications. The administration’s proposed rates would nearly halve it.
Kaua‘i Board of Realtors President Phil Fudge said the amount of property taxes on residences has never been an obstacle to homebuyers.
Median prices remain stable, he said, but sales have been down.
“For us to see renewed activity, we’re going to have to see prices come down,” Fudge said.
The council resumed the workshop at 1:30 p.m. to take another round of public testimony on the 147-page bill. Some 10 of the 25 people who attended the televised meeting voiced their concerns.
Residents said taxing vacation rentals like resorts is unfair and the timing of the reform is bad given an uncertain economy and council members in the grip of an election year.
“This is just another example of shifting the tax burden onto another group,” Larry Arruda said, noting that this time it happens to be a group who are not constituents. “There is only one fair way to cut taxes for everyone, cut your expenses.”
He also took issue with the administration’s partial justification for increasing the taxes on the resort category. Visitors do not use more county services than residents, he said.
“There’s too many questions and too many issues to pass this bill quickly,” Bruce Pleas said.
Rapozo and Iseri-Carvalho echoed these sentiments.
But Bynum said the bill has not been rushed, pointing at the public discussion on tax reform that has been happening for the past several years and more than a year of work on the legislation by the Real Property Tax Committee.
“This bill is an effort to bring equity and fairness to our tax system,” he said, adding that delaying action only allows the current inequities to continue.
