LIHU‘E — The island of Ni‘ihau presents a unique challenge for those tasked with setting its property tax rates.
County Council Members Billy DeCosta and Luke Evslin made an effort to address the Forbidden Island’s taxes on Wednesday, proposing a bill which would charge the island’s owners a flat tax of $40,000 per year.
“Given the uniqueness of Ni‘ihau, the fact they don’t use county services, they do provide housing and that they are doing ag to the greatest extent possible, the minimum tax was the simplest route,” said Evslin.
The plan arose from discussions about the new agricultural dedication bill passed last month, which sets stricter eligibility requirements for the massive tax break granted to the owners of agricultural land.
Ni‘ihau doesn’t have enough water to meet the requirements for agricultural dedication.
Previous changes to the dedication bumped the owner Robinson family’s tax bill from $32,000 in 2020 to $222,000 in 2021, which dropped to $130,000 this year.
The new $40,000 tax rate would therefore be a significant discount off their recent bill, but an increase over the rate they paid in 2020.
It is difficult to tell what the Forbidden Island is worth.
“There’s no way to assess the value because there are no island sales for comparable values,” said Evslin.
The 47,605-acre island was purchased in 1864 by Elizabeth Sinclair from the kingdom of Hawai‘i for $10,000, equal to about $170,000 in 2021.
It has remained in family hands for the last century and a half, and has since been passed on to Sinclair’s descendants, Keith and Bruce Robinson. It is currently valued at $67 million, according to county property tax records.
One comparable area might be the island of Lana‘i, largely owned by Oracle billionaire Larry Ellison.
Ellison purchased 98 percent of the island’s 90,000 acres (about double the size of Ni‘ihau) for $300 million in 2012. He paid more than $270,000 in property taxes on the island in 2021.
Another wrinkle to taxing Ni‘ihau is that the island does not use county services the same way Kaua‘i properties do.
The Kaua‘i Police Department and Kaua‘i Fire Department have never responded there. KPD would require permission from the landowners before conducting an investigation on the island.
The island is off limits to all outsiders except the Robinson family and their invited guests, U.S. Navy personnel (the Pacific Missile Range Facility keeps a small installation there) and government officials. Descendants of the Native Hawaiians who lived on the island before it was purchased are allowed to live on the land rent-free.
DeCosta reported the Robinsons were “very thoroughly” involved in the process of crafting the flat-tax bill, No. 2889
The flat tax would not be set in stone, and could be amended or abolished if the use of the island is altered. This could mean a sale of the property, an addition of tourism-centered activities, or changes to the involvement of lineal descendants.
“If things change, the number can always change,” said council Chair Arryl Kaneshiro, voting in favor to move the measure forward.
The bill unanimously passed first reading on Wednesday.
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Guthrie Scrimgeour, reporter, can be reached at 808-647-0329 or gscrimgeour@thegardenisland.com.
This is really insane they have to pay that much in tax anyways. I personally don’t think they should be taxed. It’s always been separate from that state of Hawaii and to have to pay even $40k in taxes is insane. But at the end of the day I’m not surprised because that’s what is ruining Hawaii as the years go by. More taxes and more tourism will be the downfall of this place. Hawaii is not really Hawaii anymore.
County Council Members Billy DeCosta and Luke Evslin are very naive. Whatever number they arrive at for taxation will always be passed forward to the Federal Government in lease cost increases for the Pacific Missile Range Facility. It’s the cost of doing business. It’s how business is done.
Leave the Robinsons and the people of Ni‘ihau alone. They bought the island fair and square before taxes existed. Or did Ni‘ihau get overthrown also ? The people live off the land with supplemental assistance and supply from the Robinsons.
Tax fairly for what they have on Kauai but not the Sovereign State of Ni‘ihau. The county greed is showing.