By JASON ARMSTRONG
Tribune-Herald staff writer
Native Hawaiian homesteaders owe more than $1.6 million in back property taxes, penalties and interest that Hawaii County needs but is virtually powerless to collect.
Private landowners who don’t pay taxes for three consecutive years risk losing their properties at a foreclosure auction like the one the county held June 8.
“We sold everything,” Tax Administrator Stan Sitko said of the latest sale, which he described as “spirited” because of individual bids topping $30,000.
The county keeps the tax money it’s owed, along with costs related to the auction. Remaining proceeds go to the landowner or other lien holders.
That foreclosure authority doesn’t extend to state land like property the Department of Hawaiian Home Lands leases to Native Hawaiian beneficiaries.
“The fact is we are constrained by our inability to foreclose,” Finance Director Nancy Crawford said.
Free from the threat of foreclosure, certain lessees simply haven’t paid their property taxes for well longer than three years.
Homesteaders reached Tuesday declined to comment on their individual situation.
Hawaii County and the DHHL attempted to resolve the tax issue with an agreement signed in 2002. Terms call for the county to waive all penalty and interest charges as of Dec. 31, 2001, and the department to pay any tax bill exceeding $500 that remained delinquent as of Feb. 20, 2002.
The parties also agreed to establish a trust fund, by mid-2004, in order to ensure regular payments. It’s unclear if that happened, however.
“Hawaiian homestead lessees should pay all taxes and fees required by law,” the agreement states.
As a result, the DHHL paid the county $506,583 in April 2002, according to a letter from then-Mayor Harry Kim.
Payments have plummeted since then.
As of Tuesday, the county was owed $1.61 million in back taxes, penalties and interest levied on 176 of the DHHL’s Big Island properties, according to a report Sitko generated at the Tribune-Herald’s request. Basic taxes account for $564,727 of that total.
Each of the leased parcels has been delinquent at least three years, he said, noting the county hasn’t collected any money on several since before signing the 2002 agreement with the DHHL.
“These all are ones that would be up for sale at the end of this month,” Sitko said of the 176-parcel list that excludes properties on which no taxes have been paid for fewer than three years.
“These are the ones that really are the concern,” he added.
The overdue amount will increase when the next 1 percent monthly interest fee is added July 1, Sitko said.
Sitko said that earlier this month his staff notified DHHL’s West Hawaii office of leeward tax delinquencies, but hasn’t had contact with department representatives since notifying them of East Hawaii lessees’ nonpayments in November 2009.
“I never got a response to the last letter,” he said.
The administration’s strategy is to meet Friday with new DHHL Chairman Alapaki Nahale-a, Crawford said.
“We do want to make good on collecting our taxes, so I hope we can work something out with Hawaiian Home Lands,” she said.
Nahale-a was unavailable for comment Tuesday afternoon, but DHHL spokeswoman Crystal Kua confirmed his plan to meet with Mayor Billy Kenoi and county finance officials in hopes of resolving the tax issue.
“The department’s position is homesteaders are accountable for (paying) their real property taxes,” Kua said.
Asked if the department would terminate leases issued to homesteaders who haven’t met that responsibility, Kua said each situation would be examined on a case-by-case basis.
“I can’t say as a general rule that we would cancel their leases,” she said.
Kua said while Hawaii’s weak economy likely contributed to the tax delinquencies, it doesn’t justify nonpayment.
The issue extends to the other Neighbor Islands, but it appears Hawaii County is owed the most money.
All Hawaiian homesteaders pay no property taxes for the first seven years of their lease. After that, they are charged taxes only on the value of homes and other structures built on the properties, according to Hawaii County law.
Although the county exempts the DHHL’s land, it does impose the minimum $100 yearly tax on properties that remain vacant for more than the first seven years of a new lease, Sitko said.
If a lease is reissued, the clock gets reset, he said.
Those provisions mirror Maui County’s laws. Property taxes have not been paid on roughly 1,200 DHHL properties within Maui County, generating a total delinquency that exceeds $500,000, said Scott Teruya, Maui’s real property tax administrator.
The tax debt couldn’t be obtained Tuesday from Kauai County, which imposes the minimum $25 fee and only after the first seven years of a DHHL lease.
The City and County of Honolulu doesn’t tax homestead properties, according to information Sitko provided.
E-mail Jason Armstrong at jarmstrong@hawaiitribune-
herald.com.
By JASON ARMSTRONG
Tribune-Herald staff writer
Native Hawaiian homesteaders owe more than $1.6 million in back property taxes, penalties and interest that Hawaii County needs but is virtually powerless to collect.
Private landowners who don’t pay taxes for three consecutive years risk losing their properties at a foreclosure auction like the one the county held June 8.
“We sold everything,” Tax Administrator Stan Sitko said of the latest sale, which he described as “spirited” because of individual bids topping $30,000.
The county keeps the tax money it’s owed, along with costs related to the auction. Remaining proceeds go to the landowner or other lien holders.
That foreclosure authority doesn’t extend to state land like property the Department of Hawaiian Home Lands leases to Native Hawaiian beneficiaries.
“The fact is we are constrained by our inability to foreclose,” Finance Director Nancy Crawford said.
Free from the threat of foreclosure, certain lessees simply haven’t paid their property taxes for well longer than three years.
Homesteaders reached Tuesday declined to comment on their individual situation.
Hawaii County and the DHHL attempted to resolve the tax issue with an agreement signed in 2002. Terms call for the county to waive all penalty and interest charges as of Dec. 31, 2001, and the department to pay any tax bill exceeding $500 that remained delinquent as of Feb. 20, 2002.
The parties also agreed to establish a trust fund, by mid-2004, in order to ensure regular payments. It’s unclear if that happened, however.
“Hawaiian homestead lessees should pay all taxes and fees required by law,” the agreement states.
As a result, the DHHL paid the county $506,583 in April 2002, according to a letter from then-Mayor Harry Kim.
Payments have plummeted since then.
As of Tuesday, the county was owed $1.61 million in back taxes, penalties and interest levied on 176 of the DHHL’s Big Island properties, according to a report Sitko generated at the Tribune-Herald’s request. Basic taxes account for $564,727 of that total.
Each of the leased parcels has been delinquent at least three years, he said, noting the county hasn’t collected any money on several since before signing the 2002 agreement with the DHHL.
“These all are ones that would be up for sale at the end of this month,” Sitko said of the 176-parcel list that excludes properties on which no taxes have been paid for fewer than three years.
“These are the ones that really are the concern,” he added.
The overdue amount will increase when the next 1 percent monthly interest fee is added July 1, Sitko said.
Sitko said that earlier this month his staff notified DHHL’s West Hawaii office of leeward tax delinquencies, but hasn’t had contact with department representatives since notifying them of East Hawaii lessees’ nonpayments in November 2009.
“I never got a response to the last letter,” he said.
The administration’s strategy is to meet Friday with new DHHL Chairman Alapaki Nahale-a, Crawford said.
“We do want to make good on collecting our taxes, so I hope we can work something out with Hawaiian Home Lands,” she said.
Nahale-a was unavailable for comment Tuesday afternoon, but DHHL spokeswoman Crystal Kua confirmed his plan to meet with Mayor Billy Kenoi and county finance officials in hopes of resolving the tax issue.
“The department’s position is homesteaders are accountable for (paying) their real property taxes,” Kua said.
Asked if the department would terminate leases issued to homesteaders who haven’t met that responsibility, Kua said each situation would be examined on a case-by-case basis.
“I can’t say as a general rule that we would cancel their leases,” she said.
Kua said while Hawaii’s weak economy likely contributed to the tax delinquencies, it doesn’t justify nonpayment.
The issue extends to the other Neighbor Islands, but it appears Hawaii County is owed the most money.
All Hawaiian homesteaders pay no property taxes for the first seven years of their lease. After that, they are charged taxes only on the value of homes and other structures built on the properties, according to Hawaii County law.
Although the county exempts the DHHL’s land, it does impose the minimum $100 yearly tax on properties that remain vacant for more than the first seven years of a new lease, Sitko said.
If a lease is reissued, the clock gets reset, he said.
Those provisions mirror Maui County’s laws. Property taxes have not been paid on roughly 1,200 DHHL properties within Maui County, generating a total delinquency that exceeds $500,000, said Scott Teruya, Maui’s real property tax administrator.
The tax debt couldn’t be obtained Tuesday from Kauai County, which imposes the minimum $25 fee and only after the first seven years of a DHHL lease.
The City and County of Honolulu doesn’t tax homestead properties, according to information Sitko provided.
E-mail Jason Armstrong at jarmstrong@hawaiitribune-
herald.com.