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Council rejects tax relief for Pahoa, Volcano

  • HOLLYN JOHNSON/Tribune-Herald File photo of downtown Pahoa. The County Council on Wednesday voted down a resolution seeking tax relief for commercial properties in Pahoa and Volcano.

Puna Councilwoman Eileen O’Hara was unable to muster support Wednesday for a resolution seeking to provide tax relief for commercial properties in Pahoa and Volcano.

The County Council voted against the property tax amnesty measure a second time 7-1, with O’Hara voting yes and Puna Councilwoman Jen Ruggles absent. It would have requested the county administration impose the minimum tax rate on properties in Pahoa and Volcano that host businesses impacted by the Kilauea eruption.

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Businesses in both villages were severely impacted by the eruption, which destroyed more than 700 homes in lower Puna and caused a lengthy closure of Hawaii Volcanoes National Park.

Pahoa merchants told council members that they are still struggling to recover.

“Tenants are now reporting revenue decreases up to 40 percent,” said Suzanne Kruppa, owner of Pahoa Marketplace. “Some are on the verge of collapse.”

O’Hara said Pahoa is at risk of becoming a ghost town.

“This is really needed now, and at the rate the county is moving, we’re not going to get any help in the short term,” she said.

While sympathetic to their plight, other council members said they had the same issues with the measure as when it was given a negative recommendation in committee two weeks before, mainly that it provides tax breaks to some commercial properties but not others. Several said businesses around the island have been impacted by the eruption.

Hilo Councilwoman Sue Lee Loy credited O’Hara for “scrapping for her district” but added she still doesn’t think this is the right way to legislate.

“Again, we would do the exact same thing and scrap,” she said. “I think we have to go about it a little smarter and in an appropriate policy way.”

Kohala Councilman Tim Richards said giving some property owners tax amnesty in this way would set a bad precedent.

“Although I want to support Puna, Pahoa, I cannot support it in this method,” he said.

Hilo Councilman Aaron Chung said he didn’t like that the resolution also seeks to reduce taxes for properties where a business is planning to open but doesn’t currently exist.

O’Hara said the resolution, which would request the county administration to reduce the taxes for six months, would cost the county $200,000 in lost revenue if enacted.

“This is not going to break the county,” she said, adding businesses could save $1,500 to $3,500 as a result. O’Hara said that’s the “difference between going broke and not.”

The resolution doesn’t mandate that the break is passed along to tenants. In the case of the Pahoa Marketplace, Kruppa said the tenant’s share of the tax burden is part of their rent.

As a result of properties being inundated or isolated because of lava, the county reduced the assessed value for 6,874 parcels, mostly residential, to $0, effectively giving them a property tax waiver.

The impact to the county is $3,354,529 in lost property tax revenue for the current fiscal year that began July 1.

Chung said he doesn’t think the resolution would do the same thing since the commercial properties in Pahoa and Volcano haven’t seen their assessed values reduced because of the eruption.

“What Ms. O’Hara is looking for is something that deals with an income-based assessment, and there really is no authorization for something like that,” he said.

O’Hara disagreed and said she thought the concerns were being overstated.

While facing resistance to the resolution, O’Hara suggested that Puna faces discrimination similar to what Ruggles once alleged through a controversial measure. She said Puna “continues to receive this kind of fiscal discrimination.”

Council Chairwoman Valerie Poindexter bristled at that remark.

“Saying discrimination is kind of taking it, to me, too far,” she said.

“If anything, I would say you are discriminating against the rest of us by not looking fairly at what happens around the island.

“I don’t want the public to hear what council member O’Hara is saying and hold that as truth,” Poindexter added.

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The council adopted a separate resolution Wednesday asking the federal government to lift the cap for crop disaster assistance to help farmers impacted by the eruption.

Email Tom Callis at tcallis@hawaiitribune-herald.com.