Taxes in Hawaii – Living in Waimea, Hawaii

Photo voltaic In Hawaii

Posted on April 14, 2019April 14, 2019 by JUDY HOWARD

Photo Voltaic in Hawaii? You have options!

Interested in photo voltaic in Hawaii? Hawaii is well situated for those wishing to turn the sun’s energy into electricity. Even if you chose to live in an area which is frequently cloudy-like my home-you can live a fairly normal life without being tied into the electrical grid. Or, if you live in a spot that is served by HELCO, the electric company, you may be able to tie into the grid. Here’s where to find more information about tying into the grid: https://www.hawaiielectriclight.com/products-and-services/customer-renewable-programs

Living off grid

I have been living off grid for over twenty years. The technology has improved a great deal in that time. I have a basic system, and an excellent photo voltaic technician, and the experience is almost invisible on most days. I don’t use as much power as some other households might consume, and every once in a while I am completely stumped when my system stops working, but I am happy living off grid

There are much fancier systems, in much fancier homes! Some seem as though they would require an electrical engineering degree (or an on-site technician) to keep working properly. I think that in any off-grid home, the occupant must have an interest in at least the general theory of how the various components operate.

Grid tie ins

HELCO has gone through several iterations of its grid-tie in program, with each becoming less generous than the previous one. I recently sold a small house in Luala’i, Waimea, that had 20 photo voltaic panels and a monthly utility bill of $22. That home had the benefit of an older contract with HELCO, and the occupants could use almost any conceivable amount of electricity and still not owe more than the base amount.

At times, HELCO suspends new contracts altogether. This seems silly, since Hawaii has set of goal of 100% clean energy by 2045 http://www.hawaiicleanenergyinitiative.org/

There is a plausible explanation, however. There was such a rush to photo voltaics that the remaining customers were left shouldering too great a share of the overhead costs. I don’t think the utility chose the best solution-discourage photo voltaic-but that is the path they have chosen.

Ready? Not so fast!

Many people dream of building a home in the middle of some gorgeous pasture, with views to the ocean and space to roam. Photo voltaic systems play a part in many of those dreams. Some think they might rent out cottages on the land to generate some additional income. Hawaii has recently clamped down on vacation rentals, see http://livinginwaimea.com/2019/03/30/hawaii-county-restricts-vacation-rentals/

There are also other restrictions on land use in agriculturally zoned areas, see http://livinginwaimea.com/2018/10/12/hawaii-county-agricultural-land-use-restrictions/

Photo voltaic in Hawaii, yes! Maybe with a few more draw backs than you would like, but it is definitely feasible in Hawaii. Generating income from vacation rentals on agricultural land, nope. Building multiple dwellings on agricultural land, almost certainly not. Getting the benefit of the very low assessed value on agricultural lands without actively engaging in an agricultural, probably not for long! The County audits use, and will change your property tax classification if it does not find agricultural use. See http://livinginwaimea.com/2019/03/29/kohala-ranch-property-taxes/

Kohala Ranch Property Taxes

Posted on March 29, 2019December 15, 2020 by JUDY HOWARD

Kohala Ranch has amazing views, a great climate, and wonderful homes.

As a Realtor, I get many inquiries about Kohala Ranch. People fall in love with the expansiveness of the area, the views. and the climate. The lots are large, ranging in size from about 3 acres on up to about 12 acres, and prices tend to be affordable for the area, although complying with the design rules can make building expensive. There are a number of homes for sale, many of which have luxurious amenities, and the prices are, again, relatively affordable. It is fairly close to Waimea, and both prep schools located there, but it is also far enough away, and private and safe enough, to seem like a wonderful retreat from the daily bustle. https://hawaii.elitepacific.com/results-gallery/?hood=3374513

Kohala Ranch no longer has a dedicated agricultural use classification for property tax purposes.

A couple of years ago, the Kohala Ranch HOA board decided to prohibit cattle grazing on the ranch. That decision led to the revocation of the dedicated agriculture classification for property tax purposes. (The Ranch is still zoned for agriculture uses, so all of the uses that were previously permitted are still permitted by the County.) http://livinginwaimea.com/2018/10/12/land-use-in-agriculturally-zoned-areas-on-the-big-island/

The dedicated agriculture designation reduces the assessed value of land to rock bottom. Thus, even though the tax rate remains the same as other agriculturally-zoned land, it is applied to much lower values, resulting in much lower taxes.

The loss of the dedicated agricultural use classification has increased property taxes on some parcels.

Now the agricultural rate is applied to market value, rather than dedicated agriculture value, unless individual owners have applied for and received non-dedicated agriculture status from the County Real Property Tax office. Under this program, owners must show that they are engaged in ranching or farming. If they can demonstrate such activity, they will be entitled to a much lower assessed value, although not as low as lands in the dedicated agriculture program. Also, the lower assessed value will be limited to the land devoted to the agricultural endeavor-so if you have a pool, tennis court, and pasture for cattle, only the pasture will be entitled to the lower assessed value.

If you don’t want to farm or ranch, you may still qualify for lower taxes if you can qualify as a homeowner.

Another option some owners have pursued is to be classed as homeowner, rather than agriculture, because a) the tax rate is lower and b) property tax increases are limited to no more than 3% a year. In order to qualify for this classification, the property must be the owner’s primary residence.http://www.hawaiipropertytax.com/tax_rates.html

If you are considering a second home, and offering it as a vacation rental to offset some of the costs, you should probably look elsewhere.

The County of Hawaii has just passed a stringent vacation rental bill, and unless a property in Kohala Ranch has a history of lawfully operating as a vacation rental, it will not be a permitted use. See my post:
http://livinginwaimea.com/2019/03/30/hawaii-county-restricts-vacation-rentals/

Kohala Ranch has undergone some changes, but it is still a lovely place to live!

I would be delighted to provide you with more information about properties in Kohala Ranch. You can reach me by phone at (808)885-5588, or by email at judy.howard@elitepacific.com. Aloha.

Hawaii County land use restrictions for agriculturally zoned land.

Posted on October 12, 2018December 15, 2020 by JUDY HOWARD

It is beautiful, but it is not for everyone!

Hawaii County is a place of great beauty and vast open spaces. But it is also a place where the goals of food self-sufficiency and diversified and sustainable economic growth are taken seriously. At the moment, the County is heavily dependent on tourism, which leaves us in a precarious position when visitor numbers drop for any reason. We also import an appalling percentage of our food, which leaves us vulnerable to vagaries of labor strikes and natural disasters.

Land zoned for agricultural use, Hawaii County. — Hawaii County and the State restrict use of agriculturally zoned lands

Agricultural lands receive favorable tax treatment.

First and foremost, the property taxes on land in agriculture are much lower than those on land used for residential purposes. The actual rate is higher for some agricultural land than it is for some residential land, but the assessed values to which those rates are applied results in significantly lower taxes. Grazing land, in particular, is assessed at about $10,000/acre for non-dedicated land, and is currently taxed at $9.35/$1000. Homeowner rates are currently $6.15/$1000 of assessed value, but the land and improvements are assessed at market value. Also, those low homeowner rates apply only to primary residences, not to second homes or homes held for income or investment. Rates are available here: http://www.hawaiipropertytax.com/tax_rates.html

So what constitutes an agricultural use, and where is County land use policy headed?

You can access a handy chart showing the permissible uses of land zoned in various ways here: http://www.hiplanningdept.com/wp-content/uploads/2017/09/Permitted-Uses-Table-091917.pdf

Some of the uses listed in the chart don’t do much to increase food production. There is obvious value in keeping land in agricultural use, in the sense that it is much easier to later convert open land to food production than it is to restore land that has been used for residential, commercial or industrial purposes so that it can be safely used for such production. But given the growing emphasis the State is placing on a diversified economy and food self-sufficiency, it is reasonable to expect increasing restrictions on use of agriculturally productive land for purposes other than food production and commercial agriculture. The days during which a developer could easily purchase a pasture, get it rezoned and subdivided, and build and sell houses, are gone.

Current restrictions on use of agriculturally zoned land.

Even now, the number of dwellings, and the type of occupants of dwellings, are restricted on some agricultural lands. Some lands are governed by the State Land Use Commission, and lands classified as less productive are subject to County regulation. This is a huge topic, and while I could post links to every source that would need to be consulted in order to make a determination as to the governing body and restrictions on a given parcel, I instead advise anyone considering a purchase of agriculturally zoned land in Hawaii County to consult with the Hawaii County Planning Department. Have the TMK of the parcel you are considering, and a planner should be able to outline for you all of the permitted and prohibited uses for that land. See also http://livinginwaimea.com/2019/03/29/kohala-ranch-property-taxes/

Don’t plan on paying for your agricultural land purchase by selling agricultural goods!

If you want to make a profit on agriculture in Hawaii, your options are even more limited. Some crops do reasonably well in some years, but given the cost of land, it is very difficult to thrive as a farmer or rancher in Hawaii, year in and year out. Nonetheless, there are quite a few ranchers and farmers here. Why? Because even though it is very hard work, it is also endlessly interesting and occasionally very rewarding!