Ka Wai Ola - Office of Hawaiian Affairs, Volume 11, Number 1, 1 January 1994 — Oʻahu homesteaders get tax break [ARTICLE+ILLUSTRATION]

Oʻahu homesteaders get tax break

by Patrick Johnston For the hundreds of homesteaders who gathered at the Honolulu City Council chambers for the Nov. 30 hearing, passage of Bill 53 represented more than just tax relief - it represented justice long overdue. Bill 53 was introduced last year by Councilman John DeSoto. It aimed to exempt homesteaderiessees from paying both land and property tax for as long as they remained the lessee. Present law provides for only an initial seven year exemption. Proponents of the bill argued that, because homesteaders do not own their lots, cannot use

them as collateral to obtain loans or sublease them to anyone they wish, and have restrictions on who will take over the property after their death, they should not have the same tax obligations as regular landowners. Close to 50 speakers, from leaders in the Hawaiian eommunity to O'ahu and neighbor island homesteaders and concemed citizens, gave mostly supportive testimony on Bill 53 in an emotionfilled night. "We're not begging you to pass this bill," Frenchy DeSoto, OHA trustee and President of the Wai'anae Hawaiian Home-stead-ers Association said, "we're

telling you." OHA Chairman Clayton Hee pointed out that because the county uses Hawaiian lands - whieh include three waterfront parks - and does not pay for them, the county : should compensate

homesteaders bv allowing them ta\ breaks on lheir own land. "Neither the Hawaiian people

or the Department of Hawaiian Home Lands receive compensation from the county for their use of prime beachfront property," Hee said, "and the county's use of these homestead lands benefits everyone, not just Hawaiians." Not all were in favor of the bill. Honolulu resident Patrick Barret gave testimony arguing that the bill was "based on race" and rem-

iniscent of South Africa. "The eouneil has no business trying to divide the city on racial lines," he said. The smoldering emotions of O'ahu homesteaders had been stoked by a letter from Honolulu mayor, Frank Fasi — sent to all homesteaders - that spelled out continued on page 4

What does Bill 53 mean? Beginning Jan. 1. 1994, all O'ahu homesteader lessees with residential, pastoral, aquaculture and farm lots will not have to pay real property tax as long as they remain the lessees. Buildings and other improvements will also be exempt. Eaeh homestead owner will be required to pay an annual real property tax assessment of S100 whieh is required of all tndtviduals or organizations ihat have land that is not taxed.

Tax hearing demonstrator

Hundreds of homesteaders gathered for the Nov. 30 hearing.

Homestead tax exemptions

from page 1 his objections to the bill and informed them that he planned to veto it if it crossed his desk. Fasi argued in his letter that the Hawaiian Homes Commission Act restricted the county from providing tax exemptions, making the bill illegal. He also noted that, if the exemption was passed, it would "give the impression that one particular racial group is being unduly favored over other groups." The letter pointed out that there are thousands of Hawaiians not living on homestead land that still have to pay their fair share. "In effect," the letter reads, "those who are not lessees, over 20,000 households ... are subsidizing those who are existing lessees, approximately 2,000 in number, since the former group will still need to pay its share of real property taxes under this bill."

Supporters of the bill argued the Fasi letter was racist and insensitive. "The mayor has turned this issue into a racist one with his remarks," said Kamaki Kanahele, OHA trustee and president of the Nānākuli Hawaiian Homestead Association. "The Hawaiian community is outraged by the reference." Homesteader Agnes Cope went a step further, issuing a eall to action. "In the 1994 elections," she ordered, "veto those that veto us." DeSoto's original bill had asked for a complete tax exemption on land and housing. The eouneil had amended this to include an exemption only on land tax, but at the final hearing DeSoto asked for the original bill to be voted on. After three hours of testimony, City Council passed the original bill unanimously.

, _r _ , _ _ ^ ! Legal arguments for and against tax exemption

i For

i i Supporters of the bill argue that | there is nothing in the law j requiring lessees to pay proper- ! ty taxes that prevents the eouni ties from granting an exemp- ' tion. To remove any doubt on j the issue supporters suggest j introducing a bill in the ! Legislature to extend the i exemption because there has j already been a precedent set by ! the state with regard to amend- [ ing the Hawaiian Homes i Commission Act. I

Supporters argue that the feder- ' al government has always given j special preference to Native { Americans as aboriginal people ! and that since 1921 federal and i state govemments have provid- j ed similar treatment to native \ Hawaiians. From this they eon- [ tend that Bill 53 is not racially ( discriminatory but is a constitu- i tional preference for a Native j American group based on the j government's duty to that 1 group.

Against

i ! Opponents of the bill argue that ! because the original law, whieh i determined tax obligations for i homesteaders, was enacted by ] Congress, the county's attempt ! to override it violates the ! Supremacy Clause of the U.S. ! Constitution whieh says that ' federal law takes precedence j over state or county law. i i I I

I Opponents argue that the bill [ represents a kind of city-spon-sored affirmative action whieh ! is legal on!y if it could identify i racial discrimination against j native Hawaiian homestead [ lessees in the past by the city in ! the assessment of real property ! taxes. Otherwise it represents ' reverse discrimination. i i i