Hawaii’s timeshare industry appears to have dodged a bullet this year, when the Legislature, after much deliberation, failed to pass Gov. Abercrombie’s proposals to more than triple the transient accommodations tax on timeshare units.
But according to ARDA, the national trade association for timeshare developers, the trouble here isn’t over yet – at least for Maui timeshare owners. Jason Gamel, ARDA’s vice president for state government affairs, flew into town yesterday to testify at a County Council hearing on property assessments. But Gamel (who obviously has a stake in this game,) came out of the hearing with the distinct impression that the County Council was going to stick it to timeshare once again.
“It just felt like there are certain members of the Council who have a negative view of the timeshare industry,” Gamel says. He pointed at Budget and Finance Committee Chair Joseph Pontanilla in particular. “When one councilman asked a question about the tax assessment methodologies used by other jurisdictions, the Chairman wouldn’t even let me answer the question.” That’s an odd way to treat someone who’s flown 5,000 miles to offer his mana’o.
But no one should be surprised. Maui has long been the least hospitable county for timeshare development. In fact, their tax code is downright hostile to the visitor industry in general. Gamel is delighted to illustrate this by comparing the effective property tax rates for different land uses:
- Homeowners: $2.50/$1000 assessed value
- Agriculture: $5.00/$1000
- Apartments: $5.00/$1000
- Commercial: $6.25/$1000
- Industrial: $6.50/$1000
- Hotel/Timeshare: $14.00/$1000*
*(The proposal is to increase the rate for hotels and timeshares to $15.45/$1000 of assessed value.)
Other than the fact timeshare owners don’t vote, it’s difficult to see why these units should be treated so differently from other forms of land use. “Over and over and over again, I’ve asked the Council to provide us with the justifications for increasing the rates,” Gamel says. “The best answer I could find was in the transcripts to a hearing back in 2005, where it was described as ‘philosophical reasons’. They thought timeshare should pay the same amount to the county as hotels were committing per unit in TAT to the state.”
Of course, it’s also possible that the County’s tax policy is just a slightly more egregious example of Hawaii’s ongoing antipathy for business. As Gamel puts it, “They have no problem trying to find that point where they’ll tax you out of business.” But the County Council’s focus on timeshare looks a little more concerted than that. Certainly Gamel thinks so.
“It’s a kind of land-use policy,” he says. “They’re trying to use the property tax to discourage developers. They’re saying, ‘Take this as a signal that you’re not wanted in Hawaii.’ ”
Or maybe the County’s just broke.