Special to KPUA.net by H.I.E.D.B
Upscale Resort Residential Developments Economic
Hawaii Island Economic Development Board is a private non-profit organization whose mission is, "To provide and promote private-sector support and expertise for balanced economic growth in Hawaii County, in partnership with federal, state, county and private resources."
Tax Boom To County
Take a drive on Queen Kaahumanu Highway along the Kohala Coast and it becomes readily apparent that dramatic change is underway. Long associated with luxury resorts and golf courses, the coast is now becoming an enclave of resort residences. Multi-million dollar oceanfront homes and condominiums with golf course views are being built at a rapid pace.
Hawaii Leeward Planning Conference (HLPC) wanted to know how these homes, primarily second-home and vacation residences, were affecting the County of Hawaii¹s property tax revenues. "We want to help policy makers better understand the economic impacts related to resort-residential development," stated John Ray, president of Hawaii Leeward Planning Conference, in explaining why the study was commissioned.
The results of the study have recently been released. The study indicates the property tax impact of premium resort-residential homes and condominium projects in West Hawaii accounts for a full 21% of Hawaii County¹s entire property tax base. Included in the analysis were the developments at Mauna Kea Resort, Puako Beach Lots, Mauna Lani Resort, Waikoloa Beach Resort, Hualalai Resort, Kaupulehu, Kukio, and Hokulia.
These high property tax revenues from premium resort residential units in West Hawaii totaled $22.3 million in 2003. Factor in property tax revenues from the Kohala Coast hotels, commercial areas and golf courses, and the county property tax total increases to more than $30 million. By 2008, that number is projected to exceed $55 million per year.
Developers of these high-end projects often bear the costs for roads, water and wastewater systems within the development. At the core of many of the developments are self-contained recreational facilities such as golf courses, swimming pools, picnic areas, fitness centers, tennis courts and spas. Owners, through association dues, absorb the cost to upkeep those same commodities along with provision for on-site security.
In 2003, the average assessed property tax value on owner-occupied homes at these developments was $2.5 million resulting in estimated property taxes of $13,300 per year per home. That compares to $900 per year paid on average by full-time island residents with assessed home values of $200,000. Homes built as vacation or second-homes have average assessed values of $2.9 million. Over $27,000, on average, is paid annually in property taxes on each vacation or second home. Premium condominium property taxes range from $4,000 per year in the owner-occupied units to $7,900 per year for those units owned as second homes or vacation units. Tax revenues from these projects provides steady and predictable property tax revenue streams for the county unlike sales and excise tax revenues that can be impacted during recessions.
Only 10% of the owners of premium resort-residential units reside year-round on the island. In effect, the county spends just $2 million on support costs on these residents from the more than $22 million collected from their property taxes. This is based on the County of Hawaii's estimated current expenditure of $1,133 per person for services and support.
Construction activity at these developments is projected at $255 million per year with $184 million in sales of goods and services, 2,300 construction jobs, 2,000 other jobs relating to the developments and over $191 million in payroll. Various levels of job creation from these developments is targeted to reach 3,700 in 2008 and will range from entry level positions to highly skilled professional jobs such as accountants, legal services and insurance providers.
The study clearly makes evident the importance of careful examination of future premium resort-residential developments as a way to subsidize and expand the county tax base. Doing so would ultimately mean the County of Hawaii could provide better support and services to all island residents and visitors.
Set your dial to KPUA Radio 640AM at 9:00 a.m. for "Hawaii¹s Business Forum" on the first and third Thursdays of each month. On Thursday, June 5, Hilton Waikoloa Village will share insight on the business aspect of their annual Dolphin Days Festival coming up June 27 29. The event, which benefits Hawaii Shriners Hospital for Children and the Pacific Marine Life Foundation will be celebrating its 9th year. On June 19, Susan Solari will provide information on the status of the Mauna Kea Astronomy Education Center.
See previous Focus On The Economy Features by clicking on the links below:
Hawaii Island Crossroads a Plus for Meetings Market
Drive Guide Encourages Sustainable Communities
PGA program could be right on par for Hawaii Island
Now More Than Ever, Buy Local!
FEDEX direct flight a boost for Big Island Ag
Primates Primed for Primadome