Committee forwards private-road tax credit to council after hours of testimony

The Hawaii County Committee on Finance voted 6-2 on Aug. 5 to forward Bill 38 — a proposal to create a tax credit tied to private-road maintenance — to the full County Council with a favorable recommendation.

Bill 38, as read into the record, would add a private-road tax credit to the county real property tax code; the clerk’s summary described a credit “of up to $500” payable to homeowners who spend at least $100 annually to maintain a private roadway that is open to the public and managed by a road maintenance organization (RMO). The bill’s author, Council member Connolly Klinefelter, said the current draft being considered on Aug. 5 sets a $75 minimum and a $250 maximum credit for a homeowner’s primary residence, and circulated a staff chart estimating the maximum fiscal exposure if every eligible lot applied.

The bill drew multiple public speakers from Puna and other districts and a lengthy committee discussion about who would qualify, how claims would be validated and the program’s likely fiscal cost. John Olsen, a resident testifying in support, said the measure is timely: “The reduction in the property tax, I think is appropriate,” he said. Eileen O’Hara, immediate past president of the Hawaiian Shores Community Association, described the credit as an incentive for residents to pay assessments and cited her subdivision’s recent $1.5 million USDA loan to repave 12 miles of roads. “The $75 minimum is well, it’s perfect for our subdivision because that’s the amount of our annual assessment spent on roads,” O’Hara told the committee.

Patty Pinto, a resident who also serves on a community association board and works in the county planning division, told the committee that decades of private road maintenance by volunteer associations has left many subdivisions with roads that pose public-safety and emergency-access problems. “This is an exceptional opportunity for the county to join the work of providing for public safety, emergency access, evacuation routes,” Pinto said.

Committee members pressed staff for program details. Katie Joe, assistant administrator for the Real Property Tax Division, said the division’s interpretation is that the credit would be based on the actual fee a homeowner paid to an eligible RMO in a year (for example, a homeowner who paid $150 would receive a $150 credit up to the bill’s stated maximum). Joe and Real Property Tax Administrator Lisa Mira both told the committee the simpler the credit formula, the easier it would be to implement and program in the county’s financial systems.

Deputy corporation counsel Kira Long said the administration is developing a finance director’s administrative rule that would allow an individual taxpayer to claim the credit directly if an RMO fails to file required documentation; Long said that would provide a fallback process to prevent eligible homeowners from losing the credit solely because an RMO did not submit paperwork.

Council members voiced competing concerns. Several members said they supported the policy goal of helping long-established subdivisions that lack adequate public infrastructure; others worried about the county’s near-term fiscal constraints and the staff workload to verify claims in the program’s early years. Committee member Kaguada proposed an amendment to convert the draft’s sliding credit ($75–$250) to a flat $75 credit; that amendment failed on a 2-6 roll call. After further discussion, the committee approved forwarding Bill 38 with a favorable recommendation on a 6-2 vote (two members opposed, one member absent/excused). The measure now goes to the full County Council for further readings and final action.

The committee heard repeated examples of everyday impacts the bill aims to address: canceled school bus routes where road conditions prevent stops, limited emergency access during heavy growth in some subdivisions, and disparities in how much volunteer associations can collect and spend on road upkeep. Committee members and staff repeatedly stressed that the bill does not transfer ownership or liability for private roads to the county; it creates an incentive tied to what homeowners already spend to maintain those roads.

The committee record includes staff estimates of program size and cost. The bill’s author circulated a staff-sourced table showing a theoretical maximum revenue reduction of roughly $1.7 million if every eligible lot took the maximum credit; the Real Property Tax Division said a simple $75 flat credit would produce an estimated revenue loss of about $630,000 annually based on current data. Both figures were presented to illustrate scale rather than to predict actual uptake. Committee members noted actual cost will depend on how many homeowners apply and how many RMOs submit documentation.

Next steps: the full County Council will schedule the ordinance for public hearings and additional readings. If the ordinance advances, staff said they expect to rely on administrative rules and a mix of RMO-submitted spreadsheets and limited individual validations to manage the program in its initial years.