Tax Appeal of Gardens at West Maui Vacation Club v. County of Maui

978 P.2d 772, 90 Haw. 334, 1999 Haw. LEXIS 144
CourtHawaii Supreme Court
DecidedMay 11, 1999
Docket21903
StatusPublished
Cited by27 cases

This text of 978 P.2d 772 (Tax Appeal of Gardens at West Maui Vacation Club v. County of Maui) is published on Counsel Stack Legal Research, covering Hawaii Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tax Appeal of Gardens at West Maui Vacation Club v. County of Maui, 978 P.2d 772, 90 Haw. 334, 1999 Haw. LEXIS 144 (haw 1999).

Opinion

Opinion of the Court by

KLEIN, J.

Appellant Gardens at West Maui Vacation Club (“appellant”) appeals from the judgment of the Tax Appeal Court in favor of appellee County of Maui (“the County”) and against appellant, filed September 3, 1998. Appellant challenges the real property tax assessed for the 1997 tax year upon its properties located in the County of Maui.

On appeal, appellant contends that (1) the County’s differential tax rate structure is an invalid exercise of its real property taxation powers; (2) the County’s differential tax rate with respect to time share owners of a condominium unit violates the Equal Protection Clauses of the Hawai'i and United States Constitutions; (3) Maui Ordinance 2569 (Ordinance 2569) amending subsection C.4. of Maui County Code (MCC) § 3.48.305, rendered MCC § 3.48.305.C unconstitutionally vague and ambiguous; and (4) the retroactive application of Ordinance 2569 unconstitutionally deprived appellant of “vested rights.” For the reasons set forth below, we affirm the judgment of the Tax Appeal Court.

I. BACKGROUND

The Gardens at West Maui Vacation Residence is located in the County of Maui. The properties are units subject to a time share plan, as defined in Hawai'i Revised Statutes (HRS) § 514E-1 (1993), 1 registered with the Department of Commerce and Consumer Affairs. The tax map key numbers, land classification, assessed valuations as determined by the Tax Assessor of the Second Taxation District, and the approximate taxes in controversy are as follows:

Land Taxes In Tax Key No. Classification Valuation Controversy
4-3-2^0:20 Hotel/Resort $135,400 $440
4-3-2-40:21 Hotel/Resort $135,400 $440
4-3-2-40:22 Hotel/Resort $135,400 $440
4-3-2-40:23 Hotel/Resort $135,400 $440
4-3-2-40:25 Hotel/Resort $135,400 $440
4-3-2-40:26 Hotel/Resort $135,400 $440
4-3-2-40:28 Hotel/Resort $135,400 $440
4-3-2-40:30 Hotel/Resort $130,600 $424
4-3-2-40:33 Hotel/Resort $130,600 $424
4-3-2-40:34 Hotel/Resort $130,600 $424

The County of Maui classifies real property into nine classifications based on use for the purpose of real property taxation. Based on these classifications, the County assigns differential real property tax rates. The rates instituted for the 1997 tax year for each class of property are as follows:

Tax Rate per $1000 of Net Taxable Classification Assessed Valuation
Improved Residential $4.75
Apartment $4.75
Commercial $6.50
Industrial $6.50
Agricultural $4.75
Conservation $4.75
Hotel & Resort $8.00
Unimproved Residential $4.75
Homeowner $3.50 .

Pursuant to MCC § 3.48.185, 2 real property is assessed on January 1 preceding each tax year. Accordingly, appellant’s property was assessed for the 1997 tax year on January 1, 1997. The 1997 tax year began on July 1, 1997 and ended on June 30, 1998.

During the tax years prior to 1997, appellant’s properties had been assessed in the classification “Apartment” under MCC § 3.48.305. 3 When the County tax assessment *338 notices for the 1997 tax year were distributed in March 1997, appellant was notified of a change in its properties’ classification from “Apartment” to “Hotel Resort.”

On March 14, 1997, the Mayor of the County of Maui submitted the proposed county budget for Fiscal Year 1998 accompanied by a proposed bill entitled “A Bill for an Ordinance Amending Section 3.48.805, Maui County Code, Pertaining to Real Property Taxation of Condominium Units Classified Hotel Resort” (Bill No. 29). The initial draft of bill No. 29 provided that the ordinance, if passed, would “take effect upon its approval.”

In April 1997, appellant filed an appeal from the tax assessment notices received in March 1997 with the Real Property Tax Board of Review. At the time of that appeal, MCC § 3.48.305.C.4 defined “Hotel Resort” as a unit “occupied by transient tenants for periods of less than six consecutive months.”

Thereafter, Bill No. 29 was passed by the Maui County Council on May 29, 1997 and approved by the Mayor of the County 'of Maui on June 13, 1997 (Ordinance 2569). It provided that the ordinance “shall be effective as of January 1, 1997” and amended MCC § 3.48.305 subsection C.4 to read as follows:

4. Hotel Resort. Units occupied by transient tenants for periods of less than six consecutive months and units subject to a time share plan as defined in section 5HE-1, Hawai’i Revised Statutes, as amended, shall be classified as “hotel resort.

(Emphasis added.) Ordinance 2569 officially reclassified appellant’s property from “Apartment” to “Hotel Resort” retroactive to January 1,1997.

On August 29,1997, the Real Property Tax Board of Review entered a decision in favor of the County and against appellant. Appellant filed an appeal with the Tax Appeal Court on September 29, 1997. 4 . The Tax Appeal Court entered its findings of fact and conclusions of law and order on August 17, 1998. In rejecting all four of appellant’s claims, the court concluded in pertinent part that:

1. The County of Maui has the power to set the taxation rate and classification of Appellant’s time share condominium units as “Hotel Resort.” The Hawaii State Constitution grants the counties all powers relating to real property taxation, including the power to set differential rates....
2. Retroactive tax provisions withstand due process challenges unless, in light of the “nature of the tax and the circumstances in which it was laid,” the law “is so harsh and oppressive as to transgress the constitutional limitation.” Welch v. Henry, 305 U.S. 134, 147, 59 S.Ct. 121, 83 L.Ed. 87 (1938).
... this court finds no violation of Appellant’s due process.
a) The County’s purpose was neither illegitimate nor arbitrary. There is no plausible contention that the County acted with an improper motive such as targeting Appellant for a particular reason.
b) The County acted promptly and established only a modest period of retro-activity. ...
3. ... the Owners had not acquired vested rights in being classified as “Apartment” rather than “Hotel Resort.” In Carlton,

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Bluebook (online)
978 P.2d 772, 90 Haw. 334, 1999 Haw. LEXIS 144, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tax-appeal-of-gardens-at-west-maui-vacation-club-v-county-of-maui-haw-1999.