July 23, 2010
Hawaii

Delinquent $1.5 million tax bill lost in paper trail

July 23, 2010 | By HARRY EAGAR, Staff Writer | The Maui News | www.mauinews.com

WAILUKU – Taxpayers, include “concerned citizen” in your prayers tonight. He just added $1,529,506.94 to Maui County’s strained treasury.

Every week, the county Real Property Tax Division updates its Internet posting of the 25 biggest delinquent taxpayers. According to Tax Division administrator Scott Teruya, the list doesn’t change often. But it did last week, and an anonymous resident called The Maui News to wonder if Kaheawa Wind Power LLC, which held the top spot, was “out of money.”

No, but the company didn’t know it was behind on its taxes until a reporter called.

Kent Smith, president of Makana Nui Associates, which is a partner with First Wind in the farm, said telephone calls and e-mails were flying among company officials Wednesday and Thursday to figure out what happened.

Here, according to Smith and Teruya, is how the tax bill got overlooked for three years:

Kaheawa pays all expenses through a state lease, but when the farm went into operation in 2007, the state didn’t send the lease and permit papers to the county.

“We knew there was a wind farm there,” said Teruya, but there was no paperwork to process.

Earlier this year, a county tax staffer looked into it more closely, decided taxes were due and sent a bill to the last-known address of the listed owner, UPC Wind in Newton, Mass.

However, between 2007 and now, UPC’s interest was renamed First Wind and the offices were moved to Boston.

“The state and the county never assessed us and never forwarded any bills,” said Smith. “They didn’t find any way of contacting the local wind company.”

It took about a day for Kaheawa to reconstruct what had happened, and Smith called Teruya on Thursday to assure him that First Wind’s chief financial officer, Michael Alvarez, was preparing to wire the money by Tuesday.

“One hundred percent,” said Smith by telephone Thursday from a golfing holiday in California.

It could be the harbinger of a big flow of tax revenue for the county. Kaheawa has 20 turbines, and the turbines account for much of the assessed value.

Kaheawa wants to expand by 14 units; Sempra is working on a wind farm of similar size in Ulupalakua; and Castle & Cooke and First Wind are projecting hundreds of turbines on Lanai and/or Molokai.

As of Thursday, Kaheawa still held first place in the list of top 25 delinquents, but Teruya was not concerned. “It seems like their intent is to pay. . . .