Maui County Council members will consider Thursday whether to authorize the settlement of two multimillion-dollar tax appeal cases, both involving wind farm companies alleging that the county improperly assessed their properties by including the value of wind turbines and towers as part of the tax assessment.
At a meeting beginning at 1:30 p.m. in Council Chambers, the Committee of the Whole will consider settlement of appeals from Auwahi Wind Energy, which has wind turbines in Ulupalakua, and Kaheawa Wind Power, which has turbines above Maalaea.
Auwahi is disputing a 2013 tax assessment of $85.2 million that included in the valuation the nearly $84.2 million value of its wind turbines and towers. Kaheawa has a similar case, but with its tax assessments ranging from $102.7 million to $83.3 million, per year, from 2007 to 2011.
Early this year, the Hawaii Supreme Court declined to take up appeals from the Nov. 20 ruling of the state Intermediate Court of Appeals in the Kaheawa Wind case. The high court’s action meant that intermediate court’s ruling remains the final say in the matter.
The intermediate court ruled that the value of Kaheawa’s turbines and towers could not be considered as determining the property tax valuation for the property. However, the court allowed the county to retroactively assess the property for taxes owed.
In its case, Auwahi alleged that the county improperly classified wind towers and turbines as “real property.”
“Auwahi’s position is that the turbines are not properly classified as ‘real property’ and that the building value should be reduced by $84,173,200,” according to a document on file with the Committee of the Whole.
Auwahi contended that the wind power facilities were not included in the definition of “real property’ in the Maui County Code or considered as such by the Hawaii Constitution. Instead, the wind farm facilities were “machinery” or “equipment” bolted to poured concrete slabs that were not permanent and could be moved, according to Auwahi.
On March 1, 2013, the County Council gave final approval to a bill amending the County Code to include “any and all wind conversion property” within the definition of real property for tax assessments. The measure went into effect on Jan. 1, 2014.
Committee of the Whole Chairman Don Guzman said Monday that he believes the county will owe reimbursements to the wind farms, but he wasn’t sure of the amount. And, he said he was limited in what he could discuss about the case.
“I can’t get into it too much,” he said.
The committee’s agenda says the panel may consider adoption of a resolution to settle both matters. The committee members are expected to discuss the matter in a closed executive session.
In another matter on the committee’s agenda, the panel is set to take up five workers’ compensation cases from three Maui County employees and two deceased employees stemming from a Feb. 26, 2014, plane crash on Lanai.
Planner Kathleen Kern, 50, of Kihei and Planning Department secretary Tremaine Balberdi, 52, of Kahului died in the crash, along with pilot Richard “Dick” Rooney, 66, of Spreckelsville. Deputy Corporation Counsel James Giroux, planner Doug Miller and geographical information systems analyst Mark King survived the crash, but were hospitalized for treatment of burns.
Kern’s estate is suing the companies that owned and operated the Maui Air Tours plane and the estate of the pilot, alleging negligence.
The aircraft crashed shortly after takeoff from Lanai Airport. The employees had staffed a Lanai Planning Commission meeting on the evening of Feb. 26, 2014. They were returning to Maui aboard a twin-engine Piper Chieftan, but it went down in an area known as the Miki Basin, about a mile south of the airport.
Defendants listed in the Kern lawsuit are owners Maui Island Air Inc. and Maui Aircraft Leasing LLC. Rooney was an officer of both companies.
The aircraft’s owners are liquidating the assets of the company, and there’s mediation scheduled in August to determine how the parties, including the crash victims and the deceased employees’ families, would divide up the assets and insurance payments, Guzman said.
Under Hawaii law, the county has the right to be reimbursed from the aircraft owners whatever workers’ comp benefits it has paid out to the surviving employees and the deceased families, he said. However, the county could waive its right to reimbursement, he added.
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