Maui Council committee recommends passage of property transparency bill, updated on TAT collection system

The Maui County Council’s Budget, Finance and Economic Development Committee unanimously advanced a bill Tuesday requiring greater transparency in county administration disclosures about county-owned land, while also receiving an update on the upcoming overhaul of the County’s transient accommodation tax collection system.

Property acquisition transparency bill

The committee voted 9-0 to approve the first reading of Bill 81-2025. Introduced by Committee Chair Yuki Lei Sugimura, the bill amends the current Maui County Code to mandate that the administration disclose any funding source restrictions in budget transmittals when county-owned property acquired with special-purpose funds is proposed for a different use.

The bill’s creation was prompted by the County’s acquisition of approximately 50 acres of land from Maui Land & Pineapple Co. in West Maui. The property was originally purchased using the Open Space Fund, but following the Lahaina wildfires, the site was reconsidered for affordable housing development. The bill says the Council was not informed that the property had been acquired using County Open Space funds, which are restricted to land conservation and not affordable housing.

According to the bill, the administration asked the Council to consider Bill 33 (2025) to amend the fiscal 2025 budget to appropriate $650,000 from the Affordable Housing Fund as a grant for A0746 Lahaina L.P. for predevelopment costs for the 14.99-acre Kaiaulu o Nāpili affordable housing project, a portion of County-owned land.

The Budget Committee’s report on Bill 33 says: “Although the parcel was originally acquired for open space, repurposing a portion of the site for affordable housing reflects the plan’s broader recommendation that the County take an active role in helping to meet the community’s documented housing needs.”

However, Bill 81 contains a Council finding that the administration did not disclose the incompatible use of the Open Space Fund until it was questioned about it, and council members learned the proposed use would be “contingent upon reimbursement of the Open Space Fund.”

During Tuesday’s meeting, Department of Housing Deputy Director Saumalu Mataafa confirmed that a reimbursement of approximately $1.434 million from the Affordable Housing Fund back to the Open Space Fund was already appropriated in the fiscal year 2027 budget to rectify the discrepancy. The housing project, in partnership with Ikaika ‘Ohana, is currently in its pre-development phase for design and infrastructure planning.

While the bill received unanimous support, some council members questioned its necessity, noting that Mayor Richard Bissen’s administration had been completely forthcoming throughout the West Maui land transfer.

“This administration was transparent in every step of the process,” Council Member Tamara Paltin said. “If we’re saying future administrations may not be transparent, then yes, by all means, let’s pass this.”

Council Member Keani Rawlins-Fernandez was more skeptical initially.

“This just seems to me like it’s an election year and member Sugimura is trying to get a gotcha on Mayor Bissen’s administration and that’s my read on it,” she said.

Sugimura said: “Please do not bring up the race. Please do not. This is not the right time.”

“I can say what I want to say,” Rawlins-Fernandez responded.

“You can. That’s not appreciated,” Sugimura said.

Rawlins-Fernandez ultimately voted in favor of the bill, offering praise for the current administration’s transparency.

“I thank Mayor Bissen and his hardworking administration for collaborating with the Council throughout this one example,” she said. “It’ll be good for future administrations to be held to the same standard.”

TAT software launching Oct. 5

The committee also received a status update on the implementation of new transient accommodations tax billing and collection software by FAST Enterprises. The County collects a 3% transient accommodations tax revenue from approximately 15,000 taxpayers, generating about $70 million in annual revenue across four classes: hotels, timeshares, short-term rentals, and commercialized residential properties.

In March 2024, a report by Maui County Auditor Lance Taguchi revealed that the county’s Department of Finance was understaffed and unprepared when it first began collecting the county transient accommodations tax in November 2021. The auditor’s office report also found that more than $9.3 million of County TAT was delinquent as of June 30, 2022, “and the County made little to no effort to collect it. The lack of efforts to collect is rooted in management’s failure to establish and maintain an accurate receivable list.”

During the status update to Budget Committee members, Deputy Director of Finance Maria Zielinski reported that the software implementation is running about a week ahead of schedule and is slated to go live on Oct. 5, 2026.

For the first time, the new system will allow the county to collect tax map key numbers from registering taxpayers. This data point, which the state Department of Taxation currently does not require, will enable Maui County to generate granular-level reporting by district and residency area.

Paul Neidhardt, the county’s revenue manager, said that written policies and procedures for TAT collection have been developed where none previously existed.

Regarding collections, the Finance Department shared several key details: Accounts receivable currently outnumber refunds by roughly a 2-to-1 ratio; and the County recently issued a refund estimated at roughly $1 million to a large West Maui taxpayer. The exact amount was not provided. The refund was required after the County determined the property did not qualify as a short-term rental because it was operating under a long-term contract.

Challenges with state collaboration

An issue raised during the meeting was the lack of cooperation from the state Department of Taxation regarding enforcement. Currently, the state provides taxpayer filing data to the counties on a 60-day delay and does not share its audit findings or enforcement actions.

Operating with only five active employees and awaiting approval for a critical tax auditor position, Neidhardt noted the County’s enforcement limitations.

“Currently, we don’t have the capacity nor the remit to actually go out and potentially find folks who are not reporting,” Neidhardt said. “But as we start to gain that more clarity into where the income is being derived from the properties, that offers some opportunities to cross-reference with real property, with planning, and potentially find those taxpayers who may be under-reporting, may not be reporting, but that’s a year or two down the line after we’re able to take care of all the taxpayers who do want to do the right thing and are trying to do things to the best of their abilities.”

Tips regarding non-compliant operators are currently forwarded to the state’s enforcement hotline, he added later in response to a follow-up question from Paltin.
Committee Chair Sugimura raised the idea of pursuing state legislation to formalize TAT enforcement collaboration between the state and counties, asking Paltin to look into it ahead of the next legislative session. Paltin serves as the Council’s representative on the Hawai‘i State Association of Counties.

Paltin said she’d want to talk with the other counties first, and noted the County was already behind the deadline for this session’s HSAC legislative package — though any council member could still work directly with a state legislator on the issue.

Earlier in the meeting, Paltin had floated the HSAC conference, set for Sept. 11, as one possible venue to raise the issue. Paltin said she would bring the topic to HSAC’s executive committee; Sugimura said she would also follow up directly with the Finance Department.

The TAT software update was an informational item, and the committee took no legislative action before adjourning.