TAXED OUT

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Increasing land taxes force Hawaiians off their ancestral lands

 

The Time Before

When Ed Chang was a child living in Makena in the 1930s there was only one road to get there, which was through ‘Ulupalakua Ranch up ma uka. There used to be a school but it closed in the 1920s before Chang was born so he and the other children of Makena went to ‘Ulupalakua School, six miles up the road. Chang’s grandfather was a Chinese merchant named A‘ana Chang. His grandmother was Keolakai (Hattie) Kukahiko whose family had been in Makena since the reign of Kamehameha I. Together the couple had 16 children.

Ed Chang (center) flanked by his nephew Chris and his brother, Lawrence (Chris’ dad). They are on Chang’s Paipu lot in front of the house he has been building for 30 years. Chang is afraid to finish his house because that will result in another tax increase on his land.- Photo: Jason Lees

The Chang ‘ohana had a small store across the street from their house. For a long time it was the only store in the area. Life was simple in Makena. People lived off the land. They fished and farmed. They had chickens in their yards and they raised hogs. “As a kid the thing I enjoyed most was fishing. Really that’s all we had to do,” Chang reminisced with a smile. “We’d catch bait fishes like hīnālea and kūpīpī – which you don’t see anymore. We did a lot of hukilau fishing, usually when the ‘ō‘io was running.”

Makena is in the ahupua‘a of Ka‘eo, in the moku of Honua‘ula on Maui’s south shore. Renowned for its fisheries, the ahupua‘a of Ka‘eo included a protected harbor, extensive reefs, tide pools and proximity to the abundant resources of nearby Molokini and Kaho‘olawe. Ma uka, Ka‘eo boasted forests and good, arable soil. Theirs was a close-knit community. Said Chang, “we shared with the neighbors, many of them relatives. We never locked our doors. People went to each other’s houses, and if they weren’t home they just left whatever they brought.”

No Longer Recognizable

The simple community that Chang grew up in no longer exists. The dusty red dirt road has been replaced by smooth black asphalt. The farms have been replaced by perfectly manicured golf courses. The simple family homes have been replaced by luxury condos and mansions that sell for upwards of 20 million dollars. And their fishing grounds are filled with snorkeling tourists slick with sunscreen.

Makena has become a playground for the uber wealthy. It would be unrecognizable to Chang’s parents. Google “Makena, Maui” and the top hits are sites like Trip Advisor, Makena Golf and Beach Club, and Maui Owner Condos. Attracted by the stunningly beautiful beaches and the perpetually hot, sunny weather, droves of tourists began descending shortly after statehood with the development of the Wailea Resort, just north of Makena.

By 1971 most of Makena’s coastal lands were re-designated for resort development via the Kīhei Civic Development Plan. According to a 2007 OHA-funded report called Project Ka‘eo: The Challenge to Preserve Cultural Landscapes in Modern Makena, “the prevailing wisdom (at the time) was that South Maui’s resort economy would be the lifesaver needed…to replace the sagging agricultural plantations.”

These decisions had devastating effects. Rapid development was expedited by sloppy and cursory archaeological reviews of the region. According to Project Ka‘eo, in 1974 the archaeological reconnaissance of the 1,000 acres designated for the Makena Golf Course was completed at a rate of about 71 acres per day by just five people. Along the old Makena Road, the majority of cultural sites identified were found “unworthy to survive.” And during the construction of the Wailea Resort hundreds of iwi kūpuna were removed and relocated.

Priced Out and Pushed Out

To support resort development, the County rezoned much of the land from agriculture to residential and commercial use. As development progressed, land values soared, pricing out most of the local families who were unable to meet the increasingly unmanageable tax burden. By the 1980s most Makena families had no choice but to sell or foreclose. Today only four small parcels in Makena are still owned by the Hawaiian families who lived in Makena before the 1893 overthrow: three belonging to the Chang-Kukahiko ‘Ohana, and one belonging their Kukahiko cousins, the Lu‘uwai ‘Ohana.

The challenge facing the Chang-Kukahikos and Lu‘uwais is to hold on to their remaining land. Together the Chang-Kukahiko ‘ohana’s three remaining parcels of land are valued at millions of dollars and their annual tax burden is over $100,000 per year, despite most of the land still being zoned for agriculture.

The ‘ohana was especially concerned about one parcel where the iwi of 14 Kukahiko ancestors rest in a small family graveyard. Chang’s great-great-grandfather, John Kukahiko, was buried there in 1900. But with dozens of descendants sharing claim to the land, navigating the legal issues required sophisticated and strategic thinking. It also required unity of purpose.

Determined to protect their family graveyard, they formed a corporation. As a corporation, the ‘ohana made the decision to sell some of their land and use the revenue to build what they call “Kukahiko House” on the oceanfront parcel where their iwi kūpuna sleep. This house was never intended to be a home – no one in the family can actually afford to live there. Instead, via the family corporation, they created a business renting out the house as a wedding venue in order to pay the nearly $70,000 annual land tax.

Chris Chang, the nephew who has served as president of the family corporation for the past 14 years, notes that no one in the family profits from revenues generated by Kukahiko House. “Right now the County values the land at $11 million dollars. Keeping the land takes a lot of effort. The wedding activity is just so we can pay the bills.”

“I think what was really, really brilliant about my grandfather’s generation is that they had such aloha for and connection to the land, and that they talked about these things and considered what the future might be for us,” reflected Chang’s daughter, Keiki Kawai‘ae‘a. “They realized that the family would not be able to hold on to our ‘āina kūpuna (ancestral lands) if they didn’t take action. That’s how the corporation came to be. These were just ordinary, average people; farmers and fishermen.”

While selling land to keep land might sound like a strange approach, they saw no other option. “The decision to sell became moot,” remarked Chang. “One of my aunts was living on the land at the time and she was almost $40,000 in arrears with unpaid land taxes. You can’t hold on to land that you cannot afford.”

The Lu‘uwais found a similar solution to address the increasing annual tax burden on their remaining half-acre parcel. “My parents, Boogie and Violet, built their home to support a bed and breakfast business to pay the property taxes,” said Maile Lu‘uwai. Her uncle, Bobby Lu‘uwai, now owns and continues to run the bed and breakfast. Last year’s tax bill was $27,600. While Lu‘uwai admires her parents’ foresight, she laments a system that forces families with ancestral ties to their land to go to such lengths to hold on to it. “It’s heartbreaking to have to run a business on your land just to pay the taxes on property that has been in your family for generations.”

Tax Wars

Chang, now 88 years old, owns another 3.1 acre parcel about a mile down the road from Kukahiko House in an area known as Paipu. It was purchased by his great-great-grandparents in 1883 and used off and on for farming by family members over the next 135 years. The original lot was four-acres but when Chang took over the property he had to sell off about an acre in order to buy out 55 other family members with an interest in the land. Chang moved onto the property when he retired 30 years ago with the idyllic vision of building a home and spending his retirement years quietly farming his family land. Instead, Chang has spent his golden years battling the Maui County Tax Assessor.

Chang’s lot is primarily zoned agriculture, but because he was building a house on the property, about 9,000 square feet of the lot was zoned residential. In 2000 his annual land tax was about $2,600, not exorbitant, but still a lot of money for someone on a fixed income. Over the next 20 years the tax burden steadily increased. Then suddenly it jumped 111% from about $9,800 in 2017 to over $20,000 in 2018.

“I appealed and got it reduced to $10,000,” said Chang. “But the very next year it went up to $22,000.” Out of necessity, Chang has become well versed on land valuation and tax assessment. In his opinion the County is using “unusual” approaches including doubling the square footage designated “residential” to leverage the higher tax rate and adding various “adjustments” to the property tax calculation for his land. The computation methodologies are extremely complicated, but Chang has been able to deconstruct and argue against them successfully.

Chang’s property is ma uka of Po‘olenalena Beach Park. The Po‘olenalena parcel was once privately owned but after the owner made a land swap with the County and it became a beach park, the County increased Chang’s tax rate claiming his land was now “beachfront.”

Chang’s frustration is palpable. “It’s unfair. Something is wrong. I might have to go to court just to get some stability,” sighs Chang wearily. “And I don’t see the problem ending because the property is next to a park with a sandy beach. It attracts lots of tourists. It has that value. I think we can coexist, but not if they continue to tax me the way they are.”

Adds Kawai‘ae‘a, “In the new landscape of this community we look very different. The County wants more revenue from our land. Taxation is just another way our government displaces Hawaiians. We cannot compete financially with wealthy outsiders who can pay millions of dollars for a home and then live in it for only two weeks a year.”

Not Just In Makena

This story is familiar to many Hawaiians. Land owned in full for generations suddenly increases in value due to development and real estate speculation in the surrounding area. Then their property taxes increase, exceeding the family’s ability to pay. As the tax debt accrues, the family is forced to sell to avoid foreclosure. The situation is further complicated when there are hundreds of descendants with a claim to the land and complicated land title issues.

“Figuring out how to help people hold on to their ancestral lands is something we are frequently asked to do by families from across all the islands,” said Laura Ka‘akua, CEO of the Hawaiian Islands Land Trust. “Even though the counties give tax relief for Kuleana Lands, most of the ancestral lands still owned by Hawaiian families are not covered.”

“Our family land is not Kuleana Land, and there are other Hawaiian families like ours across all the islands with ‘āina kūpuna – land that has been in their family for generations – who want to do what we want to do – continue to pass that ‘āina on,” explains Kawai‘ae‘a who believes that the best way to address this issue is with tax relief similar to that afforded to Kuleana Land owners. “I think that’s the next step. We hope the County will consider a new tax law. ”

“We need to protect properties that have been in Hawaiian families for generations,” insists Lu‘uwai. “If the only reason a family is losing their property is because of the development surrounding their community then we need a way to protect these families.”

OHA Trustee Carmen “Hulu” Lindsey of Maui agrees. “Many families have shared with me about how they lost their lands selling off parcel after parcel to pay their land taxes. We need to help these families so they can continue living in Hawai‘i.”

Searching for Solutions

Creating a new tax law is a viable approach and a precedent has already been set with the establishment of the Kuleana Land property tax exemption, versions of which were adopted by all four counties between 2007-2009 with OHA helping to draft the legislation and advocating for approval of the tax exemption county by county. Today OHA provides assistance to families pursuing this tax exemption for their property by verifying their lineal descent from the person(s) who recieved title to the land under the Kuleana Act.

With the Māhele of 1848, Kamehameha III distributed land to his ali‘i and konohiki. The subsequent Kuleana Act of 1850 was created to address the needs of the maka‘āinana. It authorized the Land Commission to grant fee-simple title to native tenants for their house lots and cultivated land. Land awards ranged from 1-40 acres; tenants had to file a claim to receive title. Luci Meyer, OHA’s Genealogy Research Specialist notes that “the Kuleana Act is the only land activity still on the books in Hawai‘i from Kingdom to Territory to State.”

Unfortunately, relatively few maka‘āinana filed land claims, likely because the concept of private land ownership was completely foreign to them. Only about 26,800 acres was actually distributed under the Kuleana Act. Land received by ali‘i families in the Māhele are not considered Kuleana Lands, nor are lands purchased as “Royal Patent Grants” after 1851 or other land purchases made during the 19th century. Thus, families like the Kukahikos and Lu‘uwais, despite generational ties to their land, do not qualify for the Kuleana Land property tax exemption.

Maui Councilmember Keani Rawlins-Fernandez is aware of the problem and is trying to do something about it. She has explored solutions like creating a tiered property tax system or creating a sliding scale that considers both the property’s market value and the owner’s income. Now she is working on legislation to define “‘Āina Kūpuna” as a concept to help distinguish properties that were purchased or inherited more than 100 years ago, that have remained in the family, and that are not being used commercially. Providing qualifying property owners tax relief under an “‘Āina Kūpuna” designation would be a game changer for people like Ed Chang.

“If a model like this can be successful in Maui County I’m hoping that other counties will adopt a similar model of their own,” said Rawlins-Fernandez.

OHA staff have been discussing possible legislative solutions with both Rawlins-Fernandez and affected families like the Chang-Kukahikos. “These can be very nuanced issues,” said Senior Public Policy Advocate Wayne Tanaka. “One solution might not fix everything, but there are steps that can provide more ‘ohana with critical relief. This will require thoughtful, dedicated leadership from elected officials, continued resilience and tenacity on the part of ‘ohana like the Chang-Kukahikos, and engagement and support from the larger community. Once ancestral lands are lost it can be very difficult to get them back.”

Connections

The emotional, spiritual and reciprocal connection that Hawaiian families have to their kulāiwi does not translate to things like land valuation, and that is the greatest disconnect between Western and Hawaiian world views in land issues. For most Hawaiians land is not a commodity; land is ‘ohana.

“Keeping generational families on their ‘āina kūpuna helps to keep the authenticity and the mo‘olelo of that place intact,” adds Rawlins-Fernandez. “The mo‘olelo has value for planning and design today because it is the result of observation over generations. Once a family moves the mo‘olelo goes with them.”

Ka‘akua agrees. “The stories passed down in families with ancestral lands about how you behave on that land, and what the land is calling for; its really a management plan – science through observation. It’s an intimate understanding of how certain actions will affect the land and the ocean below. By helping families stay on their ancestral lands, and keeping that knowledge base intact, the entire community benefits.”

“Our connections are deep because of the ways that we lived together on the land,” reflects Kawai‘ae‘a. “I would come here and visit my grandparents and my grandfather spent a lot of time walking me through the places and telling me the names and the stories. That has been passed to us across generations. As a family we have contributed to the cultural footprint of Makena.”

Chang’s cousin, Steven, lives and farms on the family’s third remaining Makena parcel. “My connection to this place is that it’s our home and it’s all we know. People are coming here, buying land, then selling it. For them it’s profit. To us it’s just home.”