Tax Appeal of Kaheawa Wind Power, LLC v. County of Maui
135 Haw. 202
| Haw. App. | 2014Background
- Kaheawa Wind Power leased State land on Maui (lease dated Jan. 19, 2005) and installed 20 commercial wind turbines mounted on towers bolted to poured concrete foundations.
- The parties stipulated turbines/towers are bolted to foundation slabs (slabs affixed to land); turbines/towers can be unbolted and removed without harming equipment or land; towers/turbines were commercially purchased and required no building permit.
- County assessed the turbines/towers as part of "building" (real property) value and issued amended assessments in 2010 retroactively covering tax years 2007–2009 and regular notices for 2010–2011.
- Kaheawa sued in the Tax Appeal Court: (1) arguing turbines/towers are personal property (equipment/machinery), not real property; (2) challenging retroactive 2007–2009 assessments as untimely and void.
- Tax Appeal Court granted Kaheawa partial summary judgment on the fixtures/real-property issue and granted County partial summary judgment permitting retroactive assessments. Both parties appealed; the Hawai'i Supreme Court reviewed de novo.
Issues
| Issue | Plaintiff's Argument (Kaheawa) | Defendant's Argument (County) | Held |
|---|---|---|---|
| Whether turbines/towers are "real property" (improvements or fixtures) under MCC § 3.48.005 | Turbines/towers are movable machinery/equipment (personal property); foundations only are real property; turbines are not fixtures because they are not annexed as permanent accretions to the freehold | Turbines/towers are improvements/fixtures included in "building" value; alternate-energy exemption language and broad definitions show turbines are taxable improvements | Turbines/towers are not real property under MCC § 3.48.005; they are not "improvements" or "fixtures" because they are machinery tied to the business use and removable without damage; summary judgment for Kaheawa affirmed |
| Whether County's 2010 amended assessments retroactively for 2007–2009 were invalid for being untimely | County knew or should have known about the lease earlier and had a duty under MCC § 3.48.165(A) to timely add omitted property; retroactive assessments beyond a reasonable time should be void; due process concerns | MCC expressly authorizes adding omitted property and contains no express or implied time limit; MCC § 3.48.145 preserves validity of assessments even if not completed within statutory time; retroactive assessments are permitted | No statutory time limit exists in the MCC for adding omitted property; County entitled to retroactive assessments here; Kaheawa's due process claim fails on these facts |
Key Cases Cited
- Kamikawa v. Lynden, [citation="89 Hawai'i 51, 968 P.2d 653"] (Haw. 1998) (standard of review for summary judgment and questions of law)
- Weinberg v. City & Cnty. of Honolulu, [citation="82 Hawai'i 317, 922 P.2d 371"] (Haw. 1996) (rules for interpreting municipal ordinances/statutes)
- Narmore v. Kawafuchi, [citation="112 Hawai'i 69, 143 P.3d 1271"] (Haw. 2006) (tax statutes construed strictly in favor of taxpayer)
- In re Fasi, 63 Haw. 624, 634 P.2d 98 (Haw. 1981) (tax construction principles)
- In re Hawaiian Tel. Co., 61 Haw. 572, 608 P.2d 383 (Haw. 1980) (tax statutes and strict construction)
- Peters v. Weatherwax, 69 Haw. 21, 731 P.2d 157 (Haw. 1987) (common-law terms carry over into statutory interpretation)
- Zangerle v. Republic Steel Corp., 144 Ohio St. 529, 60 N.E.2d 170 (Ohio 1945) (fixture analysis distinguishing chattels accessory to business from realty accretions)
- McKesson Corp. v. Div. of Alcoholic Bev. & Tobacco, 496 U.S. 18 (1990) (limits on retroactive tax impositions under due process)
- In re Tax Appeal of Cnty. of Maui v. KM Hawaii Inc., [citation="81 Hawai'i 248, 915 P.2d 1349"] (Haw. 1996) (retroactive taxation and due process considerations)
- Energrey Enters., Inc. v. Oak Creek Energy Sys., Inc., 119 B.R. 739 (E.D. Cal. 1990) (towers, turbines, and machinery held not to be fixtures; foundations were fixtures)