County of Kaua`I v. Baptiste

• Citation: 165 P.3d 916
• Decision Date: 06 August 2007
• Docket Number: No. 27351.,27351.
• Parties: COUNTY OF KAUA`I, by its County Attorney Lani D. NAKAZAWA, Plaintiff-Appellee, v. Bryan J. BAPTISTE, Mayor, County of Kauai; Michael H. Tresler, Director of Finance, County of Kaua`i; and Kaua`i County Council, Defendants-Appellees, and Gordon G. Smith, individually; Walter S. Lewis, in his capacity as Trustee of the Walter S. Lewis Revocable Living Trust; Monroe F. Richman, Trustee, Richman Family Trust; and Ming Fang, Trustee, Ming Fang Trust, Intervenors-Appellants.
• Court: Supreme Court of Hawai'i

165 P.3d 916

COUNTY OF KAUA`I, by its County Attorney Lani D. NAKAZAWA, Plaintiff-Appellee, v. Bryan J. BAPTISTE, Mayor, County of Kauai; Michael H. Tresler, Director of Finance, County of Kaua`i; and Kaua`i County Council, Defendants-Appellees, and Gordon G. Smith, individually; Walter S. Lewis, in his capacity as Trustee of the Walter S. Lewis Revocable Living Trust; Monroe F. Richman, Trustee, Richman Family Trust; and Ming Fang, Trustee, Ming Fang Trust, Intervenors-Appellants.

No. 27351.

Supreme Court of Hawai'i.

August 6, 2007.

As Corrected August 7, 2007.

Reconsideration Denied September 6, 2007.

Robert H. Thomas (of Damon Key Leong Kupchak Hastert), Honolulu, for intervenors-appellants.

Gary M. Slovin (Russell S. Kato and Corlis J. Chang, with him on the briefs, of Goodsill Anderson Quinn & Stifel, Honolulu, and Lani D.H. Nakazawa, Kaua`i County Attorney, with him on the briefs), for plaintiff-appellee.

Rosa V. Flores (Christiane L. Nakea-Tresler, Deputy County Attorney, on the brief), for defendants-appellees.

MOON, C.J., LEVINSON, and NAKAYAMA, JJ.

Opinion of the Court by MOON, C.J.

Intervenors-appellants George S. Smith, individually; Walter S. Lewis, in his capacity as Trustee of the Walter S. Lewis Revocable Living Trust; Monroe F. Richman, Trustee, Richman Family Trust; and Ming Fang, Trustee, Ming Fang Trust [hereinafter, collectively, the Appellants] appeal from the Circuit Court of the Fifth Circuit's¹ May 20, 2005 final judgment entered pursuant to the order granting plaintiff-appellee County of Kauai's (the County) motion for summary judgment. In granting summary judgment in favor of the County, the circuit court concluded that a voter-initiated and voter-approved charter amendment limiting real property taxes (the Charter Amendment) was void under the Revised Charter of the County of Kaua`i (RCCK) and violated the Constitution of the State of Hawai`i (the Hawai`i Constitution).

Briefly stated, in 1978, the voters of the State of Hawai`i (the State) approved proposed amendments to the Hawai`i Constitution that: (1) transferred exclusive power over real property taxation from the State to "the counties," see Haw. Const. art. VIII, § 3, quoted infra; and (2) established an eleven-year transition period during which "the policies and methods of assessing real property taxes shall be uniform throughout the State and shall be established by agreement of a majority of the political subdivisions." See Haw. Const. art. XVIII, § 6, quoted infra. In November 1989, the requirements of statewide uniformity for the assessment of real property taxation lapsed. See Weinberg v. City & County of Honolulu, 82 Hawai`i 317, 324, 922 P.2d 371, 378 (1996).

In 2004, the Appellants, as part of a group known as Ohana Kaua`i, successfully circulated a petition that proposed an amendment to the RCCK, essentially decreasing and limiting real property taxes for certain county residents, which was then placed on the ballot for the November 2004 general election. On October 25, 2004, prior to the election, the County, through the County Attorney, sought declaratory relief from the circuit court, alleging that the proposed Charter Amendment was "in fact an attempt to amend the existing ordinances of the County which govern the assessment of real property" (emphasis in original) and, as such: (1) was void pursuant to the RCCK's limitation on ordinances by initiative that affect taxes; (2) violated the Hawai`i Constitution; and (3) was otherwise void for vagueness.

The proposed Charter Amendment was ultimately approved by the voters. Consequently, following the election, the County amended its earlier complaint, naming Mayor Bryan J. Baptiste, Finance Director Michael H. Tresler, and the Kaua`i County Council (i.e., those allegedly responsible for implementing the Charter Amendment) as defendants [hereinafter, collectively, the Defendants]. The Appellants intervened and moved to dismiss the County's first amended complaint [hereinafter, the second motion to dismiss²]; the County, in turn, moved for summary judgment. The circuit court denied the Appellants' second motion to dismiss, granted the County's motion for summary judgment, and entered final judgment in favor of the County. The Appellants' timely appeal followed.

On appeal, the Appellants essentially contend that the circuit court erred in denying their second motion to dismiss inasmuch as (1) the County lacked standing, (2) there was a lack of an actual controversy, and (3) the claim was not ripe. The Appellants also challenge the circuit court's grant of summary judgment in favor of the County, contending that (1) the Charter Amendment was not void under the RCCK and (2) the Charter Amendment did not violate the Hawai`i Constitution.

For the reasons discussed below, we affirm in part and reverse in part the circuit court's May 20, 2005 final judgment.

I. BACKGROUND

A. Historical Background

This court previously set forth the historical background of the 1978 amendments to the Hawai`i Constitution pertaining to the power to tax real property in State ex rel. Anzai v. City & County of Honolulu, 99 Hawai`i 508, 57 P.3d 433 (2002):

At one point in Hawaii's history, all taxation authority was unequivocally vested in the State. The 1968 Hawai`i Constitution provided as follows:

The taxing power shall be reserved to the State except so much thereof as may be delegated by the legislature to the political subdivisions, and the legislature shall have the power to apportion state revenues among the several political subdivisions.

Haw. Const. art. VII, § 3 (1968). However, following the 1978 State Constitutional Convention, article VII, section 3 was renumbered and amended to include a provision vesting exclusive taxation authority over real property in the counties. Currently, the relevant section reads as follows:

The taxing power shall be reserved to the State, except so much thereof as may be delegated by the legislature to the political subdivisions, and except that all functions, powers and duties relating to the taxation of real property shall be exercised exclusively by the counties, with the exception of the county of Kalawao. The legislature shall have the power to apportion state revenues among the several political subdivisions.

Haw. Const. art. VIII, § 3 (1978) (emphasis added). Contemporaneously, revisions were made to article XVIII to ensure an orderly transition of the power to tax real property. Specifically, the 1978 Constitution provided that,

for a period of eleven years following ... ratification [which occurred on November 7, 1978], the policies and methods of assessing real property taxes shall be uniform throughout the State and shall be established by agreement of a majority of the political subdivisions. Each political subdivision shall enact such uniform policies and methods of assessment by ordinance before the effective date of this amendment [July 1, 1981], and in the event the political subdivisions fail to enact such ordinances, the uniform policies and methods of assessment shall be established by general law. Any amendments to the uniform policies and methods of assessment established by the political subdivisions may only be made by agreement of a majority of the political subdivisions and enactment thereof by ordinance in each political subdivision.

Real property tax exemptions ... as provided by law and in effect upon ratification ... shall be enacted by ordinance and shall not be eliminated or diminished for a period of eleven years following such ratification; provided that increases in such exemptions, or the additions of new and further exemptions or dedications of lands, may be established or granted only by agreement of a majority of the political subdivisions, and such increases or additions shall be enacted by ordinance in each political subdivision.

Haw. Const. art. XVIII, § 6 (1978). . . . In response to these constitutional amendments, the legislature, in 1980, enacted HRS [c]hapter 246A with the stated purpose of "provid[ing] for the orderly transfer of these functions, powers, and duties, including the transfer of personnel, records, and equipment to the counties." 1980 Haw. Sess. L. Act 279, § 1 at 534 (presently codified at HRS § 246A-1 (1993))....

Id. at 510-11, 57 P.3d at 435-36 (some ellipses in original and some added) (some emphases omitted).

B. The Charter Amendment

The Appellants, as representatives of the group Ohana Kaua`i, sought to place a proposed charter amendment on the 2004 general election ballot. Generally, charter amendments via an initiative process are permitted under Article XXIV of the RCCK, which provides in relevant part:

Section 24.01. Initiation of Amendments. Amendments may be initiated only in the following manner:

....

B. By petition presented to the council, signed by not less than five percent (5%) of the voters registered in the last general election, setting forth the proposed amendments.... Upon filing of such petition with the council, the county clerk shall examine it to see whether it contains a sufficient number of apparently genuine signatures of voters.

Section 24.02. Elections to be Called.

A. Any ... petition of the voters proposing amendments to the charter shall provide that the proposed amendments shall be submitted to the voters of the county at the next general election.

B. The county clerk shall have the proposed amendments published in a newspaper of general circulation in the county at least thirty (30) days prior to submission of the proposed amendments to the voters of the county at the next general election.

C. Should the majority of the voters voting thereon approve the proposed amendments to this charter, the amendments shall become effective at the time fixed in the amendment, or, if no time is fixed therein, thirty (30) days after its adoption by the voters of the county. Any charter amendment shall be published in a newspaper of...