Chun Kerr LLP welcomes Nathaniel A. Higa as a partner with the firm

July  2017 – A graduate of Pepperdine University School of Law, Nat advises clients in commercial litigation and tax controversies. He represents clients in the Hawaii State and Federal Courts, as well as the United States Court of Appeals for the Ninth Circuit.

Prior to joining Chun Kerr in 2015, Nat served as an extern with Ninth Circuit Judge Sandra Ikuta and worked at two other prominent Honolulu law firms.

Nat is a member of the Hawaii State Bar Association and is named a “Rising Star” among Hawaii’s Super Lawyers in 2015 and 2016.


NAH Partner Bar Journal



Webinar: The General Excise and Use Tax for Contractors in Hawaii

Monday, June 05, 2017

Chun Kerr Partner Ray Kamikawa will be presenting a web-accessible seminar on the topic of “The General Excise and Use Tax for Contractors in Hawaii” on July 26, 2017, from 9:00 to 10:30am. The seminar will provide participants with a working knowledge of: how the Hawaii General Excise Tax applies to construction contractors; how prime contractors can qualify for subcontract deductions; exemptions available to contractors; tax treatment of suppliers to constructions contractors; special use tax rules on imports used in construction; and how the general excise tax applies to owner-developers who improve and sell their own property in fee and leasehold. If you are interested in participating in the seminar you may [sign up at this link][1] and receive a 50% discount.


New Associate Joseph Dane Instructs Business Associations Course at University of Hawai’i Law School

Joseph-DaneJoseph Dane is the current instructor of the Business Associations course at the William S. Richardson School of Law at the University of Hawaii at Manoa.

He began in the Spring semester of 2016 and will continue through the Fall.



City Property Appraisal Not Legal, Attorney Says

By Rob Shikina – Honolulu Star Advertiser

A Honolulu property owner is claiming the city’s rule for determining property tax assessments is unconstitutional.

The city released its real property assessments Tuesday.

Ray Kamikawa, attorney for Schuyler Cole, said his client will appeal the city’s assessment for the Residential A classification, which applies to parcels valued at $1 million or more that do not have a homeowner’s exemption. The classification took effect in July.

Kamikawa said the classification is an illegal real propertytax classification because it classifies properties based on the value of the property rather than the property’s use

The Residential A classification sets up a higher tax rate of $6 per $1,000 of assessed value for residential use properties appraised at $l million or more, higher than the $3.50 per $1,000 of assessed value for similar properties under $1 million.

“This higher tax rate is made even more egregious because the $6 rate … is triggered when the value of the property increases by one dollar, from $999,999 to $1 million, abruptly increasing the tax by $2,500,” Kamikawa said in a statement. “This cliff effect implicates violations of the Equal Protection Clause of the Hawaiiand United States constitutions.”

“He said the cliff effect harms local residents who have had the same property in their families for generations and may be relying on such property for supplemental income, while property values have increased through no fault of their own.

“Furthermore, local taxes cannot, under the United States Constitution, have a disproportionate impact on out-of-state taxpayers,” Kamikawa said.

It’s good to have an ally who knows his stuff

Honolulu Star Advertiser

If you wanted to challenge a controversial tax law in Hawaii, you couldn’t do much better than to enlist a former state tax director who has, among other things, worked in the state Attorney General’s Office, the Internal Revenue Service’s Office of the Chief Counsel, taught tax law at the University of Hawaii and was co­ chair of the Chamber of Commerce’s tax committee. That would be Ray Kamikawa, who these days is with the law firm Chun Kerr LLP and also is representing Schuyler “Lucky” Cole, whose firm manages vacation and other rental properties.

On behalf of Cole, Kamikawa is challenging the city’s Residential A property tax classification, which taxes non­owner­occupied homes valued at $1 million or more at a rate almost twice as much as what owner­ occupied homes are taxed. Kamikawa contends that is illegal, and if he’s right, the days of the Residential A classification could be numbered.

2 More Hotels Planned For Ko Olina

By Allison Schaefers – Honolulu Star Advertiser

A Chinese firm purchases land in West Oahu and plans to invest $1 billion in developing it

A Chinese corporation closed on two Ko Olina Resort beachfront parcels Thursday and plans to make a $1 billion investment, including the construction of two new uber­luxury branded resorts.

China Oceanwide Holdings Group Co. Ltd. paid $200 million to purchase the 1 million ­square­foot fee­ simple property, said Jeffrey R. Stone, founder and master developer of The Resort Group, Hawaii’s largest landowner of master­planned resort communities. Stone said the company plans to build two new hotels, which will add 400 traditional hotel rooms and 400 residences to Ko Olina Resort. Stone said hotel branding will be announced before midyear, with construction expected to start by the end of 2016 and a target opening of 2018.

In addition to bringing Ko Olina nearer to the conclusion of what’s been about a 20­year build­out for Stone, the investment is expected to attract more of China’s coveted high­end visitors and bolster further Chinese investment in Hawaii. The purchase is expected to play a major role in increasing the emerging China market, which was forecast to bring only just over 185,000 visitors to Hawaii next year.

“By far and away this is the largest Hawaii hotel investment from a Chinese investor. Nothing compares to this,” said Joseph Toy, president and CEO of hotel consultancy Hospitality Advisors LLC. “We’ve seen that level of investment on the mainland, but never in Hawaii before.”

And what’s even better is that the investment will bring two new luxury hotels to Oahu, where Toy said only about 1,450 of about 28,000 hotel and condo rentals can be counted among the highest tier. The significant increase in top hotel rooms is expected to attract more higher­yield visitors, whose spending keeps tourism growing regardless of capacity caps. George D. Szigeti, president and CEO of the Hawaii Tourism Authority, said further development at Ko Olina is welcome news for Oahu’s visitor industry, which has been grappling for some time with hotel room compression in Waikiki and has needed more top­tier rooms.

“These new luxury hotels at Ko Olina will help alleviate concerns that westbound, and especially international, travelers have about securing firstclass accommodations, while expanding their range of offerings to choose from,” Szigeti said. “Keeping travelers excited about coming to Hawaii means our industry needs to continually evolve to satisfy their expectations. These new hotels help us to meet that reality and, ultimately, our entire visitor industry stands to benefit.”

Stone said Ko Olina’s partnership with China Oceanwide along with the May 27, 2016, opening of the Four Seasons Resort Oahu at Ko Olina and the August 2011 opening of the Aulani, a Disney Resort & Spa in Ko Olina, together play a pivotal role in attracting more of the world’s most admired hotel and leisure brands to Oahu.

“China Oceanwide has deep expertise in real estate development. The Ko Olina acquisition complements our global investment strategy very nicely, and will greatly enhance our international development portfolio,” said Lu Zhiqiang, China Oceanwide chairman.“We look forward to our partnership with Ko Olina and the Hawaii community.”

Stone, founder of The Resort Group, said its longterm strategy is to position Ko Olina as a premier mixeduse destination offering a sophisticated mix of upscale hotels, branded private residences, vacation clubs and recreational and leisure amenities with international appeal.

“China Oceanwide will bring development of our master plan to 75 percent,” Stone said. “We only have two parcels in the resort remaining. There’s the marina resort site at Lagoon Four, and then there’s the grand Ko Olina site that’s next to Disney.”

At full build-out, Stone said total investment in Ko Olina is expected to exceed $15 billion, with a yearly generator of $1.4 billion a year to the state. All the projects together will have created more than 35,000 construction jobs and some 14,400 permanent jobs, he said.

Note: Chun Kerr LLP served as local counsel to China Oceanwide Holdings Group Co. Ltd.

Ease Residential A property tax for local homeowner

Editorial – Honolulu Star Advertiser, March 22, 2017

Honolulu’s Residential A ordinance, which taxes homeowners at a higher rate for million-dollar homes that they don’t live in full time, was drafted with the intent of tapping wealthy and offshore Oahu homeowners with a revenue-generating levy.

That tax rate — 71 percent more than the regular residential tax rate — sounded good on paper. But when the City Council rolled out the new law three years ago, some homeowners, trying to hold onto modest properties now valued and taxed at the $1 million level due to soaring property assessments in the islands, cried foul.

The Council should pass Bill 7 or a similar measure that offers some Residential A relief to that group of homeowners, especially those in our aging population and their ohana who have owned older Oahu homes for generations. Many of them rent to local families who can’t afford their rent to skyrocket along with the landlord’s taxes. The proposal, which will be considered for a final vote today, amends the law by creating a tiered system.

The intended result: Properties valued at between $1 million and $1.5 million will see a lower or unchanged bill, and higher-end houses will end up paying more. The shift would allow the city to avoid losing much-needed Residential A revenue for its programs and services while easing tax pain for some property owners. Islandwide, there are some 250,000 residential properties, with about 8,000 fitting into the Residential A classification. Since the law took effect in 2014, those property owners have been paying at a rate of $6 per $1,000 of assessed value, generating about $39 million a year. The standard residential class tax rate has stayed put at $3.50 per $1,000.

Through the relief measure, Residential A properties would be taxed at $4.50 per $1,000 for the first $1 million and double that rate — $9 per $1,000 — for any value above the million-dollar mark. For example, the owner of a property assessed at $1.4 million, would pay $4,500 on the first $1 million and $3,600 for the $400,000 above that, for a total of $8,100. That owner now pays $8,400.

Initially, Residential A was criticized for its jarring “cliff effect,” which occurred when some property owners were stunned to see their tax bill nearly double. In response, the Council approved a one-time break for those who could claim an exemption tied to their own occupancy but had not done so.

Also, about 20 property owners with parcels tagged as Residential A sued the city, arguing that the ordinance is unfair and unconstitutional, in part, because it discriminates against nonresidents. In October, a state judge agreed, but two months later reversed that decision. The switch was based on arguments from the city that the tax classification is justified by Honolulu Hale’s interests in protecting the “stability and continuity of local neighborhoods.” That aim is rightly echoed in the proposed amendment. Stability is a struggle in Oahu’s surreal housing market, which has hit record prices in recent years — the 2016 median price for a singlefamily home posted at $735,000, which was more than double the mainland median of $313,600. The Honolulu Board of Realtors called the bill a step in the right direction, but would rather see the Council establish several tiers — starting at $1 million and topping out at $4 million — or a system through which the Residential A rate is set as a multiplier of median home price, allowing the city to generate revenue directly tied to appreciation of property.

In written testimony, the Board of Realtors’ president, Sue Ann Lee, said Honolulu’s current standard for the luxury property market now kicks in at $2 million and million-dollar properties are commonplace on-island.

Her group correctly contends that the current Residential A tax classification places a too-heavy burden on local families whose property values are inflated due to Oahu’s rising cost of home ownership in areas such as Manoa and Pauoa and some mauka neighborhoods, including Saint Louis and Pacific Heights.

In an effort to pinpoint the most equitable version of the tax, the Council should take a careful look at the group’s suggestions. And the Council should review the tax and housing market periodically to ensure that Residential A doesn’t place an unreasonable burden on those flagged to pay it.

Judge reverses decision, keeps property tax category intact

By Sophie Cocke

Honolulu Star Advertiser, December 24, 2016

A Honolulu ordinance that taxes homeowners at higher rates for million-dollar homes that they don’t live in full time will remain in effect after a state judge Friday reversed his October decision that found that the tax classification was unconstitutional.

After hearing new arguments from the city’s top civil attorney, Donna Leong, Tax Appeal Court Judge Gary W.B. Chang ruled that the city’s Residential A tax classification did not discriminate against nonresidents and was justified by the city’s interests in protecting the “stability and continuity of local neighborhoods.”

The new tax class, which is bringing in tens of millions of dollars in revenue annually for the city, was passed by the Honolulu City Council in 2013.

The higher property tax bracket affects nonresidents, investors with multiple residential properties on Oahu and property owners who may have qualified for the home exemption but didn’t apply for it.

City Corporation Counsel Donna Leong said after the hearing that she was “very happy” with the judge’s decision.

“It’s a very significant decision for the entire city,” she said. “The tax revenues generated by this are about $39 million a year, so it is a very important piece of tax legislation. I can’t tell you how important it is for the city’s finances.”

About 20 property owners with parcels designated Residential A sued the city earlier this year, arguing that the ordinance was unfair and unconstitutional, in part, because it discriminated against nonresidents.

Property owners who fall under the Residential A classification are taxed at $6 per $1,000 of assessed value instead of the $3.50 per $1,000 that standard residential class owners pay.

The higher tax rate applies to properties that are valued at $1 million or more and don’t have a home exemption. The exemption is granted to residential owners who live in their homes.

For instance, one of the parties to the lawsuit, Schuyler “Lucky” Cole, owns 42 properties on Oahu valued at $25 million, according to documents provided by the city. Three of the properties fall under the Residential A category, after exemptions, meaning he owes the city about $16,000 more a year.

Ray Kamikawa, an attorney for the property owners and a former state tax director, said that his clients would consider appealing the ruling.

“Our complaint was that the statute on its face and its purpose was designed to penalize nonresidents by increasing their property tax rates because it is obvious that nonresidents cannot get a home exemption, which is an escape hatch to Residential A classification,” Kamikawa told the Honolulu Star-Advertiser after the court hearing.

Kamikawa added that the jump in the property tax rate for properties assessed at $1 million or more seems unfair and “takes people by surprise.” He suggested that city officials consider a more gradual tax increase.

“I’m not saying it would be legal, but it wouldn’t have as many people complaining,” he said.

In issuing his decision, Chang said that his reversal was based on a more in-depth review of the issues. He called the prior ruling “very terse and abrupt.”

“Simply, the court, upon further study, came to a different conclusion,” said Chang.

He emphasized that Kamikawa’s arguments were “thorough, well documented” and “extremely well written.”

But Chang found that the higher tax rate didn’t discriminate against nonresidents because they could indeed apply and in some cases qualify for an exemption.

“The court is not saying that it is easy, it may require that the nonresident actually reside on the property for six months, but that may not be six consecutive months, it may be cumulative or aggregate,” he said.

“That in particular gives great comfort to the court in concluding that the subject ordinance does not discriminate against nonresidents.”

It’s rare that attorneys on the losing end of a case are successful in getting a judge to change his or her mind. In this case Leong, the city’s top civil attorney, stepped in after Chang ruled against the city in October. It was the first time that Leong had appeared in an official capacity before a judge since becoming corporation counsel in May 2013.

Leong told the Star-Advertiser earlier this month that she was going to court herself because of the importance of the case.

The city was at risk of having to repay the $39 million per year or more it has been bringing in annually from the tax hike.

Asked whether he thought Leong’s intervention made a difference in the case, Kamikawa said simply, “Donna Leong is a very worthy opponent.”


Residential A Property Tax Bills to be Challenged in Court


HONOLULU (December 17,2015) – The release of real property assessments from the City and County of Honolulu on December 15th has prompted concerned citizens to address the inequities of the Residential A real property tax classification.

In a statement issued by Ray Kamikawa, attomey for Schuyler (“Lucky”) Cole, Mr. Cole will appeal his Residential A real property tax assessments because:

  • – The Residential A classification is an illegal real property tax classification because it classifies properties differently based only on the value of the real property, as opposed to the use of the real property as required by the relevant City and County of Honolulu Revised Ordinances. The Residential A classification sets up a significantly higher tax rate ($6.00 rate) for residential use properties appraised at $1 million or more, far higher than residential use properties below that value ($3.50 rate).
  • – This higher tax rate is made even more egregious because the $6.00 rate applies to the entire value of the property and is triggered when the value of the property increases by one dollar, from $999,999 to $1 million, abruptly increasing the tax by $2,500. This cliff effect implicates violations of the Equal Protection Clause of the Hawaii and United States Constitutions.
  • – This cliff effect harms local residents who have had the same property in their families for generations, and who may be relying on such property to provide supplemental income, where property values have increased through no fault of their own.
  • – Furthermore, local taxes cannot, under the United States Constitution, have a disproportionate impact on out-of-state taxpayers.

Mr. Cole is aware that others who are similarly situated will also be challenging their assessments.

DeBartolo Signs Lease to Build Kapolei Mall – Hawaii News

By Kristen Consillio – Honolulu Star Advertiser

The developer of a planned $500 million regional shopping mall in Kapolei signed a lease for the site Monday with the state Department of Hawaiian Homelands.

DeBartolo Development said it will begin immediately to prepare the site for construction of phase one of the 1.4 million-square-foot project.

The company said the 65-year lease for Ka Makana Ali’i will generate more than $200 million in rent revenue that will support the construct¡on of thousands of new homes for Hawaiian homesteaders.

The project is projected to create an estimated 3,000 jobs during construction and 6,500 permanent full-time jobs upon completion of the center.