WAILUKU - The County Council's Budget and Finance Committee heard stiff opposition Thursday to proposed Department of Planning fees for development project permits.
Then, after learning that Budget Director Sandy Baz had not counted on receiving revenue from the higher fees in the fiscal 2013-14 budget, committee members deferred the matter to the Policy Committee for further discussion.
Likewise, because a water shortage authorization bill remains in the Water Resources Committee, panel members deferred action on proposed higher water fees during times of drought or other circumstances.
The Planning Department fees drew the most public comment Thursday morning.
Chad Fukunaga of Kaanapali Land Management Corp. said the higher fees would be an impediment to development of the Kaanapali 2020 project.
The development permit fees would quickly add up to hundreds of thousands of dollars, Fukunaga said, adding that it would be "an amount that can break your project when combined with all the other governmental impact costs, such as water meters, parks, school impacts, sewer connections and building permits."
"If the project does survive to move forward, all the costs get passed on to the con-sumers, meaning the homebuyer and business owner. It creates a vicious cycle and hurts the heart of our community," he said.
Planned with the West Maui community for more than 13 years, the Kaanapali 2020 project calls for developing a mix of single-family and multifamily homes as well as senior rental housing on 913 acres.
Ryan Churchill, president and chief operating officer of Maui Land & Pineapple Co., said that a large development project can take many years to gain entitlements and many more years to develop.
"Placing additional onerous upfront fees on these projects ends up being another disincentive to invest on Maui," he said.
Thomas Crowley of the Maui Vacation Rental Association said the county's processing of land-use permits leads to higher property values and greater tax revenue. He said that he has paid $1,900 so far for permits for a bed-and-breakfast business and in eight years will pay approximately $14,400 in additional property taxes.
"The cost to process a permit is not the end of a revenue stream. In fact, it's the start of a new revenue stream," he said.
Dave DeLeon, government affairs director of the Realtors Association of Maui, likened the proposed planning services charges to "incomprehensible charges on a hospital bill."
"Like the consumer of hospital services, the consumer of the county's planning processes does not really get a choice," he said. "If you want to use your land, you have to go through this process."
The planning permit process forces landowners to meet community standards for development, DeLeon said.
"If the beneficiary is the public, it stands to reason that the general fund should be carrying the lion's share of these costs," he said.
Planning Department Deputy Director Michele Chouteau McLean said that while it makes sense for the county to subsidize the cost of development permits because there's a public benefit, there's also a lot of work involved in processing permits.
Council Member Don Couch suggested that the committee eliminate the planning fees from the pending budget, keeping the current fee structure in place, and continue discussing the matter in committee.
Budget Committee Chairman Mike White said he would make such a recommendation to the committee when it reaches the decision-making phase of its review of the budget.
On the Arakawa administration's proposed water rate hike of 5 percent, DeLeon said the Realtors association supports the proposal and would go further to call for a 6 to 8 percent increase.
"This is the minimum increase that we need to sustain and improve our water system," he said. "Failure to increase the water rates will lead to the same situation that currently exists in Honolulu, a dysfunctional system that continually breaks down and which will ultimately cost more to fix and maintain in the future."
Maui Chamber of Commerce President Pamela Tumpap said the chamber "understands that investments in our water infrastructure must be made." The chamber believes that the need to make improvements to the island's water system are a "pay now or pay later situation," she said.
Department of Water Supply Director Dave Taylor said the proposed water rates and fees would make the department self-supporting, as it is required to be by the Maui County Charter.
The percentage increase for water consumers would depend on the size of their water meter and on their water usage, he said.
The higher water fees would generate about $2.6 million next fiscal year.
Overall, Mayor Alan Arakawa's proposed budget calls for spending $573.6 million, not including revolving and grant revenue funds, in the fiscal year beginning July 1. The council has until June 10 to take action on the budget.
* Brian Perry can be reached at email@example.com.