Residents say city trying to inflate property taxes

By Kevin Dayton
Advertiser Capitol Bureau Chief

The city's new property tax assessments have upset some homeowners, who suspect the city may be inflating estimates of the value of their homes to boost tax collections.

One example was Lawrence Dunbar, a retired Kaimuki homeowner. He said the city now estimates his three-bedroom home, excluding land, to be worth $86,200, more than double the city's assessed value of the structure last year.

Dunbar said he hasn't made improvements to the 60-year-old house since he added a carport nearly 15 years ago, so he wondered about the sudden surge in the city estimate of its worth.

"Even if the city's trying to get more revenue, it's kind of too much," Dunbar said.

City officials said the increase in assessed values this year was caused by rising real estate prices, not by any change in how the city estimates property values.

Still, the higher assessments aren't likely to please property owners. Assuming the city leaves tax rates where they are, Dunbar said the higher assessment will boost his property tax bill from $278 last year to $438 for the coming year, a 57 percent increase.

City Councilman John Henry Felix said he had received several calls yesterday from Windward area property owners such as Dunbar, and said he plans to discuss the matter in a meeting today with Mayor Jeremy Harris.

Council staff said complaints about assessed valuations are routine at this time each year as property owners receive their new tax assessment notices. The city mailed out 260,000 notices last week telling homeowners how much the city believes their properties are worth.

The city Real Property Assessment Division received about the same number of complaints this year as last, with most people asking why their assessments had increased, said city spokeswoman Carol Costa.

Overall property assessments increased by $4 billion, from $85.1 billion last year. It is the first time since 1994 that overall assessments increased.

Single-family home assessments accounted for about $3.1 billion of the increase; multi-family structures accounted for another $605 million, city officials said.

City tax bills are calculated by taking the taxable value of land and improvements and multiplying it by a tax rate set by the City Council each spring, subject to approval by the mayor.

As city estimates of property values rise, city tax collections and many property owners' tax bills will also increase unless the mayor and council act to reduce rates.

The city is confronting an extremely tight budget year. Felix said he doubts the Harris administration would abruptly adjust the method it uses to assign values to homes. To do so would be "unfair, it's not equitable," Felix said. "You can't change the rules to suit your purpose."

The assessment process needs to be consistent, and the City Council should be consulted about any change in the method of estimating property values, he said.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com or 525-8070.