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The Honolulu Advertiser

Posted on: Friday, May 11, 2001

Property values on Big Island increase

By Hugh Clark
Advertiser Big Island Bureau

HILO, Hawai'i — Construction of multimillion-dollar homes in South Kohala and North Kona helped push the value of Big Island real property to nearly a billion dollars in the last year.

That and other less significant changes in Hawai'i County revenues have allowed Mayor Harry Kim to propose a record-breaking budget of $196.2 million without the need to raise property taxes.

The 9.8 percent growth in real property value, the largest since 1994, is a lot more than county Finance Director Bill Takaba anticipated when he took the job in December with the new Kim administration.

"I knew it was going to be up, but not this high," said Takaba.

The county budget for fiscal year 2001-02 predicts $96.5 million in property tax revenues for the fiscal year that starts July 1. That's $12 million more than in the current fiscal year.

But one real estate analyst is warning the boom may be temporary. Former Kona Realtor Lin McIntosh of Hawai'i Information Services in Honolulu studies real property sales, values and trends.

She said the latest upturn began in 1999 and continued last year, but there were signs in the first four months of 2001 that the market may be cooling off.

Because land sales and new construction take about two years to affect the tax rolls, the county could do well again in the 2003 and 2004 tax years.

But McIntosh, a veteran of 30 years of land sales in Kona, said land values peak about every 10 years. No one should expect a repeat of the 50 percent gain in prices for vacant land that occurred in 1999 and 2000 in South Kohala, she said.

McIntosh, who tracks sales in east and west Hawai'i and on Kaua'i, reports that real estate activity so far this year on the Big Island is down, as are average sale prices. Kauai's sales are diminishing, reflecting what she thinks is a shrinking inventory.

Kim is more optimistic, pointing to three major initiatives now under way in Puna and Hilo: the new $30 million East Hawai'i Kamehameha Campus outside Kea'au; the pending $55 million federal Pacific Basin Agricultural Research Center associated with the University of Hawai'i-Hilo; and the $80 million UHH-Chinese Center.

Although they may not yet be directly linked to the jump in real property value, Kim said they will help ensure a stable future for the county. He said the projects are a good sign that East Hawai'i will be able to recover from the loss of three sugar operations that left the island without its major crop for the first time in more than a century. The closings occurred in rapid succession: Hamakua in 1992, Hilo Coast Processing in '93 and Ka'u in '96.

Kim will take his fiscal year 2001-02 budget, which contains no increase in property taxes, to the public in hearings at 5 p.m. Wednesday in the County Council Room at the County Building in Hilo, and 6 p.m. May 17 at the King Kamehameha Beach Hotel in Kailua-Kona.