O'ahu property values increase 17 percent
By Treena Shapiro
Advertiser Staff Writer
The assessed value of O'ahu residential properties increased by an average of 17 percent, which means a typical homeowner will pay more property taxes next year unless the city lowers the property tax rates.
But City Council member said the city needs the money to pay for expenses and she doesn't think the council will drop the rates.
"We're still going to be needing money because of the increases in the health fund, the increase in our share of the (city employees' retirement benefits), and of course, the police raises," Council Budget Chairwoman Ann Kobayashi said.
Overall, O'ahu property values were assessed at $110.4 billion, a 16 percent increase over the current year's value of $95.1 billion. City officials, however, did not have figures yesterday on how much more money would be generated if the rates aren't changed and did not say whether they favor a drop in the rates.
Residential property values increased an average of 17.2 percent for single-family homes and 16.8 percent for condominiums, city officials said. In addition, the assessed values of commercial properties increased by an average of 4.6 percent and industrial properties by 5.3 percent. Hotel and resort values dipped an average of 0.3 percent.
About 264,000 property owners received their real property assessments this week, which will be the basis for their property taxes for fiscal year 2004-05 starting July 1. The first tax payments are due in August.
The higher property values are good news for those who are trying to sell their homes, but unless the property tax rate drops, it will mean higher property tax bills.
The real estate boom contributed to the higher assessments, which are based on property sales. The median price for single-family homes at the end of September was $392,500, compared with $335,000 for all of 2002, city officials said. Condominiums also sold higher, with a median of $117,500 at the end of September, compared with $152,000 last year.
The city was slow to release property tax information this year. In previous years the figures were released before the assessments were mailed out, but this year it took a week for the city to make the figures public from The Advertiser's first request, even though a release on the assessments was drafted on Monday.
Lowell Kalapa, head of the Tax Foundation of Hawai'i, said he thinks the city held off on releasing the property value assessments that might generate more revenue because Mayor Jeremy Harris' administration was trying to put some pressure on the City Council to approve an increase in motor vehicle weight tax.
Harris yesterday afternoon called a special Council meeting to address the weight tax Dec. 24. The tax figures were released earlier in the afternoon.
Council Chairman Donovan Dela Cruz yesterday said he was hopeful the city administration, which supports the weight tax increase, and Kobayashi, who opposes it, have reached compromise. Without an agreement, Okino said he was not convinced the mayor had enough votes to pass the increase in the motor vehicle weight tax.
Kalapa said he thinks it would be better to use the property tax to pay for the police raises, even if it means waiting until August 2004 and having to come up with the raises retroactive to July 1, 2003. "It's not like we've never done this before," he said, pointing out that the state has paid two years of retroactive raises in the past.
Even though the higher assessments will translate to more revenue, Kalapa said the city should maintain or raise the property tax rates. "I think the city is in a bad financial way. If they rely solely on the increase (in assessments), I don't think the increase is going to be enough," he said.
The city has been grappling for months about how to come up with $5.8 million for police raises since details of the arbitrated contract were released at the end of September. The $5.8 million covers only the first year of the contract, which will cost the city about $66.4 million over the length of the four-year contract.
City officials yesterday said about 20 percent of the increase in residential property values is the result of new homes and condominiums and other new construction.
The assessment values mirror the Honolulu Board of Realtors data for the island. Board president Mary Begier said the increase for residential properties is "very reasonable" and she expects the values to continue to rise because of the lack of supply and growing demand.
For information about your property, including the assessments sent last year and your tax bill back to 2001, visit www.honolulupropertytax.com.
Staff writer Lynda Arakawa contributed to this report.
Reach Treena Shapiro at tshapiro@honoluluadvertiser.com or 525-8070.
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