Land tax appeals holding steady
By Treena Shapiro
Advertiser Staff Writer
The city has returned about $1.4 million in tax refunds to 447 property owners who successfully challenged the property tax assessments sent to them last December.
The city's review boards still have to consider 1,610 more appeals by property owners challenging the city's assessment of their property value.
Even if those all result in tax refunds, it is not likely to make much of a dent in the $421 million the city expects to receive in property taxes, a key source of revenue in the $1.2 billion budget.
For an individual homeowner, however, a successful appeal can make a huge difference.
Harold Look, who owns a home in Niu Valley, appealed his property tax assessments the past two years because they were much higher than his neighbor's, who owns a similar home.
"Last year, they raised my assessment by 95 percent," he said. This year, his assessment went up 55 percent. He appealed both years, and successfully convinced the city to match his assessment to the average rate for his neighborhood.
"It made a big difference," Look said.
The amount refunded by the city comes from its latest figures on the status of 2,590 appeals. The city levies property taxes for the current fiscal year based on the December assessments.
The appeals represent roughly 1 percent of the 255,000 assessments of residential, commercial, industrial and agricultural property and structures, which is the usual rate, said Robin Freitas of the Real Property Tax Division. The exception was 2002, when nearly 4,500 appeals were filed.
For this year, only 0.5 percent of residential property owners — 1,182 of the city's 235,000 residential and apartment property owners — contested their assessments.
After the city sends out its property tax assessments in December, property owners have a month to decide whether it is worth spending $25 to contest the property value or number of exemptions. The city generally receives about 2,500 appeals a year, and the volunteer boards hear about 50 cases a week between July 1 and June 30.
Assessments sent out Dec. 15 will include appeal forms, making it easier to contest the assessments.
The city Real Property Assessment Division's two review boards have made it through only 980 of the 2,590 appeals filed this year. The five-member boards hope to complete the remainder by the end of the fiscal year, June 30, 2004. Property owners are expected to pay their bills on time while the appeals are pending.
Only about 40 percent of appeals, on average, result in property taxes adjusted downward by more than 50 percent — the criteria the city uses to determine whether a case is successful. About 309 owners have had their $25 filing fee returned because the refund came to more than half the tax.
The city will adjust property tax rates when the assessment is more than 10 percent over market value.
Although nonresidential property owners hold only about 8 percent of properties on O'ahu, they filed more than half the appeals this year. Of the 1,408 nonresidential appeals, 1,019 fell in the hotel/ resort property class.
Freitas said property owners generally appeal because they think the assessment is too high, they feel they should be in another tax classification or believe they are entitled to a tax exemption.
O'ahu real property assessments increased 6.6 percent over last year, to $95.1 billion from $89.2 billion. In addition, most property owners saw higher tax bills in August after the City Council approved increases ranging from 2.7 percent for single-family homes to almost 15 percent for commercial properties. Apartment and condominium owners saw their taxes go down 4.5 percent.
The rate of appeals spiked in 2002 because many property owners were caught off guard by higher sale prices driving up property values. Median sales prices for single-family homes rose 12 percent from 2001, while condominium prices rose 17 percent.
"That was the year we started increasing values again, based on the market and lower interest rates," Freitas said of the year 4,474 appeals were filed.
A large number of those appeals resulted from changes in property classes, which forced Waikiki apartment owners to pay taxes at the higher hotel/resort rates, Freitas said.
The city could not immediately provide figures on how many of those appeals were successful, but city officials said the refunds came to $4.1 million.
The real-estate boom has continued into this year, but Gary Kurokawa, head of the Real Property Tax Division, said that when people can see the market rising, they feel a higher assessment is justified and are less inclined to appeal.
Reach Treena Shapiro at tshapiro@honoluluadvertiser.com or 525-8070.
