When Tavares' father settled in Ku'au, Maui, in 1910, he bought a 2-acre oceanfront parcel for $500. Today, you can't buy 10 square feet there for $500, and the land is worth millions.

The property, which the Tavares family has no plans to sell, has exploded in value in just the past few years as neighboring properties have been scooped up for millions, resulting in a huge jump in property taxes.

It's the same story across rural Hawai'i, where a hot real estate market is drawing buyers of vacation homes, oceanfront property and large tracts for investment. While the land buys are adding to the county treasury through substantial tax collections, they end up increasing the existing property tax bills as the neighborhood values rise accordingly.

All the counties have begun efforts to address the situation:

• On Kaua'i, the county hasn't had an initiative on the ballot in 20 years, but a citizens group formed a year ago was able to qualify a measure aimed at rolling back owner-occupied property tax bills to 1998-99 levels, with increases thereafter capped at 2 percent per year or the Social Security retirement compensation adjustment, whichever is smaller.

• Also on Kaua'i, a task force has proposed lowering assessed values to an average of the values from 1999 to 2003. In addition, property taxes for long-term residential owners would be set at half the rate of every other land category.

• On the Big Island, the County Council is advancing three property tax relief measures proposed by Mayor Harry Kim. One would increase the homeowner's exemption by 20 percent, another would limit increases in assessed valuations to no more than 3 percent a year, and the third would allow homeowners to dedicate their property for residential uses for five years, freezing their assessed valuation during that time.

• On Maui, Tavares' group —known as COMET, or the Committee for More Equitable Taxation — is gearing up to lobby the County Council for a 4 percent cap on property tax assessment and for other proposals to help compensate the county for any lost revenue.

"This is a broken system. It's antiquated," said Kihei resident Tony Fisher, a COMET board member. "It works fine if you're in Podunk, Iowa, where there is no change in real estate, but Hawai'i is a unique place."

COMET was formed in the late 1980s, during the last major real estate boom that forced property taxes skyward. The County Council responded with a four-year freeze in assessed valuations and eventually with a "circuit breaker" tax credit that allows qualified homeowners to pay no more than 3 percent of their adjusted gross income on the property they occupy.

When the economy lost steam in the 1990s, the citizens group went dormant. Now that real estate is scorching again, the group has picked up where it left off.

Tavares said most affected now are owners of oceanfront homes who are not interested in selling. For example, the assessment of his son's home, a 17,000-square-foot property on the original Tavares acreage, recently rose by 16.5 percent in one year to $1.34 million.

"It's the kiss of death to be on the water now," he said.

Increasing property taxes is a nationwide phenomenon, rising an average of 10 percent between 2001 and 2003, according to some estimates. Some of the hardest hit places are suburban areas and other desirable locations, including coastal regions, where home prices and assessments have been marching upward.

"It's a big problem here," said Sandra Scarr, a Kona coffee farmer in Holualoa, whose taxes have risen $800 in two years. "Land values are going up and people are being taxed off ... their farms and out of their homes."

Farther south, Larry Ford, 66, lives mostly on a fixed retirement income challenged by continual increases in property tax on his 2-acre parcel. The problem has been exacerbated by recent pricey property sales in his neighborhood, he said.

"Real estate prices are going up in Kona but not my income," he said. "I don't want to move. My place is not for sale."

Ford said he doesn't feel the county has an equitable tax system — which might make the increases more bearable.

For example, only two police officers serve the rural region from South Kona to Ka'u, he said, while numerous officers serve the Hilo area. While the population is bigger in Hilo, the property values and tax bills are larger in West Hawai'i.

"Everyone should bear the burden equally," Ford said.

Lowell Kalapa, president of the nonprofit Tax Foundation of Hawai'i, said changes to the property tax system are needed but not merely for residential property, as many of the current proposals propose. Tax breaks for homeowners merely shift the tax burden to businesses and others who then charge more for their goods and services, he said.

"The truth is the taxpayers end up paying for it anyway," he said.

What's more, politicians lose accountability for their spending, Kalapa said. When homeowners get an artificially low property tax bill, they think they can ask for more parks, police and services, and politicians can oblige with seemingly little impact.

Right now the counties play a "smoke-and-mirrors game" to cater to their largest constituency, he said.

Kalapa said he would recommend three actions, in concert, to deal more honestly deal with the property tax system: First, create a tax circuit breaker credit that allows homeowners to pay no more than 3 percent of their income. Second, stop the homeowner's exemption that decreases assessed values across the board, for this will build a bigger tax base so the tax rate can be lowered. Third, establish a single rate for all classes of property.

Maui County Councilman Riki Hokama, chairman of the Budget and Finance Committee, said council members will be taking up property tax issues in October, and he's looking at creating a property tax category that imposes the highest rate on time-shares and short-term rentals outside the resort areas.

As for a major overhaul, Hokama said that will have to be examined carefully so that all taxpayers are treated fairly.