Posted on: Wednesday, September 8, 2004
Kaua'i seeks property tax relief
| • | Spiraling property taxes rile Hawai'i residents |
By Jan TenBruggencate
Advertiser Staff Writer
A county task force has proposed a new Kaua'i property tax model that would decouple property taxes from market valuations, relieving homeowners of sudden increases in taxes if they live in an area with a "hot" real estate market.
Under a proposal before the Kaua'i City Council, the owner of a long-term residential property would pay $2 per $1,000 on the value of the land, and $6 per $1,000 on the value of the building. The current homestead residential tax rates are $3.44 per $1,000 for buildings and $4 for land. If the assessed values remained the same on a property with a $200,000 house on a $200,000 lot, the old tax would be $1,488 annually, while under the new plan it would be $1,600. But on property that had significant hikes in valuation during the past two years, the actual tax would drop, due to the change in assessed value. Remaining properties that were not classified as long-term residential would pay double those rates: $4 per $1,000 for land and $12 for buildings. Under the existing system, properties are assessed based on their fair market value, and some homeowners have seen dramatic tax hikes due to high-priced sales during the current real estate boom.
Deputy county Finance Director Eric Knudzen said the new system also eases the burden on families with large parcels of land but modest homes, while increasing the amount of tax paid by luxury residential properties.
"The goal was to develop an improved real property taxation model — one that is easier to understand and generally more acceptable to the general public," Knudzen said.
The plan would create two tax categories for the purposes of property assessments: long-term residential and everything else. Currently, properties fall into one of eight categories, including residential, commercial, resort, agricultural, and more.
Long-term residential includes owner-occupied housing and rented residential properties with lease terms of one year or more.
Knudzen said the measure would be revenue-neutral to the county in the first fiscal year. The measure, if approved by the mayor and council, would go into effect in July 2005. Thereafter, revenue could be positive or negative, depending on whether real estate is in a bust or a boom cycle.
"The task force did a remarkable job in identifying and developing a proposal that is equitable for our public," said Mayor Bryan Baptiste.
The task force was appointed jointly by the mayor and County Council. Its members included chairman Steve Hunt, Dottie Bekeart, David Pratt, Ray Chuan, Roy Oyama, Arnold Nurock, Steve Nishimura, Mike Dyer and Curtis Tom.
The proposed change can be approved by the council and mayor without going to the electorate.
Voters in the general election will see another real property tax option on their ballots, however.
The initiative proposal of the 'Ohana Kaua'i group, which has received enough signatures to be placed on the ballot as a charter amendment, would roll back property tax bills to fiscal year 1998 levels.
Increases thereafter would be capped at 2 percent per year or the retirement compensation adjustment used by the Social Security Administration, whichever is smaller.
Under the proposal, land would be valued based on an average of the assessed property value from 1999 to 2003. After that, the value of all parcels would be increased each year to account for inflation, using the Honolulu consumer price index as the multiplier. Buildings would be valued at their replacement value, adjusted for depreciation.
Kaua'i tax proposal
