Posted on: Sunday, September 12, 2004
Tax disputes increase with land values across Islands
By Timothy Hurley
Advertiser Staff Writer
The number of property owners disputing their tax assessment this year increased sharply in some areas of the state, in large part because of rising property values and frustration over accompanying tax increases.
Increases in tax appeals were seen in three of the state's four counties as a growing number of property owners formally challenged the value assigned to their parcels by tax assessors.
Officials attributed the increase to "sticker shock" in the wake of soaring property values that have also sparked property tax reform efforts across Hawai'i.
On Kaua'i, tax appeals are up almost 300 percent this year — from 121 in 2003 to 418 in 2004. County tax assessor John Herring said it was a reflection of a booming housing market that pushed islandwide gross assessed values up 26 percent.
Some areas experienced between 100 percent and 300 percent increases in assessed valuation, while others saw perhaps 5 percent.
"I don't think any area went down," he said.
North shore agricultural lands have appreciated 70 percent a year since 2000, Herring noted, while oceanfront properties and others with ocean views have been appreciating rapidly as well.
Upset by rising property taxes, a Kaua'i citizens group has qualified a measure on the November ballot aimed at rolling back owner-occupied property tax bills to 1998-99 levels, with increases thereafter capped at 2 percent per year.
A Kaua'i County Council task force also has proposed lowering assessed values to an average of the values from 1999 to 2003, and property taxes for long-term residential owners would be set at half the rate of every other land category.
In Honolulu, tax appeals have risen by a third, from 2,590 in the fiscal year ending in 2004 to 3,837 this fiscal year.
City spokeswoman Carol Costa said the increase largely was attributable to issues associated with the City Council's farm bill mandating tax reductions for farmers and agricultural landowners.
The Real Property Assessment Division encouraged farmers to appeal and keep their options open, Costa said, and more than 500 appealed while the council was discussing Bill 35.
But other appeals were likely tied to rising land values and people's reaction to them, she said. Total islandwide valuation is up 15 percent.
Dorothy Carvelo, 78, of Kailua, said she was shocked when she got her last property tax bill, which doubled to more than $1,600 a year. The culprit, she said, is the recent construction of "million-dollar mansions" in her neighborhood and more seem to be on the way.
Carvelo said she survives on Social Security and nothing else, so the tax increase hit her hard.
"It's incredible. It's hurting me so badly. I don't want to sell my property," she said.
On the Big Island, Board of Review tax appeals rose from 308 in 2003 to 385 in 2004, said Stan Sitko, assistant administrator of the Hawai'i County Real Property Tax Division.
Sitko said he wouldn't describe the tax appeal rate as significant because years ago the county had numbers in the 1,200 to 1,600 range. In addition, he has worked in other jurisdictions where 15,000 appeals were common.
One of the reasons the number of Big Island appeals isn't huge, he said, is that assessments are at least one year behind in calculating actual values.
Sitko said a new computerized valuation process using market modeling and sales comparisons should be implemented in the next few years to produce more up-to-date assessments.
Even if assessments are behind, however, land values and taxes have been marching skyward, prompting Mayor Harry Kim to propose three property tax relief measures.
The County Council is considering the proposals, including one that would limit increases in assessed valuations to no more than 3 percent a year.
In Maui County, officials have seen a decline in tax appeals in the past three years, from 514 to 298.
Finance director Kalbert Young said property owners generally realize that values are increasing and have been accepting their assessments as accurate.
Countywide, property valuation increased by almost 15 percent last year, he said, and the Maui County Council has not raised the property tax rate.
But not everyone is happy on the Valley Isle. A citizen group known as COMET, or the Committee for More Equitable Taxation, is preparing to lobby the Maui County Council for a 4 percent cap on property tax assessment, among other proposals.
Retired Maui school principal Alvin Soares said he was astounded when he opened his latest property tax bill and saw a 58 percent increase — to about $1,600 a year.
"I couldn't believe it. It's ridiculous," he said.
Soares, who retired from the state Department of Education in 1983 and lives with his wife on a fixed income, said he was told recent sales of property in his Wailuku Heights neighborhood were to blame. Meanwhile, the couple lives in an aging, 44-year-old pre-cut house with no plans to move.
Soares said he wanted to appeal his property tax bill but was told it was too late. He also couldn't take advantage this year of the county's circuit-breaker tax credit, which limits property tax to 3 percent of income.
"The system is broken. It's wrong. It needs fixing," he said. "(The County Council) has had many hearings over the years, and they're not listening to the people who pay for their wages."
Reach Timothy Hurley at thurley@honoluluadvertiser.com or (808) 244-4880.
