Conveyance tax hike will likely pass today
By Gordon Y.K. Pang
Advertiser Capitol Bureau
Bills aimed at increasing the conveyance tax to set aside money for land conservation and to build affordable rentals are being applauded by environmental groups but opposed by Realtors, who warned the effects of the tax hike could be more far-reaching than envisioned by supporters.
The two bills are expected to be approved by both houses of the Legislature, along with hundreds of other measures, today, the second-to-last day of the 2005 session. Other major proposals up for a final vote would increase the excise tax to help build a rail line on O'ahu and increase the state's minimum wage.
Under the plan, the conveyance tax rate would increase on all types of properties sold at $600,000 or more and on all residential properties purchased that are not intended to be owner-occupied.
Josh Stanbro, Hawai'i project manager for the Trust for Public Land, said establishment of the fund would help the state and different agencies buy properties in dire need of protection, "especially coastal areas that have been increasingly the subject of development."
Lawmakers, conservationists and affordable-home developers, during a press conference yesterday, pointed to the back of Moanalua Valley on O'ahu and the Honu'apo Estuary in Ka'u on the Big Island as examples of properties that could have benefited from what is being called the "Land Conservation Fund." Instead, lawmakers have separately set aside $1 million to buy Honu'apo and $3 million in the budget next year to partly fund the Moanalua purchase.
Jeff Mikulina, director of the Sierra Club Hawai'i Chapter, described the establishment of the Legacy Lands Trust as "the most important environmental legislation to come out of the State Capitol in years."
Stanbro noted that the Board of Land and Natural Resources, in deciding which projects would be eligible for what initially is projected to bring in $3.6 million annually, would not look only at lands deemed most environmentally sensitive, although that is expected to be a major concern.
"We realize that lands benefit a whole bunch of different segments — farmers and conservationists and hikers, as well as people who want to get outdoors, as well as kids for education," he said.
The Legacy Lands bill says lands having value that are "natural, environmental, recreational, scenic, cultural, agricultural production or historic" are eligible for the funds.
Under the new split of conveyance taxes, such lands would receive 10 percent of collections, the Rental Housing Trust Fund 30 percent, the Natural Areas Reserve Fund 25 percent and the state general fund 35 percent. Currently, the Rental Housing Trust Fund gets 25 percent, the Natural Areas Reserve Fund gets 25 percent and the general fund 50 percent.
The conveyance tax increase goes hand-in-hand with the Legislature's affordable housing omnibus bill.
The tax increase would give the Rental Housing Trust Fund, which provides loans and grants to builders of affordable rentals, about $10.8 million annually, up from the current $3 million to $5 million.
Lawmakers noted that the tax increase would apply only to about 7 percent of real-estate purchases.
Realtors sharply disagree, warning that at least half of all home sales may see a conveyance tax increase.
"The average price of a home in Honolulu is currently over $550,000; on Maui, the average price is over $630,000," said Mac Lowson, president of the Hawai'i Association of Realtors. "At least half of the residence sales will be impacted by the increased tax."
Renters would also suffer, he said, since the higher increase on conveyance taxes on the sale of homes not owner-occupied likely would be passed down to them, Lowson said.
Lawmakers pointed out that Hawai'i residents pay among the lowest conveyance tax rates in the nation, and even with the increase, would fall below average.
Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or at 525-8070.
