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The Honolulu Advertiser
Posted on: Thursday, February 2, 2006

Cross fingers, O'ahu property owners

By Robbie Dingeman
Advertiser Staff Writer


The City Council will consider a variety of property tax relief proposals at its next regular meeting, which begins at 9 a.m. Feb. 15 in the Council Chambers, third floor of Honolulu Hale.

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All Honolulu homeowners would see some tax relief under a policy taking shape at the City Council.

Rather than targeting just the elderly, the poor or long-term residents, the City Council yesterday took the broad approach to tax relief in the hope that all who have borne the burden of years of property tax increases can get a break this year.

The action came as the number of taxpayers filing appeals reached near-record numbers. Gary Kurokawa, administrator of the real property tax assessment division, said yesterday that 6,030 property owners appealed their assessments, which is more than any year in the past decade and close to the 1995 record of 6,200 appeals filed.

Council Budget Chairwoman Ann Kobayashi said council members have heard the call from residents stung by three years of double-digit increases in their property tax bills and are looking for a way to pay the increasing costs of city government while giving some of the money back to taxpayers.

"We're trying to provide the best relief we can as soon as we can," Kobayashi said.

The rise in property values tied to a red-hot real estate market has left residents reeling from the increase. If the council doesn't change the rates this year, the city would collect an additional $125 million windfall.

The council weeded out about 10 proposals yesterday, favoring a handful that would provide relief in a variety of ways. Kobayashi emphasized that further tweaking will take place as the council gets more information about the city's budget from the mayor by early next month.

Kailua resident Bob Grantham, who helped found the citizens group Real Property Tax Relief Now, said he likes the idea of changing the way the assessments are figured as proposed in Bill 12.

That measure, which was among those advancing yesterday, establishes a new way of setting property tax rates so your property tax bill does not increase from year to year except to adjust for inflation-related increases to the cost of basic city services.

"It's all about accountability," Grantham said. "If they're going to raise the rate, they can no longer blame the fluctuation of the real-estate market. They can't blame the speculators. They have no one to blame but themselves."

Grantham's grassroots group is collecting signatures on a petition to require city officials to reduce the tax rate to a level that will produce revenue no higher than in the last tax collection. He said they have gathered more than 8,000 signatures so far.

Citizen Paul Tyksinski also supported Bill 12 as a way to control tax rates and spending each year but force city officials to justify any rate increase above basic services. "This is a fair way to do it even though you're going to get annual grief," he said.

Mayor Mufi Hannemann has proposed returning about $40 million to taxpayers in a one-time credit; putting $20 million into a rainy-day financial reserve fund; and spending $65 million on rising city costs such as salaries and debt service.

Councilman Gary Okino argued for his proposals that would at least double exemption amounts for all homeowners in future tax years and an accompanying tax credit that would give a similar break right away.

But Kobayashi stopped short of endorsing the higher exemptions for all age categories, saying the cost in missed revenue might be too high. "We don't want to break the bank," she said.

City Councilwoman Barbara Marshall urged caution on tax credit proposals in general. "I don't think it's a solution," she said.

But Councilman Todd Apo said the credits offer the only hope that taxpayers could get some break this year. While it doesn't solve the problem of increases permanently, it can be a way to "accelerate the start of that long-term solution," he said.

And Marshall worried that broad-based proposals would hurt the estimated half of the island's residents who rent. City budget director Mary Pat Waterhouse said she believes supply and demand drive rent prices more than property taxes do.

But Waterhouse acknowledged that the rental market is tight.

"We cannot help the renters as much as we would like to help the renters," she said.

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.