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The Honolulu Advertiser
Posted on: Sunday, May 28, 2006

Business property tax rate may rise

By Robbie Dingeman
Advertiser Staff Writer


The City Council Budget Committee will hold a special meeting at 9 a.m. Wednesday in the second-floor committee room at Honolulu Hale. The new tax rates and the city budget bills all are poised to pass on June 7.

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The City Council Budget Committee has proposed that residential property owners pay a lower tax rate than others.

Residential properties (single-family and apartments)

Now: $3.75 per $1,000 valuation Proposed: $3.59 per $1,000 valuation

Nonresidential properties

Now: $11.37 per $1,000 valuation Proposed: $11.97 per $1,000 valuation

What it means: The committee also proposed a one-time homeowner's discount for owner-occupants who had filed a homeowner's exemption in 2005. If a homeowner with an exemption in 2005 has a home valued at $500,000, the proposal would drop the tax on that home from $1,725 to $1,451, a savings of about $274 ($200 for the discount and $74 based on the lower tax rate).

Source: City Council Budget Committee

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Property tax rates would dip for owners of single-family homes and apartments but increase for nonresidential properties, under the latest proposal to emerge from the City Council's Budget Committee.

After hearing loud and clear from frustrated homeowners hard-hit by skyrocketing tax bills linked to double-digit increases in property values, Budget Chairwoman Ann Kobayashi said the council has been working to figure out some tax break for homeowners while still steering money toward core city services.

Each year, the council is charged with setting tax rates. The latest proposals come in addition to tax relief measures approved in February.

Kobayashi said the council wanted to give taxpayers a break for the bills they get in July that are due in August.

She said they proposed to drop the residential rates for single-family homes and apartments by 16 cents per $1,000 in valuation while raising the nonresidential rates for commercial, industrial and hotel/resort by 60 cents per $1,000 in valuation.

Combined with another proposal to offer a one-time discount to residential owner-occupants who filed for a homeowner's exemption in 2005, an owner whose house is valued at $500,000 would save about $274.

While she'd like to do more, "we just can't afford it," she said. "We have to fix our sewers and begin to pay down our debt."

In 1999, Kobayashi said the residential categories paid 49 percent of the revenue but that had risen to 63 percent this year while the nonresidential categories that paid 45 percent in 1999 had decreased to 34 percent this year.

"The balance had shifted," Kobayashi said and that's why she saw room to increase those rates this year.

Kailua resident Bob Grantham has been one of the most vocal advocates for tax relief, testifying time after time before the council about the subject. He said he believes the response from taxpayers made a difference.

He said the latest proposal offers the average homeowner a good break. "It's not exactly everything that we wanted but we're basically satisfied with it," he said.

Grantham praised the council for easing the tax burden on homeowners and shifting it toward commercial property owners. "They're trying to bring that back to a better balance," he said.

But Murray Towill, president of the Hawai'i Hotel Association, said he's disappointed the council is proposing the latest rate change.

Towill acknowledges property values have increased substantially, forcing up homeowners' bills, so he understands the push for relief.

But Towill said, "I don't understand why there's a need to increase the rate for any category because the city has experienced an increase in revenue" from the higher values.

City Council Chairman Donovan Dela Cruz said the council has worked hard "to respond to taxpayers and balance the needs of our community."

In the end, Dela Cruz said he believes taxpayers will see some benefits. "I think the taxpayers are going to be receptive to what we're doing."

Reach Robbie Dingeman at rdingeman@honoluluadvertiser.com.