With O'ahu property values and tax bills at record levels, Hawaiians who trace their lineage to recipients of 19th-century land grants could get a major tax break.

After a year of delays, a plan awaiting a final City Council vote tomorrow would lower taxes on certain Hawaiian-owned properties to $100 per year — the city's minimum tax bill.

The rate would apply to property tied to kuleana lands, or parcels awarded to native farmers by the Hawaiian kingdom in 1850.

Officials are not sure how many acres could qualify, how many Hawaiians would benefit or how much revenue the city would give up.

But the state Office of Hawaiian Affairs, which is backing the plan, expects the financial impact to be minimal.

So far, fewer than 10 owners who might qualify have been identified, said OHA associate staff attorney Jim McMahon.

They responded to advertisements OHA ran in its newspaper, Ka Wai Ola o OHA, which is sent to thousands of Hawaiian families, he said.

Others are expected to come forward if the tax plan is approved, including some who could lose their land to rapidly rising tax assessments, McMahon said.

"Given the special nature of these lands, it would be a real tragedy if people were forced to leave after 150 years," he said. "It's got a lengthy and deep historical aspect to it."

LAND FROM 1848 MAHELE

The tax break would be available for residential and agricultural properties that include any portion of kuleana lands, but would not be limited to the kuleana part of the property, he said.

To qualify, land must be owned wholly or partly by someone who can prove he or she is a lineal descendant of the Hawaiian who first received title from the kingdom's Land Commission.

Such titles were awarded after King Kamehameha III proclaimed the 1848 Mahele, which created Hawai'i's first system of private land ownership.

"The increase in property taxes, combined with the very special nature of these lands going back to the Mahele, just doesn't seem right and just for families that go all the way back to then," McMahon said.

The Land Commission awarded 8,421 kuleana claims to hoa'aina, or native tenants, throughout the kingdom before the process ended in 1855, according to OHA.

The awards totaled 28,658 acres, but some land was unsuitable for farming or was later lost to unscrupulous land agents or aggressive foreigners, OHA trustee Rowena Akana said in testimony submitted to the council last month.

"Since most of the kuleana lands were carved up and taken away or abandoned, the impact on tax revenues would be extremely minimal, so there should be no reason why this legislation shouldn't pass," Akana said.

But OHA, city officials and the City Council cannot estimate how much the impact is likely to be. That will only become clear if the plan is adopted and owners apply for the kuleana exemption, McMahon said.

The council approved the tax plan in several preliminary votes last year but requested more information before making a final decision.

Councilman Donovan Dela Cruz, who sponsored the measure, said the priority last year had been to seek tax breaks for the general public.

But with rising property values expected to produce a tax windfall, it may be time for Hawaiian owners of kuleana land to receive special attention, he said.

PLAN AMENDED

The plan also has been amended in response to questions raised by city budget officials. The current version clarifies that Hawaiian genealogy can be verified by OHA or a court order, and that property owners would be responsible for any verification expenses.

The city expects to collect about 41 percent of its $1.8 billion operating budget from property taxes next year.

Mayor Mufi Hannemann and the council are considering a variety of property tax breaks for the general public, including lowering tax rates and granting a one-time $376 discount on tax bills.

Reach Johnny Brannon at jbrannon@honoluluadvertiser.com.