The value of residential property on O'ahu has decreased slightly for the second time in seven years, meaning some homeowners could receive lower tax bills next year barring a last-minute rate raise by the city.

Honolulu officials began mailing out property assessment notices yesterday, but it will be well into the new year before the City Council approves the tax rates.

Excluding new inventory and construction, the value of O'ahu's residential property dropped to $155.3 billion from $157.5 billion the previous year, according to the city.

More than 283,000 O'ahu property owners will receive their 2009 real property assessment notices this week, including about 5,000 assessment notices that will be sent by e-mail.

Gary Kurokawa, who heads the city's Real Property Assessment Division, said O'ahu residential property has experienced some loss of value, but it pales in comparison to declines experienced in comparable Mainland jurisdictions.

"If you look at urban Honolulu (where most of the property value is), the drop is not that significant," Kurokawa said. "We're seeing a decline, but not anywhere close to what the West Coast is seeing."

The total gross assessed valuation for all real property on O'ahu increased slightly from $190.7 billion to $191.1 billion, a gain of 0.2 percent, according to a city news release.

The addition of new inventory and construction and renovations to existing properties helped to offset the decrease in residential property values.

Hotel and resort property values decreased by 0.1 percent, while commercial and industrial properties rose in value by 4.3 percent and 9.3 percent, respectively.

City Council Chairman Todd K. Apo said because nonresidential property values increased, the city might still see a slight increase in property tax revenue.

Apo also said the council and the administration will work hard to avoid raising property tax rates.

"The reality is the city faces a number of unavoidable cost increases. There are set union raises and a general cost increase for some goods," Apo said. "There is going to be a need to find additional (budget) reductions or savings. The administration and the council are going to have to look hard at where in the budget can be cut."

Percentage changes represent broad totals, and the actual change in the assessed value of a particular property could be more or less than the islandwide figures.

The assessment notice is not a tax bill, but a notification of what the city has determined to be a property's value.

The assessment notice also includes information on exemptions.

The standard homeowner exemption is $80,000 and increases to $120,000 for homeowners age 65 and older. The exemption amount is deducted from a property's value, which reduces the tax for the property.

The tax bills will be mailed on July 20 with the first-half installment due on Aug. 20 and the second-half installment due on Feb. 20, 2010, according to the city.