City Council Looking for more money from Property Taxes

City Council Looking for more money from Property Taxes

In 2013 the Honolulu City Council amended the definition of the "Residential A" real property tax classification as follows:

"Residential A" shall mean a parcel, or portion thereof, which either:

1. Is improved with no more than two single family dwelling units; and(A) Has an assessed value of $1,000,000 or more; (B) Does not have a home exemption; and (C) Is zoned R-3.5, R-5, R-7.5, R-10 or R-20 or is dedicated for residential use;
2. Is vacant land zoned R-3.5, R-5, R-7.5, R-10 or R-20; or
3. Is a condominium unit with an assessed valuation of $1,000,000 or more and does not have a home exemption.

Residential A excludes any parcel or a portion thereof, improved with military housing located on or outside of a military base.

This revised definition of "Residential A" appears to focus on second homes or investment properties, as properties are not eligible for or do not have a homeowner exemption.

This year, Resolution 14-53, CD 1 would establish the tax rate for this category at $6 per $1,000 of the property's assessed value. This Resolution will be heard by the full City Council on Wednesday, June 4 at 9:00 a.m. as part of the City Budget hearing.

At previous hearings, HBR testified in favor of raising the threshold of Residential A properties from $1 million to $2 million. In addition, HBR proposed a tiered tax structure as follows:

            $1 to $2 million at a rate of $3.50 per $1,000

            $2 to $4 million at a rate of $4.50 per $1,000

            $4+ million up at a rate of $5.50 per $1,000

In initial discussion with Councilmembers, a single tax rate for Residential A at $4.50 per $1,000 was considered. The current proposed rate of $6.00 is higher than originally discussed. This upcoming hearing is about the rate. No further changes can be made to the threshold or to the classification at this time.  

The City Affairs Committee strongly objects to this rate and is calling for our members to take at least one of the following actions before theWednesday, June 4, 9:00 a.m. City Council hearing:

1. Contact your City Councilmember to voice your concern that the high rates would be passed on to renters forcing many low to middle class renters out of the rental market;
2. Send in written comments objecting to the proposed tax rate for Residential A by June 3 to your City Councilmember; and
3. Attend the City Council hearing scheduled for Wednesday, June 4 at 9:00 a.m.  If you intend to read your written comments, please submit your written testimony to Council Chair Ernie Martin byTuesday, June 3 at 9:00 a.m. You may also attend the hearing without comment.