Caldwell insists he’s not in favor of property tax increase

Honolulu Mayor Kirk Caldwell said Monday that raising property tax rates to pay for operations of the upcoming Honolulu rail line isn’t part of his game plan.

“I want to make absolutely certain: I’m not in favor, nor do I support, raising real property taxes that pay for the operation of rail,” Caldwell said, noting that other factors need to be considered.

City finance officials said last month that, assuming a 30 percent rate of return and no other sources of revenues, property taxes would have to increase by 9 percent to subsidize the estimated $112 million that operation and maintenance is expected to cost annually.

Property tax revenues are expected to continue to rise as a result of a robust real estate market, Caldwell said, adding that the city is forecast to see $70 million more in property tax revenues next year without any rate increases.

“I think we’re going to continue to see a strong real estate market, and that income will increase,” he said. Development around rail stations will help that, he said.

Using the 9 percent estimate cited by the finance officials is “mixing apples and oranges,” Caldwell said. “You’re taking 2015 property taxes and talking about operation and maintenance in the year 2021.”

Other sources of revenues are likely to include naming rights for rail stations, as well as advertising within stations and renting out kiosk space, he said.

Caldwell on Monday signed Bill 23, clearing the way for the contentious 0.5 percent general excise tax surcharge to be extended through 2027 to help fund construction of the $6.57 billion East Kapolei-Ala Moana rail line, the most expensive public works project in state history.

“Tens of thousands of people suffer in traffic every single day on this island,” Caldwell said during a bill signing ceremony at Honolulu Hale.

“We’ve doomed those folks to traffic gridlock because we said we wanted 70 percent of all the growth on this island to occur out on the west side, and then we built just one, one freeway for those guys to come to and from work.”

With no new freeways or highways in the works, “I think the only way we can address (gridlock) is through rail,” Caldwell said.

The extension is expected to bring in between $1.2 billion and $1.8 billion annually over the five years, depending on economic factors.

Language inserted by City Council Chairman Ernie Martin specifies that the Honolulu Authority for Rapid Transportation may use up to $1.1 billion from the extension. But it also lets the project tap further from the funding for contingency and rail-related expenses.

In addition, the measure requires HART to submit additional financial reports to the Council.

The City Council approved the bill 7-2 Wednesday after months of deliberations.