Tax snafu taught lesson

The City Council is taking the right steps rectifying a scheme to quadruple property taxes of Oahu residents whose homes were reclassified. City officials should have seen the problem coming. They now promise to explain ramifications of zoning changes to those affected, an essential communication policy that should spread throughout city government.

Zoning classification of 247 properties in Kalihi, Kapahulu, Moiliili and Waipahu was changed last year from residential to commercial or industrial. City officials apparently did not physically check the properties to determine whether they were used as homes or businesses. The city notified the affected property owners by mail but did not mention that their property taxes would rise. And rise they did — for many, exorbitantly.

The problem surfaced in July when Kalihi residents learned that their tax rate had gone from $3.42 for owner occupants or $3.58 for non-occupant owners, to $12.40 per assessed value of $1,000. One retiree said his tax bill would go from $2,336 to $10,552.

Acting Mayor Kirk Caldwell said city property assessors were merely following ordinances and classifying properties according to their "highest and best use." They found apartment buildings that should have been classified as commercial because they were in business-zoned lands.

The City Council has advanced four bills aimed at providing refunds or cost rebates of the tax increases paid by the residents. The property owners who faced enormous tax hikes can feel some relief because of the legislation, as can politicians whom some opponents held accountable for the problem during this election campaign.

Because of the recession's reduction of the city's payroll, an argument could be made that officials didn't have the time to look at each of the properties affected. But the least they could have done was to add to the mailed notification of the property reclassification the warning that the taxes would rise.

City Budget Director Rix Maurer III told Council members that future notices to property owners of zoning changes should include an explanation of how the owner's tax bill would be affected. Good; that's one lesson from this unfortunate episode. That policy is necessary not only in distributing notices of changes of zoned property but in those of any developments that affect residents.