The owner of a historic Kailua house beside the one the president uses has his property bill cut
POSTED: 1:30 a.m. HST, Dec 27, 2010
LAST UPDATED: 2:43 p.m. HST, Dec 27, 2010
The absentee owner of a multimillion-dollar home being used by President Barack Obama's visiting entourage gets one of the biggest residential property tax breaks on Oahu.
Kevin Comcowich, the Houston investment executive who purchased the nearly 5,000-square-foot home for $9 million in January 2008, was charged $300 in property taxes this year.
Last year, Comcowich paid nearly $30,000 in taxes for his 1-acre beachfront spread in Kailua. In 2007 the tab — paid by the previous owner — was about $48,000, according to city records.
Comcowich got the huge break because he was granted a 10-year property tax exemption by the city for his historic residence, built in the 1940s by Harold Castle, a key figure in the development of Kailua. The exemption is designed to encourage the preservation of historic homes.
Like last year, friends of the president are using the Comcowich home while they are vacationing here. Obama and his family are staying in a home next door.
Those who get full exemptions on Oahu pay only $300 annually in property taxes — regardless of the value of the residence. The flat rate, raised from $100 last year, is believed to be one of the most generous property tax breaks for historic homes in the country.
Critics of the program cite the Comcowich case as the latest and, with the president's visit, highest-profile example of the program's unfairness.
They say the exemptions disproportionately benefit the rich and provide an excessive break, without taking into account the value of the homes, how much is spent on maintenance, whether the owners live there and whether they even need the public to subsidize their taxes.
All homeowners who seek the exemption must sign an application that certifies, among other things, that the pre-exemption level of property taxes is a "material factor" threatening the existence of the home. But the city does not check to see whether that actually is the case. Comcowich had to sign such a form.
"There's no equity in the system," said good-government activist Holly Huber, who noted that Comcowich pays the same $300 in property taxes as the owner of a 731-square-foot Ewa Villages plantation home assessed at $268,000. Comcowich's property was assessed at $6.5 million.
Comcowich did not respond to two messages left on his phone in Houston.
Those who support the program say it is vital to preserving aging but architecturally significant residences that are costly to maintain. Without the tax breaks, more owners would be inclined to demolish their homes to build something that would provide a greater return on the dollar, program advocates say.
Supporters also say the program helps bring stability to neighborhoods and contributes to the overall preservation of characteristics that make Hawaii special.
A home must be placed on the State Register of Historic Places before it becomes eligible for the tax break.
"Historic Hawai'i Foundation feels that fundamental fairness requires that any property that meets the conditions for acceptance and that complies with the rules should be treated the same," the foundation's Kiersten Faulkner said in a statement. "The city should not discriminate based on income or citizenship, as long as the property owner is keeping the historic property's integrity and meeting the program's requirements."
THE CITY is reviewing the roughly 250 historic residences getting the exemptions in response to previous Star-Advertiser stories highlighting gaps in oversight.
Among other problems, the newspaper found that the city failed to adequately enforce a requirement ensuring the public had "reasonable" visual access to the homes. The Star-Advertiser found roughly two dozen mostly high-end residences for which the view from public streets was blocked or largely obscured. High perimeter walls, thick vegetation and other obstacles obstructed sightlines.
The Comcowich house, at 55 Kailuana Place, was among those with obscured views. The residence, at the end of a long driveway, is mostly hidden behind a rock wall and gate.
The home can be seen from the beach. But people unfamiliar with the area likely would have to guess which one it is.
Because the city charges a flat rate to those getting the full exemption, homeowners with the most valuable properties end up getting the biggest breaks.
Of the roughly 250 benefiting from the program, only one owner has a property — the former Walker Estate in Nuuanu — with a higher assessed value than that of the Comcowich house. That estate is valued at $7.8 million, city records show.
A bill revising the program is pending before the City Council.
"In these times of economic stress, property taxes are rising for homeowners who sometimes have multiple jobs in order to keep a roof over their heads," said Manoa resident Gary Andersen, who sits on that area's neighborhood board. "In my mind there is no question the historic homes tax exemption (program) is broke and needs to be fixed."
Manoa has the most homes getting the exemption.
John Riggins, a Realtor, said homeowners who sufficiently maintain their historic residences should be given a slight tax break because the properties add value to the community. Owners who allow the public to tour the homes at least once a year should be given the biggest break, he said.
But a $300 flat rate simply is too generous, Riggins added. "I don't believe the current program is fair."
Riggins is among those who believe the break should be linked to a property's value and maintenance costs and the owner's income.
But the city has said the program is not structured to help the rich.
"Any claim that the historic-homes exemption is designed to benefit the wealthy with expensive homes is simply inaccurate," Gary Kurokawa, the city's real property assessment administrator, said in September. He noted that dozens of homes in Ewa and Waipahu get the tax break.
Given the intent of the program, the exemption is based on the character of the home, not the income of the owner, he said.
The administration has so far reviewed properties that received exemptions since 2008 and "is following up with owners primarily on visual access issues," said city spokeswoman Louise Kim McCoy.
She also noted that the exemption ordinance "does not have a requirement or limitations with regard to ability to pay or level of owner income."
The Historic Hawai'i Foundation's Faulkner, in her written comments, referred to the estimated $900,000 the city does not collect because of the historic-home exemptions and said that represented only 0.005 percent of the total operating budget. While that percentage is minuscule, the investment in historic properties provides direct financial and indirect social benefits, including job creation, environmental stability and smart growth, according to Faulkner. She referred to a national study concluding that the forgone tax revenue often generates three to five times more revenue in new taxes and investments.
Kualoa Ranch President John Morgan, whose family trust owns three Robinson Lane historic homes, all designed by his great-grandfather beginning in the late 1800s, said properly maintaining the properties is expensive. "We certainly appreciate the tax break. It's a huge help."
The fact that his family owns three historic homes should not be a factor because each case needs to be considered on its own merits, Morgan added.
In researching homeowners getting the breaks, Huber found many to be current or retired corporate executives, lawyers, physicians, professors and others from well-paying professions.
Some, she found, were absentee owners, like Comcowich, who rent their properties. Some get more than one exemption because they own multiple historic homes. Some have only one exemption but own multiple parcels, including one co-owner who also had title to 14 other Oahu properties, according to Huber's research, which she presented to Mayor Peter Carlisle.
Huber has been particularly critical of what she sees as a double standard between how the city treats the rich and poor.
While historic-home owners do not have to live in their homes or prove the "material factor" requirement, those getting assistance in other residential programs have to be owner-occupants and must abide by strict requirements pertaining to finances, Huber said.
"The city is rubber-stamping exemptions for millionaires, while subjecting low-income residents to in-depth evaluations and scrutiny," Huber wrote in a letter to Carlisle. "This is egregious and unfair."