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Many Kalihi apartment owners are jarred after learning their property taxes are being tripled by being classified as industrial or commercial property. The city’s initial response seems to have been to follow the letter of the bureaucratic process, which fails to address the immediate predicament.
City Councilman Romy Cachola said he has been receiving calls from constituents complaining that their taxes have increased from the residential rate of $3.42 per $1,000 of assessed value to the industrial or commercial rate of $12.40 per $1,000 of assessed value.
Retiree James Cabais, 79, a lifelong resident of Stanley Street, says his tax bill went from $2,336 to $10,552. He says he cannot afford a $10,000 yearly tax on his Stanley Street house on a monthly Social Security check of $1,000, and he is not alone.
Many of the owners were not notified of the change in classification while others received notices in December, but those notifications did not mention the resulting tax increase. Cachola said they learned of the tax hike only when they were billed at the end of July.
An area bounded between North King Street and Dillingham Boulevard was rezoned from residential to industrial or commercial in the 1970s, including apartments in buildings that included commercial or industrial units, but individual apartments were allowed to pay residential taxes.
Gary Kurokawa, the tax division’s administrator, told the Star-Advertiser’s Leila Fujimori that the tax rate was increased in response to "complaints of inequitable treatment by owners of similar properties who were already being assessed at the higher commercial or industrial class rate."
If a business owner was aware that a nearby store owner was paying residential rates, such a complaint would have been reasonable, resulting in such businesses being put on the same taxing field. But Cachola says he knows of 95 Kalihi homes that were suddenly treated by the tax division as commercial or industrial, and he said he believes the problem is islandwide.
In all, the city says about 250 properties have been reclassified from residential to commercial or industrial. Those are buildings that include apartments as well as commercial or industrial sections. Despite the tax notice to Cabais for his single-family home, city spokesman Bill Brennan insisted the tax change was directed only at apartment owners.
Apartment owners notified of the tax increase were told they have no recourse but to pay this year’s bill and have until September to file a form asking that their property be reclassified as residential. Still, they must pay this year’s higher tax or face penalties and interest on taxes if the deadline is not met.
Brennan said apartment owners who already have received this year’s tax bill will be contacted to negotiate payments. He said the owner’s affordability will be an issue to determine the payment schedule and total amount.
The ultimatum made to homeowners last month was unfair and could be devastating for some families if enforced. The city should have taken more care from the beginning to avoid damage to homeowners.
