The problem of quadrupled property taxes for some 250 Oahu property owners has become election-year fodder even as the city proposes remedies.
"There’s a lot of political theater that’s going on right now," acting Mayor Kirk Caldwell remarked yesterday after a news conference on the issue.
Caldwell, who is running for mayor, announced that he is proposing a measure to give tax credits to property owners who saw their bills jump dramatically because of a change in property tax classification.
During Friday’s televised gubernatorial debate, former Mayor Mufi Hannemann accused City Councilman Romy Cachola of making political hay out of the issue by blaming Hannemann for the mushrooming taxes.
Caldwell insisted the city property assessors were simply doing their job when they removed the residential classification last year from 250 properties in neighborhoods including Kalihi, Kapahulu, Moiliili and Waipahu, despite their actual use. Now classified either commercial or industrial, the properties are taxed at a much higher rate.
The bill, if passed, would allow affected taxpayers to get back some of the higher taxes they are paying this year through a credit. But to receive the credit, taxpayers must pay this year’s taxes.
The first increment was due yesterday.
Caldwell could not explain why the city did not bother to physically check on the properties’ actual use before hiking the tax rates, except to say that the city has 280,000 properties to keep track of, and referred to these as a small "gap group."
Those areas had originally been zoned residential, but zoning began shifting in the 1970s to industrial and commercial.
"These, by law, are also required to be classified as commercial or industrial because they are in business-zoned land," city spokesman Bill Brennan said.
For single-family home owners, a provision to dedicate their properties to residential use has been around for decades, but not for apartment building owners, Brennan said.
"That’s what led to the creation and passage of Bill 6," which allows residents to dedicate their properties to residential use and allows residential property owners to pay residential rates.
Councilman Donovan Dela Cruz said he introduced Bill 6 after he learned of a Moiliili woman in her 80s who owned and lived in an eight-unit Moiliili apartment building and was being taxed at the industrial rate for all but the unit she lived in.
The city never informed the Council that there were hardships being created by reclassifying properties to a higher use, Dela Cruz said.
"The whole point was to provide relief so the renters would have affordable rates," he said.
Residents have until Sept. 1 to apply for a dedication.
But as Cachola said, single-family home owners were not given enough time to file a dedication since they received letters from the city after Dec. 15 — and some say they never received any notification. Moreover, the city had no provision to help apartment building owners this year.
Cachola and Councilman Ikaika Anderson, meanwhile, are crafting a bill that would refund affected taxpayers for the amount they pay for property taxes this year above the residential rates, and would tax all properties with homes and apartments at residential tax rates rather than commercial or industrial rates.
Cachola responded to Hannemann’s "making political hay" comment, saying, "How can he say that when I’m not even running? I’m term-limited out. I’m honestly doing this to help people."
Last week, Cachola and his staff walked through Kalihi neighborhoods handing out form letters addressed to the Budget and Fiscal Services Department director to ask for a compromise to lower their tax bills, as well as a dedication form to apply for a residential rate next year.
Cachola pointed out Caldwell has "changed his tune" since Thursday when the only relief he offered was for taxpayers to pay this year’s exorbitant property taxes on a payment plan.
Hannemann declined to comment.