Historic homes are cherished in Honolulu, as they are in many cities, so having a tax policy that supports their preservation makes perfect sense. Sacrificing most of the tax revenue the property yields to the city is worthwhile if the tradeoff is a community enriched by the beauty of its distinctive period architecture.
Homeowners can use their tax savings for the upkeep of their historic property. The ultimate, overall result of this policy should be preservation of more architectural treasures than the city could accomplish otherwise. The rest of the public picks up the slack — either because other property taxes are raised or services are reduced to offset the loss.
That’s the ideal.
The reality in Honolulu is the situation as described in stories by Star-Advertiser writer Rob Perez: Homeowners get an extremely generous tax break — for most qualifying homes, they pay only $300 a year — that yields too little benefit for the community underwriting it.
The people who seek this tax exemption do have a steep hill to climb to qualify, jumping through the hoops required to get the home placed on the state historic register. If the exemption is approved, owners forfeit any right to change their property use for 10 years, and they must ensure that people have "reasonable" means of seeing the property, either through viewing from a public right-of-way or, when it’s not readily visible, 12 days annually when the public will be allowed to see it.
As Perez found, it doesn’t usually work out so nicely. Many of the roughly 250 homes getting the tax break shield the residence from prying eyes through tall hedges, or have the advantage of being hidden down a long driveway. Relatively few offset that hindrance, as they should, with public viewing days.
And the city does little to check up on the beneficiaries of the break.
The city pleads for indulgence because of its staffing shortage. That suggests the owners of historic homes aren’t paying enough.
The city should consider raising the rate at least enough so that staff dedicated to regular inspections could be hired. Homeowners ought to be expected at least to document how they met their requirements on an annual basis.
Many other cities offer tax exemptions, but none as rich as this one. According to a 2007 survey by the National Trust for Historic Preservation, other municipalities or counties offered only percentage discounts off the property tax break, not the virtual tax waiver Oahu homeowners enjoy.
Further, the city could do a much better job letting the public in on the architectural secret, displaying its online roster more prominently. Hopeful tourists must find the realpropertyhonolulu.com site and then navigate to "exemptions and dedications" and "historic property" to find the link.
The upkeep of historic homes is expensive, and giving homeowners some leeway to achieve it is a rational calculation. But Honolulu officials may have given homeowners too wide a berth and should consider adjusting that benefit.
Finally, without enforcement — making sure the homes are, in fact, both visible and maintained — the public won’t get the full reward that’s due for its sacrifice.