Half the roughly 250 Oahu homes getting property-tax exemptions as historic properties appear to not be in compliance with the program requirements, according to data from the city.
During visual drive-by checks of the residences, city personnel found 117 that did not appear to have the required historic home signs visible from a public way and 28 that did not appear to have the required "reasonable visual access," said Gary Kurokawa, administrator of the city’s Real Property Assessment Division.
Twenty of the 28 also appeared to lack a sign and were counted in the 117.
The visual access requirement is designed to allow people to appreciate the aesthetics of Oahu’s historic homes, providing a key public benefit in exchange for the major tax break owners receive.
Homeowners with the full exemption — most receive one — pay only $300 a year in property taxes, regardless of the value of the residences. That saves some homeowners thousands of dollars annually.
The city did the compliance checks in response to a Star-Advertiser story in September that disclosed the problem of exempted homes being largely hidden from public view. Many were valued at around $1 million or more. The newspaper also found dozens of residences without the required signs.
Kurokawa has acknowledged that enforcement was lax because of a lack of resources and training.
"All the city does is rubber stamp the applications," said Holly Huber, a community advocate who is pushing to reform the exemption system and strengthen enforcement.
Kurokawa said the administration has a bill before the City Council that would clarify ambiguities in the law and allow his office to better monitor compliance.
"This (Bill 3) would give it a lot more enforceability," he said. "People would have a clear understanding of what is required."
The administration in its proposed budget also is seeking three new positions dedicated exclusively to checking compliance with the many property tax exemptions it issues. Current monitoring largely is driven by complaints, the city says.
Among other things, Bill 3 would define what is meant by visual access, provide specific parameters for an alternative compliance method for homes not visible from public ways and require the homes to be kept in at least average condition as defined by the city. Those lacking visual access from a public way would have to designate a spot on their property from which people could view the homes 12 days each year during specific hours.
The administration proposal also eliminates some provisions in the existing law. One such provision makes the exemption contingent on the homeowner certifying that the pre-exemption level of taxation is a "material factor" threatening the continued existence of the historic residence. The city does not verify that certification.
Huber noted that the proposed ordinance was developed in consultation with historic home advocates and essentially guts all reasonable requirements, enabling the homeowners to keep their generous tax breaks for doing little in return.
"It’s like asking the oil companies to write their own environmental regulations," she said.
Huber also believes the number of homes the city refers to as lacking visual access is a gross underestimate, especially using the standard that the administration pushes in its own bill, requiring the full front or rear of the home to be visible.
Kurokawa said the bill allows the city to yank an exemption and go after back taxes if the homeowner violates the requirements or does not comply with other pertinent city ordinances.
Two other bills before the Council also deal with changes to the historic home program, including repealing it, reducing the magnitude of the tax break or changing the exemption to a credit based on the cost of maintaining a historic residence. All three bills were discussed Tuesday at a Council committee meeting and passed to the next stage.
Whether the historic exemption is kept intact or revised, the city still needs to clarify the underlying requirements, Kurokawa said.
The city forgoes about $900,000 annually in property tax revenue because of the exemption, which encourages preservation of historically or architecturally significant dwellings.