The City Council is moving forward with a proposal that would tighten requirements for receiving a historic home tax exemption and another measure to examine all tax exemptions to determine if they should continue.
Members of the Council’s Budget Committee advanced both measures Wednesday.
Bill 3, the proposal to modify the property tax exemption for historic homes, was introduced last year by the city in response to a series of Star-Advertiser stories revealing significant gaps in oversight of the taxpayer-subsidized program.
Although many homes are valued in the millions, most homeowners getting the break pay only $300 a year in property taxes.
Owners of historic properties testifying at Council meetings say they are not millionaires, and that maintaining their properties costs far more than the savings they receive from the tax exemption.
The program is aimed at giving owners of historic homes a financial incentive to preserve the properties, helping to stabilize Oahu’s neighborhoods and to retain structures important to Hawaii’s architectural heritage. But the city has said monitoring has loosened during the years because of a lack of resources.
Requirements for receiving the exemption include visible display of a sign indicating the property is historic, adequate visual access from the street and provisions to admit visitors on a regular basis.
City Budget Director Michael Hansen said the department also wants Bill 3 to tighten definitions and other provisions to help with enforcement.
Bill 3 would make various changes to the law such as defining the "average condition of property" to ensure that the property is being maintained to extend its life expectancy. Owners also would be able to provide alternate visual access and still claim the exemption. Additionally, no portion of the property less than 50 years old would qualify for the exemption.
The proposal comes up for final reading at the next meeting of the full Council on June 3.
The Budget Committee also approved Resolution 11-143, establishing a long-discussed "blue ribbon" panel to examine various tax code issues.
The resolution states the seven-member committee will examine only tax exemptions, but Budget Chairman Ernie Martin said the exemptions were only a starting point.
Several Council members and members of the public urged the Council to expand the scope of the panel to examine all aspects of real property taxes and the tax code.