City anticipates revenue increase

Property values on Oahu rose slightly over the past year, giving the City Council and the Carlisle administration the expectation for some added revenue to work with as they craft a budget for the next fiscal year.

Total gross assessed valuation of all taxable real property on Oahu was $180.15 billion, up 1 percent from $178.26 billion a year ago. Gross valuations of residential property increased 0.7 percent, to $145.05 billion from $144.02 billion, the city said.

Budget Director Michael Hansen, through a spokeswoman, noted that the valuations are a preliminary estimate and that the city will have a clearer picture of property tax revenue once the appeals process is concluded.

The latest tax assessments do not necessarily correspond to how much property owners will pay in taxes next year. That will be determined when the Council sets tax rates in June. For residential properties the current rate is $3.50 per $1,000 of property value.

If left unchanged, Council Budget Chairwoman Ann Kobayashi said she fears many homeowners will see their tax bills increase.

"Valuations are going up, but at the same time people’s incomes are not going up," she said. "In fact, money either stays the same or they get it reduced, so now is not the time to be looking at ways to increase anyone’s tax bill."

It is too early to say whether taxpayers can expect a rate change, as the city’s entire property tax structure — from rates to exemptions — will be scrutinized when the Council begins meeting again next year, she said.

Property values were driven largely by new development, such as residential subdivisions, condominiums, commercial and industrial projects, and other construction, the city said. The overall increase of 1 percent was more than last year, when property values increased 0.2 percent from 2009.

"I’m glad that it looks like, for the county, that there’s additional revenues being projected," Council Chairman Ernie Martin said. "It shows, at least from the construction industry side, that there is some activity that’s sparing the economy."

Among Oahu’s nine property tax zones, residential property values increased in six while three saw decreases. The largest increase was in Zone 3, in East Oahu, where property values were up 2 percent from the previous year. Zone 8, along Leeward Oahu, had the largest decline, with property values down 3.4 percent.

Hotel and resort property values increased 2.7 percent, and commercial property values increased 4.4 percent, while industrial property values dropped 0.5 percent, the city said.

Tax assessment notices sent out to about 290,000 property owners this week might show an increase, decrease or no change to a valuation depending on sales of similar properties in their neighborhoods.

The rate cards are not tax bills. How much a property owner pays is based on the assessed value, minus exemptions, multiplied by the tax rate.

The standard owner-occupied homeowner’s exemption is $80,000 and increases to $120,000 for homeowners 65 or older.

"What we’ll be looking at is to see whether these additional revenues are going to be accounted for in the mayor’s budget," Martin said.

Carlisle must submit his budget to the Council by March, and the Council has until its June meeting to approve the budget, along with the property tax rate.

Martin said the added revenue also puts the Council in a better position to assess the recommendations of the Real Property Tax Advisory Commission, an independent panel convened by the Council to study ways to make the tax exemption system fairer, more transparent and more efficient without regard to political consequences.

» For information on how to appeal an assessment, request an assessment notice or other issues, go to www.honolulu.gov and click on "2012 Oahu Real Property Assessments Released" under News Releases.