Nearly 25 Oahu homeowners will no longer get major property tax breaks for owning historic residences because of a failure to comply with new regulations for the exemption program or because they have opted out of it.
Many of the 23 homeowners who are losing their breaks have saved thousands of dollars on their tax bills in recent years.
Another 39 owners of historic homes are receiving warning letters from the city, giving them 60 days to comply with the regulations or risk losing their exemptions. The 39 homeowners mostly do not have required signs easily visible from public streets.
The stepped-up enforcement came after the city was criticized for being lax with oversight for years, enabling many homeowners to get the tax breaks without complying with all the requirements, including ensuring the public has reasonable visual access to the homes.
The Star-Advertiser previously had disclosed that dozens of homeowners of so-called hidden homes — some worth more than $1 million — were getting the tax breaks. That prompted the city to adopt an ordinance overhauling the regulations, making them clearer and easier to enforce, and adding two new positions for compliance officers, whose job will be to monitor all exemption programs.
Among the 10 homeowners who have voluntarily opted out of the program is mayoral candidate Kirk Caldwell, who has paid the minimum tax — $300 each of the past two years and $100 annually from 2006 through 2009 — for his historic Manoa residence, which is valued by the city at nearly $1.9 million.
Before getting the exemption, Caldwell and his wife, Donna Tanoue, paid about $5,500 in property taxes in 2005.
Lex Smith, Caldwell’s campaign chairman, said Caldwell, a big supporter of historic preservation programs, decided to forgo the exemption because of the mayor’s race.
"It was made into a political issue about him rather than the benefits of historic preservation," Smith said.
In a May 3 letter to Gary Kurokawa, the city’s real property assessment division administrator, Caldwell asked that his exemption be canceled even though the Manoa home always has been and still is in compliance with the program requirements.
"I consider it a privilege to live in a historic home, and I intend to continue to meet and exceed the requirements for the tax exemption, including participation in the Malama Manoa Historic Home Tour," Caldwell wrote. His home has been featured in that tour.
Among the regulations that were clarified was one specifying how owners of homes with largely obstructed views from public roads must establish a spot on their property where people can see the residences on the second Saturday of each month. The spot must be clearly marked.
Forty-nine homes now are using that "alternative visual visitation," according to city officials. Those homes are listed on the city’s website.
"Finally, residents of Hawaii have an opportunity to see these hidden homes that they’ve subsidized for years," said Holly Huber, a community activist who has criticized the city’s lax enforcement of the program.
After the city established the new regulations and gave homeowners time to comply, Kurokawa’s staff checked all 200-plus historic residences last month and found 13 that are now being removed from the program, 39 whose owners are getting the warning letters and several dozen others whose owners are dealing with compliance issues.
Three homes were denied the exemption outright, while 157 were deemed fully compliant.
City officials say the revised program is much improved.
"The rules are clear," Kurokawa said. "The program is much more black and white."
The majority of the homeowners get the full exemption, which means they pay only $300 a year in property taxes no matter what the assessed value of their home is.
The idea behind the program is to encourage preservation of historic homes by giving a tax break designed to offset the higher cost of maintaining these older dwellings.
