A former chairman of the state panel that decides which nominated properties go on the Hawaii Register of Historic Places says the list has become a tool for wealthy, well-connected homeowners to get huge property tax breaks even when their residences don’t qualify.
Kenneth Hays, whose six-year tenure on the Hawaii Historic Places Review Board ended this month, said the listing process has become tainted by cronyism and friendships between panel members and homeowners or their representatives, leading to dwellings that don’t meet the eligibility criteria being listed. The process is driven by the owners’ desire to get property tax exemptions, he said.
"I can say with great certainty that most people who came in there had one motivation," said Hays, an architectural historian for the Army who served as chairman of the review board for the past year. "It was not to participate in a historic preservation program, and it was not to get their home recognized as a historic property. Their primary motivation was to get that tax break."
Hays’ criticism of the review process comes as the federal government is pressuring the State Historic Preservation Division to increase the cultural diversity of the state and national registers, which are meant to celebrate the rich histories of Hawaii and the country and identify properties worthy of protection. Owners generally must agree to have their properties listed.
The list for Hawaii, a place of great ethnic diversity, has been dominated by historic homes.
In the past 10 years, nearly 85 percent of the 120-plus Oahu properties added to the state register have been historic homes, and most are getting property tax exemptions, according to a Star-Advertiser analysis of state and county data.
More than three-quarters of those homes were in five relatively well-heeled areas: Manoa, Nuuanu, Lanikai, Diamond Head and Tantalus. Manoa, with more than 50 properties, had by far the most.
Yet during the same 10-year period, relatively few cultural sites, especially those considered significant to Native Hawaiians, made the register. Until this year not a single Filipino site was featured. Few mom-and-pop properties were listed.
The notion that the register has become primarily a tool for owners of expensive houses tends to be supported by the data, especially in recent years.
Since mid-2008, 44 Oahu historic dwellings have been added to the state register, and those residences have an average assessed value of roughly $1.7 million — nearly three times the median sales price of a Honolulu house, according to the newspaper’s analysis.
Three of every 4 Oahu houses added during that period were valued at $1 million or more, with the highest assessed at $6 million.
The tax reduction for higher-end homes can be significant.
The owner of a $6 million Kailua residence — one of the houses President Barack Obama’s entourage rented during holiday visits the past few years — pays only $300 annually in property taxes because of the 10-year tax exemption received from the city in 2009. Without the exemption, the tax tab for the 55 Kailuana Place home was about $48,000 in 2007.
One of the requirements to obtain the exemption, which is designed to encourage preservation of historic properties and is considered among the most generous in the country, is that the house must be on the state register. Owners who get the full exemption, as most do, pay $300 in property taxes annually on Oahu and even less on the other islands.
"This is a giveaway to the rich and famous," said Holly Huber, a community activist and critic of who is getting the exemptions. "It’s completely skewed."
Pua Aiu, administrator of the Historic Preservation Division, defended the integrity of the review process, saying it was working the way it was designed to work.
She said board members regularly debated whether a property should be added to the register, and if a majority voted to do so, the site would be listed, even though not everyone may agree.
"That’s the democratic process," Aiu said.
BUT HAYS said approvals often were made on the basis of friendships and personal relationships, not necessarily on the merits of a property, leading to questionable decisions. Sometimes, board members acknowledged being good friends with the homeowners and then voted to support their nominations, said Hays, who added that he often was the only one raising objections.
Asked for an example of a home that shouldn’t have been listed, Hays cited the $6 million Kailua property, which was presented to the board by consultant Don Hibbard, a former SHPD administrator who frequently is hired to shepherd high-end homes through the nomination process.
While the nomination documents linked the home’s significance to its late-1940s architecture and its ownership by Harold Castle, a key figure in the development of Kailua, Hays said the residence had undergone such major remodeling and expansion that it no longer maintained its historical integrity.
At the August 2009 meeting in which the review board approved the home’s listing, the only comment reflected in the minutes was from a board member who noted the beauty of the house and complimented the owners for their hard work. Hays was the only board member present who did not support the listing, according to the minutes.
Nominations to the register generally are initiated by property owners and provide special protections to sites that are listed. But because few financial incentives are available beyond the historic-home tax exemption and because of the time and cost involved — $6,000 to $8,000 minimum, by some accounts — to pursue a nomination, getting more variety on the registers can be challenging.
Still, the National Park Service, which has oversight of federal dollars and certification given to SHPD, has pushed for improvements in the review process, raised concerns about transparency and accountability, and is seeking more varied register listings. The NPS has threatened to yank SHPD’s certification and federal funding if a variety of changes is not made by the agency by next year.
Regarding the listings, the park service said SHPD nomination files it examined contained little review documentation and that the state’s nomination process did not appear to meet the criteria for the national register, a flaw the state has since addressed.
Additionally, NPS has mandated that the state agency consult with Native Hawaiian organizations on nominations to the national register. It also is urging SHPD staff to increase efforts to expand the cultural diversity of listings.
"The nomination process is largely a grassroots effort that depends on the interests and efforts of members of the public," Paul Lusignan, historian at the national register, wrote in response to Star-Advertiser questions. "If that interest is not out there, or those groups are not aware of the programs, fewer such sites will be considered for listing."
Keola Lindsey of the Office of Hawaiian Affairs said his agency is working with SHPD to get more Native Hawaiian properties onto the register, believing the list should be more reflective of what makes Hawaii special.
But one challenge is that some Native Hawaiians are reluctant to have sites on their properties placed on a public register because of concerns about loss of privacy, Lindsey said. Some get their property designated as eligible, gaining the same protections as if the sites were listed, but stop there, he added.
Despite a lack of personnel, SHPD is making headway on the diversity front.
It recently added a Japanese temple, a Maui general store and a Filipino church to the state list and has other sites in the pipeline.
Getting more diversity, including archaeological sites and those of various ethnic groups, is a goal of SHPD, Aiu said. Among other things, the agency is examining ways to get more funding to community groups to pursue nominations.
Hays, who applied to the Abercrombie administration for reappointment to the review board but wasn’t selected, said he believes more must be done to make the evaluation process more objective, transparent and accountable.
"The public deserves better," he said.
