A new proposal would allow residential owner-occupants on Oahu to petition the city for one-time property tax compromise bills if they got shoved into the new Residential A tax class, requiring them to pay at a much higher rate.
Officials with Mayor Kirk Caldwell’s Department of Budget and Fiscal Services said they haven’t decided whether to support the proposal, but believe it will not help many homeowners.
Resolution 14-179, introduced last week by City Council Chairman Ernie Martin and Council Budget Chairwoman Ann Kobayashi, will be heard by the Council at its monthly meeting Aug. 13. It is designed to address sharp tax hikes faced by those who have homes valued at $1 million or more, live on those properties and as a result were shoved into the new Residential A tax class.
The compromises would be available to those who failed to get a homeowner exemption before the city’s Sept. 30, 2013, deadline.
"It’s for people who lived in their homes a long time and never filed for an exemption," Kobayashi said.
One homeowner told Council members last month that the new class, coupled with higher tax assessments, will mean he’ll need to pay $11,000 more than last year.
The resolution calls on the Department of Budget and Fiscal Services to consider compromises for those Residential A property owners who apply for such relief, provided they were eligible for a homeowner exemption by the Sept. 30 deadline.
In June the Council adopted a tax rate of $6 per $1,000 of assessed value for the new Residential A category, up 71 percent over the standard residential tax class rate of $3.50 per $1,000.
The Council created the Residential A tax class in September primarily to shield most owner-occupants from higher taxes. By definition the roughly 7,400 properties in the class are those residential parcels valued at $1 million or more and do not have an owner-occupant or homeowner exemption. Any property owner with a homeowner exemption is automatically excluded from the Residential A category.
Since tax bills began reaching homeowners in mid-July, Council members said, their offices have received a steady stream of complaints from residents seeking relief.
A Manoa property owner told the Honolulu Star-Advertiser that she always believed exemptions were available only to owner-occupants 65 and older.
In reaction to those concerns, Council members last month sought to allow Residential A homeowners to continue being charged at $3.50, instead of $6, for one year. But those measures were deferred in Kobayashi’s committee after budget officials said it would cost the city millions, be unfair to others not allowed to appeal, and place an undue burden on the tax system.
Martin said he’s unhappy the administration did not do a better job of outreach after the rates were passed.
Kobayashi said Monday that the new measure is less onerous because instead of seeking a freeze on rates, it asks only that budget officials consider negotiating a compromise with those affected.
"It’ll be up to the department," she said.
Deputy Budget Director Gary Kurokawa said the administration has yet to form a position on the resolution but has some preliminary reservations.
Kurokawa questioned the fairness of allowing compromises for Residential A homeowners when the city does not allow compromises even for property owners who are hit with foreclosure actions due to various types of hardships.
Further, he said, the way the resolution is written, only those eligible but not receiving an exemption would qualify. Tax officials contend there are fewer than 10 property owners in such a situation, he said.
Kobayashi said she thinks there are more than 10 homeowners who would be able to take advantage of the relief, but not so many that it would have a large impact on city finances.
Jesse Broder Van Dyke, Caldwell’s spokesman, noted that the administration supported the creation of Residential A "in order to avoid raising property taxes on average Oahu homeowners" after the Council rejected other moneymaking measures the mayor proposed. Caldwell proposed a rate of $5.50 per $1,000 for the class for this year, and the Council chose to increase the rate to $6, he said.
