Bill would cut taxes on industrial lands near the rail system

City Councilwoman Carol Fukunaga hopes to preserve and promote industrial uses along the rail transit route through a bill that seeks to offer real property tax incentives.

Bill 61 would allow a landowner whose parcel is within a mile of a rail station to dedicate the land for industrial uses for 10 years. Under the proposal, the land would then be assessed at 50 percent of its fair market value as it remains “in continuous industrial use throughout the dedication period.”

Industrial uses include automotive repair, manufacturing, warehousing, wholesaling and distribution.

The measure passed first reading earlier this month and was referred to the Council Budget Committee for discussion Wednesday.

City officials are compiling transit-oriented development, or TOD, plans that map out developments around each rail station. Council members have so far approved the Waipahu and Aiea-Pearl City plans. A vote on the Kalihi neighborhood plan was deferred by the Council’s Zoning and Planning Committee last month.

Fukunaga said she introduced the measure so industrial properties can remain in business amid increased development. She said the bill could especially be helpful to those near the airport, Kalihi, Chinatown and downtown. The bill states that industrial businesses provide employment in the “urban center,” where these businesses “are facing financial pressure due to transit-induced property valuation.”

Fukunaga said, “For the most part, as property taxes increase and with the zoning that is occurring, it makes it very hard for those kinds of businesses to remain in the urban core because it just becomes too expensive.” She added, “People who are catching transit, etc., still have needs or even if they live close by, they still need to get the car repaired.”

City administrators said they are studying the potential impacts, including zoning procedures, and have not yet taken a position.

“We are looking at the consequences of reducing taxes on large amounts of industrial land while exploring other policies to preserve and enhance industrial uses in certain TOD areas,” said Harrison Rue, administrator of the city’s TOD program, in a statement.

Councilman Brandon Elefante, who voted with reservations to pass the bill on first reading, said he is concerned about the potential economic impacts.

“I understand that industrial areas … are very important,” Elefante said. “(But) I want to hear discussion when we move it to committee based on how having industrial ones will impact real property tax revenue.”

Elefante added that he did not recall any concerns brought up with the Waipahu and Aiea-Pearl City TOD plans about preserving industrial lands.

Fukunaga said she has asked the city Department of Budget and Fiscal Services to identify industrial properties in areas like Kakaako and Kalihi, and to provide information on the economic impacts. But she added that she does not think the impact would be major.

The process would be similar to dedicating agricultural lands, she said.

“I think realistically for some of those areas, they’re relatively small in comparison to the rest of the areas,” Fukunaga said. “So I don’t think it will be that much.”

Ryan Mandado, chairman of the Kalihi/Palama Neighborhood Board, said he thinks the bill could be beneficial to those industrial businesses that do not want to relocate.

But Chu Lan Shubert-Kwock, vice chairwoman of the Downtown Neighborhood Board and president of the Chinatown Business and Community Association, said she has not heard concerns about the need to preserve industrial businesses.