Oahu property tax assessments up 1.7%

The total value of Oahu properties increased by only 1.7% this year, and that likely will have a negative impact on the city’s budget next year.

But Mayor Kirk Caldwell said Tuesday he will not propose an increase in property tax rates for next year despite the anticipated budget constraints.

Property taxes are the city’s largest source of revenues. The value of a property multiplied by a rate set each June by the Honolulu City Council forms the basis of a property’s annual tax bill.

Total assessments on Oahu last year went up 6.9%, and they have gone up between 5% and 10% annually since 2013. So this year’s small increase likely is going to mean tough choices will have to be made in the coming months for the next fiscal year, which begins July 1, the mayor said.

“It does mean we’re going to face some struggles in making hard decisions on what to fund and not fund,” he said, adding that there’s a push for more spending in the Honolulu Police Department in the wake of an increase in high-profile crimes in recent months.

With nearly flat growth in assessments, any increases in one agency’s budget likely will mean reductions elsewhere, he said.

Despite that situation, however, “we have no proposal to increase real property tax rates at any level” or in any of the tax categories, Caldwell said. As his budget staff begins preparing for its budget submittal in March, “we have nothing on the table, and I’m not planning to,” he said. “I don’t know what the Council’s going to do, but I doubt they’re going to (raise property tax rates) either.”

The city’s Real Property Assessment Division on or around Sunday will distribute notices to about 297,000 Oahu property owners informing them of their assessments for the 2020-21 tax year. Distribution will be either by U.S. mail or email.

The larger assessments over the last six years have resulted in higher projected tax revenues that have given Caldwell, who took office in 2013, some leeway in dealing with higher expenses, but that won’t be the case next year.

“In some ways I’ve lived a charmed life (as mayor) in terms of assessed values going up every year — and quite healthy increases,” Caldwell said Tuesday. “That’s partly because of the strong economy we’ve seen in the state of Hawaii and particularly in the City and County of Honolulu.”

Caldwell said he expects the Hawaii economy will stay strong in the next year, but the leveling off in the assessment increases indicates that the momentum has slowed.

Caldwell said the overall assessment increase includes new residential inventory coming up in burgeoning areas like Ewa and Kakaako. “So I’ve been told that the actual growth is much less because part of that 1.7% (growth) is new product; it’s not existing product. Then perhaps maybe it’s flat growth.”

In March, Caldwell recommended the Council raise rates for the so-called Residential A tax classification for homes valued at $1 million-plus not occupied by owners, as well the hotel-­resort class.

Council members obliged by increasing the Residential A rate to $10.50 per $1,000 of assessed value for every $1,000 of assessed value above $999,999, up from the current $9 per $1,000. The tax will continue to be $4.50 per $1,000 for the first $999,999 of value. The hotel-resort tax rate went to $13.90 for every $1,000 of assessed value, up from $12.90 per $1,000 of valuation.

Standard residential tax rates have remained at $3.50 per $1,000.

Caldwell said the need to beef up staffing at the Department of Transportation Services created by the projected opening of the first segment of rail in December 2020 coupled with growing fixed costs for employees was the reason for this year’s increase to the Residential A and hotel-resort classes.

By tax categories: Standard residential and Residential A categories went up 1%; the commercial category went up 3.4%; the industrial class went up 6.9%; the hotel-resort class went up 4.1%; and the agricultural category dropped 2.1%.

Residential assessments, by regional zones, showed Leeward Oahu property assessments up the most at 2.2%; Urban Honolulu properties up 1.7%; Wahiawa properties up 1.6%; Central Oahu properties up 1.3%; Windward Oahu and East Honolulu properties up 0.7%; and Kaaawa-Kahuku properties up 0.1%. Assessments on properties in the North Shore zone actually dropped 1.3% while those in the Salt Lake-Kalihi zone went down 0.8%.

Assessed values reflect the value of real property as of Oct. 1 and are derived from sales of similar property through June 30.

REPORT INACCURACIES

To report inaccuracies or discrepancies, call 768-7000 between Monday and Jan. 15 or email bfsrpmailbox@honolulu.gov. Appeals may be filed in the same time frame. Find out more at realpropertyhonolulu.com.