Some Oahu residents are expressing frustration and outrage as they brace for a jump in property tax bills after the latest property value assessments were released in December. The increased assessments come as the City and County of Honolulu looks to come up with more cash for public service employees and after residential buying surged, city officials said.

The steepest increases were on the North Shore and in a neighboring area stretching from Kahuku to Kaaawa where residential values shot up 20.4% and 18.4%, respectively. The smallest bumps were on the Windward side, 12.5%, and in East Honolulu, 10.1%.

Toby Allen, an 81-year-old Hawaii Kai resident on a fixed income, says the likely hike in taxes will force him to cut back on necessities like food and medical expenses and will jeopardize his dream of revisiting his homeland of England before he dies. “I’ve got to save, save, save,” said Allen, a retired hotel manager.

Allen says the value of his home — a single-story, four-bedroom, two-bathroom house built in 1966 which he purchased in 2019 — has jumped to $1.5 million from just over $1 million at the time of purchase. “All I added was the solar panels,” he said. (He also added a remote-controlled gate and a cover for his lanai, in the first year he owned the property.) “It’s not worth that much. I don’t know where they’re coming up with those figures.”

Scott Humber, a spokesperson for Mayor Rick Blangiardi, attributed the rise in part to “very low residential property inventory on Oahu, historically low borrowing costs during 2021 and through mid-2022, and a surge in residential buying demand by residents and non-residents once the restrictions due to the pandemic were lifted.” In an email statement, Humber noted that the mayor has not proposed an increase in property tax rates. Further, the higher assessed valuations, as of Oct. 1, “could be an aberration and the administration is evaluating the city’s finances.”

Particularly concerned about the increases issued by Honolulu Hale’s Real Property Assessment Division are residents of the North Shore, where the cumulative taxable property value went up by one-fifth — an increase some attribute to wealthy people snapping up parcels in recent years.

“The guys that are arriving here now have pockets full of money,” said Bob Leinau, treasurer of the North Shore Neighborhood Board.

Leinau says that while certain properties, particularly those along the beach, have sold for significantly more recently, that shouldn’t affect everyone else. “If you take a radius of a quarter- mile from where I live, a bunch of houses sold for $2 million. Does that mean my house is worth $2 million?” he asked. “It seems there ought to be a more exacting formula for that valuation.” He added, “There ought to be some limits on how hard they can hit you.”

SharLyn Foo, secretary of the North Shore board, called the recent assessments “outrageous” and “inflated,” citing the example of a 5,000-square-foot parking lot she owns across from Three Tables Beach that was assessed at $1,002,900 — up from $911,000.“There is no structure on it. It’s ridiculous,” she said.

Foo noted that her own personal residence saw an increase of $300,000, and other properties she owns have seen similar spikes. “It’s … absolutely wrong,” Foo said. “Things sold for a lot of money; that’s the only reason it’s gone up this high. It’s going to hurt a lot of people.”

Foo says many neighbors she’s spoken to are now worried about staying in their homes. “Everyone’s just freaked out trying to find a way to pay it,” she said. “They’re going to put poor people who are on fixed income out.”

Kathleen Pahinui, chair of the North Shore board, has received similar complaints from community members, particularly seniors on fixed incomes. “It’s hard when the people that live here can’t afford to live here anymore,” she said.

Pahinui’s own valuation went up $185,900 from the previous year. “Unfortunately, people were just spending crazy money on buying properties,” she said. “Real fixer-uppers were going for $800,000 to $900,000 to a million dollars.”

Mike Lyons, also member of the North Shore board, is retired and on a fixed income. He suggests looking to California’s Proposition 13 — a 1978 measure that limits the property tax rate to 1% and yearly increases in taxable property value to 2% — as a possible solution.

“My house I have lived in for 45 years. Single-walled construction. I have never moved,” Lyons said. “My house is worth nothing, zero, until I sell it. When I sell it, if I ever do, then let the new guy pay the taxes.”

At his home, Lyons said, “We have talked over and over about leaving the state, because they’re killing us.” Pointing out that many area friends have moved to the mainland, he said, “It’s sad because they’re good people but they can’t afford it.”

Residents of Leeward Oahu, where the cumulative taxable property value went up 13.6%, also expect to be hit hard by their property tax bills.

Tiana Wilbur, vice chair of the Waianae Coast Neighborhood Board, worries that the likely tax increases will lead to more families losing their homes, particularly those that have been in the family for generations. “It would definitely be very detrimental to families out here,” Wilbur said. “I don’t know if it’s an intended push to get more of the locals out of the islands, but it’s sad to see that more and more families lose their homes off of property tax.”

Wilbur says the higher assessed value of taxable properties could reach renters, too, as landlords might pass on the additional cost to tenants. Before the City Council sets tax rates in June and sends the bills in July, Wilbur hopes to work with legislators to find ways to support local families and homeowners.

Public service workers’ salaries are a factor

Aside from the surge in residential purchases, the need to fund collective bargaining agreements for public service employees proved to be a major factor in raising property value assessments, according to City Council member Calvin Say.

The city relies on the real property tax as a primary source of revenue. “If we didn’t get the valuation increase, all we could do is raise rates,” Say said, emphasizing that he doesn’t plan to support any possible proposals to increase the real property tax rate itself.

“If you and I were paying $100 today on our home, and it went up to $140, that $40 assessment increase on the real property tax values has been earmarked for collective bargaining,” Say said.

Asked whether lawmakers or union officials had a hand in pushing for raising property values in order to increase the pool for collective bargaining, Say said, “I believe so.”

City officials have pointed to inflation and the ever- burgeoning cost of living in Hawaii as reasons they need to pay public service employees — like police, firefighters, lifeguards and Emergency Medical Services staff — more. “It’s never gonna stop,” Say said, referring to inflation’s apparent effect on cost of living and the need to pay workers more.

Blangiardi’s spokesman Humber wrote in an email, “Taxpayers want expansions of city services, and the costs of providing the city’s core services are increasing due to the same driving factors that residents are dealing with.”

Humber confirmed that the increase in real property tax revenue will also pay for core services including public safety, facilities maintenance, transportation services, parks and recreation, highways and roads, and so on.

But the “compensation increases” due to the recent collective bargaining settlements for all of the city unions make up a particularly large portion of “increased costs to run the city when compared to debt service, employee benefits, insurance, fuel, utilities, supplies, etc.,” Humber wrote in an email.

Say suggested that if any excess funds remain after paying for collective bargaining agreements, those funds could be used to provide relief for seniors and others facing financial hardship. However, he said, it is not yet clear how much the increased assessments will generate in tax revenue or how much relief might be possible.

“I can sympathize with them, but I also have to sympathize with those that are now providing the services,” Say said.

Council member Esther Kiaaina says she does not intend to back any possible move to increase the tax rate for owner-occupied residential properties or those that house long-term renters, and she supports increasing the home exemption and property tax credit for such residents.

“We have been looking at potential ways to offset relief, including through increased property tax collections from short-term rentals and vacant homes,” Kiaaina said in an email statement.

Blangiardi, through Humber, pointed to a low-income tax credit for the tax year starting July 1, which is the difference between one’s assessed real property tax and 3% of one’s gross income. Taxpayers may be eligible if they have a home exemption in effect, don’t own any other property, had a combined gross income of no more than $60,000 in 2021 and have not previously attempted to defraud the city or evade paying real property taxes. (An example, in a brochure from the city, says that a couple who made $25,000 in 2021 and owed $2,500 in property tax would subtract 3% of their gross income, or $750, and pay only $1,750.)

The mayor is still “formulating” the proposed budget for fiscal year 2024 and will look for opportunities for further “temporary” tax relief, his spokesperson said.

Matt Weyer, the newly elected Council member representing the North Shore, says he wants to increase the owner-occupied tax exemption.

“As residents leave the state in record numbers, we must also act now to stop the dramatic movement of land into the hands of out-of-state investors,” Weyer wrote in an email.

The increased property valuations come at a time when the state has a surplus of $1.9 billion, prompting some residents to wonder why officials at the city level are not doing more to help homeowners. “You’d think they would back off a little,” said Allen, the 81-year-old Hawaii Kai resident. “Every year, condos open up, new houses get built,” generating more tax revenues. “This feels like the city is double dipping.”