Dubbed the “empty homes tax,” Bill 9 is among dozens of related real property tax measures now under City Council review.

In its first public meeting Tuesday, the Council’s Permitted Interaction Group, or PIG — composed of Council Chair Tommy Waters, Vice Chair Esther Kia‘aina, Radiant Cordero and Matt Weyer — took written and oral testimony over potential tax measures addressing long-term rental classifications or exemptions, modification to the real property tax credit, homeowner exemptions and Residential and Residential A real property tax rate classifications.

The panel — having met in closed session May 9 — held its latest discussion­-only meeting in which no actual votes were taken or deadlines given with regard to resident-focused tax relief.

Although not the final measure, Bill 9, first introduced by Waters in 2022, drew the group’s strong interest as a candidate for further analysis as it deals with the city’s twin crises of lack of affordable housing and homelessness.

As drafted, the bill would create an empty homes tax intended to encourage existing owners to rent or sell vacant housing stock for use as homes for local residents; increase the city’s supply of homes to better meet demand and reduce market pressures that cause high, unaffordable prices; and raise funds for affordable housing and homelessness solutions.

“An empty homes tax can help convert existing investment properties into housing for local residents without the need for costly construction, long delays for development and permitting, and taking more land for development,” Bill 9 reads. “The tax will increase affordable housing stock for residents by encouraging long-term rentals and providing funds for the construction of new affordable housing.”

The proposed tax would only be imposed on properties not used as long-term housing, and would not raise taxes on homes occupied by long-term residents, the bill states.

“The empty homes tax can help control and potentially lower the city’s rapidly increasing housing prices, as it would encourage productive investments and utilization of the City’s housing supply,” Bill 9 reads. “An empty homes tax should help renters; as housing supply increases, landlords will need to offer reasonable rent prices to secure renters to avoid the tax. An empty homes tax can create a dedicated source of revenue for addressing affordable housing and homeless needs.”

And Bill 9, as written, comes with penalties for violators: a civil fine of up to $25,000 per day, per offense, and the city’s ability to foreclose on any residential property if taxes or fines go unpaid.

Among Bill 9 supporters, Betty Lou Larson of Catholic Charities Hawaii stated the measure would create more housing and reduce homelessness on an island where local residents are being priced out of their own homes.

“We feel that there really needs to be bold action. We have such a crisis that slow steps will take too long,” Larson said, adding her organization gets calls daily over housing-related issues, largely from senior residents. “We’re particularly concerned about our kupuna, we’ve had a doubling of homeless and at-risk kupuna coming to us this year and these are people who are long-term tenants usually; they’ve lost their housing because of rent increases or the house is sold … and they’re now out on the street and it’s really sad and it happens all the time and we really need to take action fast.”

Partners In Care, a coalition of nonprofit homeless providers and other stakeholders, also supports Bill 9.

“Investors are hoarding our housing units, leaving 34,253 housing units vacant on Oahu,” Partners In Care wrote in support of the bill. “These empty homes drive up rental and sales costs for everyone; the median family home is $1 (million), which is unaffordable to most working people. (Bill 9) will increase our supply of homes to better meet our enormous need for affordable housing. It will also discourage outside investment that causes high housing costs, and focus the real estate industry on local housing needs, not investors.”

But to determine the feasibility of Bill 9 — or any other tax relief measure the council is considering — will require study of not only the bill but of the city’s own operations to implement it, the city says.

Andrew Kawano, the city’s Department of Budget and Fiscal Services director, told the panel the city is working on a “procurement” to hire a consultant to assess how his department “needed to be structured to address the problem correctly and implement the tax in an effective manner.”

“We’re looking at what we need in terms of staffing, policies, rules, what kind of budget we’re going to be looking at in terms of inspectors, investigators, how many of each type of employee class do we need,” Kawano said. “In terms of implementing the tax, looking at tax law and rules that we can properly implement to establish a program that’s successful.”

Under Bill 9, Kawano noted “the objective is to increase not just city revenues but an inventory of affordable homes.” However, he also noted the city will have to manage its costs to create a workable program. “Because we don’t want a situation where we bring in a few million dollars but we incur $10 million of cost; it’s not going to make sense based on where the city is right now.”

Meanwhile, he said the city “wanted to do a hard look and do the analysis” on the bill. “We’ll support it if it makes sense once the analysis is done.”

Waters suggested Bill 9, like all of the tax relief bills, meant lost revenue to the city.

“Ultimately though, if we were to pass these measures the administration can adjust spending next year to account for the lost revenue that may occur … right?” Waters asked.

“To some extent, yes,” Kawano replied. “We have some costs that are already set,” noting the city’s cost to operate the new rail line as well as pending increases of $165 million in city workers salaries and wages beginning in fiscal year 2025 “are going to be in place regardless.”

After the meeting, Weyer told the Honolulu Star-­Advertiser that discussions over tax relief measures will continue.

“It could result in one or multiple bills being considered by the full Council,” he said. “None of us are limited to the bills introduced, and any one of the nine of (the) full Council is free to introduce new bills.”