The Honolulu City Council has approved two real property tax relief measures aimed at helping homeowners and the island’s vulnerable residents.
During a special Council meeting Friday, the panel voted 8-0 — with Council member Andria Tupola absent from the meeting — on the third and final readings for two measures introduced by Vice Chair Esther Kia‘aina in 2022: Bills 37 and 40.
Both measures took effect upon approval.
However, as drafted, the measures will apply to the tax year beginning July 1, 2024, and thereafter.
As adopted, Bill 37 increases the threshold income level for the real property tax credit to $80,000 from $60,000. It also provides a tax credit for homeowners whose property tax exceeds 3% of their income, the city says.
To qualify for this tax credit, the combined income of all titleholders for the property must not exceed $80,000, and the homeowner must file for the credit by Sept. 30, the city says.
Likewise, Bill 40 increases the exemption amount to $120,000 from $100,000 for homeowners, and to $160,000 from $140,000 for kupuna.
For those who already have homeowner exemptions and kupuna exemptions, the amount will change automatically. For those who do not have homeowner or kupuna exemptions, residents must file for their homeowners exemption by Sept. 30, the city says.
Residents can apply and find information at realpropertyhonolulu.com. Residents can apply online or via a form. If residents have issues, they can call the Real Property Assessment Division at 808-768-3799, the city says.
Prior to the Council votes, several from the public spoke on these measures as well as a Council subcommittee’s final report dealing with the problem of real property tax relief in response to 10% or greater real property tax assessments leveled on Oahu homeowners in recent years.
Among them, Ted Kefalas, director of strategic campaigns for Grassroot Institute of Hawaii, said his group supported Bill 37, noting those earning $80,000 a year, with a 3% cap, would get a $2,400 tax bill.
“We support increasing the eligibility to the tax credit to assist the low- income folks,” he said. “This circuit breaker is for low-income households that, just historically, have not kept up with inflation.”
He added that his group also supported Bill 40.
“This bill is a welcome increase to the home exemption,” said Kefalas, adding that Honolulu’s standard home exemption was last increased in 2019. “Since then we’ve all seen property assessment values increase exponentially. Back in 2019 the median sales price for a home was $767,000. Today it’s around a million dollars.”
Increasing the homeowners exemption by $20,000 “doesn’t fully offset the increase, but it would be close,” he added.
Still, Kefalas noted that Maui and Kauai have higher homeowners exemptions than Oahu: $300,000 and $160,000, respectively.
“We hope that Council will hopefully continue to look at this issue in the future, but now we appreciate you all taking this up,” he said.
To offset rising costs, resident Choon James said the city needed to adopt a “culture of fiscal prudence.”
“Because for sure property taxes are going to keep going up,” she said.
On the tax credit measure, resident B.A. Alexander said Bill 37 “doesn’t quite get us there.”
“I think it’s time for the City Council and the Assessor’s Office to realize that given what’s going on in the real estate market, this issue ought to be addressed annually,” Alexander said. “Because I just feel that especially longtime homeowners, they’re just hanging on by a thread, and so while I am happy to see this increase, I just really want to emphasize that we can’t let it go another how many years before it’s addressed again.”
Prior to the special Council meeting, Chair Tommy Waters told the Honolulu Star-Advertiser that these tax relief measures were “crucial.”
But to see these bills pass into law, Waters said the Council had to act quickly as annual real property tax assessments are issued by the city at the beginning of July.
“And this is the only opportunity before the Sept. 30 deadline to get the word out to as many homeowners as possible,” Waters said via email. “As a Council, we have prioritized real property tax relief, and while changing the law is crucial, ensuring that homeowners have the information they need to apply is equally important.”
After the meeting, Waters told the Star-Advertiser, “I intend to work with the administration to provide workshops in the community to share information and assist residents in accessing this important tax relief.”
In the meantime the city is expected to send public notices informing residents of the new tax relief laws, he added.
Correction: Ted Kefalas of Grassroot Institute of Hawaii said, under Bill 37, someone earning $80,000 a year, with a 3% cap, a person would receive a tax bill of $2,400. An earlier version misstated that Kefalas said someone in that situation would get a $2,400 tax credit. Also the name of the institute has been corrected.
