by Andrew Walden
After pushing all summer for a tax hike, the Caldwell Administration in August bizarrely asked for deferral of its very own Bill 34 which would have levied property taxes for the first time on properties owned by labor unions and other non-profits. Honolulu’s senior citizens were not so lucky. Now that the dust has settled, it turns out they alone are bearing the brunt of Caldwell’s tax-hike frenzy. Ordinances 13-32 and 13-33 tell the story.
ORD13-32 - Relating to certain real property tax exemptions. This ordinance cuts homeowner exemptions for the elderly from a previous range of $140K to $200K down to a flat $120K. Kupunas on fixed incomes living in homes whose value has appreciated dramatically in the decades since their purchase will pay higher property taxes as a result. Think of it as the social engineering bill designed to clear oldsters from the neighborhood making way for someone running an illegal vacation rental to pay for his purchase. Approved September 26, 2013. Takes effect September 30, 2013.
ORD13-33 - Relating to real property taxation.
In assigning [land] real property to one of the general classes, the director shall give major consideration to the districting established by the city in its general plan and zoning ordinance, and such other factors which influence highest and best use.
Translation: If your home is on land zoned commercial or industrial, you will be taxed at much higher rates as if you were a commercial or industrial property rather than a residential property. This will affect hundreds of elderly residents in Kalihi and other upzoned areas. Ordinance 13-33 creates a financial incentive for the Council to upzone neighborhoods in order to generate more property taxes and drive residents out making way for commercial, resort, or industrial users. Approved September 26, 2013, Ordinance 13-33 applies to tax years beginning July 1, 2014.
Proposed countermeasure: If homeowners are to be taxed at the industrial rate, their property should be assessed for industrial value only. Since a residence is not useable as an industrial building, it therefore has no industrial value. Assessments should be appealed by homeowners arguing that improvements should be assessed at zero value and the property value should be calculated at land value only.
Meanwhile, thanks to a Christmas Tree Clause in 13-33, developers and wealthy individuals with 10 acres or more have been given an easy out for upzoned properties:
Notwithstanding the city’s zoning district classification, the director shall assign to the agricultural class any [land] real property classified as tree farm property under HRS Chapter 186.
Newly Enacted Ordinances 13-32 and 13-33 are available for viewing at: DOCUSHARE