Tuesday, January 15, 2019
Hawai'i Free Press

Current Articles | Archives

Sunday, August 27, 2017
Honolulu: For 1000s Property Tax Rate Will Quadruple Sept 1
By Tom Yamachika @ 5:01 AM :: 3843 Views :: Honolulu County, Taxes

Highest and Best Use, and Why You Should Care

by Tom Yamachika, President, Tax Foundation Hawaii

Earlier this year, the City & County of Honolulu tinkered with its real property tax system. People who aren’t aware of what happened may find themselves with property tax bills many times what they are now.

In Honolulu, as in most other counties here and in many jurisdictions on the Mainland, there are several property tax classifications. For example, there is residential use that is taxed at $3.50 per $1,000 of assessed value; commercial use, taxed at $12.40; and hotel/resort, taxed at $12.90. The classification that you fall in is determined by the “highest and best use” of your property.

Highest and best use has nothing to do with how you are actually using your property. It means the most productive use that your property could be put to, if it is legal under applicable law and zoning. So, for example, a person who owns industrial zoned land next to a shopping mall can build a farm on it and grow vegetables, but the property tax rate that will be applied won’t be the agricultural rate, it will be the higher commercial rate.

For most people, qualifying for the residential rate, the county’s lowest, is not a problem. Much of the land that people build houses on is zoned for residential use, which means it’s not legal to run businesses or resorts on that land. The highest and best use is residential, and that’s what determines the tax classification. However, some properties in the Honolulu urban core are given “mixed use” designations, which means it is legal to build a house on the property or to have a shop there.

This is where the problem arises. Currently, the tax ordinances allow condominium units to be classified based on actual use, not highest and best use. Thus, people who live in condominium units were allowed the residential rate if they said they were actually living in them, even though the zoning allowed commercial use. Some complained that the system was inconsistent: if the farmer in the example above had to pay at the commercial rate, why does the person living in the condominium unit get to qualify for residential? Ordinance 17-13, enacted earlier this year, took away the actual use “loophole,” bringing back the highest and best use rule for condominium units.

To get around the highest and best use rule, the ordinances allow property owners to make a “dedication.” A dedication is a contract with the county that says the use of your property will be restricted to a particular use even though the zoning allows something else. With the dedication in place, commercial or hotel uses become illegal even though the zoning may allow them, so those uses cannot be considered highest and best.

Ordinance 17-13, mentioned earlier, also allows for those living in mixed use areas to make a dedication to residential use. A property owner who makes one will be allowed the residential tax classification. A property owner who doesn’t may well be reclassified to commercial or hotel/resort, with severe financial consequences.

To make a dedication, the appropriate form needs to be filed by September 1. It’s referred to as Form BFS-RP-P-41E, Petition to Dedicate Certain Property for Residential Use (5 Year Dedication). Don’t be late!


KHON: List of condominium projects impacted by Ordinance 17‐13


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


808 Silent Majority

808 State Update AM940


ACA Signups Hawaii


Affordable Hawaii Coalition


Alliance Defending Freedom

Aloha Conservative Alliance

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii



Antonio Gramsci Reading List

A Place for Women in Waipio

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute

Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

Conservative Forum for Hawaii

CSIS Pacific Forum

DAR Hawaii


DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii


Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute


Hawaii Aganst Assisted Suicide

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Families for Educational Choice

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Heritage Foundation

HI Coalition Against Legalized Gambling


Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube


Hump Day Report

Hunting, Farming and Fishing Assoc.

I Vote Hawaii

If Hawaii News

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

Judgepedia Hawaii

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes


Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group


Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii



National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii

OHA Lies

Ohana Policy Group


Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons 

Pro-GMO Hawaii



Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Salvage The Rail

Save the Plastic Bag

School Choice in Hawaii


SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Copenull

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

TEA Party Maui

TFB Micronesia

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu


West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii