Two new measures designed to help property owners cope with the impacts of sharply higher property tax bills this year got preliminary approvals by the City Council Budget Committee Wednesday.
Bill 53 would establish two periods a year when a property owner could apply for a homeowner exemption, which are granted to those who can prove they live on their residential properties. Currently, new exemption applications are due Sept. 30 annually. The measure, introduced by Council Budget Chairwoman Ann Kobayashi, would help those who might want to sell one home they live in and buy another dwelling.
Bill 54, introduced by Kobayashi and Council Chairman Ernie Martin, would increase to $60,000 from $50,000 the maximum household income to qualify for a low-income tax credit.
City Budget and Fiscal Services Director Nelson Koyanagi opposed the measure creating a second homeowner exemption deadline. The process is well-established and modifying the real property tax system to accommodate two deadlines would require additional workers to administer the program and incur other costs, Koyanagi said. "It’ll be resource intensive."
What’s more, he said, allowing two periods for filing of exemptions would create uncertainty in the budgeting process.
About 3,300 property owners with homeowner exemptions "transferred" them to a second property last year, Koyanagi said.
Despite the administration’s objections, the committee advanced the bill.
The committee also kept alive the second measure, increasing the qualifying maximum income level for the so-called "circuit breaker" program — which allows owner-occupants who qualify to pay no more than 4 percent of their total annual income in property taxes.
This year, about 7,700 properties were placed in a new Residential A tax class because they were valued at $1 million or more and did not qualify for a homeowner exemption. Both Mayor Kirk Caldwell and Council members supported the shift, saying they wanted to shield owner-occupants from tax increases. Instead, Residential A owners saw their tax rates go to $6 per $1,000 of assessed value, up from $3.50. The rate for those in the standard residential tax class remained at $3.50.
Meanwhile, property assessments skyrocketed in certain neighborhoods, leading to a record number of assessment appeals.
Honolulu resident Deborah Bennett said there’s a dire need to address renters affected by the Residential A tax class. She said she and her husband bought a North Shore home 15 years ago intending to retire there one day. Because it’s now in the Residential A category, her longtime renter now has to pay $400 more each month.
"The concept that Residential A protects ordinary, everyday residents from cost increases while taxing the wealthy, or tenants presumed to be wealthy enough to live in a $1 million house, is flawed," Bennett said.