The total assessed value of taxable property across Oahu is rising 5.9 percent in 2017, with residential owners seeing an average increase of 5.2 percent, city tax officials said Tuesday.
Homeowners primarily on the Waianae Coast are seeing the biggest rise and, at 12.6 percent, the only double-digit increase in values.
The value of a property multiplied by a rate set each June by the Honolulu City Council forms the basis of a property’s annual tax bill. So if the Council decides to keep residential tax rates the same or increase them, Leeward residential property owners could face a double-digit percent spike in their taxes.
Homeowners on Oahu are assessed in Tax Map Key Zones. In addition to a rise in the Leeward Oahu zone, the North Shore and Kaaawa-Kahuku zones also are seeing significant jumps of 9.7 and 9.5 percent, respectively, according to the data provided by the Real Property Assessment Division of the Department of Budget and Fiscal Services.
Gary Kurokawa, the city’s deputy budget director, said the numbers show that there continues to be a relatively strong real estate market on Oahu. Residential assessments went up 5.1 percent in 2016, 7.2 percent in 2015 and 9.9 percent in 2014.
Continuing a trend from last year, “the strength is now in the medium- and lower-value properties,” Kurokawa said. Higher-end properties, which predominantly are in the East Honolulu and, to some extent, Urban Honolulu zones, have already seen their values go up dramatically in previous years.
“Usually, the higher-end properties move first,” he said. Once they reach a saturation point, there’s a trickle-down effect as homes in other price categories fill the void and meet demand, he said.
Keith Yamashita, city real property appraisal officer, said he believes the growth of Kapolei and the rest of West Oahu as a job center may also be contributing to the demand, and therefore increased values, of homes along the Leeward Coast.
“People that weren’t willing to move out there before maybe are more willing to now,” Yamashita said.
Jaymes Song, an agent with Better Homes and Gardens Real Estate, said the increase in valuations appears to be in line with other data he’s seen. “Among the higher-end properties the prices seem to have stabilized, but the demand for homes under $1 million is still very strong,” he said. “So people are looking out west because that’s all they can really afford if they want to buy a decent house. They’ve been priced out everywhere else.”
Tax officials said higher market values pushed about 1,000 properties into the newer Residential A category, which pay at a higher rate of $6 per $1,000 of assessed value versus the $3.50 per $1,000 paid for standard residential properties. There are 10,700 properties in the Residential A category, which consists of parcels assessed at $1 million or more but carry no home exemptions typically given to owner-occupants. Most are in the Urban Honolulu and East Honolulu zones.
In October a state Circuit Court judge ruled the Residential A category unconstitutional. The city is expected to appeal the decision, which if upheld could cost the city an estimated $39 million in revenues annually.
Song said he believes that legal or not, the Residential A category is unfair and ultimately hurts renters.
Both Song and City Council Budget Chairwoman Ann Kobayashi also said they worry that the higher assessments along the Waianae Coast will hurt the pocketbooks of those who live there. “They’re going to see their property taxes go up,” Song said.
“I would like to know why it’s going up so high in that area,” Kobayashi said.
The hotel-resort tax classification jumped 15.9 percent, the highest of all property tax categories. Commercial properties went up 7.1 percent while industrial properties rose 5.6 percent.
New projects helped boost the commercial category assessments as well as overall valuations. The recently completed Ewa wing of Ala Moana Center added about $70 million in assessed value, the renovated International Market Place in Waikiki about $60 million and the new Ka Makana Alii shopping center in Kapolei about $147 million, Yamashita said.
On the hotel side the new Ritz-Carlton Residences in Waikiki added about $360 million in value, while a partial addition of the new Hilton Grand Vacations tower chipped in $100 million (it added some of its value last year) and the renovations at the Four Seasons Resort (formerly the Ihilani) at Ko Olina added $115 million, Yamashita said.
Tax officials stress that increases and decreases in valuations for overall zones and classifications represent average changes only. The values of individual properties can vary widely.
The city Thursday will mail out assessment notices to the owners of about 300,000 properties.
Assessed valuations for 2017 were set as of Oct. 1 and are based on sales of similar properties through June 30.
Kurokawa said the main goal of sending out the valuations this week is to ensure property owners can study their assessments and decide whether it is something they want to appeal, and to check whether they have an exemption or can qualify for one.
Property owners have from Thursday to Jan. 15 to file an appeal with the city. Appeal forms can be found, and submitted, at realpropertyhonolulu.com.
The city has set up an “appeal hotline” this year that will be open from 7:45 a.m. to 4:30 p.m. weekdays through Jan. 13. The public can dial 768-7000 with any questions or possible discrepancies in property descriptions and/or values. Questions and inquiries can also be emailed to bfsrpmailbox@honolulu.gov.
2016 Property Value Tax Map by Honolulu Star-Advertiser on Scribd
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