To Oahu property owners, renters and residents: Like many of you, we were surprised by the extent to which the real property assessment valuations surged last year.
The increase in those valuations is more than enough cause for grave concern without the additional layer of fear that has seeped into the property tax conversation as a result of misrepresentations and falsehoods that we would like to clear up.
We’ll start, purposefully and deliberately, by addressing a recent line in David Shapiro’s “Volcanic Ash” column: “Valuations by the city’s Real Property Assessment Division are supposed to be objective, honest and fair.” And they are. These valuations, conducted in compliance with city ordinance, are always handled with objectivity, honesty and fairness.
The notion that anything besides the standardized process for conducting these assessments could be to blame for the increase in property assessment valuations is wrong; the idea that lawmakers or union officials had a hand in pushing for raising property values in order to increase the pool for collective bargaining is more than untrue. It’s ridiculous.
There is no nexus — none whatsoever — between any collective bargaining settlement and an increase in real property tax valuations.
Real property tax valuations by the city’s Real Property Assessment Division are performed on an independent basis by appraisers who are trained to follow professional standards set forth by the International Association of Assessing Officers and the Uniform Standards of Professional Appraisal Practice.
They use the same mass appraisal approach for real property valuation that has been utilized for decades. It has been presented repeatedly to the Honolulu City Council, and it is explained in detail in a video available to all Oahu taxpayers on the city’s Real Property Assessment Division’s website.
The appraisal approach is market data-driven and takes into account the sale price of properties in individual neighborhoods over a set period of time. And the island’s housing market did more than set records in 2021 — it reached unprecedented heights.
In our pre-pandemic economy, the cumulative value of all Honolulu residential real estate purchases in a given year never exceeded $10 billion, averaging roughly $7 billion between 2008 and 2020.
But in 2021 — fueled by low inventory, extremely low mortgage rates and extraordinarily high demand — the cumulative value of all Honolulu residential real estate purchases was roughly $12.7 billion. That pace carried into 2022, when nearly $10 billion in residential property transactions were logged through the first nine months of the year.
As a result of those record-breaking numbers, many of you saw a noticeable difference in your property assessment valuations. But there wasn’t any difference in the process by which the city’s Real Property Assessment Division reached those numbers.
With the deadline to appeal assessed property values now behind us, our attention turns to the city’s budget process — and the financial relief that we know we need to provide our residential property owners.
Andrew Kawano is director of the Honolulu Department of Budget and Fiscal Services; Calvin Say is a Honolulu City Councilman who chairs the Council’s Budget Committee.
