The city requires low-income homeowners applying for a break on property taxes to submit a slew of documentation to verify eligibility.

But eligible owners of historic homes who typically get even bigger breaks under a separate city program do not have to provide any documentation to substantiate their claims that they need the taxpayer-subsidized financial help to preserve their properties.

The disparity between how the two groups are treated is fueling criticism regarding the equity of the city’s property-tax system and the perception that the rich are afforded more benefits than the poor.

"That is absolutely not fair," substitute teacher Sandy McKee of Kaimuki said of the disparate treatment. Owners of historic homes "need to prove (financial need), just like the low-income have to prove that they’re low income."

The city, however, defends how it treats applicants of the two programs, one which provides low-income owners with a tax credit and the other which provides a preservation incentive to owners of historic homes.

"Any claim that the historic homes exemption is designed to benefit the wealthy with expensive homes is simply inaccurate," said Gary Kurokawa, the city’s real property assessment administrator, noting that dozens of homes in the Ewa and Waipahu area get the exemptions.

The city’s handling of the exemption program has come under fire since the Star-Advertiser published a story Sunday detailing how lax the city has been in monitoring its requirements.

To get the tax exemption, which reduces the annual tab to $300 for most recipients regardless of the value of their property, an owner must certify on the application that the public has reasonable visual access to the historic residence. The owner also must certify that the pre-exemption level of taxation is a "material factor" that threatens the continued existence of the home.

But the city has not been monitoring the homes to ensure the public has reasonable visual access, and the Star-Advertiser found multiple properties that were completely or largely hidden from public view.

The city also does not require any documentation to verify the homeowner’s assertion about the impact of the higher taxes. The city simply takes the word of the applicant, noting that the responsibility for compliance is with the homeowner.

While any homeowner whose residence is on the state’s register of historic places can seek the exemption, a clear majority of those getting the exemption own higher-end properties.

Of the roughly 240 benefiting from the break, 65 percent have properties assessed at more than $700,000, according to a database created from city records as of April. About 42 percent have homes assessed at more than $1 million.

In his written statement, Kurokawa noted that the tax-credit program is based on the income of the applicant while the exemption program is based on the character of the home. The purposes of the two programs, he added, are completely different.

Claims that the process for the low-income applicant is more burdensome fails to take into consideration that the owner of the historic home must first get the property on the state’s list, Kurokawa added. "It’s not an easy process to be placed on the registry," he said.

Unlike those benefiting from the historic-home program, people getting breaks via the tax-credit program do not get outright exemptions. If the homeowner has income of less than $50,000 a year, he or she is eligible for a discounted tax bill, capped at 3 or 4 percent of total income, depending on the applicant’s age.

An owner less than 75 years old and having income of $25,000, for instance, would have a maximum tax of $1,000 — far more than an owner of a million-dollar historic home getting the full exemption.

The low-income homeowner also can’t own any other property — a restriction not imposed on those getting the historic-home exemption. Some owners of Oahu’s most valuable historic homes own multiple properties on the island.

Another major difference is that the low-income homeowner must apply annually to get the credit. For the owner of the historic home, the exemption is granted for 10 years and is renewed automatically.

On the documentation front, the low-income homeowner who files a federal tax return must provide the city with a tax transcript from the Internal Revenue Service, list all sources of nontaxable income and provide copies of documents and schedules typically filed with or used to complete a return.

The low-income property owner is required to apply annually because income changes from year to year, Kurokawa said. By contrast, the character of an historic home has been maintained for at least 50 years to be eligible for a state historic designation and that character doesn’t change, thus a 10-year exemption period is permitted, he added.

"This exemption is not based on hardship but rather intended to motivate homeowners to spend the anticipated higher costs of renovation and repair instead of tearing down and building anew," Kurokawa said. "The low-income tax credit program gives tax relief to owners so that they don’t lose their homes because of an inability to pay the full amount of the property tax."

Of the roughly 100 properties the Star-Advertiser checked — mostly properties valued at more than $700,000 — for the Sunday story, the newspaper found about 20 exempted properties with public views that were blocked or largely obscured.

One of those properties — a Black Point-area home assessed at $816,000 — is owned by MidWeek columnist Bob Jones and his wife, KITV reporter Denby Fawcett. MidWeek and the Star-Advertiser are owned by Oahu Publications Inc.

Although Jones signed the exemption application, which included all the requirements that must be met, he said he was unaware of the visual access and "material factor" ones until contacted by the Star-Advertiser.

No one from the city raised either issue with him, and the city did not send anyone to inspect his property before granting the exemption, Jones said.

The city acknowledged that its oversight of the program had become inconsistent over the years because of a lack of resources. In response to the Star-Advertiser’s findings, Kurokawa said the city intends to inspect each property for compliance.

Sunday’s story triggered more than 200 comments on the newspaper’s website, most critical of the program or the city’s handling of it. Some linked the exemptions to the recent controversy over the city’s reclassification of residential properties for about 250 homeowners, resulting in a quadrupling of tax rates for many of them.

The City Council’s Budget Committee is expected to meet today to discuss possible relief for those homeowners.

"There is considerably more scrutiny on the poor than there is on the rich," said Holly Huber, a government watchdog and activist. "Imagine if the wealthy had to submit tax returns to prove the ‘material factor’ in receiving a historic home exemption."