Honolulu City Council leaders say they want to extend until Nov. 17 the deadline for homeowners who were pushed unintentionally into the higher-taxed Residential A class to apply for a break in what they owe.
The city received 652 applications for tax breaks, essentially compromise bills that charge homeowners at last year’s tax rate, by the original Sept. 30 deadline. But Council Chairman Ernie Martin and Council Vice Chairman Ikaika Anderson, who co-introduced Resolution 14-255 Thursday, said that since Sept. 30 they’ve continued to receive queries from property owners who say they could have been eligible and would have applied for tax compromise bills but did not know the program existed. Anderson said his office has received at least a dozen calls.
In some cases, Anderson said Thursday, property owners were unaware of their higher taxes or that they were eligible for a break until they were informed by the mortgage companies that handle their property tax payments.
The resolution, expected to be heard by the Council at its regular Nov. 12 meeting, reopens the tax compromise program and allows eligible homeowners to apply through Nov. 17.
Both Martin and Anderson urged those eligible to file, even if the resolution had not yet been approved, at www.realpropertyhonolulu.com.
The compromise tax bill program was designed to give a one-time tax break this year to those whose properties were placed into the Residential A tax class even though they live in those homes. Homeowners who were eligible for owner-occupant tax breaks by Sept. 30, 2013, but did not get them are entitled to a "compromise"tax bill, essentially allowing them to pay at the lower standard Residential tax class.
The Residential A tax class, created by the Council last year with urging from Mayor Kirk Caldwell, was intended to shield Oahu homeowners who live in their homes from higher property taxes by creating a new, higher-taxed bracket which is supposed to include only those residential properties valued at $1 million or more, and not receiving a homeowner exemption.
In June the Council adopted a property tax rate of $6 per $1,000 of assessed value for Residential A properties, a 71 percent increase over the $3.50 per $1,000 rate that the Council retained for the standard Residential tax class.
But after tax bills went out this summer, a larger-than-expected number of Residential A property owners who live in their homes complained about the significantly higher amounts they owed. They argued that while eligible, for a variety of reasons, they never filed to receive a homeowner exemption.
That’s when the Council adopted the original compromise tax bill program through Resolution 14-179.
Of the 652 applications received, more than 10 percent were from homeowners who are not in the Residential A class and therefore are already paying the $3.50 rate rather than the $6 rate, city Budget Director Nelson Koyanagi told the Honolulu Star-Advertiser last week.
Koyanagi said his department had not yet verified how many applicants actually meet the criteria (which include filing for a homeowner exemption in 2014) but said that if they all did, it would cost city coffers $2,474,623 in anticipated revenues. He added that the amount could be easily absorbed by the city without any negative impacts on the city’s $2 billion annual operating budget.
Anderson said how much the city loses in budgeted tax revenues was inconsequential.
"I don’t believe that these moneys were justly collected by the city because these were not moneys that were due the city, so I don’t see this as lost revenue,"he said. "This is money we should return to our taxpayers."
Martin said that early next year the Council likely will revisit the whole issue of the Residential A class, including the recommendations of the city Real Property Tax Advisory Commission.