A Honolulu City Council idea to provide property tax breaks to businesses suffering from construction of the rail project is being panned by the Caldwell administration for lacking specific details.

Bill 67, introduced by Council members Carol Fukunaga and Ernie Martin, would offer to qualifying property owners between Pearlridge and West Loch a significant tax break, specifically a 50 percent exemption on the assessed value of their properties.

The city determines a property owner’s taxes by multiplying its assessed value, minus exemptions, by a tax rate that is set annually.

The bill was given second-reading approval by the Council at Kapolei Hale on Wednesday, and now returns to the Budget Committee for more work.

Exactly how many businesses would be eligible for the benefit is still unclear. The bill calls for “small business property affected by the Honolulu High Capacity Transit Project construction” to qualify for the exemption if the business is within an as-yet undetermined distance from the project route between the Pearlridge and West Loch stations.

Businesses throughout the 20-mile project between East Kapolei and Ala Moana Center have complained about the loss of customers as a result of traffic inconveniences caused by the $6 billion rail project. A majority of those complaints, however, have come from businesses in Pearl City and Waipahu where rail construction has caused the most traffic havoc so far.

Lacey Kazama Shimabukuro of Katsumi Kazama Family Partners, majority owner of Waimalu Shopping Center, told Council members Wednesday that the bill would both “help us proceed with planned improvements that we have for the center and … help businesses in our shopping center who have talked to me about business being slower lately.”

Many of her tenants, she said, are “single-location, family-owned businesses.”

Shimabukuro, in response to questions by Council members, promised to pass along any tax breaks to her tenants. “If our expenses, our property taxes, are lowered, definitely … their share for the property taxes would be lowered as well.”

Businesses along both Kamehameha and Farrington highways, where rail construction has altered the streetscape the most, have suffered greatly, said state Sen. Clarence Nishihara (D, Waipahu-Pearl City).

“We’re the ones who are right now feeling the impact,” Nishihara said. The roadwork has been “a challenge for all of us who have to traverse that area.”

But for affected businesses, it’s more than just an inconvenience, he said. “The loss of customers who have been avoiding the area translates to a real hardship in the loss of revenues and possibly employment.”

Nishihara applauded the Honolulu Authority for Rail Transit’s “Shop and Dine on the Line” program, coordinated with merchants to coordinate discounts to customers. But its success has been limited, he said.

One of Shimabukuro’s tenants, Shiro’s Saimin Haven President Linda Matsuo, also submitted testimony supporting the bill.

Caldwell administration officials did not testify Wednesday but previously submitted testimony in opposition.

City Budget Director Nelson Koyanagi questioned the bill’s definition of “small business property,” which is based on language used by the U.S. Small Business Administration.

“We believe this is an overly broad definition of properties that may be ‘affected’ by the rail project,” Koyanagi said. His department may not have enough personnel “to process the anticipated large volumes of claimants who might apply for the exemption under this broad definition,” nor have the expertise to determine which businesses would qualify, he said.

Additionally, the Real Property Tax Division is still in the process of analyzing what impact the rail project has had on affected businesses.

Koyanagi also wrote that it would be difficult to ensure that landlords would pass on their savings from the exemption onto their tenants.

Councilman Brandon Elefante, while among the nine supporting the bill, expressed reservations about the uncertainty over which businesses could qualify for the break. The definition of “small business” in the bill is based on U.S. Small Business Administration language, which is 46 pages long. “It’s too general and overly broad,” he said.

Also on Wednesday, the Council approved Resolution 15-245, which urges the state to grant businesses that can show they’ve been affected by rail construction temporary relief from paying general excise taxes.

The two initiatives are the latest offered up by the Council to provide tax relief to businesses hurt by rail.

In August, the Council approved Bill 42, which creates a fund to address mitigation costs for businesses affected negatively by rail. Council members, however, have yet to determine a way to support the fund.

Council members have wanted to use federal transit money to put in the fund. But a letter to HART Executive Director Dan Grabauskas from Federal Transit Administration Regional Administrator Leslie Rogers makes it clear that would not be possible.

The fund from which the city is receiving $1.55 billion will pay for relocation costs of those businesses displaced by a rail project, Rogers said. But it cannot be used as a grant or loan to businesses that claim to be losing business income tied to construction of a rail project, he said.