Average property
values drop 6.7%

The city faces a loss of $27
million next year unless
tax rates are raised

By Gordon Y.K. Pang
Star-Bulletin

Oahu property owners will get an assessment notice card this week showing an average 6.7 percent decrease in value.

The city mailed about 247,000 assessment notice cards to Oahu property owners yesterday.

The falling property values will mean $27 million less for city coffers next year unless tax rates are raised.

The declining revenues are part of the projected $130 million shortfall in the city's operating budget for its next fiscal year, beginning in July. Property taxes are the city's largest source of revenue.

The City Council and Mayor Jeremy Harris must decide whether to deal with the expected shortfall by raising property tax rates and, if so, how much.

That question likely won't be answered until late spring, after the city has looked at other means to increase revenue and reduce spending.

Overall, gross property values as assessed by the city are down 5.9 percent from a year before, said Roy Amemiya, budget and fiscal services director. It is the fifth consecutive year of declines, he said.

The largest drops were in areas with a substantial inventory of homes, such as West and Central Oahu, where home prices have not stabilized. Properties in East Honolulu and the Windward Side decreased as well, but not as significantly.

By classification, values in the apartment class fell 10.3 percent and in improved residential by 3.3 percent.

Among the drops in other classifications: industrial, 8.6 percent; commercial, 7.6 percent; agricultural, 7.1 percent; unimproved residential, 5 percent; hotel, 4.1 percent; and conservation, 2.3 percent.

Mike Sklarz, director of research for Prudential Locations, said the numbers show no surprises.

"I would say it is a fair, overall representation."

A panel of business leaders convened by Harris to review property taxes met for the first time yesterday.

Panel members appeared willing to recommend a revenue-neutral scenario but reluctant to suggest more taxes.

"That's a very likely recommendation," said Nick Ordway, a University of Hawaii business professor. "If you increase taxes 10 to 15 percent, you could put some people over the the edge toward bankruptcy."

"There's reluctance on everyone's part to raise taxes," said Murray Towill, executive director of the Hawaii Hotel Association.

"Most of the people (on the task force) realize raising taxes is not going to help stimulate the economy."

The panel will make its recommendations to Harris Jan. 6.