Oahu’s property values up 15%
Rising property tax bills will be offset for some homeowners by larger tax exemptions
Property values on Oahu rose an average of 15.1 percent this year, marking the fourth straight year that valuations have increased by a double-digit margin.
Here is a look at how the increase in property valuations could affect a homeowner's tax bill. The following is only one example, and does not reflect tax credits, additional exemptions or other factors that could affect a property owner's valuation. The property tax rate is $3.59 for every $1,000 of value.
2005-06 fiscal year
Median sale price of a single-family home: $590,000*
Homeowner's exemption: $40,000**
Net taxable: $550,000
Estimated taxes: $1,975
2006-07 fiscal year
Median sale price of a single-family home: $659,000***
Homeowner's exemption: $80,000
Net taxable: $579,000
Estimated taxes: $2,079
* According to Honolulu Board of Realtors 2005
** Homeowner's exemption has doubled since last year
*** 11.8 percent increase from 2005-06 assessment for a single-family home without upgrade or expansion
Source: City Department of Budget and Fiscal Services
Fueled by rising sales prices, the building of new properties and renovations to existing ones, the total assessed value of all real property on Oahu increased to $191.6 billion from $166.5 billion, according to figures released by the city's Department of Budget and Fiscal Services.
The increase in property assessments translates to a budget surplus for the city of about $109 million, said city Budget Director Mary Pat Waterhouse.
While the higher assessments will mean rising property tax bills next year, the pain will be mitigated for some homeowners.
Gary Kurokawa, chief of the city's Real Property Assessment Division, noted that the homeowner's tax exemption has doubled to $80,000 this fiscal year, but only for those who live in the home they own.
"For the homeowner, that really is going to negate a lot of the (assessment) increase," Kurokawa said.
But he said nonresident owners, such as people who own rental properties, "are going to see much more impact of the rising value than those (resident) homeowners."
Mayor Mufi Hannemann noted that while the assessment rate increased 15.1 percent, it is well below last year's 26.1 percent rise.
"Even though you have a robust economy, we are slowing down a little bit," Hannemann said.
The new assessed valuations were set as of Oct. 1 and are based on recent sales of similar properties through June 30.
Waterhouse and Kurokawa both noted that more recent analyses done since July 1 indicate that the market is flattening.
"We don't know what's going to happen the remaining six months at this point, but hopefully that trend will continue," she said. "If it goes up, it will probably go up a small amount (next year), or it may remain flat; we don't know at this point."
Since the end of 2003, when property tax assessments were up 15.6 percent, values have increased to 20.3 percent at the end of 2004 and 26.1 percent at the end of last year before tapering off this year.
Waterhouse said it was too soon to say what specific tax proposals might be introduced by the administration. Hannemann said he would work with the City Council to look at tax rates, which are set by the council and currently are at $3.59 per $1,000 of property value. But the mayor cautioned that the slowdown in growth could prevent any significant tax cuts.
"We've got to be careful in how we spend and manage our monies," the mayor said. "I've always said that we've got to have a fiscal reserve, so I want to save some more money again."
The mayor is scheduled to deliver his budget proposal to the City Council on March 2.
City Council Budget Chairwoman Ann Kobayashi said the Council would continue looking at ways to ease the tax burden on residents, particularly low-income residents.
She said the Council last year passed a measure stating that those who earn less than $50,000 a year may pay 4 percent of their total income if that amount is lower than their property tax bill.
"We've been trying to do things based on income, because we want to help those who need help the most," she said.
She said the Council might consider increasing the $50,000 threshold, but because this was the first year of that measure, "we don't know what the hit is to our city coffers."
However, Kobayashi also said it could be difficult to pass significant tax cut measures because of a charter amendment approved by voters last month that sets 1 percent of property taxes -- about $7 million -- aside for affordable housing and land preservation efforts.
"Right off the top, 1 percent has to go to that before any city services," she said.
She said the Council plans to schedule a tax workshop in January "to see what we can do to ease the burden."
Councilman Charles Djou said the city simply needs to reign in spending.
"The people just don't have enough money. We don't have the financial resources to pay all of these tax increases," Djou said, noting that the property tax increase comes as Oahu residents also are gearing up for a half-percentage point raise in the general excise tax Jan. 1 to pay for a mass transit system.
"The government has got to straighten its house -- reduce our spending," he said. "We can't be going off on these massive projects that the mayor is suggesting."
Of the $191.6 billion in property value, more than half, $115.2 billion, is for single-family properties that were not renovated or expanded. Valuations for those units were up 11.8 percent islandwide.
The biggest increase was along the Waianae Coast, from Nanakuli to Makua, where values were up 23.6 percent. Next highest was Wahiawa (19.9 percent) and the North Shore from Kaaawa to Kahuku (19.5 percent).
Slower growth rates were recorded in urban Honolulu: 5.5 percent from the Aliamanu to Nuuanu area and 7.1 percent from Downtown to Manoa.
For existing apartment and condominium properties with no renovations or upgrades, the values were placed at $43.8 billion, an increase of 14.9 percent from a year ago.
The city began mailing valuations yesterday, although the taxes are not due until August. Those who wish to dispute the assessment have until Jan. 16 to file an appeal.
Star-Bulletin reporter Gene Park contributed to this report.