Wednesday, July 8, 1998

Property owners
unhappy with proposed
assessment rule changes

A workshop on the subject
will be held tomorrow; so far
at least one councilmember is
talking about a compromise

By Gordon Y.K. Pang


At least one City Council member is talking about a compromise for a controversial property tax bill.

The bill, freezing property assessments for three years and preventing fluctuations in values and revenues, will be the subject of a workshop tomorrow. Currently, assessments are done annually.

Councilman Jon Yoshimura said Council members are mulling the idea of reducing the freeze to two years and possibly freezing tax rates during that period.

But property owner groups, which slammed the proposed freeze at a news conference yesterday, still oppose Yoshimura's compromise, which apparently is shaky with some Council members and the administration.

Property owners say the city should not be freezing assessments during a time of falling property values just to maintain spending.

"The intent of this bill is not to get a backdoor tax increase -- that's ridiculous," Yoshimura said. "What it has been is an attempt to make predictable taxpayer cost and city revenues and at the same time free up work time for city tax assessors so they can do a more complete job."

City Budget Director Malcolm Tom said the city spends $4 million annually coming up with the assessments for 252,000 properties.

"The focus of the bill is to improve government efficiency," Tom said.

Only nine states in the country maintain the policy of annual assessments, he said.

The administration will take a look at Yoshimura's suggested compromise measures, Tom said. He indicated, however, administration support for the compromise might not be coming.

Council support for Yoshimura's compromise plan may also be shaky. Budget Chairman John Henry Felix said freezing rates gives the city little flexibility if it finds itself in financial straits.

Such a policy may also affect bond ratings, he said.

At least six property owner and management groups criticized the bill.

Jay Fidell, who is with both the Building Owners and Managers Association and the Institute of Real Estate Management, said the suggested changes from Yoshimura don't change opposition from property groups.

"The thing conceptually is wrong," Fidell said. "It attempts to disregard the connection of fair market value with real property tax. It's the wrong time to do this."

Fidell noted that there are currently investigations taking place into whether taxes were assessed properly for the 1995 tax season.

"There is a crisis in confidence in the way valuations are made in Honolulu," he said.

"Like everyone else, the city of Honolulu should spend less," he said.

"If everyone in this business community has to tighten his or her belt in this recession, then so should the city."

Marlene DeCosta of the Institute of Real Estate Management said landowners are not the only ones who would suffer from the effects of the bill since costs are passed on.

"It is our tenants who pay the operating expenses of property; it is our tenants who suffer."

Bill Ramsey, a manager for a residential property owner, agreed. He said the proposal was tantamount to the Internal Revenue Service telling a worker that he would have to report his income at a previous year's level even if he were making less money.

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