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Harris proposes
tax cut for condos

Harris wants a decrease in the rate
for condos and apartments to make
it closer to single-family home rates

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By Gordon Y.K. Pang
Star-Bulletin

Owners of apartments and condominiums are the big winners in a budget that Mayor Jeremy Harris was to submit today.

Not only would their tax rates be going down during the next three years, but if the mayor has his way, they could be paying the same rates as single-family homeowners by 2004.

Harris was to present a $1.1 billion operating budget and a $498 million capital improvements project to the City Council today.

Despite warnings that the property tax could increase, the fiscal 2002 budget contains no increases in tax rates for any property classes.

The reduction in apartment/condominium rates would drive overall property tax revenues down about $3 million, Harris said.

The mayor is proposing a 28-cent decrease in the apartment/ condominium rate, to $4.21 from $4.49 per $1,000 of value.

Single-family rates would stay the same.

The 28 cents represents about one-third of the 84-cent difference between the $4.49 per $1,000 that apartment owners now pay and the $3.65 that single-family homeowners pay.

Harris said he intends to introduce budgets in the next two years that would continue to lower apartment/condominium rates by 84 cents overall, with both rates being equal in 2004.

"We've committed to a three-year plan to lower apartment/condominium tax rates down to residential," Harris said.

Single-family and apartment/ condominium rates split in fiscal 1991.

Apartment and condo owners have complained for years that the system is unfair to them because most do not get garbage pickup like most single-family dwellers and are saddled with the additional burden of condominium fees.

There have been several unsuccessful attempts to address the inequity in recent years. In 1999 three Council members introduced a bill that would have raised single-family rates to the same as apartment/condominium rates.

That same year, three other Council members proposed a measure that would have given refunds to apartment/condominium owners who did not receive municipal trash pickup.

The other good news in next year's budget is that a looming $60 million shortfall in funds appears to have been met. Negotiated pay raises for city workers and an increase in the retirement system contributions required by the city are contributing to the additional expenses.

Harris said a large chunk of that extra cost will be covered by a restructuring of city debt with lower interest bonds, saving about $25 million from this year's debt service payout, Harris said.

Additionally, the city is banking on receiving between $23 million and $28 million in revenues from Oahu's share of the new public service company tax, the mayor said.

A recent court settlement gave the counties a share of that revenue.

The mayor was to outline how the city would raise the remaining $7 million or $12 million.

The Harris budget for next year proposes no increases in any fees, including bus fares.

A bill now moving through the Council would raise all bus fares, with the single-ride fee going to $1.50 from $1.

It was unclear last night if Harris would try to block that proposed fare increase.

The mayor said his budget also does not include any reduction in services or personnel.

On the capital improvements side, the $498 million budget is the largest Harris has proposed since his first budget in 1995.

The previous high for Harris was in 1997, when he proposed a $415 million budget.

A year ago, Harris submitted a $267 million budget for this year, fiscal 2001.

However, the Council's approved version was for $299 million. Then, last week, the Council approved a supplemental budget request for $84 million.

Harris was quick to point out, however, that the average capital improvements budget since he took office has been $316 million and that it was $446 million under the last five years of former Mayor Frank Fasi.

About $200 million of the capital improvements money would go toward federally mandated waste-water improvements such as a $52 million upgrade of the Sand Island Wastewater Treatment Plant.

Also in next year's capital improvements budget are $25 million for transit-related projects, $5 million for a Waianae Coast emergency access road and $8 million for expansion of the city's telecommunications system.

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City & County of Honolulu