[ OUR OPINION ]
City may have to offer
relief on property taxesHOMEOWNERS in Hawaii are experiencing a perfect storm of factors that may punch pukas in their pockets, but unlike in past years, it is doubtful the city will come to their rescue by lowering property tax rates. Too strapped for cash, the administration and City Council aren't inclined to cut the rate even as property values are going up.
THE ISSUE
Assessed values of residential properties on Oahu have risen at an average of 17 percent during the past year.However, officials should consider offering some relief since some of the biggest value jumps are in low-income rural neighborhoods that are fast becoming attractive to wealthier buyers as urban areas are built out and residential inventory dwindles. Oahu residents do not want to see a repeat of problems like those on Kauai where ever-increasing assessments are forcing people to give up their homes and where affordable rental units are almost nonexistent.
A confluence of a boost in demand for housing, a drop in mortgage rates and population growth has propelled a stunning 17.2 percent rise in Oahu property values for single-family homes. Condominium values saw similar increases at 16.8 percent.
Commercial and industrial properties rose 4.6 percent and 5.4 percent respectively, while values for hotel and resort properties declined. With economic forecasts predicting a rise in visitor spending and a rosy view of the state's economy, officials would do better to raise rates on these properties before hitting struggling homeowners.
Among the highest single-family home increases are those in the Waimanalo-Waikane district at 16.8 percent, the North Shore with 23 percent and Nanakuli to Makua at close to 25 percent, all areas with many lower-income residents. Assessment notices went out this week and already Council members are hearing complaints.
However, other than advising constituents to appeal their assessments by the Jan. 15 deadline, members may not be agreeable to lowering the tax rate. Councilman Charles Djou, whose East Honolulu district caught a break with the lowest increase at 8.6 percent, said increases in real property valuations "is a good thing for the city because the city is strapped for cash."
In fact, the Council has been desperately hunting revenue to fund pay raises due police officers. Mayor Harris has called members to a rare special session on Christmas Eve to see if he can get their vote to bump up the city's vehicle weight tax.
The real estate market is booming with the average price for new homes -- fired by condominium sales -- up 3 percent to $388,453 in October, compared to 2002. After a decade-long economic slump when developers put home-building projects on hold, and with fewer existing homes available, inventory deficits are pushing up sales.
Meanwhile, the state's population, fueled by stronger economic growth than on the mainland, rose at the 10th highest rate in the nation from July 2002 to July 2003. With a 1.4 percent increase, the state's population stands at about 1.25 million.
If a swelling population is good news, the bad news is that the nearly 17,000 more people who now call Hawaii home all need places to live. As fast as developers can build houses, so do problems like traffic jams and crowded schools multiply. Government is hard pressed to keep pace with a increased demand for services without a parallel increase in revenue. Something's got to give.
