Arnold and Merry Glass Nurock bought their small two-bedroom home on Kauai's North Shore in 1971 for $130,000. It is now appraised at more than $4 million due to skyrocketing real estate prices.

Growing chorus
demands relief from
soaring real estate taxes

Hawaii's tax rates are low,
but the high home prices
make the burden heavier

Arnold Nurock wants to live out his years in the home he purchased more than three decades ago on the shores of Anini Beach but fears he will be unable to afford the taxes if home values keep rising.

Nurock, a retired doctor, has seen his taxes triple as the value of his two-bedroom home rose from its $140,000 purchase price to more than $4 million after celebrities such as Sylvester Stallone discovered Kauai's North Shore.

"This whole road used to be full of people who had lived here for generations," Nurock said. "Now, almost everyone is gone, and most of the properties have been turned into vacation rentals or second homes."

Since property valuation for tax purposes is partially based on comparable sales prices, many homeowners have seen their tax bills double, triple and even quadruple.

The rapid rise in home prices is good news for those who want to sell their homes or borrow against their home's equity; however, some homeowners, especially those on fixed incomes like Nurock, say they have become locked in by skyrocketing tax bills.

"It's squeezing some people out of their homes," said Nurock, whose tax bill rose from $500 a month to $1,500 a month in 2003, before quickly dropping back. Now the tax payments are on the rise again.

While property tax rates differ on all islands, the rapid rise in tax bills for those who live in increasingly expensive communities has caught the attention of lawmakers on all the islands, said Honolulu City Councilwoman Ann Kobayashi.

The most recent property tax assessments mailed to Oahu homeowners rose 26 percent overall, but in some neighborhoods the increase in values soared above 40 percent, she said.

"Appeals are the highest that they've ever been -- even more than at the height of the Japanese bubble," Kobayashi said.

Arnold Nurock holds a handwritten graph of how a 2002 proposed property tax hike would have nearly tripled taxes for his Anini Beach home in Kauai.

He thumbed through his growing stack of property tax documents. "It's squeezing some people out of their homes," Arnold said of his tax bill that jumped to $1,500 a month from $500 in 2003. It dropped back quickly, but is on the rise again.

The council's Budget Committee, which Kobayashi chairs, is considering a proposal that could limit taxes for low- and middle-income homeowners, she said.

"Lawmakers could also lower tax rates to bring homeowners relief as their assessments rise, but it's unlikely because state property taxes in Hawaii are among the lowest in the country," said Lowell Kalapa, president of the Tax Foundation of Hawaii, a watchdog organization.

People who pay $2,000 to $3,000 for property taxes in Hawaii would likely pay between $8,000 and $10,000 on the mainland, he said.

Nurock has been able to absorb his higher costs because Kauai granted homeowners some relief; however, he's seen others take in boarders or turn their properties into vacation rentals. Some have sold, only to have a hard time finding something else to buy, he said.

Paul Kaneshiro, a part-time Waimanalo farmer and retired federal employee who lives on his family farm, said some of his neighbors have pursued agricultural designations to reduce their property taxes.

Kaneshiro grows mint on his land; however, having an agricultural rate has not entirely reduced his worries.

"There's a house a couple of doors down from me that might be put up for sale for around $1 million," he said. "If that happens, it could really impact me."


At the bottom

Honolulu ranks at the bottom of all the 51 largest cities in the United states in terms of nominal and effective property tax rates.
City Rank Tax burden
Bridgeport, Conn. 1 $5,737
Fargo, N.D. 10 $1,955
New Orleans 20 $1,020
Salt Lake City 30 $1,338
Las Vegas 40 $1,548
Honolulu 51 $1,107
Source: Tax Foundation of Hawaii

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