COM 0395.003 2002-2004 - Laserfiche WebLink

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U _ C. ,r.l C... September 27, 2004 `JLi 1s ~J CUJ~~., , Dear Councilman Tyler: I am giving you my input regarding Bills 175 and 176 relating to real property taxes. Please be clear that my position is not intended to be representative of my department or any other County official. Too many times the people thought to benefit from pending legislation will suffer the most. We see it in California now with decades of Proposition 13. The older person in poor health who has raised a family in a large home is stuck in that house. If they move into a smaller more manageable property, they will lose their preferential assessment and see their tax bill increase by several times. The young family buying their first home will see a tax bill much larger than their older, more affluent neighbors who have been in their homes for years. When a benefit is given to one group another group is going to have to pay for it. Bill 175 will put the burden on the people least able to afford it. Rental properties will not qualify, vacant properties will not qualify, and most properties will not qualify. The recent mainland transplant who has just paid twice the assessed valuation for his home will qualify for a regulated cap based upon the 2004 assessment. Only the roughly 29,000 parcels in the homeowner class will qualify. There are over 140,000 parcels on this Island. When the voters hear about a 3 percent annual cap on assessments, they automatically think their tax bills will remain relatively stable for years. It sounds good. However, if the cost of the benefit is too great the County Council will be forced to raise the tax rates. It happened in 2002. Despite increasing assessments, a construction boom, and unprecedented residential growth at the extreme upper end, there has been a 25 percent increase in the homeowner class tax rate under the present administration. Two components make up the tax amount, the assessed valuation and the tax rate. Ideally we can see a reduction in the tax rate. Bill 176, currently Section 19-58.1 and 19-58.2, will diminish a benefit that has existed in the County of Hawaii since 1992. Currently a homeowner can freeze his assessment for a ten year period by dedicating his real property for non-speculative residential use. The new bill will change the dedication period from ten years to five. As market values increase, the greatest benefit from a frozen assessment will come in the latter years of the dedication. Additionally, our administrator tells me that a property in the non-speculative program will not be subject to the 3 percent cap in the event of renewal. If the owner renews the dedication, his new frozen assessment will be increased by 50 percent of the difference between the dedicated value and the new market assessment. Comm. No. 3 Ref. To: Q'esenrwd ' f Ref. Uate