Kalihi property tax quadruples

Kalihi homeowners whose properties were reclassified to industrial or commercial are facing a fourfold property tax jump they describe as unfair.

Jayme Cabais, 79, a lifelong resident of a Stanley Street house, said yesterday that he received no notice of the change until the end of July when he received this year's tax bill for $10,552.40, more than quadruple last year's $2,335.52 bill.

The retiree cannot afford $10,000 a year on a monthly $1,000 Social Security check. "I want to be able to afford to eat," he said.

City Council member Romy Cachola said his office has been flooded with complaints about the tax increase from the residential rate of $3.42 to $12.40 for industrial or commercial per $1,000 of assessed value. Cachola knows of 95 structures that were affected but suspects the number is higher.

"The Hannemann administration pulled the trigger" last year and decided to reclassify these residential homes without the Council's knowledge, Cachola said.

He believes the problem is islandwide, likely striking other older neighborhoods that had been rezoned to industrial and commercial, often hurting the needy and seniors on fixed incomes.

While many owners did not receive notices, some got letters in December notifying them of the zoning reclassification, but the letters failed to mention any tax increase. They only learned of the major increase when they got their bills in the mail.

They were told by the city they have no recourse but to pay this year's bills. Their only consolation is to file a form by September asking their land be reclassified as residential.

The Council passed a bill in July that would allow residential property owners to dedicate their properties to residential, allowing them to pay the lower rate.

The changes were made in response to "complaints of inequitable treatment by owners of similar properties who were already being assessed at the higher commercial or industrial class rate," said Gary Kurokawa, the city's real property tax division administrator.

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City Council members are irate that, unbeknownst to them, the city administratively reclassified about 250 residential properties from Waipahu to Kapahulu, jacking up some homeowners' property taxes by more than 300 percent.

"I don't recall ever sitting down or having one conversation, one memo, one iota that this reclassification was occurring," said Council Budget Chairman Nestor Garcia on Friday.

He said he would have remembered "something that was going to hit this many people this deep in the pocketbook."

Council Chairman Todd Apo said the Council members should have been advised beforehand.

"Had we been informed, we could have, either through a new law or via the budget bill, created some form of relief for this situation," he said.

By today, owners of formerly classified residential properties must pay the first installment of quadrupled property taxes or face late penalties.

Last year the city reclassified some residential properties in areas zoned commercial or residential to commercial or industrial use. Some owners received letters from the city in December informing them of the reclassification but had no clue it would result in a huge jump in taxes.

Acting Mayor Kirk Caldwell defended former Mayor Mufi Hannemann's administration on the issue, saying, "The change in classification of these apartment properties was not the result of any policy decision on the part of either the Hannemann or Caldwell administrations.

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[8/26/10] I would like to provide clarification of the classification of real property ("Tax jump alarms Kalihi residents," Star-Advertiser, Aug. 20).

By law, the city's Real Property Assessment Division is the sole agency responsible for determining the classification and assessment of all taxable real property in the City and County of Honolulu. To suggest that the mayor or City Council could influence an assessment is irresponsible.

The main objective in assessing the city's real property inventory is to be uniform and equitable. The employees of the division work hard to maintain the integrity of the assessment system.

Recent changes in classification from residential to commercial/industrial were done to address complaints from taxpayers who were paying a higher tax rate than some of their neighbors. Unfortunately, application of existing laws sometimes results in unintended, negative consequences, as was the case here. Acting Mayor Kirk Caldwell and the Council are currently working to fashion a measure of tax relief to assist taxpayers impacted by the reclassification this year.

Gary T. Kurokawa
Administrator, Real Property Assessment Division, City Department of Budget and Fiscal Services