The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Hawaii County Council on June 21, 2023.
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June 21, 2023
9 a.m.
Hawaii County Building
To: Hawaii County Council
Heather Kimball, Chair
Holeka Goro Inaba, Vice Chair
From: Grassroot Institute of Hawaii
Jonathan Helton, Policy Researcher
RE: Bill 28 — RELATING TO REAL PROPERTY TAXES
Comments Only
Dear Chair and Council Members:
The Grassroot Institute of Hawaii would like to offer its comments on Bill 28, which would allow owner-occupied homes on parcels in the “agricultural or native forests” class to qualify for the homeowner tax class.
The bill also would allow affordable long-term rentals on agricultural land to be taxed as if they were under the “affordable rental housing” class.
This measure is a welcome one, since Hawaii County’s real property tax revenues increased by more than by 19% between fiscal years 2022 and 2023, to $435 million.[1]
With increased property assessments combined with inflation taking a toll on many Hawaii County property owners, this bill would allow more Hawaii island residents to qualify for the County’s homeowner tax class, which entails a lower rate and an assessment cap — a mechanism that protects homeowners from dramatic swings in property assessments. Expanding eligibility for the assessment cap would be a good step toward providing Hawaii County residents relief from rising property taxes.
Since Hawaii County has a large number of housing units on parcels designated as agricultural or native forests, this measure would create fairness among owner-occupied households. No longer would someone living on land classed as agricultural be ineligible for the protections the homeowners tax class brings with it.
Allowing affordable rentals on agricultural-classed land to be taxed as affordable rental housing would result in lower tax rates on these properties. In fiscal year 2023, owners of agricultural class properties paid $9.35 per $1,000 rate; the rate for affordable rental housing was $6.15 per $1,000.[2]
The assessments for the 2024 fiscal year showed that an assessment cap could benefit the average homeowner living on agricultural land. The assessed value of all properties in the homeowner tax class increased by 5.43% over 2023 valuations, while the assessed value of all properties in the agricultural and native forests tax class increased by 6.42%.
Thus, the 3% assessment cap would have cut the increase for homeowners on agricultural land by on average more than half this year.
We appreciate that this committee has taken up this timely issue and look forward to a continuing dialogue on how to lower the property tax burden for Hawaii County homeowners.
Thank you for the opportunity to testify.
Sincerely,
Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii
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[1] “County of Hawaii Real Property Tax Valuation for Fiscal Year 2021-2022,” Real Property Assessment Division, Department of Budget and Fiscal Services, City and County of Honolulu; and “County of Hawaii Real Property Tax Valuation for Tax Year 2022-2023,” Real Property Assessment Division, Department of Budget and Fiscal Services, City and County of Honolulu, August 2022.
[2] “Real Property Tax Rates for Tax Year July 1, 2022 to June 30, 2023,” Real Property Assessment Division, Department of Budget and Fiscal Services, City and County of Honolulu, August 2022.
