The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Honolulu County Council on July 12, 2023.
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July 12, 2023
10 a.m.
Honolulu City Council Chambers
To: Honolulu City and County Council
Councilmember Tommy Waters, Chair
Councilmember Esther Kiaʻāina, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: Bill 34 (2023) — RELATING TO REAL PROPERTY TAXATION
Comments Only
Dear Chair and Committee Members:
The Grassroot Institute of Hawaii would like to offer its comments on Bill 34 (2023), which would increase the standard home exemption from $100,000 to $250,000 and the exemption for homeowners age 65 and older from $140,000 to $300,000.
The Institute generally supports the intent of this measure. Compared to Honolulu’s current $100,000 exemption — soon to be $120,000[1] — Kauai and Maui each offer home exemptions of a much higher value, at $160,000 and $300,000 respectively.[2]
If the Council is interested in further increasing the value of the home exemption, it should explore the “Boston model,” whereby the dollar value of the home exemption is tied to the average assessed value of properties in the Residential tax class.
The Lincoln Institute of Land Policy, a policy research group based in Cambridge, Massachusetts, explains it this way:
“The taxable value of a homeowner’s principal residence gets reduced by a flat dollar amount, equivalent to 35% of the average assessed home value in the city that year. In 2021, that meant the first $295,503 of a primary residence’s value was exempt from property taxes. So if a Boston resident’s condo was assessed at $395,000 that year, the owner would only have to pay property taxes on the last $100,000 or so of the home’s value — a discount of roughly 75%.”[3]
On Oahu, the average property in the Residential class had a gross value of $934,012.64 in fiscal 2024.[4] The $100,000 exemption was equal to 10.71% of the average assessed value, while a $250,000 exemption would have been equal to 26.77% of the average assessed value.
Indexing the value of the home exemption would ensure that property tax relief automatically increases when the overall value of the Residential tax class increases.
Setting Honolulu’s property tax home exemption equal to 20% or 25% of the average assessed value would fulfill this bill’s intention and ensure that relief is not whittled away by high home prices in the future.
Thank you for the opportunity to testify.
Sincerely,
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] Ben Angarone, “Honolulu Property Owners Would Get Quick Relief With Tax Measures Passed By City Council,” Honolulu Civil Beat, July 7, 2023.
[2] Jonathan Helton, “How Hawaii’s county lawmakers can provide tax relief to offset higher property assessments,” Grassroot Institute of Hawaii, April 2023, p. 9.
[3] Jon Gorey, “This Simple Policy Tool Can Make Property Taxes Fairer and Ease Homeowner Hardship,” Lincoln Institute of Land Policy, Dec. 6, 2022.
[4] “City and County of Honolulu Real Property Tax Valuation for Fiscal Year 2023 – 2024,” Technical Branch, Real Property Assessment Division, Department of Budget and Fiscal Services, City and County of Honolulu, July 2023.
