The new Honolulu City Council proposal, Bill 46, is slightly updated from versions going back to 2020, but the practical flaws remain
Public testimony ran 20-to-1 on Wednesday in favor of a property tax surcharge on so-called empty homes at the Honolulu City Council’s first reading of Bill 46, with only the Grassroot Institute of Hawaii offering comments in opposition.
The stated goals of the proposed tax are to encourage owners to rent or sell vacant homes, increase the supply of homes and raise funds for affordable housing and homelessness.
Grassroot Director of Strategic Campaigns Ted Kefalas testified that “Grassroot believes an empty homes tax would be difficult to administer, create substantial paperwork problems for Honolulu residents — to the extent even of comprising an invasion of privacy — and likely not achieve its housing goals.”
Kefalas said the tax might be useful for generating tax revenue, but it would be almost impossible to quantify how much.
“Do we really want to create a headache for the city administration and city property owners in hopes of raising an unquantified sum of money — especially when there are easier ways to go about raising revenue?” he asked.
Moreover, he added, there are more effective ways to produce affordable housing, –– and at no cost to Oahu taxpayers — such as removing or updating the many state and county regulations that hinder homebuilding, as noted in Grassroot’s December 2023 report “How to facilitate more homebuilding in Hawaii.”
Nevertheless, all nine of the Council members voted to move the bill forward for further public hearings.
By way of background, Bill 46 is a slightly revised version of Honolulu Bill 9, introduced in February 2022, which was preceded in 2020 by Bill 76. Arguments in favor of both those failed were addressed fully in Grassroot’s May 2023 report “The ’empty homes’ theory of Hawaii’s housing crisis.”
