The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Hawai‘i County Council on Sept. 17, 2024.
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Sept. 17, 2024, 9 a.m.
Hawai‘i County Building
To: Hawai‘i County Council
Heather Kimball, Chair
Holeka Goro Inaba, Vice-Chair
From: Grassroot Institute of Hawaii
Jonathan Helton, Policy Researcher
RE: BILL 104 — RELATING TO THE CREATION OF A LONG-TERM RENTAL CLASS FOR REAL PROPERTY TAXES
Aloha Chair Kimball, Vice-Chair Inaba and other Council members,
The Grassroot Institute of Hawaii offers comments on Bill 104, draft 7, which would create a new real property tax class specifically for long-term rental properties that do not currently fall into the “affordable rental housing” class.
To qualify for the new class, a property would have to be leased for at least six consecutive months by the same tenants.
Properties moving into the new class would presumably move out of the existing residential class, provided no property in the residential class valued at $2 million or more would be eligible to move, according to the bill.
Finally, the bill would set the rate of the long-term rental class at a rate that would be no lower than the affordable rental housing tax rate, rounded to the nearest five cents. At current rates, this would entail a tax levy of no less than $5.95 per $1,000 in assessed value for the new class.
We appreciate the intent of the bill. Using the property tax to incentivize property owners to rent long term is a good goal that could help with the county’s housing shortage. For example, moving an $800,000 property from the residential class to the long-term rental class could save the owner as much as $4,120 a year.
We would caution the Council, however, against increasing tax rates on other classes to pay for whatever revenue loss could come about as a result of this bill — especially in the near term.
A higher tax rate on the residential class, for example, could unintentionally penalize long-term rental owners who might not know about the new class or who did not file for it because of special lease circumstances that could make compliance difficult.
Thank you for the opportunity to testify.
Jonathan Helton
Policy Researcher
Grassroot Institute of Hawaii
