The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Honolulu City Council Committee on Budget on July 22, 2025.
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July 22, 2025, 9 a.m.
Honolulu Hale
To: Honolulu City Council Committee on Budget
Val Okimoto, Chair
Scott Nishimoto, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: Bill 48 (2024) — RELATING TO REAL PROPERTY TAXATION
Aloha Chair Okimoto, Vice Chair Nishimoto and other members of the Committee,
The Grassroot Institute of Hawaii would like to offer comments on Bill 48 (2024), which would reduce the tax rate for any properties in the Residential A class that are dedicated to rental use for at least four years.
To clarify, properties in the Residential A class typically are non-owner-occupied homes and are taxed at $4 per $1,000 for the first $1 million of the property’s value, and $11.40 per $1,000 on any value greater than $1 million.[1]
Under Bill 48, any Residential A property qualifying for the reduction would pay $3.50 per $1,000 in assessed value versus the current
Grassroot believes that such tax relief would benefit both the owners and tenants of such properties, since research suggests that rental owners typically pass along at least some portion of their property tax bills to their tenants,[2] and lower taxes could result in lower rents, or at least more stable rents.
Grassroot suggests that tax reductions for long-term rentals come in the form of an amendment to the existing residential-use dedication instead of creating an entirely new program for the city to administer and property owners to navigate.
The existing residential-use dedication allows the owners of properties used as residences for periods of 30 or more consecutive days to dedicate their properties to residential use for a minimum of five years. In exchange, the city places those properties into the Residential tax class.[3]
Not all properties qualify for the current dedication, however. Properties zoned Residential, Country and Agricultural are excluded. Grassroot recommends that the Council amend the current dedication to include these zones so that all single-family homes that now fall into the Residential A tax class would be able to take advantage of the lower tax rate.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] “Real Property Tax Rates for Tax Year July 1, 2024 to June 30, 2025,” City and County of Honolulu, accessed July 3, 2025.
[2] David Schwegman and John Yinger, “The Shifting of the Property Tax on Urban Renters: Evidence from New York State’s Homestead Tax Option,” U.S. Census Bureau Center for Economic Studies, December 2020; Bill Wheaton, “Can Landlords really pass on higher property taxes to tenants?” MIT Center for Real Estate, Oct. 5, 2018; and Leah Tsoodle and Tracy Turner, “Property Taxes and Residential Rents,” Journal of Real Estate Economics, February 2008.
[3] § 8-7.5 Certain property dedicated for residential use., Revised Ordinances of Honolulu, accessed July 18, 2025.
