April 22, 2026, 8:30 a.m.
Historic County Building
To: Kaua'i County Council
Mel Rapozo, Chair
KipuKai Kuali'i, Vice Chair
From: Grassroot Institute of Hawaii
Jonathan Helton, Policy Analyst
RE: Bill 2995 — RELATING TO REAL PROPERTY TAX
Aloha Chair Rapozo, Vice Chair Kuali'i and other Council members,
The Grassroot Institute of Hawaii offers comments on — and an amendment to — Bill 2995, which would impose a tax rollback provision for cases in which the Kaua'i Director of Finance determines a property in the long-term affordable rental class is not being used as a long-term rental.
Grassroot does not object to the creation of a rollback provision that would reclassify a property if it is in fact not being used as a long-term rental; however, we have concerns about the bill’s wording and suggest the following underlined and bracketed amendments:
(g) If, during the course of any tax year, the Long-Term Affordable Rental classification is revoked, the property [tax classification] shall be reclassified and reassessed. Taxes for that tax year [those years] shall be recalculated, and the cap reset, at the same time the Long-Term Affordable Rental classification is disallowed.
These changes would ensure that property owners do not face tax penalties for the entire time in which the property was in the long-term affordable rental class. After all, it is possible that the property might be in this class for six or seven years but be used as something other than a long-term rental for a just portion of time.
The tax consequences of a rollback could be significant. The proposed rate for the long-term affordable rental class, which is in its first year of existence, is $2.59 per $1,000 in assessed value.
Meanwhile, if the property were reclassified into the non-owner-occupied residential class, it would face a tax rate of at least $5.45 per $1,000. If the rollback was applied to several years, the tax bill could easily be more than $10,000.
With the proposed amendments, this bill would strike a balance between compliance and protecting taxpayers from unjust expenses.
Thank you again for the opportunity to testify.
Jonathan Helton
Policy Analyst
Grassroot Institute of Hawaii
1050 Bishop St. #508 | Honolulu, HI 96813 | 808-864-1776 | info@grassrootinstitute.org
