LIHU‘E — Members of a Kaua‘i County Council committee were asked yesterday to improve a proposed property-tax-relief bill to ensure homeowners aren’t confronted by high assessments after a two-year tax relief program ends.
Hanalei resident Ray Chuan said he liked the idea behind the bill to grant an exemption to homeowners who dedicate their home for permanent residential use for two years.
However, the key flaw in the bill is that it doesn’t control assessments during the duration of the program, Chuan said.
Homeowners will be hit by high assessments, and will be forced to pay high property taxes again when the program ends, thwarting the intent of the program, he said.
Chuan made his comments during a meeting of the council’s Finance/Intergovernmental Relations Committee at the historic County Building.
Councilwoman JoAnn Yukimura said she hoped a task force would find a solution to that problem when it forges its tax-reform plan. The plan will eventually go to the full council for approval.
The task force was formed to look at more equitable taxing methods and ways to help longtime homeowners who risk being taxed off their lands by rising assessments caused by high-price sales and repeat sales of neighboring properties.
The trend has affected the entire island, driving home prices to astronomical heights, county officials and residents wanting tax relief have said. Assessments have risen the highest in the past four years, they said.
Chuan, who is a member of the task force, promised all property-tax issues will be reviewed by the group, and that the council can move matters along.
“I am hoping something quick can come along with the help of the council,” Chuan said.
Council vice chair James Tokioka complimented councilmembers Daryl Kaneshiro and Jay Furfaro for having introduced the tax-relief bill.
While acknowledging the tax-reform group is able and competent, Tokioka said it appears unlikely the body, with its heavy workload, will “come up with something that could be workable so soon that could affect the next tax cycle,” hence the need for the bill.
“We are trying to give tax relief as soon as possible,” Tokioka said.
The bill would cap any increases in taxes at 6 percent a year.
One exception would be in a case where improvements are made on the property, and improvements increase the property’s market value.
Another exception deals with cases when omitted improvements are added to tax rolls, and the taxes will be increased based on the fair-market-value of the omitted improvements, plus up to the 6 percent cap.
Previously, many residents participated in a 10-year, home-dedication program. It expired December 2001.
In fairness to property owners who participated in that program and derived benefits, the proposed two-year program should be retroactive to 2002, Chuan said.
Tokioka said the council can’t control assessments, and that its priority is to try to find tax relief for property owners now.
Councilman Mel Rapozo said he too wants to give relief, and that the council can’t control rising assessments tied to market sales of homes. The only real control the council wields is in setting property-tax rates, Rapozo said.
Should the bill become law, the county could lose $172,000 in property tax revenues in the first year of the legislation, and $197,000 in the second year, provided all eligible property owners apply for the relief program, Furfaro said.
But the losses would probably be offset because of additional construction and growth on the island, Furfaro said.
“There is going to be some assessment (increases) and there is going to be new building, so that in fact, I believe that it will not retard itself,” Furfaro said.
Finance director Michael Tresler said the projected revenue losses are derived from the current appreciation, evaluation and taxes of exempted homes.
Over the past 15 years, the average growth rate in assessments for eight tax categories has been about 6 percent, he said.
Yukimura said that figure may not be true because property values plummeted in the years after Hurricane ‘Iniki, because of extensive property damage.
She said it seemed assessments have jumped only in the last four years.
She asked Tresler to provide her with written documentation on the projected property-revenue losses. “I am very interested in that,” she said. “It is very important data as we fashion tax relief.”
Residents also would be able to avail themselves of a circuit-breaker, property-tax-relief program that was initiated by council chair Kaipo Asing and approved by the whole council.
With help from Tresler, residents could sign up for that program or the one pending before the council. Their selection would be based on which program would provide the better benefits, council members said.
Staff Writer Lester Chang may be reached at mailto:firstname.lastname@example.org, or 245-3681 (ext. 225).