When the mischief being perpetrated by our county officials in the property tax arena overflows as it does periodically there is a motivation to examine its nature and offer a few words about the happenings. The current story begins with
When the mischief being perpetrated by our county officials in the property tax arena overflows as it does periodically there is a motivation to examine its nature and offer a few words about the happenings.
The current story begins with the offering by a group of employees in the county Finance Department of a measure (Bill 2274) to make a major overhaul of the county’s property tax system. Their program, having the endorsement of the mayor, was presented to the Council last June with a PowerPoint flourish.
While the proposal had some good features it contained a number of controversial provisions, including prominently the elimination of the 2 percent cap that protected resident homeowners and renters from the startling tax increases made a few years ago and a pro-tax collector bias.
The council evidently decided that it did not want to process the bill and potentially alienate voters at a time when members were actively campaigning for reelection to the council or other offices. So the measure lies dormant, but not extinguished in the recesses of the council’s backlog.
One council member last year sought to use the lull in activity on the tax front by offering two proposals that did not significantly affect revenues. His first endeavor, to protect Kaua‘i’s taro farmers, was accepted by the council, but his second (Bill 2292), to provide taxpayers who appealed their assessments a fair hearing succumbed to the political hobgoblins.
Although his measure would remedy what is generally considered a kangaroo court condition and establish a fair process, the sponsor gave up the battle claiming he had insufficient council votes and the bill was deferred.
Once again our council seems sadly lacking in its willingness to give taxpayers a fair system. It seems likely that Bill 2292 will be thrown into the melting pot if and when Bill 2274 is resuscitated from its limbo status. However, the delay as to Bill 2292 means that any taxpayer who feels aggrieved about his 2009 property assessment will have to suffer with the lopsided system now in effect.
Meanwhile back at the ranch our county tax assessors have, as of March 15, issued their determination of the fair market value at Jan. 1 of the county’s taxable real properties. This task has been far more difficult this year than previously because of the economic turmoil surrounding our nation and its impact on Kaua‘i.
The media has been replete with reports of average price declines in residential properties across our country approximating nationally 30 percent from the level at the end of 2007.
I discussed the position on Kaua‘i with the head of one of the large real estate brokerage firms on our island and was assured that the national conditions are also significantly impacting Kaua‘i.
I was informed that value declines on condos were steeper than single-family dwellings but both were off sharply and as always variances arose due to area and nature of the property. And that to get a realistic assessment of value it would be appropriate to look at the values in the 2003-2004 time frame rather than those in 2005-2006 which would be distorted by the unsustainable escalation then occurring.
The chief appraiser in the county tax office has said that he does not consider foreclosure sales to represent fair market value, but when their frequency is soaring and when a large part of the other sales that are being made are short sales by pressed speculator owners and “in lieu” sales by mortgagees it is apparent that the market here is linked to the conditions prevailing elsewhere in our country. The distinction between a foreclosure sale and other distress sales seems slender indeed. This data should not be ignored by our property tax assessors.
No sales of newly constructed condos have occurred since November. The increased inventory of unsold properties is another factor that decreases prices. At the beginning of March this year in the Hanalei district’s 158 condos were on the market while only 66 had been sold in the preceding year. For single-family residences 190 were on the market and only 58 had been sold.
I called the Real Property Assessment offices and sought information as to the changes made in the assessments as of Jan. 1 from those of the preceding year. They responded with the advice that the 2009 assessments had not yet been “certified” and no information was given. For those who think that the public is entitled to reasonable information from our Kaua‘i government there can only be disappointment.
From limited inquiries I have made, I have learned empirically that some assessments actually rose from 2008 levels, although most were somewhat reduced.
The story available from a Title Guaranty survey is much more revealing. Their compilations show that for Kaua‘i for the first two months of this year compared with the first two months of 2008 sales volume for single-family residences was down 56 percent and median prices were down 38 percent. For condominiums in the same periods unit sales volume was down 52 percent and prices were down 48 percent. Kaua‘i had by far the lowest volume of sales activity in Hawai‘i.
The 2009 assessment of our home is down 6.5 percent from its 2008 level. Recently the home of a close neighbor sold. Its 2008 appraisal was 37 percent higher than the sales price and the 2009 appraisal was 27 percent higher than the sales price.
A better comparable sale to our situation cannot be found. Many taxpayers will be in a position similar to ours with their property having an assessment greater than the amount that could be reasonably expected in a current sale. For each of them the difficult choice is whether to appeal in a taxpayer unfriendly system that the council failed to repair or to accept the assessment made. Time to appeal expires April 9. Bon voyage.
• Walter Lewis is a resident of Princeville and writes a bi-weekly column for The Garden Island.
