Flooded house rises in value

  • Photo courtesy David Denson Flood waters surround David Denson’s home in April 2018.

LIHUE — At the beginning of 2018, David Denson’s family home in Hanalei was worth a little over $1 million. A few months later, the house was almost completely underwater.

Now, nine months after historic floods ravaged the North Shore, the house increased in value by more than $300,000, — at least, according to the county Department of Finance Real Property Assessment Division — and with it, Denson’s property tax bill has gone up once again.

The county’s assessed value of the property has more than doubled in the last five years, a spike that would be the envy of any real estate investor. But for Denson and his family, the upswing in value does not translate to personal wealth. They never intend to sell the property. So when the value of their home goes up, it just means they have to pay more in property taxes.

With the most recent assessment roughly a third higher than the previous year, Denson now finds himself on the hook for over $8,200 in property taxes, a bill that has increased every year since 2014 and is becoming increasingly cost-prohibitive.

Denson says the heavy financial burden has not translated to better services from the county. He paid over $5,000 in property taxes in 2018 but said, in return, “I get trash service. That’s it.”

He also criticized the county’s response to the flood, claiming his family was left high and dry, even as their property was under five feet of water.

“The county did nothing for us,” Denson said. “Less than nothing.”

The owners of land parcels beyond the North Shore checkpoint were all given a 25 percent discount on land values to compensate for flood damage. But because Denson’s property lies just east of the Hanalei checkpoint, he is not entitled to that discount.

According to an official in the Real Property Assessment Division, the property tax increase is due to several recent home sales in the neighborhood.

The county’s property value assessments are based in part on the market value of surrounding homes. When a property sells for a price that is higher than the county’s most recent assessment, it drives up the taxable value of other properties nearby.

So even though the floor of Denson’s home was covered in two feet of thick, red mud, and the entire inside had to be gutted, leaving the house a shell of its former self, as far as the county is concerned, the property is worth well over a million dollars.

“It’s like a $20,000 house,” County Councilmember Mason Chock said in an interview earlier this month. Chock is familiar with Denson’s issue because the situation, although unique in many respects, shares a common thread with Native Hawaiian landowners all over the island.

The property is kuleana land and has been passed down within the family for generations.

Denson ended up with the property through marriage to his now-deceased wife, Leiliwin Mahuiki — the great-great-great-granddaughter of Kalaimamahu, half-brother of Kamehameha I. None of the heirs on the deed are still living.

Denson says the land has been in the family since his former wife’s great-great-grandfather, David Kaheleiki, acquired the lot back in 1848.

Kuleana landowners are entitled to a tax exemption that allows them to pay a significantly reduced property tax. But Denson’s name is not on the deed. In fact, none of the hundreds of heirs listed on the property’s title are still alive.

So the property is simply shared among the dozens of extended family members who make use of it and contribute in varying degrees. The home is currently occupied by some of Denson’s cousins. The cousins maintain the property and help out any family members, who come to stay.

In exchange, Denson pays the property tax, because he has a military job that affords him the financial means to do so, although that responsibility is becoming more difficult with each passing year.

Denson has submitted an appeal to the county’s real estate division, hoping to reduce the assessed value to the previous year’s rate. But even if his appeal is successful, the solution is not a long-term one.

Chock said he is in favor of reforming the county’s laws dealing with broken-title kuleana lands, but he knows the process is going to take time and cooperation.

“The bottom line is, if we do it, it’s going to take an overhaul of the whole system,” he said. “I’m open to it, but I’m just one guy.”

•••

Caleb Loehrer, staff writer, can be reached at 245-0441 or cloehrer@thegardenisland.com.

Editor’s note: This story has been changed to reflect that land values were discounted 25 percent which would result in various reductions in tax depending on the land to building ratios.

5 Comments
  1. Geckoman February 3, 2019 7:26 am Reply

    Finally a story that draws attention to the outrageous price gouging on the island. The problem stems from worthless county leaders getting voted back in by uninformed or ignorant residents.


  2. RG DeSoto February 3, 2019 11:42 am Reply

    Another in a long list of object lessons about government. It is uncaring, contrary to the progressive myth and political lies of compassionate government. It produces nothing of marketable value and therefore, like a criminal, resorts to the only means by which it can exist: force, coercion and theft…the proverbial, but in this case literal, gun to the head method.
    Left alone, the government and its political hacks will milk the productive members of society-you that work and earn-until you can no longer bear the burden. Simply stated someday, the state will simply run out of other people’s money because it will have bled us all into poverty, leaving behind two classes: the political elite and the poor (all of us)…the middle class having been destroyed along the way (something that is in progress).
    Sad state of affairs,
    RG DeSoto


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