Residents may qualify for property tax exemptions

LIHUE — The longer we wait, the harder it will be to solve, said Councilmember Ross Kagawa at Wednesday’s Finance and Economic Development Committee meeting of the County Council. He was talking about Bill No. 2756 that aims to grant real property tax exemptions to family members whose names are not on titles.

“Let’s continue taking these steps,” said Kagawa, a proponent of the bill.

As time goes on, situations become murkier and title gets “clouded,” thus, making it even more cumbersome and expensive for families to receive the same kind of tax relief that every other property owner on the island, if eligible, is allowed to apply for.

Families that have lived on their land for generations and have no intention to sell, but can’t keep up with taxes based upon soaring property values, would be granted the opportunity to move from their current “residential” or “residential investor” classifications to various others, including homestead. They may even be able to apply for a low-income tax exemption.

As property values rise, family members who have lived on their land for decades, some more than a century, are having to pay double the taxes of others. Since property values in locations such as Haena and Hanalei have skyrocketed into the millions, that can translate to annual taxes as high as $20,000. In other words, under their current residential tax classification, they may be paying $6.05 per $1,000 assessed value, as opposed to $3.05 per $1,000 assessed value under the homestead classification.

“Hawaiian families are losing their homes,” said North Shore resident Mehana Vaughan.

Every family has their own circumstances to contend with, and while some have had taxes forgiven, others are faced with back taxes they haven’t been able to pay, she said.

“I think we need to understand what it’s like being in this situation,” Vaughan said. “This (bill) creates an avenue for ohana to qualify for existing tax breaks they are already entitled to.”

The proposed amendments would ease some of their tax burdens, as long as no living person is named on the title, and as long as a family member can prove that they are related to the property owner(s) by blood, marriage, a “reciprocal beneficiary relationship,” or as step-relatives.

Additionally, if an applicant can prove they are a lineal descendant of the original titleholder, they can apply for the kuleana exemption. The state Office of Hawaiian Affairs, in fact, has agreed to step in and help with identifying blood-related family members.

Malia Nobrega-Olivera of Hanapepe said she is also thankful for the help that the bill would offer.

“And the kind of kokua this can provide to family members,” she said.

County Finance Department Director Reiko Matsuyama clarified the intent of the bill and provided several examples of situations in which family members could be eligible for tax exemptions.

It’s unclear how many families would benefit, as the Finance Department doesn’t have software to track that information, said Matsuyama. But Councilmember Luke Evslin said it will likely only be a small number of people, and that the bill is just a starting point.

“We’re too late for so many,” said Evslin who, along with Councilmember Mason Chock introduced the bill.

Residents of the properties will still have “every incentive to clear title,” even though it can cost up to $100,000, Evslin said. Providing substantial tax relief may help some families do so.

“This is a way for people to get on their feet,” he said. “It’s not giving them anything extra, just giving them what they deserve.”

“It’s the least that we can do,” Councilmember Felicia Cowden said.

The second reading of Bill No. 2756 is scheduled for Wednesday at the next County Council meeting.

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Coco Zickos, county reporter, can be reached at 245-0424 or czickos@thegardenisland.com.