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Act Now to Protect the Property Tax Exemption for Historic Residential Properties

Update 6/17/15: The Honolulu City Council Budget Committee decided to defer CB28 relating to the property tax exemption for historic residences. The council-members voiced support for preservation of our historic buildings and districts. Committee Chair Ann Kobayashi also acknowledged the ways that enforcement and compliance have improved since Council reviewed the program a few years ago. She noted that Historic Hawai‘i Foundation and a group of historic homeowners are willing to look at further improvements and suggestions. The committee decided to defer further action on the bill for now.

Many thanks to all who submitted written testimony and attended the hearing. It was important for the council members to understand the concerns and issues, and also the importance of preserving historic neighborhoods and buildings.

We will be following-up on possible recommendations and will look forward to working on this issue together in the near future.

Update 6/11/15:  Honolulu City Council Budget Committee has scheduled a public hearing on CB28 for Wednesday, June 17 at 9 a.m. in Council Committee Room in Honolulu Hale.

Update 5/13/15: Honolulu City Council’s Budget Committee deferred action on CB28 at its special meeting on May 12. The bill will be held in committee without further action, which will leave the property tax exemption for registered historic residences unchanged.

Mahalo nui to the preservation community and historic homeowners for providing testimony in opposition to the bill, and providing information to the council-members about why the heritage of Hawaii is important and should be supported.

Council has the ability to revive a deferred bill at a later date; Historic Hawai‘i Foundation will continue to monitor it and will provide an update if the measure is scheduled for future action. Be sure to sign up for HHF Action Alerts for timely notice of this and other preservation advocacy opportunities.

THE ISSUE

5/8/15: Honolulu City Council is considering a bill that would affect the property tax assessments on designated historic residences. Council Bill 28 (2015) proposes to change the property tax exemption provided to historic residential properties by establishing the exemption at 50% of the assessed value, rather than the full exemption currently provided.

PUBLIC HEARING

The bill will be considered by the Council Budget Committee at a public hearing on Wednesday, June 17 beginning at 9 a.m., in the Council Committee Room in Honolulu Hale.  The bill is one of several measures that Council is considering to increase property tax collections.

Click here for the hearing notice. 
Click here to read CB28 (2015)

HOW YOU CAN HELP

Provide public testimony opposing the bill at the meeting on Wednesday, June 17 beginning at 9 a.m., in the Council Committee Room in Honolulu Hale.  Can’t make it in person? Fax your testimony or submit online. Written testimony submitted for the first hearing in May is still considered by the Budget Committee and does not need to be resent. However, we received reports that some online submittals did not go through, so check that you received a confirmation email if you submit comments online.

SPEAKER REGISTRATION:
Persons wishing to testify are requested to register by 9 a.m. as follows:

  1. Online at http://www.honolulu.gov/ccl-testimony-form.html;
  2. By faxing to 768-3827 your name, phone number and the agenda item;
  3. By filling out the registration form in person; or
  4. By calling 768-3801.

Persons who have not registered to testify will be given an opportunity to speak on an item following oral testimonies of the registered speakers. Each speaker is limited to a one-minute presentation.

WRITTEN TESTIMONY:
Written testimony may be faxed to 768-3827 or transmitted via internet at http://www.honolulu.gov/ccl-testimony-form.html for distribution at the meeting.

OUR TAKE & TALKING POINTS

Historic Hawaii Foundation opposes the proposed bill and has submitted testimony asking Council to defer the measure.

HHF finds that:

  • The property tax exemption for historic residential properties was established in 1984 in all four counties in the State. The City’s real property tax reduction program offers owners of registered historic properties an economic incentive to preserve and protect these significant resources.
  • The tax exemption allows owners to have some financial relief in the face of economic pressure to demolish, subdivide, redevelop or otherwise destroy historic properties. Economic incentives for historic preservation are vitally important, and the property tax exemption program helps to make preservation of our historic districts and buildings affordable when they may otherwise be at risk.
  • In 2011, City & County of Honolulu examined the historic residential property tax exemption program in detail, which led to amendments to provide for increased clarity, transparency and improved enforcement within the program. The Real Property Assessment Division then promulgated rules per the amended ordinance, and historic home owners have either come into compliance or have been removed from the program, either voluntarily or through enforcement action.
  • With these recent changes and improvements, the program appears to be working well as an incentive to preserve and protect historic homes.  The program recognizes the value that historic residences contribute to the public good.
  • The 2014 reports on real property exemptions and valuation[i] indicate that the program includes 266 historic residences on Oahu, with a total exemption of about $3.6 million. As a program to help preserve Oahu’s historic neighborhoods and residences, the program is very cost effective, helping to perpetuate the characteristics and sense of place that are unique to each district.
  • The foregone tax revenue represented by the historic residential exemption represents about 0.7% of the value of the combined property tax exemptions and about 0.017% of the City’s annual operating budget of $2.1 Billion[ii]. As a revenue-enhancement measure, increasing taxes on historic homes would have an insignificant impact on the City’s operating budget, but would certainly impact the ability of the property owners to continue to preserve and maintain historic properties. The low benefit does not justify the high impact to historic districts and residences.

Council’s Budget Committee is accepting public testimony on the proposed bill. Submittal instructions are included on the meeting agenda. Written testimony may be faxed to 768-3827 or transmitted via internet at http://www.honolulu.gov/ccl-testimony-form.html for distribution at the meeting.

[i] https://www.realpropertyhonolulu.com/content/rpadcms/documents/2014/14_ex.pdf

[ii] http://www.honolulu.gov/rep/site/bfs/fy2015oper.pdf