Tax Relief

Sticker shock: Companies beg for property tax relief

Hawaii Island business groups, facing steep increases in property values, are clamoring for relief from taxes set forth in a record high $689.9 million budget proposed by Mayor Mitch Roth.

Council members say they’ve been hearing from real estate and business improvement associations as well as the island’s numerous chambers of commerce about taxable property values ​​in commercial, industrial, agricultural and vacant land categories facing 40% to 128% increases compared to last year.

“It’s concerning because the community is already struggling,” Finance Committee Chairman Matt Kaneali’i-Kleinfelder, representing Puna, said Thursday. “I hear a lot of people asking for a solution. Everyone is feeling the pinch right now.”

The groups are asking the council to consider emergency reassessments, assessment caps or rollbacks in the tax rates to help soften the blow. Even if the current tax rates are held steady, the ballooning property values ​​following a hot real estate market means a bigger tax hit for property owners and more money in the county coffers.

“They are actually being sensitive about seeking solutions,” said Hilo Councilwoman Sue Lee Loy, who’s been talking to business groups and the mayor about the issue. “This was a big jump, and this (pandemic) recovery takes time.”

Property tax revenue, based on the new valuations at the current tax rate, are expected to go up 12.9% or $45.9 million, according to the preliminary proposed budget Roth released March 1. But because property in the homeowner class is limited to a 3% Valuation increase annually until it’s sold, it’s expected that the other property classes will bear the brunt of that increase.

Property owners have the opportunity to appeal their assessments by mailing an appeal form (https://hawaiipropertytax.com/docs/TAXPAYER%27S%20NOTICE%20OF%20COMPLAINT.pdf) with a $50 deposit. It must be hand-delivered to the tax office or postmarked by Monday.

Property values ​​will be certified in the coming weeks and Roth has until May 5 to submit a revised preliminary budget.

Roth did not respond to questions posed by the newspaper Friday or Saturday.

“We understand their concerns,” Finance Director Deanna Sako said Friday. “Real property tax values ​​have not yet been certified. When we have the final numbers, we will consider all of our options at that time.”

Meanwhile, the council Finance Committee this week begins a department-by-department scrutiny of the budget. Meetings will be held at council chambers in the county building in Hilo, starting at 9 am Tuesday and continuing through Thursday.

Once approved, the new budget goes into effect July 1.

The public can testify in Hilo or at the West Hawaii Civic Center or Puna or Waimea council offices. The public can also testify via Zoom by registering with the county by noon Monday.

“We are very concerned with these increased costs of doing business,” said Wendy Laros, president and CEO of the Kona-Kohala Chamber of Commerce.

Laros said the chamber is hearing from members that commercial property tax liabilities are 40% to 100% higher compared to last tax year’s valuations. That’s on top of other challenges including increased employee costs, supply chain disruptions and labor shortages at all levels.

“We should all be very concerned about the increased costs of doing business in Hawaii,” Laros said. “Businesses need to survive to offer needed products and services, provide jobs for our community and to support our local government by paying taxes.”

On the plus side for commercial property owners, Kanealii-Kleinfelder noted, is the likely windfall if they sell.

“If you sold your property,” he said, “you make a killing.”

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.

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