City considers bills on historic residence tax exemptions

Honolulu City Council’s Budget Committee has held a public hearing on three bills related to the City’s historic residential property tax exemption program. The city forgoes about $900,000 yearly in property taxes because of this exemption, which aims to encourage preservation of historically or architecturally significant dwellings.

According to media reports, 117 of the roughly 250 residences that have been granted the exemptions do not abide by the rules, which include keeping the house well-maintained and visible to the public. Drive-by checks by city personnel, confirmed that only 28 lacked "reasonable visual access."

The bills, CB2, CB3 and CB4, were read and public testimony was heard on Wednesday, April 20. Historic Hawaii Foundation supports CB3, which tightens the requirements of the existing exemption.  If CB 3 is approved, the other two bills would not be necessary, the foundation says. 

• CB2 outlines four options to amend the tax incentive for historic residential real property, according to the foundation.  Council would select an option or combination of options and amend the bill. The options are: Repeal the existing property tax exemption; repeal the existing property tax exemption for a period of time; repeal the existing property tax exemption and re-enact a new property tax exemption; or repeal the existing property tax exemption and enact a new historic structures tax credit.
• CB3, proposed by the Carlisle administration, revises the existing property tax exemption program by adding definitions and enforcement provisions for better accountability and clarity. 
• CB4 would repeal the property tax exemption and replace it with a tax credit for rehabilitation of residential historic properties.

Historic Hawaii Foundation says it supports CB 3 because it would strengthen and improve the existing program, but leave the basic concept and incentive intact.  It is the most comprehensive response to testimony and public comment on the previous bill. CB3 adds provisions that include: definition and proof of visual access from a public way; definition, proof and communication of alternative visual visitation 12 days per year if the property is not visible from a public way; standards for maintenance, repair and condition; and standardizing submittal requirements, enforcement procedures and penalties for non-compliance.

“The City’s property tax incentive program is critically important to protect Hawaii’s historic resources,” the foundation’s web site maintains. “CB3 provides clear, fair and effective standards and guidelines for enforcement of the program to ensure that the public benefit is maintained.”