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Property tax assessment appeals on the rise

More than twice as many property owners appealed their tax assessments this year than last year, according to the 2020 report of the county Real Property Tax Board of Review.

The five-member volunteer board, which devotes long hours evaluating property owners’ appeals of their assessments, reported 750 appeals on property totaling $660.7 million in real estate value, compared to 355 appeals in 2019.

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Of the latest appeals, 407 were filed on East Hawaii property and 343 on parcels in West Hawaii.

Of the cases brought before the board, one was dismissed, 170 cases resulted in the reduction in the assessment or approval of an exemption by the board, 105 of the county’s assessments were sustained by the board, 340 resulted in a settlement between the county and the appellant, and 134 were withdrawn by the appellant, said Assistant Real Property Tax Administrator Keita Jo.

Jo said the increased caseload wasn’t a surprise.

“This was anticipated due to COVID-19 impacts starting in February and many being able to review their assessments in greater detail,” she said. “However, the date of assessment for last year’s assessment was January 1 and predated any potential COVID-19 impacts to the real estate market.”

Next year’s assessments may create a similar flood of appeals when notices go out March 15, she said.

“We are anticipating a large number of appeals for the 2021 assessments as the current COVID-19 crisis continues,” Jo said. “However, it should be noted that preliminary market data supports an increase in many sectors of the real estate market within Hawaii County for the upcoming assessments to be issued on March 15th.”

She said the division will continue monitoring sales in the coming weeks and months and will adjust accordingly.

The board recommended the county make the $50 appeal fee nonrefundable. Currently, the fee is refunded to taxpayers who win their appeals. The change would require action by the County Council.

The board, for the eighth year in a row, also recommended the county do away with a tax exemption program known as the “non-speculative residential” program, a move advocated by both the tax board and the Real Property Tax Review Working Group,

A 2008 law closed the program to new property owners, but those who were grandfathered into the 1958 program may have an unfair advantage over other property owners who can’t participate, tax officials said. The program allows property owners to freeze their property value for five or 10 years by dedicating it to their own homestead use. The county’s homeowners property class and a homeowners exemption have taken the place of the program for all but 483 property owners.

Recommended steps include informing all owners currently with parcels in this program of the repeal for tax year 2019, allow all parcels currently in this program to automatically convert these parcels to the homeowner exemption program at the 2019 frozen value and explain the 3 percent cap would then be applied to the tax year 2020.

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The impact to the real property tax revenue in tax year 2020 based on the current frozen non spec values would be $23,000 total. In addition, the county will save approximately $4,400 per year in staff time allocated to administering the program.

“The Board believes the Non-Speculative Residential Program should no longer exist because the homeowners class, exemptions and other programs have taken its place,” said the report, signed by the five members, Chairman Michael Hughes, Vice Chairwoman Emygrace (Grace) Reinhard and members Nelson Harano, V. Diane Blancett-Maddock and Michael Okumoto.

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