So this sounds like a great idea, right? Find a way to tax the “rich” who own all these “extra” homes that are “empty” and “not being used,” and use all that money for affordable housing for Hawaii residents! Yeah! Vote YES! Umm…NO! It’s not this easy. First off, it’s not written this way but packaged this way in a pretty red bow, ready to sign off for Christmas! Well, thank goodness many have found the flaws in this current bill and were able to convince the councilmembers to at least hold off before voting yes on the third council reading held on December 11, 2024. Council Chair Tommy Waters co-introduced this bill back in August and has suggested deferring it for the time being.

Let’s dive into some of the controversial issues with this bill. First and foremost, probably the most important issue that will and should resonate with EVERYONE is the fact that it is marketed as an Affordable Housing Bill to help support affordable housing…guess what? Only 20% of the revenue is going to affordable housing, 5% to administration for the tax implementation, and 75% will go to the General Fund! What? 75% of the revenue is going to whatever the government chooses to spend it on? Not even half is given to affordable housing? In this case, it should be called a General Fund Bill versus an Affordable Housing Bill. So, right off the bat, this is already alarming and once again shows some true colors in these politicians that make us question their motives.

Next, let’s take a closer look at another highlight they feature to make it look so attractive: that it will only affect homes considered empty. Every property that doesn’t have an owner-occupant exemption will automatically be considered an empty home. Many forget to change this after they purchase, and if you fail to file as an owner-occupant, you will be taxed as though it’s an empty home—which, by the way, is 3% of the property’s value per year! If your home is worth $1,000,000, that is $30,000 per year in taxes just for this tax, not to mention other taxes already in place. Can you imagine the mess this will create when appeals start flooding in for the city to process? We already have a year-long lag with home exemptions as it is; this will break the system. You will also need to prove your status, which can violate an owner’s privacy and personal circumstances.

Although this bill has close to 15 qualifying exemptions, it does not account for local families that own a home on Oahu shared among family members who use the home regularly throughout the year but not for a solid six months. This could be a home they bought intending to move back and retire to, but in the interim, it’s their home away from home. How can they afford this double tax? I’m sure if this bill finds its way into law, people will find loopholes to avoid these high taxes, and sadly, the kupuna and most vulnerable will be affected if they don’t have a solution.

Here is another shocker: one of the main points of this bill was to turn empty homes into rental units for local residents or potential local home purchases should the current owners rent or sell their empty homes. Ha! If we really conduct a study and actually wait for the results, I’m pretty sure most of these homes will be luxury condos built in the last 15 years. Many of these condos are far from “affordable” for local residents, whether for purchase or rental. The local demographic often consists of first-time homebuyers or families looking for single-family homes well below our median sales price of over $1,000,000. With the crazy high-interest rates, they have no chance!

Last but not least, Ernst & Young has been hired to conduct the study and feasibility report on this bill, costing taxpayers $500,000! The study is expected to be complete early next year, yet the council is trying to push this vote before it’s even finished? Why not wait until the study comes out and reveals the affected market and potential outcomes of this tax first? Then make an educated decision. Thank goodness this was decided upon, and they deferred voting to a later time on Wednesday, December 11, 2024. I couldn’t believe it was up for its third hearing and had gone under the radar from most of the general public and businesses. A big mahalo to the Honolulu Board of Realtors for stepping up and sharing their concerns—our concerns—and for also trying to work with the councilmembers on solutions that might lead to a compromise. As the bill is currently written, it’s not a solution for affordable housing and a NO from me. I am a big proponent of affordable housing, but it’s sad to say this bill is very misleading and seems to support the General Fund—who knows where that money goes? Stay tuned; I’ll update this once more information comes out.