LIHU‘E — A bill to provide property-tax exemptions on mixed-use buildings passed unanimously on its first reading before the Kaua‘i County Council last Wednesday.
Introduced by Councilmembers Mason Chock and Luke Evslin, Bill No. 2795 incentivizes mixed-use construction and usage by giving property-tax exemptions for residential units located above commercial spaces.
The bill adds an additional level of exemption to properties rented at affordable rates.
“Over this past term, there’s been a lot of effort trying to address the need for housing and its affordability,” Chock said. “We see this as a cross between the tax code and also our Housing Agency and Planning, rather. What became prevalent is how we can increase rentals on the island, particularly affordable-housing inventory.”
The bill proposes a $100,000 exemption for each residential unit in a mixed-use building, and a $150,000 exemption for each residential unit that meets the lease and rent requirements of a unit that qualifies as affordable.
The property would remain in the commercial tax bracket. Commercial properties are currently taxed at $8.10 per $1,000 of net assessed value.
The exemptions would apply to the assessed value of the complex, with a maximum reduction of 25% for residential units and a 35% reduction for long-term, affordable rentals.
The maximum reduction would be based on the difference between the residential tax rate of $6.05 and the commercialized home-use rate of $5.05 per $1,000 of assessed valuation.
For the past seven months, alongside the county Department of Finance and its Real Property Assessment Division, Evslin and Chock have worked on the bill.
Part of it incentivizes the use of mixed-use buildings and the filling fill up pf vacant commercial properties by providing a tax exemption that’s “proportionate to the use” of the building, Evslin said. Taxing residential properties at commercial rates does not make developers want to come in and create a mixed-use building, he said.
The county shied away from a mixed-use tax rate or a specific rate per building because it could get complicated and make for more work for the county.
“The idea with the two exemptions is to reduce the assessed value of the unit to make it roughly proportionate to what the residential or homestead rates would be,” Evslin said.
A property like Hokuala Kaua‘i in Lihu‘e has mixed-use value, and is different, since it has individual, segmented properties. The type of properties this bill seeks to address is single parcels with the potential for multiple units, explained Brad Cone, manager of the county Real Property Assessment Division.
The bill will come up for public hearing before being sent to committee.
•••
Sabrina Bodon, public safety and government reporter, can be reached at 245-0441 or sbodon@thegardenisland.com.
