A Civil Beat investigation of public financial disclosures shows the real estate values listed by 14 Hawaii lawmakers differed from public assessments.

Discrepancies ranged into the hundreds of thousands of dollars.

As required by state law, all politicians must include the address and value of any interests in real property that aren’t considered their personal residence.

Civil Beat decided to compare the claimed values on the disclosure forms of all 76 members of the Hawaii Legislature with real property assessments. While some were off by a few thousand dollars, 14 were off by tens or hundreds of thousands of dollars.

Ensuring accurate financial disclosures is important for proper government transparency, State Ethics Commission Executive Director Les Kondo tells Civil Beat.

“It’s to allow the public to have some transparency into public officials, including legislators, what their assets are,” Kondo said.

Kondo says that if a complaint were made regarding a disclosure, a request would be sent to the filer to respond to the complaint. If the commission felt strongly that the mistake wasn’t a simple oversight, a fine of up to $500 per violation could be imposed.

Explanations offered to Civil Beat for the differences included disagreements with property assessments, simple mistakes and the use of ‘Ohana’ housing. The table below shows the residences, the claimed values and the actual assessments of the properties.

Lawmaker Address of Property Claimed Value Real Property Assessed Value
Rep. Rida Cabanilla 737 Kaipuu St., Honolulu, HI, 96826 $60,000 $760,600
Rep. Rida Cabanilla 738 Kaipuu St., Honolulu, HI, 96826 $50,000 $901,400
Rep. Jerry Chang 444 Niu St, # 715, Honolulu, HI, 96815 $150,000 – $250,000 $76,900
Rep. Isaac Choy 7264 Nuulolo St, Honolulu, HI, 96825 $250,000 – $500,000 $637,800
Rep. Faye Hanahano Kaohe/South Rd, Hawaii $500,000 – $750,000 $1,121,900
Rep. Gilbert Keith-Agaran 364 S. Lehua St., Kahului, Maui, 96732 $150,000 – $200,000 $442,300
Rep. Mark Nakashima 17-7670 North Kulani Rd., Hawaii $250,000 – $500,000 $146,800
Rep. Marcus Oshiro 86-318 Puhawai Rd., Waianae, HI $10,000 – $25,000 $392,500
Rep. Gilbert Riviere 65-010 Hukilau Loop, Waialua, HI, 96791 $600,000 $378,000
Rep. Gilbert Riviere 54-151 Puuowaa St., Hauula, HI, 96717 $600,000 $414,100
Rep. Joseph Souki 596 Pio Dr., Wailuku, HI, 96739 $275,000 $441,400
Sen. Carol Fukunaga 1571 Piikoi St, Honolulu $150,000 – $250,000 $338,000
Sen. David Ige 1108 Hookahi St, Pearl City, HI, 96782 $25,000 – $50,000 $497,900
Sen. Donna Kim 1528 Onipaa St., Honolulu, HI, 96819 $250,000 – $500,000 $697,900
Sen. Ronald Kouchi 3391 B. Eono St., Lihue, HI, 96766 $150,000 – $250,000 $476,000
Sen. Maile Shimabukuro 2637 Kuilei St, Honolulu, HI, 96826 $150,000 – $200,000 $231,700

Gap Caused by Being a Sub-Lessee

Rep. Rida Cabanilla had the biggest difference between her disclosure and assessment.

She has interests in two properties, both on Oahu, and listed their values at $60,000 and $50,000. Actual property assessments show the first unit is worth about $700,000 more than what Cabinilla indicated. The second property was worth about $850,000 more than claimed.

Cabanilla’s disclosure shows she was the filer for both properties. The real property assessment for 737 Kaipuu St. shows she is listed as one of three sub-lessees and that there is also a fee-owner and a lessee. The other address, 738 Kaipuu St., also lists Cabanilla as one of three sub-lessees, along with a fee-owner.

Because she is a sub-lessee, Cabanilla says she does not own the properties or the land the properties are on, and that the values indicated are what she feels her investments are worth.

“The value of the building, to me, is that amount,” Cabanilla told Civil Beat. “If I find a buyer today that would want to take it from me with the lease, that’s what I think would be the value.”

Cabanilla said the values weren’t scientifically derived and that the figures used were based on her judgment.

Confusion Over What Forms Require

Rep. Marcus Oshiro argued that the financial disclosure asks for only income derived from property investments, not the property values themselves.

In an email to Civil Beat, Oshiro explained: “The property disclosed in my ethics filing lists residential rental property 86-318 Puhawai Road, Waianae under Item 1: ‘Income for Services Rendered for Preceding Calendar Year.’ The instructions from the Hawaii State Ethics Commission requires us to report ‘the source and amount of all income of $1,000 or more, for services rendered, received during the preceding calendar year.’ The amount provided in my 2010 filing, which falls within financial amount code B, which is ‘at least $1,000 but less than $10,000,’ is the amount of income I claimed to have earned from rental property in 2009. This range does not reflect the amount of ‘personal investment in the property.'”

Oshiro did include the rental income in his financial disclosure under Item 1 of the form, indicating he received between $1,000 and $10,000 from the house.

However, the Ethics Commission provides an instructional form for financial disclosures, which clearly states property values are required to be disclosed.

Under Item 6 on the instructional form, “Interests in Real Property Held,” it states: “You are required to disclose the street address and the tax map key number (if a tax map key number exists) of any real property in or outside of the State, if the interest has a value of $10,000 or more and was held by you, your spouse, or any dependent children during the disclosure period. The value of the real property interest may be computed in any reasonable manner. You may, for example, compute the value from the property’s assessed valuation. You are not required to disclose real property held that is your personal residence or the personal residence of your spouse or dependent children.”

Oshiro listed the rental property under Item 6 of his disclosure, but the indicated value was far below the real property assessment. Oshiro said that because he did not sell the property, there was no valued derived “for services rendered.”

Trusts, Ohana Housing and More

Several lawmakers — including Rep. Joe Souki, Sen. David Ige and Rep. Gilbert Keith-Agaran — listed properties held in a family trust.

In an email, Keith-Agaran explained the discrepancy on his form this way: “The property is held by my late father’s trust, my mother’s trust, my sister (individually) and me (individually). My mother is the trustee for both trusts. I believe the two family trusts each hold approximately 20 percent interest; my sister has 30 percent and I hold the remaining 30 percent. If the current tax assessed value is $442,300 you can see why I value my interest as ranging between $150,000 and $250,000.”

Souki and Ige had similar replies. They explained that they listed the value of their personal investments, not the actual value of the properties.

Sen. Carol Fukunaga acknowledged she made a simple mistake.

“I guess the valuation we used was from an earlier City notice, and I’m happy to modify it for future filings,” Fukunaga wrote in an email. “In spite of City valuations at a much higher level, sales in my building during the past several years have been so low that even a $250,000 valuation would be considered on the high side.”

Rep. Gil Riviere said he had problems with the use of real property assessments.

“The tax assessed value is not necessarily the value of a home, but rather the value used by the County for real property tax purposes,” Riviere wrote. “It is hardly a scientific or verified value. In many cases, appraised values, assessed values and sales prices are all different. The value of my real estate has surely dropped from a few years ago, but there is no way of knowing the ‘real value’ (unless) the property actually sold. So, I estimated what I thought it was worth.”

Sen. Donna Mercado Kim said she was only a 50 percent owner of her property and that she “was guessing at the assessment.”

Sen. Ronald Kouchi told Civil Beat he has an ‘Ohana’ unit at his personal residence, another home attached to his, where family live. So, because he is not required to list his personal residence, he only listed the value of the Ohana unit.

Rep. Faye Hanohano said her property is agricultural land in the lava zone on the Big Island, and that it has been handed down in her family for generations. She says the value she listed was a guess and that she has no interest in selling it.

“I have like 40 acres of forest,” Hanohano said. “I’m just being a steward of the land.”

Rep. Jerry Chang, who undervalued his property, provided a little humor in his explanation.

“I bought that unit for $153,500, which is not what it is worth now,” Chang wrote in an email. “Realtors estimate the value around $110,000.00. Thanks for letting me know what the assessed value is right now. Quite depressing.”

Rep. Isaac Choy listed his personal investment in his property, which he jointly owns with his daughter. His 50 percent stake falls within the $250,000 to $500,000 range, he said.

Rep. Mark Nakashima told Civil Beat the figure he listed covered two properties adjacent to each other. His financial disclosure listed two tax map key numbers, but only a single address.

“Although they exist as two different properties… I’m thinking that the amount that I gave, because I don’t distinguish between the two, was that one amount,” Nakashima said.

Importance

Each lawmaker with a discrepancy between their disclosures and their real property assessments has a rational explanation.

That said, the discrepancies are telling in that they underscore weaknesses with the financial disclosure process and requirements, such as confusion over requirements and lack of oversight. There are others. Previous Civil Beat stories have identified problems, such as a loophole that means officials don’t have to reveal certain sources of their income and filing dates that make the information less relevant.

On Monday, Civil Beat revealed that less than 10 percent of disclosures in Hawaii and Honolulu are public. Tomorrow, we’re going to report how few Hawaii lawmakers say they own stocks or mutual funds, a far lower percentage than for Americans as a whole.

Important as financial disclosures are in offering a window to our politicians’ and public employees’ financial relationships, the series of articles has shown that the system has flaws.

As State Ethics Commission Executive Director Les Kondo told Civil Beat: “The transparency that might have been intended… it’s not like looking through glass. There’s not a lot of transparency.”