Dear council member Esther Kiaaina and Mayor Rick Blangiardi: We need some help.

As our elected representatives, we believe you are in the position to help find a solution to a matter with which we are struggling. And we are certainly not alone.

Over the last two years, from 2021 to 2023, the property value assessment for the house we own in Kailua’s Coconut Grove, which is in a long-term rental, increased 43%. This is extraordinary and unanticipated.

But wait! Our property taxes have not increased “only” 43%. Nope, as a result of being pushed into Residential A rates in 2022 with an initial, whopping 31% increase in value assessed, those property taxes more than doubled from $266 a month to $545 a month, and it appears they are set to increase another 9% this coming year, based on another $107,700 increase in theoretical value.

We raised our children in this home for more than 20 years. In fact, we all lived in it as we built it — it took us six years!

When we became empty nesters we decided to move into a smaller house. We also built our second home, which allowed us to offer the Coconut Grove property to a local extended family that has been there for the past 12 years.

Regretfully, we have notified them that their rent would increase due to the increased property tax valuation as the property moved into the Residential A category in addition to the 31% increase in valuation. This was a difficult decision as we have maintained it at less than market rate, providing long-term stability for our tenants.

We carefully followed and supported the Residential A property tax legislation when it was put into place but did note the concern, expressed by then-council member Ann Kobayashi, regarding the $1,000,000 valuation threshold as a possible future impediment to maintaining long-term rentals at rates that would support local families.

Indeed, this situation is now occurring. We are asking the City Council and Blangiardi administration to readdress this issue.

Taxes Doubled

With the Residential A threshold valuation threshold remaining unchanged as property valuations have risen dramatically in just two years, many properties that support workforce rentals are becoming more and more difficult to maintain at reasonable rental costs.

This scenario has essentially ensured that all rental properties in the Coconut Grove area of Kailua, and other workforce communities across the City and County of Honolulu, are increasing in cost to renters. This impact is contrary to the goal of maintaining affordable rentals for local working families.

In real life, the tax increases mean our long-term tenants in Coconut Grove are potentially subject to the type of unexpected rent increases we have sought to avoid as we sacrificed our profits over the years to keep their rent 25% lower than market: aka “affordable.”

Should we pass along the more-than-doubled tax bill to our tenants? Will that push them into homelessness? How does this tax scheme benefit our tenants and others similarly impacted?

Meanwhile, we also must absorb increased state excise and state income taxes on any higher rent collected. This at the same time our own primary residence property taxes are increasing significantly.

We have both “65-and-over” and “owner-occupied” property tax exemptions, but neither the “65-and-over” nor “owner-occupied” exemption values have been adjusted as property valuations have increased. Put all this together and the significant increase in property valuation is straining local families from both ends.

Who benefits from this financial squeeze on residents? First, the City and County of Honolulu, and second, the state. Not us. Not our tenants.

We believe the City Council has the power and responsibility to:

1. cap property tax increases year-over-year for owner-occupied residences
2. reduce the tax rates based on valuation increased beyond a certain threshold and/or
3. commensurately raise the threshold for Res A homes to reflect increased valuations.

You and your colleagues on the City Council have the ability to correct this situation as it affects housing costs for all residents. The mayor and his administration also have the ability to address this issue and keep local renters in their homes as federal funds become less available to support affordable rentals.

Thank you for you attention and support in addressing this issue.