Honolulu Empty Homes Tax Proposal Advances
The bill was amended to earn the support of short-term rental owners.
A plan to increases taxes on homes that sit empty on Oahu moved forward Wednesday when a Honolulu City Council committee agreed to send it on to the council budget committee.
passed out of the Housing, Sustainability and Health Committee on a 3-2 vote.
In addition to standard property taxes of about half of a percentage point or less on the home鈥檚 value, the empty homes tax would start at 1% of a home鈥檚 value its first year and then climb to 2% the next year before ending at 3%.
Supporters hope that the tax, long in the making, would help solve Honolulu鈥檚 housing affordability crisis.
鈥淚 think that Bill 46 is a step in the right direction in trying to get rid of, or, trying to disincentivize people from speculating on homes and leaving them empty instead of allowing people to live in it,鈥 Ben Sadowski from Unite Here Local 5 testified.
The idea is to create more housing by taxing thousands of property owners who have bought homes they don鈥檛 live in and don鈥檛 rent out solely to serve as investments. An empty homes tax would incentivize them to either sell the property or rent it out, increasing the supply of homes on Oahu and therefore lowering the prices.
And if a property owner chooses not to sell their empty home, that would mean more revenue for the city to spend toward constructing more affordable housing, among other things. At 3%, annual revenue could be about $180 million, according to a recent estimate from .
The City Council has discussed passing an empty homes tax for years, and top elected officials including both Mayor Rick Blangiardi and Council Chair Tommy Waters have expressed their support as far back as 2020.
But an empty homes tax also poses a lot of practical questions. Among them: How would the tax be enforced? What makes a home 鈥渆mpty?鈥 Where would the collected money go?
These questions have tripped up officials like Budget and Fiscal Services Director Andrew Kawano and real property assessment division administrator Steven Takara, who in the past have expressed concern with the overhead needed to sift through homeowners鈥 declarations of occupancy.
To help handle those administrative challenges, the city in July commissioned a half-million dollar study by consulting firm Ernst & Young. A final report .
In addition, the Oahu Short-Term Rental Alliance opposed the initial version of this bill because a quirk in the wording would have categorized short-term rentals as empty. Council member Matt Weyer introduced an amendment to change that, earning the alliance鈥檚 support.
Perhaps the biggest question mark remaining is where the revenue would go. Council member Esther Kiaaina prefers that it go to the city鈥檚 general fund so it can be spent on anything from homelessness services to parks, while Weyer 鈥 who chairs the housing committee — amended the bill and directed 20% of the money to the city鈥檚 affordable housing fund.聽
That would ensure it on projects and programs related to affordable housing for people making 60% of the area median income or less, or about $58,500 for a single person and $83,250 for a family of four.
The rest of the money would go to the general fund, where at least 10% of it would be used to address homelessness and at least 20% would be used to boost the supply of affordable housing for people making 140% of the area median income or less, or about $118,000 for a single person and $168,000 for a family of four.
Correction: An earlier version of this story said that all of the revenue would go towards the affordable housing fund.
Despite having reservations about that specific amendment, Kiaaina voted to advance the bill, joining Weyer and council member Tyler Dos Santos-Tam. Council members Val Okimoto and Augie Tulba voted against it.
still has to pass one more City Council committee and then be approved by the full council.
The bill鈥檚 next hearing, at the budget committee, has not been scheduled yet.
