The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Honolulu City Council Committee on Budget on Jan. 13, 2026.
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Jan. 13, 2026, 9 a.m.
Honolulu Hale
To: Honolulu City Council Committee on Budget
Val Okimoto, Chair
Scott Nishimoto, Vice Chair
From: Grassroot Institute of Hawaii
Ted Kefalas, Director of Strategic Campaigns
RE: Bill 63 (2025) — RELATING TO PROPERTY TAXATION
Aloha Chair Okimoto, Vice Chair Nishimoto and other members of the Committee,
The Grassroot Institute of Hawaii offers comments on — and amendments to — Bill 63 (2025), CD1, which would amend eligibility for the city’s property tax dedication for low-income rental properties.
Currently, the owners of properties taxed at the Residential A tax rate can dedicate their properties to low-income rental use for five years and be taxed at the lower Residential property tax rate.
The difference between these tax rates is significant. In fiscal 2025, a duplex valued at $1.8 million would face a tax bill of $13,120 if taxed at the Residential A rate and only $6,300 if taxed at the Residential rate.[1]
In addition to giving Residential A property owners tax relief if they dedicate their properties to low-income rental use for five years, Bill 63 (2025) would expand the maximum rents that property owners who participate in the program can charge from what is considered affordable for those making 80% of the area median income to what is considered affordable for those making 100% of the area median income.
It would also change owner and tenant eligibility for the dedication and create rules for what happens when properties are sold or transferred during the five-year dedication period.
Grassroot urges the Committee to adopt the amendments suggested at the Council’s Dec. 2, 2025, meeting by the Honolulu Board of REALTORS. Those amendments were:
>> Shorten the five-year dedication period.
>> Increase the 45-day window during which the property can be used for something other than a long-term rental, to give owners more time to make repairs in case the property is between tenants.
>> Remove rollback penalties if the property is transferred to an owner-occupier.
>> Increase the allowable area median income level from 100% to some higher level.
The 2024 Hawaii Housing Planning Study conducted by private consultants for the state Department of Business, Economic Development and Tourism estimated that Oahu alone needs more than 20,000 new units affordable to those making less than 120% of the area median income, with a need of close to 9,000 units affordable to those making between 60% and 120% of AMI.[2]
It is clear that Honolulu needs more housing attainable to local families, and this measure could make a difference.
Thank you for the opportunity to testify.
Ted Kefalas
Director of Strategic Campaigns
Grassroot Institute of Hawaii
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[1] “Real Property Tax Rates for Tax Year July 1, 2024 to June 30, 2025,” City and County of Honolulu, accessed July 3, 2025.
[2] “Hawaii Housing Planning Study 2024,” prepared by SMS Research and Marketing Services, Inc., FSR Consulting LLC and Ward Research, Inc. for the Hawaii Department of Business, Economic Development and Tourism, Table 39A, p. 123.
