Council advances property tax break for longtime family landowners

Long-held family lands on the Big Island moved a step closer to a new tax break Tuesday, as the Hawaii County Council’s Committee on Finance voted 8-0 to advance Bill 163. The proposal would create an Aina Kupuna dedication for properties that have stayed in the same family since before Jan. 1, 1926, and it is aimed at keeping ancestral parcels from being lost as tax bills rise.

Under the draft, qualified owners would pay the county’s minimum property tax, now $200 a year, for 10 years. To get in, a property would have to be 20 acres or less, have generated more than $10,000 in property taxes over the previous decade and have at least one owner living in Hawaii County. The bill also would bar the land from being sold to a nonlineal descendant while the dedication remains active.

The proposal is designed to help families that have stayed on the land for generations but are now being squeezed by higher assessments and the county’s tax structure. For owners whose annual bills have climbed above the minimum, the savings could be substantial over a 10-year period. At the same time, the county would give up higher tax revenue it might otherwise collect from those parcels, a fiscal tradeoff that could matter in a county where property taxes help fund local services.

Bill 163 Draft 01 was introduced by Council Member James Hustace and referred to Finance on June 2. The committee first postponed action to June 16 before sending it forward with a favorable recommendation. Kona Councilwoman Rebecca Villegas was absent and excused for Tuesday’s vote.

The draft includes a strict verification process. Hawaii County’s finance director could require deeds, court orders, wills, trusts, birth certificates, death certificates and genealogical verification from the Office of Hawaiian Affairs. The first-year petition deadline would be Dec. 31, and later petitions would be due by Sept. 1 before the tax year the dedication would take effect.

If a property owner breaks the dedication rules, the bill would require repayment of back taxes plus a 10% penalty, and those amounts would become a paramount lien on the property. The measure would also limit commercial use, while allowing agriculture.

The proposal comes as Hawaii County continues to reshape property taxes. The county’s current minimum real property tax is $200, and rates are set annually by the council on or before June 20 for the next tax year. The council recently approved a separate luxury-home category for residential properties worth more than $4 million, a reminder that county tax policy is being adjusted on multiple fronts this year.

The new Aina Kupuna dedication would go in a different direction than the luxury-home tax: instead of raising more from high-value properties, it would try to shield longtime family holdings from being priced out of reach.