On the other side of the Waialae Country Club, there’s an area of large homes along and near the ocean (well, really, most would call these mansions, from small to extremely large). A few also front the golf course.
Here’s one of those we walk past on some of our early morning outings. It’s a 7,000 square foot, two-story house with six bedrooms and six baths, and a swimming pool, along the 7th hole at Waialae. It appears to be mostly unoccupied. In the two years we’ve walked through the area, we have perhaps seen evidence of anyone staying there once or twice, for only a few days at most. Usually the yard crew would be the only people to be seen.
City real property records show that the building is currently assessed for tax purposes at $1,805,000. The 13,000+ square foot lot is appraised at another $3,001,300. The annual real property tax is $38,756.70, according to city records.
Viewed from above.
From Google Streetview.
Well, a couple of weeks ago construction fences went up to block dust, and a demolition crew moved in. The $1.8 million structure, pool, and landscaping are now history.
The property was purchased in 2004 by Up-Front Group Co. Ltd., a Japanese entertainment company. The owners have now applied for a building permit for a new structure they value at $1.8 million.
The permit doesn’t say much about the new building.
I suppose this is all good news for the local companies that benefit from the construction. It will create jobs, at least in the short run. And the tax revenue certainly adds to city coffers.
Nearby, along the beach, is a string of perhaps a dozen mansions. All also empty nearly all of the time.
It’s hard to comprehend how much corporate or personal wealth is tied up in these chunks of island real estate without providing housing for anyone.
All I can do is shake my head in wonder. And share the thought here.
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As long as residential real estate is an acceptable form of foreign corporate investment, we can look forward to more neighborless neighborhoods.
Asset class not a place to live.
Kahuku, brand new, 5 bdrm homes, CPR, located on Kam Hwy, next to fire dept for sale $800k.
I am interested in these examples. Divide the annual taxes paid by the assessment for land and building and I get a property tax rate of $0.80 per $100.. in LA the Residential rate a couple of years ago was $1.40 per,, Cincinatti it was $2.40. So the city doesn’t collect all that much. The best way of reducing this behavior would be to increase the rate on these properties to 3.00 per, or higher. (That’s Clevelands rate, and it increases the cost of holding real estate here).
I’m not saying that he property tax rate can’t go up (I think it probably can), but you aren’t making an apples to apples comparison. Hawaii is anamolous in funding education at the state level. In the other cities you mentioned, those property tax rates support public schools. In Hawaii, property tax receipts do not go to the public school system.
The flip side of the argument is that these owners are providing tax revenue while consuming essentially zero public services. If the city is unable to redirect some of this essentially “free” property tax revenue towards developing housing solutions, that is not the fault of these wealthy landowners.
Disgusting! This is one of the things wrong in Hawaii.
We might consider whether the alternatives are any better. As Woo Woo points out, while these buildings are unoccupied, there is no associated contribution to things like traffic and parking congestion.
Sure, they don’t help our housing crunch, but neither do houses turned into TVRs, and the people who stay in those houses do consume public services.
Were I the owner of such a high-end property about to be demoed, I’d wonder whether some rock band might want to rent it and not have to worry about the damage they do.
So many stores in NYC are going out of business and creating permanent vacancies.
https://www.nytimes.com/2017/11/19/opinion/nyc-empty-stores.html
It’s not just online retail creating these vacancies. Taxes on retail businesses might be too high.
Also, landlords are unrealistic, waiting for some luxury brand to rent from them, so that the landlord can charge astronomical rents. But no such high-end renters are biting.
One unorthodox solution is to levy a vacancy tax on such empty stores that are contributing to urban blight. The vacancy tax would compel owners to rent out.
Would that also be a useful solution for all the houses and condominiums in Hawaii that are empty?
Hawaii has the lowest property tax rate in the United States.
https://taxfoundation.org/how-high-are-property-taxes-your-state/
Interestingly, Texas has one of the highest property tax rates in the US, and California has one of the lowest rates. In the case of California, this goes back to the passage of Proposition 13 in 1978, which slashed property taxes.
The investor Warren Buffet owns a modest two-story house in Omaha and an ocean-side mansion in California. He reports that he pays more property taxes on his Nebraska house than he does on the mansion in California.
Taxes are the Achilles heal of democracy because only in a democracy do those who establish the tax rate — ultimately, the people — pay the taxes. Among the states, California has the greatest orientation toward democracy in terms of its system of initiatives and referendums. The outcome of these referenda consistently reflect what California voters want:
1) very low taxes.
2) very high social spending.
If Hawaii has the lowest property taxes in the nation, that makes Hawaii even more of a “democracy” than California. And democracy does not work.
One would assume that a moderate tax rate would be the best, although it might be contentious determining what “moderation” consists of. The Laffer curve is a curve, not a straight line, so moderate taxes are by definition the best course.
One thing that no one seems to be thinking about is periodic review of coastal setbacks, and the potential ramifications.
As seas levels rise, existing homes will be in no-build areas. In those areas, building new structures and renovating existing structures will become illegal.
https://www.postandcourier.com/news/state-s-new-beach-setback-lines-jeopardize-existing-homes-along/article_942b2d9e-b021-11e7-aa88-535494fe552f.html
What is interesting is how rich people seem to get away with anything. Ian pointed out how so much of the public land on the beach has been silently and illegally taken over and excluded for public use by the Kahala Hotel and Resort. So one can imagine that even if setbacks are reviewed, the laws might conveniently be altered or simply go unenforced.
Vancouver, B.C. has an Empty Homes Tax. Homes are purchased by wealthy Asians not just as investments, but as a path to Canadian citizenship.
http://vancouver.ca/home-property-development/empty-homes-tax.aspx
San Francisco contemplates a similar law.
http://www.sfchronicle.com/business/networth/article/Should-SF-tax-empty-homes-and-buildings-11306541.php