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Council advances change to property‑dedication program to encourage longer‑term rentals, with administration urging caution
Summary
Bill 63 (CD1) would expand the property dedication program for residential owners to five‑year rental dedications and raise the AMI threshold to 100% to attract participants; BFS recommended starting at 100% AMI and keeping a five‑year dedication window to preserve revenue and program stability, while Realtors warned five years and rollback penalties may deter owner participation.
Councilmember Kia‘aina presented Bill 63 (CD1) on Jan. 13 to update Honolulu’s property‑dedication program intended to increase rental housing supply by offering a residential tax rate for properties dedicated to long‑term rental. The measure would allow five‑year dedications and set eligibility at households earning up to 100% of area median income (AMI), replacing the previous 80% threshold.
BFS Director Andy Kawano urged starting at 100% AMI to avoid an immediate, significant reduction in general‑fund revenue and recommended keeping a five‑year dedication period (rather than shorter proposals from stakeholders) to avoid frequent program churn and administrative burden. Kawano said BFS will report annually on program status and recommended a 45‑day violation threshold instead of a 60‑day grace period suggested by some stakeholders.
Suzanne Young, CEO of the Honolulu Board of Realtors, told the committee that a five‑year dedication and rollback penalties would discourage property owners from participating and that the city should further incentivize participation to achieve meaningful program uptake. Community commenters suggested making exemptions for family transfers or clarifying homeowner exemption processing timelines to avoid unintended rollback impacts for intergenerational transfers.
The committee reported Bill 63 CD1 out for passage on third reading. BFS and the department of Housing and Land Management agreed to monitor the program and provide data to guide future adjustments.
