How property value and tax class are decided

(a) The director shall cause the fair market value of all taxable real property to be determined and annually assessed by the market data and cost approaches to value using appropriate systematic methods suitable for mass valuation of real property for ad valorem taxation purposes, so selected and applied to obtain, as far as possible, uniform and equalized assessments throughout the city. (b) So far as practicable, records must be compiled and kept which must show the methods established by or under the authority of the director, for the determination of values. (c) (1) Real property must be classified into the following general classes, upon consideration of its highest and best use, and upon other criteria set forth in this section: (A) Residential; (B) Hotel and resort; (C) Commercial; (D) Industrial; (E) Agricultural; (F) Preservation; (G) Public service; (H) Vacant agricultural; (I) Residential A; (J) Bed and breakfast home; and (K) Transient vacation. (2) In assigning real property to one of the general classes, the director shall give major consideration to the districting established by the city in its general plan and zoning ordinance, specific class definitions or criteria set forth in this section, and such other factors that influence highest and best use. Notwithstanding the city’s zoning district classification, the director shall assign to the agricultural class any real property classified as tree farm property under HRS Chapter 186. (3) When real property is subdivided into condominium units, each unit and its appertaining common interest: (A) Will be deemed a parcel and assessed separately from other units; and (B) Will be classified as follows: (i) If the unit has a single, legally permitted, exclusive actual use, it must be classified upon consideration of the unit’s actual use into one of the general classes in the same manner as real property; (ii) If the unit has multiple, legally permitted uses, it must be classified: (aa) Upon consideration of the unit’s highest and best use into one of the general classes in the same manner as real property; or (bb) Residential, only upon approved dedication as provided in § 8-7.5 when the unit is legally permitted multiple exclusive uses, including residential use; or (iii) If the unit is a condominium parking unit or a condominium storage unit, it must be classified as residential, only upon approved dedication when the unit is used in conjunction with a unit in residential use within the project. (4) “Residential A” means a parcel, or portion thereof, which: (A) Is improved with no more than two single-family dwelling units; and (i) Has an assessed value of $1,300,000 or more; (ii) Does not have a home exemption; and (iii) Is zoned R-3.5, R-5, R-7.5, R-10, or R-20 or is dedicated for residential use; (B) Is vacant land zoned R-3.5, R-5, R-7.5, R-10, or R-20 and has an assessed value of $1,300,000 or more; or (C) Is a condominium unit classified as residential under subdivision (3)(B) with an assessed valuation of $1,300,000 or more and does not have a home exemption. Residential A excludes any parcel, or portion thereof, improved with military housing located on or outside of a military base. (5) Notwithstanding this subsection, real property with the following uses must be classified as follows: (A) Real property used as a bed and breakfast home, in accordance with Chapter 21 (the land use ordinance), must be classified as bed and breakfast home. “Bed and breakfast home” has the same meaning as defined in § 21-10.1 . (B) Real property used as a transient vacation unit, in accordance with Chapter 21 (the land use ordinance), must be classified as transient vacation. “Transient vacation unit” has the same meaning as defined in § 21-10.1 . (C) Real property used as a time share unit. in accordance with HRS Chapter 514E and Chapter 21 (the land use ordinance), must be classified as hotel and resort. “Time share unit” has the same meaning as defined in § 21-10.1 . Property used as a bed and breakfast home, transient vacation unit, or time share unit must not be classified as residential or residential A. (6) “Vacant agricultural” means a parcel, or portion thereof, that would otherwise be classified as agricultural by the director upon major consideration of the districting established by the city in its general plan and zoning ordinance and of such other factors that influence highest and best use, but which parcel, or portion thereof: (A) Has no residential buildings; and (B) Is not dedicated for agricultural purposes. If a portion of a parcel is dedicated as vacant agricultural, the remainder of the parcel that is zoned agricultural must be dedicated for agricultural use. (7) Notwithstanding this subsection, all real property actually used by a public service company in its public service business will be classified as public service. For the purposes of this subsection,”public service company” means a public utility, except airlines, motor carriers, common carriers by water, and contract carriers, where: (A) “Public utility” includes every person that may own, control, operate, or manage as owner, lessee, trustee, receiver, or otherwise, whether under a franchise, charter, license, articles of association, or otherwise, any plant or equipment, or any part thereof, directly or indirectly for public use, for the transportation of passengers or freight, or the conveyance or transmission of telecommunications messages, or the furnishing of facilities for the transmission of intelligence by electricity by land, water, or air within the State, or between points within the State, or for the production, conveyance, transmission, delivery, or furnishing of light, power, heat, cold, water, gas, or oil, or for the storage or warehousing of goods, or the disposal of sewage; provided that the term: (i) Includes any person insofar as that person owns or operates a private sewer company or sewer facility; (ii) Includes any telecommunications carrier or telecommunications common carrier; (iii) Does not include any person insofar as that person owns or operates an aerial transportation enterprise; (iv) Does not include persons owning or operating taxicabs, as defined in this subsection; (v) Does not include common carriers transporting only freight on the public highways, unless operating within localities or along routes or between points that the State public utilities commission finds to be inadequately serviced without regulation under this chapter; (vi) Does not include persons engaged in the business of warehousing or storage, unless the State public utilities commission finds that regulation thereof is necessary in the public interest; (vii) Does not include: (aa) The business of any carrier by water to the extent that the carrier enters into private contracts for towage, salvage, hauling, or carriage between points within the State and the carriage is not pursuant to either an established schedule or an undertaking to perform carriage services on behalf of the public generally; and (bb) The business of any carrier by water, substantially engaged in interstate or foreign commerce, transporting passengers on luxury cruises between points within the State or on luxury round-trip cruises returning to the point of departure; (viii) Does not include any person that: (aa) Controls, operates, or manages plants or facilities for the production, transmission, or furnishing of power primarily or entirely from non-fossil fuel sources; and (bb) Provides, sells, or transmits all of that power, except such power as is used in its own internal operations, directly to a public utility for transmission to the public; (ix) Does not include a telecommunications provider only to the extent determined by the State public utilities commission, pursuant to applicable State law; (x) Does not include any person that controls, operates, or manages plants or facilities developed pursuant to applicable State law for conveying, distributing, and transmitting water for irrigation and such other purposes that are held for public use and purpose; and (xi) Does not include any person that owns, controls, operates, or manages plants or facilities for the reclamation of wastewater; provided that: (aa) The services of the facility must be provided pursuant to a service contract between the person and a State or city agency and at least 10 percent of the wastewater processed is used directly by the State or city agency that has entered into the service contract; (bb) The primary function of the facility must be the processing of secondary treated wastewater that has been produced by a municipal wastewater treatment facility that is owned by a State or city agency; (cc) The facility must not make sales of water to residential customers; (dd) The facility may distribute and sell recycled or reclaimed water to entities not covered by a State or city service contract; provided that in the absence of regulatory oversight and direct competition, the distribution and sale of recycled or reclaimed water must be voluntary and its pricing fair and reasonable. For the purposes of this subparagraph, “recycled water” and “reclaimed water” mean treated wastewater that by design is intended or used for a beneficial purpose; and (ee) The facility must not be engaged, either directly or indirectly, in the processing of food wastes; (B) “Motor carrier” means a common carrier or contract carrier transporting freight or other property on the public highways, other than a public utility or taxicab; (C) “Contract carrier” means a person other than a public utility or taxicab that, under contracts or agreements, engages in the transportation of persons or property for compensation, by land, water, or air; (D) “Carrier” means a person that engages in transportation, and does not include a person such as a freight forwarder or tour packager that provides transportation by contracting with others, except to the extent that the person engages in transportation; (E) “Taxicab” includes: (i) Any motor vehicle used in the movement of passengers on the public highways under the following circumstances, namely, the passenger hires the vehicle on call or at a fixed stand, with or without baggage for transportation, and directs the vehicle to the passenger’s destination; and (ii) Any motor vehicle having seating accommodations for eight or fewer passengers used in the movement of passengers on the public highways between a terminal, i.e., a fixed stand, in the city, and a terminal in a geographical district outside the limits of the city, and vice versa, without picking up passengers other than at the terminals or fixed stands; provided that passengers may be unloaded at any point between terminals; and provided further that this definition relating to motor vehicles operating between terminals pertains only to those motor vehicles whose operators or owners were duly licensed under any applicable provision of law or ordinance and doing business between such terminals on January 1, 1957; (F) “Telecommunications carrier” or “telecommunications common carrier” means any person that owns, operates, manages, or controls any facility used to furnish telecommunications services for profit to the public, or to classes of users as to be effectively available to the public, engaged in the provision of services, such as voice, data, image, graphics, and video services, that make use of all or part of their transmission facilities, switches, broadcast equipment, signaling, or control devices; and (G) “Telecommunications service” or “telecommunications” means the offering of transmission between or among points specified by a user, of information of the user’s choosing, including voice, data, image, graphics, and video without change in the form or content of the information, as sent and received, by means of electromagnetic transmission, or other similarly capable means of transmission, with or without benefit of any closed transmission medium, and does not include cable service as defined under applicable State law. (d) Whenever land has been divided into lots or parcels as provided by law, each such lot or parcel must be separately assessed. (e) When a parcel of land that has been classified as agricultural is improved with a single-family dwelling and has been granted a home exemption for the tax year, that portion of the parcel that is used for residential purposes will be classified as residential. This classification will: (1) Apply only to that portion used for residential purposes; (2) Not exceed 5,000 square feet of land and the buildings and improvements on that land; and (3) Remain in effect only so long as the property qualifies for a home exemption. (f) When a parcel of land that has been classified as preservation is improved with a single-family dwelling and has been granted a home exemption for the tax year, that portion of the parcel that is used for residential purposes will be classified as residential. This classification will: (1) Apply only to that portion used for residential purposes; (2) Not exceed 5,000 square feet of land and the buildings and improvements on that land; and (3) Remain in effect only so long as the property qualifies for a home exemption. (g) (1) In determining the value of buildings, consideration must be given to any additions, alterations, remodeling, modifications, or other new construction, improvement, or repair work undertaken upon or made to existing buildings as the same may result in a higher assessable valuation of the buildings; provided that any increase in value resulting from any additions, alterations, modifications, or other new construction, improvement, or repair work to buildings undertaken or made by the owner occupant thereof pursuant to the requirements of any urban redevelopment, rehabilitation, or conservation project under HRS Chapter 53, Part II, must not increase the assessable valuation of any building for a period of seven years from the date of certification as hereinafter provided. (2) It is further provided that the owner occupant shall file with the director, in the manner and at the place the director may designate, a statement of the details of the improvements certified in the following manner: (A) In the case of additions, alterations, modifications, or other new construction, improvement, or repair work to a building that is undertaken pursuant to any urban redevelopment, rehabilitation, or conservation project as hereinabove mentioned, the statement must be certified by the mayor or any governmental official designated by the mayor and approved by the council, that the additions, alterations, modifications, or other new construction, improvement, or repair work to the buildings were made and satisfactorily comply with the particular urban development, rehabilitation, or conservation act provision; or (B) In the case of maintenance or repairs to a residential building undertaken pursuant to any health, safety, sanitation, or other governmental code provision, the statement must be certified by the mayor or any governmental official designated by the mayor and approved by the council, that: (i) The building was inspected by them and found to be substandard when the owner or occupant made the claim; and (ii) The maintenance or repairs to the buildings were made and satisfactorily comply with the particular code provision. ) Editor’s note: Amendments made to §§ 8-7.1 and 8-11.1 in Ord. 25-44 apply to tax years beginning July 1, 2027.