§246-10  Valuation; consideration in fixing. (a)  The director of taxation shall cause the fair market value of all taxablereal property to be determined and annually assessed as provided by law;provided that the value of land classified and used for agriculture, whethersuch lands are dedicated pursuant to section 246-12 or not, shall, for realproperty tax purposes, be the value of such land for agricultural use withoutregard to any value that such land might have for other purposes or uses, or toneighboring land uses, as determined as provided in subsection (f)(2) of thissection.  In making such determination and assessment, the director shallseparately value and assess, within each class established in accordance withsubsection (d) of this section:  (1) buildings, and (2) all other realproperty, exclusive of buildings.

(b)  All property shall be valued byappropriate systematic methods so selected and applied as to obtain, as far aspossible, uniform and equalized assessments throughout the State.

(c)  So far as practicable, records shall becompiled and kept in each district which shall show the methods established byor under the authority of the director, for the determination of values.

(d)  (1)  The land in each county shall be classified,upon consideration of its highest and best use, into the following generalclasses:

(A)  Single-family and two-family residential,

(B)  Three or more family residential,apartment, hotel and resort,

(C)  Commercial,

(D)  Industrial,

(E)  Agricultural, and

(F)  Conservation.

(2)  In assigning land to one of the general classesthe director of taxation shall give major consideration to the districtingestablished by the land use commission pursuant to chapter 205, the districtingestablished by a county in its general plan and zoning ordinance, useclassifications established in the general plan of the State, and such otherfactors which influence highest and best use.

(3)  "Improved residential property" shallmean property which is classified as residential by the department of taxationupon consideration of its highest and best use, and is property which fulfillsthe provisions of at least one of the following subparagraphs:

(A)  Property which has been subdivided priorto any assessment year as a lot for single or two-family residential use inconformity with the then existing county zoning ordinances, and has beenapproved for sale or approved as being in conformity with all of thesubdivision requirements of the particular county in which it is located, or

(B)  Property which is in actual single ortwo-family residential use at a density of at least a single or a two-familyresidential building per acre, or

(C)  Land which is sufficiently developed withnecessary land improvements to support a use density of at least a single or atwo-family residential building per acre.

(4)  "Unimproved residential property" shallmean all residential class lands not classified as "improved residentialproperty" by the department of taxation.

(e)  The director shall select and require theuse of mathematical tables or formulas based upon a suitable unit of quantityand designed to determine equitably the effect, upon the value, of street orhighway frontages, depth from the street or highway, shape, street corners, andother physical elements the effect of which upon value the director findsfeasible to determine by means of tables or formulas.  These tables or formulasshall be used for all areas where this can be done appropriately, and in anyevent as provided in the next paragraph.

Whenever land has been divided into lots orparcels which are used or suitable for use for residential, commercial, orother urban or village purposes, each such lot or parcel shall be separatelyassessed, and the aforesaid mathematical tables or formulas shall be usedunless this is precluded by the shape of the lots or parcels.

(f)  (1)  In determining the value of land, other thanland classified and used for agriculture, consideration shall be given toselling prices and income (including, where available, such data relating tothe property being assessed and similar data for comparable properties),productivity, and nature of use (actual and potential), the advantage ordisadvantage of factors such as location, accessibility, transportationfacilities, size, shape, topography, quality of soil, water privileges,availability of water and its cost, easements and appurtenances, zoning,dedication of lands as provided for in section 246-12, and further to theopinions of persons who may be considered to have special knowledge of landvalues, and all other influences, whether similar to those listed or not, whichfairly and reasonably bear upon the question of value.

(2)  In determining the value of lands which areclassified and used for agriculture, whether such lands are dedicated pursuantto section 246-12 or not, consideration shall be given to rent, productivity,nature of actual agricultural use, the advantage or disadvantage of factorssuch as location, accessibility, transportation facilities, size, shape,topography, quality of soil, water privileges, availability of water and itscost, easements and appurtenances, and to the opinions of persons who may beconsidered to have special knowledge of land values.

(3)  A deferred or roll back tax shall be imposed onthe owner of agricultural lands assessed according to its agricultural use asprovided in subsection (a) of this section in the event of a change in land useclassification by the authorized state agency to urban or rural districts orupon the subdivision of the land into parcels of five acres or less, providedthat the tax shall not apply if the owner dedicates the owner's land asprovided in section 246-12 within three years from the date of the change inland use classification and fulfills all of the requirements of thededication.  The deferred tax shall be due and payable at the end of the thirdyear following the change in land use classification provided that the landshall continue to be used for agriculture during this period.  The total amountof deferred taxes shall be computed commencing at the end of the third yearfollowing the change in classification where the land has continuously beenused for agriculture; provided however that where the land has been put to ahigher urban or rural use prior to the expiration of the three-year period theamount of deferred taxes shall be computed commencing at the end of the year inwhich the land has been put to such higher urban or rural use, and shall beretroactive to the date the assessment was made pursuant to subsection (a) ofthis section provided the retroactive period shall not exceed ten years.  Wherethe owner has subdivided the owner's land into parcels of five acres or less,the deferred tax shall commence from the date the conversion was maderetroactive to the date the assessment was made pursuant to subsection (a) ofthis section but for not more than ten years.  Any other provisions to thecontrary notwithstanding, the deferred or roll back tax shall apply only if achange in land use classification has been made as a result of a petition byany property owner or lessee and shall apply only upon lands owned by the owneror lessee who has petitioned for the change in classification.  The deferred orroll back tax shall not apply to lands owned by any owner or lessee who has notpetitioned for the change in classification provided the owner or lessee shallcontinue to use the land in its agricultural use for a period of three yearsafter the change in land use classification is made, or where the change inclassification is initiated by any governmental agency or instrumentality.  Thedeferred or roll back tax shall be based on the difference in assessed valuebetween the highest and best use and the agricultural use of the land, at thetax rate applicable for the respective years.

(A)  Where the owner subdivides the owner'sland into parcels of five acres or less, the deferred tax shall be due andpayable within sixty days of such conversion, subject to a ten per cent perannum penalty, provided that if the conversion occurs within five years of thedate of enactment of this law, twice the amount of taxes and penalties asprovided herein shall become due and owing.

(B)  Where the owner changes the land useclassification, the deferred tax shall be due and payable within three years ofsuch conversion except that where the land has been put to its higher urban orrural use, the tax shall be due and payable at the end of the year in which theland has been put to such higher use, subject to a ten per cent per annumpenalty.

Any other provisions to the contrarynotwithstanding, the land shall continue to be assessed in its agricultural useas provided in subsection (a) of this section until the land is put to its higherurban or rural use or for a period of three years following the change inclassification whichever is shorter, provided that for purposes of determiningthe amount of deferred taxes to be assessed to the owner or lessee, theretroactive period shall include the period during which the land is continuedto be assessed in its agricultural use following the change in classification. Any tax due and owing shall attach to the land as a paramount lien in favor ofthe State pursuant to section 246-55.

(4)  Where lands located within agricultural districtsare put to agricultural uses, that portion of such lands not usable or suitablefor any agricultural use, whether dedicated pursuant to section 246-12 or not,the tax upon such unusable or unsuitable land shall be deferred and shall bepayable upon conversion as provided under this section.

(g)  Buildings shall be valued each year uponthe basis of the cost of replacement less depreciation, if any.  Age,condition, and utility or obsolescence shall be considered.  The director shalldetermine and require the use of average-basic replacement cost factors.

In determining the value of buildings,consideration shall be given to any additions, alterations, remodeling,modifications or other new construction, improvement or repair work undertakenupon or made to existing buildings as the same may result in a higherassessable valuation of said buildings, provided however that, (1) any increasein value resulting from any additions, alterations, modifications or other newconstruction, improvement or repair work to buildings undertaken or made by theowner- occupant thereof pursuant to the requirements of any urbanredevelopment, rehabilitation or conservation project under the provisions ofpart II of chapter 53 shall not increase the assessable valuation of anybuilding for a period of seven years from the date of certification ashereinafter provided and (2) any increase in value resulting from anymaintenance or repairs to any residential buildings undertaken or made by theowner- occupant thereof (who occupies the entire building) pursuant to anyrequirements of any health, sanitation, safety, or other governmental codeprovisions, shall not increase the assessable valuation of any such buildingfor a period up to and including April 11, 1972.

It is further provided that the owner-occupantshall file with the director of taxation, in the manner and place which thedirector may designate, a statement of the details of the improvementscertified in the following manner:

(1)  In the case of additions, alterations,modifications or other new construction, improvement or repair work to abuilding that are undertaken pursuant to any urban redevelopment,rehabilitation or conservation project as hereinabove mentioned, the statementshall be certified by the urban renewal coordinator in the city and county ofHonolulu, or the county chairperson of any county, or any governmental officialdesignated by them, that the additions, alterations, modifications, or othernew construction, improvement or repair work to the buildings were made andsatisfactorily comply with the particular urban redevelopment, rehabilitationor conservation act provision, or

(2)  In the case of maintenance or repairs to aresidential building undertaken pursuant to any health, safety, sanitation orother governmental code provision, the statement shall be certified by thebuilding superintendent of the building department of the city and county ofHonolulu, or the county chairperson of any county, or any governmental officialdesignated by them, that (A) the building was inspected by them and found to besubstandard when the owner-occupant made the owner-occupant's claim, and (B)the maintenance or repairs to the buildings were made and satisfactorily complywith the particular code provision. [L 1932 2d, c 40, pt of §26; RL 1935, pt of§1935; am L 1939, c 208, §4; RL 1945, pt of §5146; am L 1945, c 79, §9; am L1951, c 164, §1; am L 1955, c 213, §1; RL 1955, §128-9; am L Sp 1957, c 1,§14(c); am L 1963, c 142, §3; am L 1965, c 201, §33; am L 1966, c 34, §2; am L1967, c 37, §1; HRS §246-10; am L 1968, c 56, §3; am L 1969, c 218, §1; am L1973, c 175, §2; am L 1977, c 111, §1 and c 139, §2; gen ch 1985, 1993]

 

Case Notes

 

  Ascertaining fairvalue.  41 H. 141.  Use of unit square foot method of valuation or averagesquare foot or acreage method of valuation.  Id.

  Method adopted forvaluation of cane lands held inappropriate.  Reliance on past assessment valuesas sole basis for current assessment is unsound.  47 H. 41, 384 P.2d 287.

  Director not limitedto replacement cost method of valuing buildings.  65 H. 499, 654 P.2d 363.

  To the extent thereis any conflict between subsection (f)(1) and Revised Ordinances of Honolulu§8-7.1(a), the ordinance is controlling.  82 H. 317, 922 P.2d 371.

 

Decisions underprior law.

  Taxing water as suchand again as giving increased value to land irrigated by it held doubletaxation and illegal.  6 H. 532.

  Assessment: Assessment of irrigation ditch.  6 H. 322.  As to assessment based on the valueof the enterprise itself rather than the value of the property which constituteits basis.  10 H. 624.  Increased assessment of property resulting fromplanting exempted items held erroneous.  11 H. 689.

  Valuation:  Method ofvaluation based on income held improper.  8 H. 81.  Valuation where leaseinvolved, under prior laws.  8 H. 196.  Valuation of leasehold.  10 H. 643; 11H. 210.  Failure to value property similarly for all corporations is not groundto set aside assessment as fraudulent discrimination.  10 H. 624.  Ascertainingfair value.  11 H. 235; 25 H. 278; 25 H. 769; 33 H. 149.

  Cited:  34 H. 515,536.