§246-10  Valuation; consideration in fixing. 
(a)  The director of taxation shall cause the fair market value of all taxable
real property to be determined and annually assessed as provided by law;
provided that the value of land classified and used for agriculture, whether
such lands are dedicated pursuant to section 246-12 or not, shall, for real
property tax purposes, be the value of such land for agricultural use without
regard to any value that such land might have for other purposes or uses, or to
neighboring land uses, as determined as provided in subsection (f)(2) of this
section.  In making such determination and assessment, the director shall
separately value and assess, within each class established in accordance with
subsection (d) of this section:  (1) buildings, and (2) all other real
property, exclusive of buildings.



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



(c)  So far as practicable, records shall be
compiled and kept in each district which shall show the methods established by
or 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 general
classes:



(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 classes
the director of taxation shall give major consideration to the districting
established by the land use commission pursuant to chapter 205, the districting
established by a county in its general plan and zoning ordinance, use
classifications established in the general plan of the State, and such other
factors which influence highest and best use.



(3)  "Improved residential property" shall
mean property which is classified as residential by the department of taxation
upon consideration of its highest and best use, and is property which fulfills
the provisions of at least one of the following subparagraphs:



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



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



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



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



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



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



(f)  (1)  In determining the value of land, other than
land classified and used for agriculture, consideration shall be given to
selling prices and income (including, where available, such data relating to
the property being assessed and similar data for comparable properties),
productivity, and nature of use (actual and potential), the advantage or
disadvantage of factors such as location, accessibility, transportation
facilities, 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 the
opinions of persons who may be considered to have special knowledge of land
values, and all other influences, whether similar to those listed or not, which
fairly and reasonably bear upon the question of value.



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



(3)  A deferred or roll back tax shall be imposed on
the owner of agricultural lands assessed according to its agricultural use as
provided in subsection (a) of this section in the event of a change in land use
classification by the authorized state agency to urban or rural districts or
upon the subdivision of the land into parcels of five acres or less, provided
that the tax shall not apply if the owner dedicates the owner's land as
provided in section 246-12 within three years from the date of the change in
land use classification and fulfills all of the requirements of the
dedication.  The deferred tax shall be due and payable at the end of the third
year following the change in land use classification provided that the land
shall continue to be used for agriculture during this period.  The total amount
of deferred taxes shall be computed commencing at the end of the third year
following the change in classification where the land has continuously been
used for agriculture; provided however that where the land has been put to a
higher urban or rural use prior to the expiration of the three-year period the
amount of deferred taxes shall be computed commencing at the end of the year in
which the land has been put to such higher urban or rural use, and shall be
retroactive to the date the assessment was made pursuant to subsection (a) of
this section provided the retroactive period shall not exceed ten years.  Where
the 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 made
retroactive to the date the assessment was made pursuant to subsection (a) of
this section but for not more than ten years.  Any other provisions to the
contrary notwithstanding, the deferred or roll back tax shall apply only if a
change in land use classification has been made as a result of a petition by
any property owner or lessee and shall apply only upon lands owned by the owner
or lessee who has petitioned for the change in classification.  The deferred or
roll back tax shall not apply to lands owned by any owner or lessee who has not
petitioned for the change in classification provided the owner or lessee shall
continue to use the land in its agricultural use for a period of three years
after the change in land use classification is made, or where the change in
classification is initiated by any governmental agency or instrumentality.  The
deferred or roll back tax shall be based on the difference in assessed value
between the highest and best use and the agricultural use of the land, at the
tax rate applicable for the respective years.



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



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



Any other provisions to the contrary
notwithstanding, the land shall continue to be assessed in its agricultural use
as provided in subsection (a) of this section until the land is put to its higher
urban or rural use or for a period of three years following the change in
classification whichever is shorter, provided that for purposes of determining
the amount of deferred taxes to be assessed to the owner or lessee, the
retroactive period shall include the period during which the land is continued
to 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 of
the State pursuant to section 246-55.



(4)  Where lands located within agricultural districts
are put to agricultural uses, that portion of such lands not usable or suitable
for 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 be
payable upon conversion as provided under this section.



(g)  Buildings shall be valued each year upon
the basis of the cost of replacement less depreciation, if any.  Age,
condition, and utility or obsolescence shall be considered.  The director shall
determine 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 undertaken
upon or made to existing buildings as the same may result in a higher
assessable valuation of said buildings, provided however that, (1) 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 the provisions of
part II of chapter 53 shall not increase the assessable valuation of any
building for a period of seven years from the date of certification as
hereinafter provided and (2) any increase in value resulting from any
maintenance or repairs to any residential buildings undertaken or made by the
owner- occupant thereof (who occupies the entire building) pursuant to any
requirements of any health, sanitation, safety, or other governmental code
provisions, shall not increase the assessable valuation of any such building
for a period up to and including April 11, 1972.



It is further provided that the owner-occupant
shall file with the director of taxation, in the manner and place which the
director may designate, a statement of the details of the improvements
certified in the following manner:



(1)  In the case of additions, alterations,
modifications or other new construction, improvement or repair work to a
building that are undertaken pursuant to any urban redevelopment,
rehabilitation or conservation project as hereinabove mentioned, the statement
shall be certified by the urban renewal coordinator in the city and county of
Honolulu, or the county chairperson of any county, or any governmental official
designated by them, 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 redevelopment, rehabilitation
or conservation act provision, or



(2)  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 shall be certified by the
building superintendent of the building department of the city and county of
Honolulu, or the county chairperson of any county, or any governmental official
designated by them, that (A) the building was inspected by them and found to be
substandard when the owner-occupant made the owner-occupant's claim, and (B)
the maintenance or repairs to the buildings were made and satisfactorily comply
with 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 L
1951, 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 L
1967, c 37, §1; HRS §246-10; am L 1968, c 56, §3; am L 1969, c 218, §1; am L
1973, c 175, §2; am L 1977, c 111, §1 and c 139, §2; gen ch 1985, 1993]



 



Case Notes



 



  Ascertaining fair
value.  41 H. 141.  Use of unit square foot method of valuation or average
square foot or acreage method of valuation.  Id.



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



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



  To the extent there
is 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 under
prior law.



  Taxing water as such
and again as giving increased value to land irrigated by it held double
taxation and illegal.  6 H. 532.



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



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



  Cited:  34 H. 515,
536.