Study Finds Honolulu Property Taxes Excessive For Tens Of Thousands Of Property Owners

PRIMARY FINDINGS:

A recent independent study has revealed that over 60,000 Honolulu property owners are paying more than 10% above market value in property taxes due to inaccurate City assessments. Alarmingly, more than 15,000 taxpayers are overpaying by more than 20%, with some cases exceeding 30%.

Conversely, many properties are under-assessed, resulting in unfair disparities across the tax base.

Fewer than half of the City’s assessments fall within 5% of actual market value—a performance metric that would be unacceptable in any professional setting.

This study has been submitted multiple times over the past year to the Department of Budget and Finance, the City Council, and the Mayor’s Office. The Mayor’s Office has provided limited response, the City Council has offered none, and the Department has issued outright denials.

Taxation is a powerful government tool—one that must be exercised fairly. The City and County of Honolulu is failing in this obligation and appears uninterested in addressing the issue.

ADDITIONAL FINDINGS:

Lack of Performance Metrics

City departments maintain “performance metrics,” yet there are none in place to measure the accuracy of property tax assessments. The only related metric is the number of appeals processed—averaging just 1,565 annually—which is insignificant compared to the 60,000+ properties that may warrant appeals. This suggests systemic neglect and lack of internal accountability.

The Department refuses to consider a simple, transparent method proposed in this study for evaluating assessment accuracy.

Assessment Appeal Process Is Ineffective

Under current rules, property owners must prove that their assessment is at least 10% over market value to file an appeal—effectively granting the City a 10% margin of error without accountability. This outdated threshold has been in place for over 40 years despite technology advances.

Given today’s market, a 20% error can mean an overpayment of $1,000 or more. By comparison, San Diego allows appeals without a threshold, promoting fairness. Honolulu should consider reducing its threshold to 5% or eliminating it altogether.
Property owners should look closely at their notification of proposed assessed value in December. If they think it is high, they should contact their Realtor for assistance.

Public Awareness & the Kūpuna (Elderly)

The low appeal rate suggests the public either lacks understanding, fears the process, or feels powerless. This is particularly true for our kūpuna (elderly), who may find the system inaccessible or intimidating. A fair system must also be an understandable and approachable one.

Consider Privatization

The Assessment Division employs 104 staff members with a total payroll of $6.5 million annually. Despite this, they consistently fail the taxpayers. There is a compelling case to consider privatizing this function, which could likely be done at lower cost and higher accuracy. The absence of self-auditing or accountability indicates complacent leadership and a lack of public service commitment.

Flawed Use of Technology

The City uses the CAMA (Computer-Assisted Mass Appraisal) system. While CAMA is widely accepted, its effectiveness depends on the accuracy of input data. The principle of “Garbage In, Garbage Out (GIGO)” applies here. The flawed outputs we’re seeing reflect garbage input—a failure in data integrity and oversight.

Market Value Compliance

City law requires properties to be assessed at 100% of market value, yet less than half of assessments are within ±5% of that mark. This is unacceptable and clearly noncompliant with legal obligations.

STUDY METHODOLOGY:

For the 2024–2025 tax year, the City assessed values as of October 1, 2024, using sales data collected from July 2023 to June 2024. These assessments were sent to owners in mid-December 2024.

To test accuracy, I compared City assessments against actual closed sales data (MLS) from July to September 2024—the most relevant, objective indicator of market value. I randomly selected 100 out of 674 sales across all 9 zones of O’ahu for sales in July 2024. I also conducted similar reviews for September and for the previous tax year.

Results were consistent: City assessments frequently deviated significantly from actual sales values. Backup data is available.

If the City truly wanted to evaluate its assessment accuracy, it could replicate this study using all 1,954 closed sales from Q3 2024. My work took roughly three hours per review. The City has ample resources to do better—and chooses not to.

ABOUT THE STUDY AUTHOR:

Dan Madden performed the study and has gotten agreement as to its validity by knowledgeable professionals (appraisers, accountants, Realtors). He has been a Realtor for 37 years, now with Hawaii Life. He graduated from the U. S. Naval Academy with a degree in ocean engineering; is a retired naval officer (Commander O-5); was promoted to GM-15 as a multi-billion dollar program manager at the age of 35 in the Navy Department in Washington, D. C.; and was Principal Broker for a Honolulu multi-office real estate brokerage.

As a Realtor, Dan has an obligation to property owners in his community. In the last five years he has assisted dozens of Hawaii Kai property owners in successfully appealing their assessments. This exposure caused him to question the system.