The City Council last night voted 5-3 to approve a bill designed to shield owner-occupants from larger property tax increases by creating a new category just for them.

Also yesterday, the council heard nearly four hours of public testimony before voting to give the second of three approvals for a bill that would allow new permits to be issued to bed-and-breakfast businesses for the first time in more than 20 years.

The drama in council chambers yesterday, however, was with Bill 09-51, the homeowner tax bill. Several council members angrily accused Mayor Mufi Hannemann of trying to manipulate the council.

Yesterday morning, believing there was not the five votes necessary to move the bill out, the council voted unanimously to send the bill back to the Budget Committee.

But after 6 p.m., with the bed-and-breakfast issue finished, the council, at the urging of city Managing Director Kirk Caldwell, voted to reverse itself so the new tax category would be in effect in the coming year as the city deals with a looming budget crisis.

"This gives us the flexibility to address the upcoming shortfall ... it's very important." Caldwell said.

Council Chairman Todd Apo, who had consistently expressed reservations about how a new tax category would affect owners who did not live on their properties, as well as the effect on renters, proved to be the swing vote on the measure. Joining him were members Donovan Dela Cruz, Nestor Garcia, Gary Okino and Rod Tam.

Opposed were members Ikaika Anderson, Romy Cachola and Ann Kobayashi.

Councilman Charles Djou, among the most vocal critics of creating a new classification, was present when the council voted to send the bill back to the Budget Committee but was not in the chambers for the second, unscheduled vote.

Apo said he voted for the bill after meeting with Hannemann in the mayor's office yesterday afternoon. Apo said Hannemann convinced him how badly the administration wanted to have an owner-occupant category as a tool when it deals with next year's budget.

Cachola and Kobayashi assailed Hannemann for trying to manipulate the council by persuading Apo to change his mind.

ANGRY WORDS

Saying the council had allowed itself to be "manipulated" by the mayor, Kobayashi said she "apologized" to the public. Council members' votes, she said, are worthless when "all it takes is for the mayor to say, 'Change it.' "

Cachola said the council's integrity had been compromised and he suggested political horse-trading had taken place to change Apo's vote.

But Apo said he had been promised nothing.

Hannemann told The Advertiser last night that his conversation with Apo involved only the tax bill. Hannemann said he was able to convince Apo that if a new tax rate was going to be created in time to be reflected in property assessments that are mailed out in December, the bill had to be moved out of the council yesterday.

With the administration already expecting a budget shortfall of $150 million, it's a near-certainty that property taxes will need to be increased to maintain city services. Supporters of the bill have argued it will allow the council and the mayor to protect those most in need.

But opponents of the bill said it makes it too easy for the administration and council members to shift the burden of any tax increase to landlords and owners of lands in other categories, such as commercial or agricultural properties.

Djou has said "protecting homeowners so we can stick it to everyone else doesn't make sense."

B&B TESTIMONY

Kobayashi said there are better ways to help those most in need, such as improving upon an existing program that allows low-income families to apply for a tax credit.

Apo pointed out that it is ultimately the council which sets tax rates, and stressed that he is still not convinced that owner-occupants should have separate rates from other property owners.

Councilman Gary Okino said he had the same reservations as Apo about the owner-occupant tax category but that he voted to support the bill to give the administration more tools.

Council members spent most of the afternoon hearing from people for and against allowing new bed and breakfast establishments to be legalized for the first time since the late 1980s.

The version of Bill 08-07 that advances back to the Zoning Committee would allow for a set number of B&Bs to be granted in each of the nine council districts. Proposed by Councilman Ikaika Anderson, it limits the number of rooms per B&B to three and the number of occupants to two per room.

A B&B operator, who would only be allowed one permit at a time, would need to pay $500 for the permit and be required to provide off-street parking for guests.

More than 75 people signed up to testify on the matter, with those opposing the measure slightly outnumbering those who spoke for it.

North Shore resident David Bramlett invited council members to visit his neighborhood to learn about the ills of B&Bs.

"To state the obvious, it's spot zoning," Bramlett said.

But Will Paige, a supporter of the B&B bill, said many people living near the establishments welcome them into their neighborhoods.

"B&Bs provide a good, genuine service," Paige said.

Six votes will be needed for final approval of the B&B bill.