06/06/2026
By Alexander Lugo – Commercial Real Estate Reporter, Pacific Business News
Jun 4, 2026
Story Highlights
What's This?
Alexander & Baldwin paid $4.19 million in conveyance taxes on property transfer.
Hawaii legislators failed to pass bills closing the LLC loophole this session.
The conveyance tax funds affordable housing and land conservation initiatives statewide.
Alexander & Baldwin recently transferred ownership of more than 765 acres of Hawaii properties to a Blackstone-led entity that purchased the company earlier this year.
It cost the Honolulu commercial real estate company at least $4.19 million to transfer those properties to the Blackstone-led entity that purchased A&B for $2.3 billion earlier this year.
That $4.19 million stemmed from Hawaii's conveyance tax, a form of property tax that has been the subject of debate for years. Most notably, Oracle co-founder Larry Ellison's $300 million purchase of 98% of the island of Lanai from a fellow billionaire, Castle & Cooke's David Murdock, skirted that tax using a loophole, often prompting discussions on whether Hawaii should change how the tax works.
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Amazon founder Jeff Bezos' purchase of a remote estate near La Perouse Bay on Maui also avoided the tax. Ellison’s $300 million purchase of Lanai would have incurred a $3.75 million conveyance tax bill while Bezos’ $78 million Maui purchase would have incurred a $975,000 conveyance tax bill.
“[The] Bezos and Ellison [sellers] paid less in conveyance taxes than I paid for my $550,000 house in Lihue, which is crazy,” Hawaii state Rep. Luke Evslin told Pacific Business News in an interview conducted shortly after two bills that aimed to reform the conveyance tax law failed to pass the Hawaii Legislature this session.
Rep Luke Evslinexpand
Rep. Luke Evslin
PBN
What is a conveyance tax?
Whenever someone sells property in Hawaii, they’re typically subject to the state’s conveyance tax, which varies depending on the sale price.
The money raised from the tax gets split into a few special funds dedicated to things like affordable housing and land conservation. But Hawaii's conveyance tax is on the low end when compared to states like California and New York, making it a favorite target for Hawaii legislators looking to raise state funds.
The highest bracket applies to sales above $10 million involving a non-owner-occupant buyer. That rate — $1.25 per $100 — means a sale just above $10 million generates a $125,000.01 tax bill.
Meanwhile, the lowest rate is paid for transactions under $600,000 for owner-occupant buyers. Those sales are subject to 10 cents for every $100 spent, meaning a sale just under $600,000 would total $599.99 in conveyance taxes.
The origins of the tax go back to 1967, when the state of Hawaii was still in charge of collecting property taxes, a duty that has since gone to the counties. Because property deeds did not declare what the value of a property sale was, the state created the conveyance tax as an instrument to fund the recording of that value.
To cover administrative costs, the state charged a small tax. At that time, the tax for a $1 million sale would have amounted to $500.
“As time went on, people were looking at different taxes in the system and they said, ‘Oh, we have a conveyance tax. Well, we need to fund this initiative or that initiative ... so let's jack up the tax and let's earmark the funds.’ And that's what happened,” said Tom Yamachika, president of the Tax Foundation of Hawaii.
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Tom Yamachika is president of the Tax Foundation of Hawaii
Tina Yuen PBN
Hawaii legislators frequently craft bills targeting increases to the tax since it’s a way for the government to raise money without increasing more commonly known taxes like income taxes.
The 2026 legislative session saw Senate Bill 3028 fail, which would have restructured the conveyance tax to a marginal rate and raised the tax for sales over $2 million.
The bill would have also eliminated the conveyance tax on sales under $600,000 entirely while lowering the tax for sales under $4.3 million, which accounts for 95% of transactions, according to Evslin, D-Wailua-Puhi, who pushed for the bill.
“We could zero out rates for under $600,000 because all of the revenue is coming from the $10 million plus properties,” said Evslin, who chairs the House Committee on Housing.
Closing the loophole
The loophole that was used for Ellison’s Lanai purchase and Bezos’ Maui purchase was also the subject of legislative attempts to change how the tax works.
Ellison and Bezos purchased the limited liability company, or LLC, entities that owned each property instead of opting to buy the properties outright. Buying entities that control real estate, instead of buying the real estate itself, does not trigger the tax.
A&B chose to not go that route when it transferred properties to the joint venture that acquired it earlier this year. Kaneohe Ranch also paid conveyance taxes in 2013 when it sold its Windward Oahu commercial real estate portfolio to A&B for $373 million, which included many of the Kailua properties that are now owned by Blackstone-led entities.
A spokesperson for A&B declined to comment on the transfers. But the loophole isn’t always the preferred route.
“There's other implications related to acquiring an entity to avoid a conveyance tax that are more risky," said CBRE Senior Vice President Matthew Bittick. "For example, if an entity has tail liability associated with it, where there are potential lawsuits or potential liability associated with something else that could be potentially unknown. Do you want to avoid paying conveyance tax and take on that risk?”
Once someone buys an entity that could be subject to litigation, that person or company could be caught up in potential litigation because they are now the owner of the entity that could be sued. And retail properties, which make up a major part of A&B’s portfolio, can be magnets for negligence lawsuits, for example.
For that reason, A&B could have avoided the loophole route. But it’s hard to say if that’s the whole reasoning definitively because the A&B merger is just such a large and complicated transaction, Bittick said.
Evslin introduced House Bill 1918, which would have subjected sales of entities controlling real property to the tax. That bill died in the Senate Ways and Means Committee after passing the House and crossing over.
It failed to get through because of tight deadlines, but also because of contention between a proposal in the same bill to divert more funding to the Department of Hawaiian Home Lands, according to state Sen. Donovan Dela Cruz, who chairs the Ways and Means Committee.
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Sen. Donavan Dela Cruz
Hawaii State Senate
“What we want the agencies to do is just explain which projects they need or which positions they may need, and then the Legislature appropriates instead of doing this dedicated funding arrangement where there would be no checks and balances,” Dela Cruz said.
But the bill’s supporters in the House were dead set on setting up that funding stream for DHHL.
“That was a primary purpose of the bill, to come up the first-ever dedicated funding source for DHHL,” Evslin said. “They got $30 million for various projects. But who knows what they're going to get next year? It's just hard to plan around not knowing how much funding you're going to have.”
For now, the tax work-around is staying in place. But Evslin stated that he’s targeting similar attempts in next year’s legislative session with some tweaks to this year’s approach.
Some of this year’s negotiations involved proposals to send the DHHL part of the funding to a special fund that the Legislature could have oversight on. That way, if DHHL wanted to use funds from the dedicated bucket, it would have to get approval. But the money would still be streamlined to DHHL spending.
Hawaii Realtors, the statewide real estate trade organization, supports such tweaks.
Evslin believes the framework is the closest it’s ever been to passing. He is still contemplating how to approach next year’s attempts, with the DHHL piece of it being central to those discussions.
Support for the bill extends beyond the Legislature.
“Hawaii Realtors supports the intent to treat transactions the same, whether the transfer occurs through a direct sale of real property or through the transfer of an ownership interest by an entity,” a spokesperson for Hawaii Realtors told PBN in a statement. "However, any restructuring of the conveyance tax should include a discussion about addressing this loophole while ensuring that Hawaii's homeowners are not unduly burdened in everyday transactions."
A Snapshot of A&B Property Transfers
These are some of the properties included in the transfer that netted $4.19 million in conveyance taxes.
