O'ahu property owners who provide housing to low-income families would get substantial tax breaks under a bill just introduced before the Honolulu City Council.

Councilman Donovan Dela Cruz said he proposed the measure as a companion bill to a plan by Mayor Mufi Hannemann to create a new property tax category for people who live in the homes they own.

Dela Cruz said both owner-occupants and low-income renters need to be sheltered from the possibility of high property tax rates.

"Should the administration bill move forward, (this) is a good companion bill because it helps address those who are on fixed income or have limited income and are renters," Dela Cruz said.

The administration's owner-occupant proposal, Bill 51-09, made it out of the Council Budget Committee by a 3-2 vote two weeks ago and is up for the second of three full council votes on Wednesday.

While Hannemann and other supporters of the bill say it provides tax relief to those who need it most, critics say it shields those most likely to vote and makes it easier for elected officials to raise property taxes on everyone else.

Some also believe creating an owner-occupant classification would hurt renters, reasoning that those renting to them would pass on the cost of future tax increases.

Dela Cruz said that's where his measure, Bill 83-09, comes into play by providing incentive to those who provide affordable rentals to continue doing so.

To qualify for an affordable rental housing property tax exemption, all of the units on a property must be leased or rented at "an affordable rate."

What's considered affordable is based on median income figures determined by the U.S. Department of Housing and Urban Development. According to the latest figures, the median income for a family of four on O'ahu — the point where half the families make more and half make less — is about $79,000.

"If you charge higher for a rental, you don't get the break," said Dela Cruz, adding that there's a trend of high-rent buildings going up in Waikiki and other parts of urban Honolulu.

The bill would provide an exemption of up to $80,000 in valuation for each unit on a rental property. It would apply to both single-family and multi-family units, or both homes and apartments /condominiums.

Dela Cruz said he's not committed to an $80,000 exemption and said he offered it up only as a starting point for debate. Currently, owner-occupants enjoy an $80,000 exemption and seniors who live in their own homes get a higher exemption based on how old they are.

The bill will get the first of three votes before the council on Wednesday.

Dela Cruz also has introduced a bill that would give seven-year tax exemptions for property owners who put up new buildings or make improvements to existing structures.

Dela Cruz said Bill 66-09 is designed to aid the building industry.

The language of the bill is similar to legislation adopted by the council in the 1990s giving tax breaks to property owners in the Waikiki Special District. Those exemptions helped spur the development of some of the first new improvements in Waikiki in several decades, including the Kalia Tower at Hilton Hawaiian Village and Outrigger Enterprises' Beachwalk/Lewers Street redevelopment.

Several major development projects in Waikiki and elsewhere on O'ahu have been delayed by the bad economy and could be jump-started with a tax break, Dela Cruz said.

The city doesn't lose revenues it already gets because the exemption would only apply to the improved portions of a property, Dela Cruz said.