Update on the 2015 Hawaii Legislative Session
In January, we faced almost a dozen bills which could have impacted our transient vacation rentals. In the end, only one survived. When we last wrote, HR22 was still alive. HR22 asked the State Auditor to determine if transient vacation rentals should become a regulated industry in the same way real estate agents are regulated, but as only House passed this bill, the State Auditor refused to take the request. The other bill was SB519 – which we will discuss below.
SB519 SD2 HD3 CD1 (“SB519”) is now Act 204
On July 2, Governor Ige signed SB519 into law and is now known as Act 204. Generally, this bill covers Local Contacts, Advertising and Tax Compliance for Transient Rentals. The latest version of the bill was posted on the legislative website Saturday, May 2, and can be accessed through this link: SB519 CD1.htm
This is a very good outcome for RBOAA members and all those who own or own and operate rental accommodations in Hawaii. There is no doubt that we would be in a very different place, and a very disadvantageous place, had it not been for all the efforts of the RBOAA membership. We banded together and made strong, passionate and logical arguments to the Legislators.
Please note that this bill replaces Act 326 which ceases to have force on December 31, 2015. SB519/Act 204 negates the need to extend Act 326 as certain key provisions of Act 326 are carried forward indefinitely within the Transient Accommodations Tax Act.
The following is an email sent to all Hawaiian Senators and Representatives offering to work together to resolve the challenges posed by TVR and the unsubstantiated claims being made:
Dear Hawaii Senators and State Representatives:
I’m writing to you in the hope that we might work together to put in place a consistent, effective approach to the state’s array of accommodation offerings including owner-operated transient accommodations and agency-managed transient accommodations.
This legislative session — and the four legislative sessions prior — have witnessed a number of bills introduced that offer widely disparate statements as to the definition, quantity, and legality of these types of transient accommodations. Whether the description is Individual Visitor Units (IVUs), Individually Advertised Units (IAUs), Transient Vacation Rentals (TVRs), or Transient Vacation Units (TVUs), we do not believe that Hawaii wishes to put an end to this type of accommodation, nor do we believe Hawaii wants to send a message that such options are to be denied to consumers. But the attacks on this popular vacation option has seen Hawaii legislators criticized for advancing bills that create monopolies for hotels or property managers.
Legislative Update — May 5, 2015
In January, we faced almost a dozen bills which could have impacted our transient vacation rentals. In the end, only two survived. HR22 asked the State Auditor to determine if transient vacation rentals should become a regulated industry in the same way real estate agents are regulated. The State Auditor will examine this issue over the next year and report back to the legislature. The other bill was SB519.
SB519 SD2 HD3 CD1
On May 1, SB519 SD2 HD3 CD1 (“SB519”) emerged from the Conference Committee stage of the Hawaii Legislature. Generally, this bill covers Local Contacts, Advertising and Tax Compliance for Transient Rentals. The latest version of the bill was posted on the legislative website Saturday, May 2, and can be accessed through this link: SB519 CD1.htm
This bill passed the House and the Senate on May 5.
RBOAA has once again been as impressed at the time and care taken by Hawaii legislators to listen to, consider, and respond to the views of all who have had input to the broader issue of vacation rentals, and to specific issues in respect of their legal operation and management.
Please note that should this bill proceed in its current form, and progress to become law, it would supersede, i.e., replace, Act 326 which ceases to have force on December 31, 2015. Indeed, various previous versions of SB519 have contained provisions that would have extended Act 326 for varying lengths of time. In its current form and structure, SB519 negates the need to extend Act 326 as certain key provisions of Act 326 are carried forward indefinitely within the Transient Accommodations Tax Act.
Accordingly, with Act 326 due to sunset on December 31, 2015, we begin presentation of the various sections of SB519 (which is followed by a restatement of the provisions in an at-a-glance form):
This Act shall take effect on January 1, 2016.
The preamble sees the legislature declare, per Section 521-43(f) of the Hawaii Revised Statutes, (the Landlord Tenant Code) that as a consumer-protection measure, an owner who lives out of state or on a different island than the rental unit shall designate an agent who resides on the same island to act on the owner’s behalf. The preamble explains that designating a “local contact” is essential in the case of an emergency or natural disaster, and for dealing with any questions, concerns, or property issues that might arise regarding the transient accommodation.
The bill amends section 237D-1 of the Hawaii Revised Statutes (the Transient Accommodation Tax Act) to add a new definition — “Local Contact” — which it defines as: ““Local contact” means an individual residing on the same island as the transient accommodation or resort time share vacation unit or an entity with a place of business and at least one employee, officer, partner, member, or other person working on behalf of the company who is residing on the same island as the transient accommodation or resort time share vacation unit.”
The bill amends section 237D-1 of the Hawaii Revised Statutes to add a new definition — “Transient Accommodations Broker” — which it defines as: ““Transient accommodations broker” means any person or entity, including but not limited to persons who operate online websites, online travel agencies, or online booking agencies, that offers, lists, advertises, or accepts reservations or collects whole or partial payment for transient accommodations or resort time share vacation interests, units, or plans.”
The bill amends the definition of “transient accommodations” in section 237D-1 of the Hawaii Revised Statutes to include single family dwelling and dwelling unit (Chapter 514B), so as to affirm that when such defined spaces are used for less than 180 consecutive days by a transient, the spaces are “transient accommodations” and fall subject to compliance with applicable statutes.
The bill amends section 237D-4 of the Hawaii Revised Statutes relating to the display of the Hawaii Tax ID, i.e., the “Certificate of Registration,” adding that, “The name, phone number, and electronic mail address of the local contact shall at all times be conspicuously displayed in the same place as the registration or the same place as the notice stating where the registration may be inspected and examined. Failure to meet the requirements of this subsection shall be unlawful.” [Note: RBOAA recommends that the information be displayed in the rental property.]
The bill amends section 237D-4 of the Hawaii Revised Statutes to advise that, “The department [Department of Taxation] may issue citations to any person who fails to conspicuously display the registration or notice, or the local contact’s name, phone number, or electronic mail address as required. A citation issued pursuant to this subsection for each transient accommodation or resort time share vacation interest, plan, or unit in violation of this subsection shall include a monetary fine of not less than: (1) $500 per day, for a first violation for which a citation is issued; (2) $1,000 per day, for a second violation for which a citation is issued; and, (3) $5,000 per day, for a third and any subsequent violation for which a citation is issued. Any monetary fine assessed under this section shall be due and payable thirty days after issuance of the citation, subject to appeal rights provided under this subsection. Citations may be appealed to the director of taxation or the director’s designee.”
The bill amends section 237D-4 of the Hawaii Revised Statutes relating to the advertisements for transient accommodations, to advise that “Any advertisement, including an online advertisement, for any transient accommodation or resort time share vacation interest, plan, or unit shall conspicuously provide: (1) The registration identification number or an electronic link to the registration identification number of the operator or plan manager issued pursuant to this section; and, (2) The local contact’s name, phone number, and electronic mail address, provided that this paragraph shall be considered satisfied if this information is provided to the transient or occupant prior to the furnishing of the transient accommodation or resort time share vacation unit. Failure to meet the requirements shall be unlawful.” [Note: RBOAA recommends that owner operators include the Tax ID in every advertisement.]
The bill amends section 237D-4 to advise that, “The department [Department of Taxation] may issue citations to any person, including operators, plan managers, and transient accommodations brokers, who violates [the ‘advertisement’] subsection. The penalties are the same as for operators, as noted above.
Bill SB519 at-a-glance:
If you don’t live on the same island as your vacation rental, you need to name a Local Contact. The Local Contact is a person or a company resident on the island (there are certain restrictions on companies being local contacts as they must have someone who resides on the island). The Local Contact is not necessarily a real estate agent and is not necessarily an employee of the owner.
- You must post your Hawaii Tax ID (your TAT ID number) number conspicuously in all advertisements and in your rental;
- You must identify your local contact by name, phone number and email address to your guests before they check in and within the rental property;
- There is no longer any requirement for the HOA to collect and remit tax ID and local contact information annually;
- Your online advertising system, i.e., VRBO, FlipKey, AirBnB, must ensure you have posted your Hawaii Tax ID in your advertisement;
- The same rules now apply to time shares and homes as to other transient accommodations; and,
- The fines for non-compliance are very steep and include a monetary fine and a prohibition against operation.
We have been touched by the kindness and patience shown to us by Hawaii’s Representatives, Senators, their staffs, and department and agency officials — like so many Members who have written and emailed us to tell us of their similar, positive experience with some very caring and hard-working men and women.
Whatever the days and weeks ahead may hold, RBOAA will continue to work tirelessly to provide input, perspective, and support to the Hawaii Legislative process and its elected, staff, and administrative representatives for the fairness and balance they have brought to this and so many complex policy areas.
I want to thank everyone for submitting testimony, for reading and considering the bills, and for providing input and ideas. We’re all busy with life, I know, and it has been just terrific to know that while we’ve been doing our work at RBOAA (and as individual owners, too!) so many are doing exactly the same.
Let me start with the harsh reality: Of all the bills we have been actively involved in, it is essential for us all to know that there are still a couple we must keep our eyes on. As we all know from 2012, the Hawaii Legislature can quickly throw some harmful language into another bill, and immediately, we’d have a new bill that can cause us additional angst.
Pending Legislation Introduced in 2015
(as of January 28, 2015)
Bills to amend Act 326 that have been introduced in the 2015 legislature as of January 28, 2015 are:
SB1031 (Baker and others) requires 'local contact" to now be "on-island agent" who must be a licensed realtor. Custodian/caretaker must be an employee and work for only one owner.
Legislative session wrap-up: RBOAA again turns tide in Hawaii legislature, by Alicia Hopkins, President, RBOAA
Another Hawaii legislative session has ended. Once again, the efforts of the Hawaii Rental By Owner Awareness Association (RBOAA) played a significant role in preserving the owner-operated vacation-rental accommodation choice in Hawaii for visitors, and upholding the ability of owners who invest in Hawaii to provide it. Click here to read more...
Rental By Owner Awareness Association's (RBOAA) Mission is:
to provide accurate information about Hawaiian vacation rentals to property owners and Hawaiian legislators
to support the Hawaiian economy by ensuring that visitors have sufficient options in their selection of accommodations
to provide Hawaiian vacation rental property owners with information that will increase their awareness of changing federal, state, and local regulations and requirements with which their ongoing compliance is required
to help ensure that the rights of Hawaiian vacation rental property owners are not infringed on by others who would prefer to restrict them to reduce competition.
MEMBERS PLEASE NOTE:
Key reporting dates approaching under Act 326 . . .
Regular visitors to the RBOAA website will be quite familiar with our “Complying with Act 326” tab found under “News and Updates.” Once there, you’ll see we’ve placed a helpful link to the Hawaii “Department of Taxation Announcement 2014-02” which spells out responsibilities of vacation rental owners and AOAOs under Act 326.
March 31, 2014 — If you are an operator of transient accommodation, you must report certain information to your AOAO by this date.
April 30, 2014 — Your AOAO must file a report of this information with the Hawaii Department of Taxation by this date.
It may well be that your AOAO has already requested the Act 326 information from you, or that you have supplied it to your AOAO without their reminder. For our part, given the importance of Act 326, and the penalties for non-compliance, RBOAA is recommending that all owners of transient accommodation exercise an abundance of caution, and provide to their AOAO by March 31, 2014, the information required of operators of transient accommodation under Act 326.