Aloha!
November 2017 Member — Update
- Remember – TAT goes up 1% on January 1, 2018
- Call for volunteers with legal background
- County of Honolulu
- County of Hawaii ( Big Island )
- County of Maui
TAT Increase
Remember that the TAT rate goes up 1% on January 1, 2018 to pay for the new railway from Honolulu Airport.
Call for Volunteers
As we assemble the team to lead us through the 2018 Hawaii legislative session, we have identified a couple of gaps.
Our Government Relations team needs assistance from individuals with an understanding of legal concepts.
The Government Relations team would also benefit from individuals who are willing to do internet research. For example, there are reports from DBEDTS, Hawaii Tourism Authority, etc. that we use to incorporate into our position. Anyone who is willing to do directed research would be of tremendous help.
RBOAA’s mandate is to represent the interests of vacation rental owners at the State level. We do not have volunteers who are representing the interests of vacation rental owners at the County levels. However, as we have been predicting for a few years now, the focus is shifting from the State to the Counties.
If you are interested in helping RBOAA work at the County level, please let us know.
Otherwise, the best we can do is to share information that we gather. If we become aware of new groups being formed to address the County specific issues, we will provide that information to our members.
And with that – here is some information to share.
County of Honolulu
RBOAA is watching, but not responding to, four proposals in front of the Honolulu City Council. This except from the Honolulu Star-Advertiser is an excellent summary of the proposals.
Proponents of vacation rentals, who argue they are a positive for the visitor industry and the communities where they operate, want to lift a moratorium on permits and allow for more units to operate legally.
Opponents argue vacation rentals are a blight on residential neighborhoods and contribute to the island’s housing crunch, and they want tighter enforcement of existing laws, including a crackdown on illegal operators.
A bed-and-breakfast unit by definition is rented for less than 30 days by an owner living in the same dwelling.
Transient vacation rentals, TVUs, are other units rented for less than 30 days. The owner does not live in the same dwelling, but TVUs are allowed without permits in resort districts such as Waikiki.
The city stopped issuing permits for both in 1989-90.
Larry Bartley, executive director of Save Oahu’s Neighborhoods, sent an email to supporters urging them to support the two proposals emphasizing enforcement and oppose the two that would permit more vacation rentals.
“These (proposals) are the showdown for our neighborhoods and housing for everyone living (on) Oahu,” Bartley said. Most of the short-term rentals on Oahu “are illegal under Honolulu zoning law and are removing much-needed rental housing from local families.”
Meanwhile, San Francisco-based Airbnb Inc. sent out an email calling for its supporters to push against more restrictions.
“These regulations could end home sharing on Oahu as we know it, by imposing huge fines on individuals who rely on home sharing to make ends meet,” the email said. “These harsh new regulations will pit neighbor against neighbor and encourage intrusive spying by allowing complaints from neighbors to go directly to judicial review.”
Complicated issue
Council members have tried unsuccessfully for decades to find a compromise position on the issue, most recently in 2015 and 2009.
Council Zoning Chairwoman Kymberly Pine said new legislation is needed to curb the growing number of illegal vacation rentals, which are eating into the island’s residential inventory and making it more difficult for the city to tackle the affordable-housing shortage.
“We have to get control of this or no one will be left living here but rich people,” Pine said in a statement. “I am not opposed to grandma and grandpa renting a room or a studio on the property they live on as they are doing that just to survive in Hawaii. However, I am against the turnover of entire homes especially in residential, non-tourist areas (to vacation rentals).”
Councilman Ernie Martin, in a statement, agreed. “There is an opportunity here to get a handle on an industry that is extremely popular but also threatens to negatively impact Oahu’s rental market,” he said.
“We cannot ignore how attractive and convenient this type of accommodation is to our visitors and the owners who host them.”
One idea, Martin said, is to create a separate tax classification for vacation rentals.
“Whatever policy emerges from these deliberations must consider the realities of our housing and rental market and carve out an appropriate place for the business owners and the consumers,” he said.
Council Chairman Ron Menor said he’s not opposed to vacation rentals, because there should be a diversity of accommodations that visitors can use.
But with the mushrooming of illegal vacation rentals, “the Department of Planning and Permitting has been stretched thin in attempting to enforce the law given their limited resources,” Menor said.
He said stronger enforcement would also allow the city to identify owners and operators of illegal vacation rentals who have not been paying taxes and collect lost revenue for the state and city.
SUMMARY OF THE 4 PROPOSALS
Resolution 17-52, introduced by Council Chairman Ron Menor and Councilman Joey Manahan, would impose additional regulations on vacation rentals, as well as new regulations on online marketplace sites for vacation rentals such as Airbnb. The proposal calls for allowing neighbors of vacation rentals to compel the city to enforce violations. The proposal also allows a neighbor to take legal action against violators.
It also calls for “hosting platforms” like Airbnb to submit to the city reports on the addresses and owners of operators advertising on their sites, and bars operators from advertising their rentals by any other method.
Save Oahu’s Neighborhoods supports this proposal while Airbnb opposes it.
Resolution 17-163, introduced by Councilman Ernie Martin, establishes a process for allowing an unspecified but “limited number” of new B&B and TVU permits to be issued.
Save Oahu’s Neighborhoods opposes this proposal.
Resolution 17-164, also introduced by Martin, allows the city to issue a lien against a property whose owner violates TVU or B&B law, requires advertisements of vacation rentals to include the addresses and certificate numbers, and allows for advertisements to be used as evidence against an operator. It also bars a TVU or B&B permit from being transferred via sale of a property.
Save Oahu’s Neighborhoods supports this proposal while Airbnb opposes it.
Resolution 17-301, introduced by Councilman Ikaika Anderson, establishes a process allowing for a limited number of bed-and-breakfast permits, specifically no more than 0.5 percent of all Oahu residential properties, and for each of the nine Council districts no more than one-third of the citywide total allowed.
Save Oahu’s Neighborhoods opposes this proposal.
County of Hawaii
The County of Hawaii currently has little to no regulation concerning vacation rentals, however, there is movement toward some degree of regulation in the County. We aren’t sure of the details yet, but there could be restrictions on rentals located on agricultural lands and general restrictions in the name of addressing homelessness and affordable housing. The latter might be addressed through a basic registration system and/or perhaps a property tax change. Vacation rentals could be restricted to resort zones.
County of Maui
Governments seem addicted to taxes, especially taxes that are easy to increase without spending political capital. This excerpt from the Maui News:
Last week the Maui Finance and Budget committee recommended a bill to the full council that establishes a new property tax category for short-term rentals. Currently, short-term rental permit holders fall in the commercial classification.
Others facing reclassification to the new category include short-term rentals in hotel-zoned areas and condominium units where short-term rentals are allowed. Those owners currently fall in the hotel and resort classification.
Another bill recommended for approval would classify condominium units at their “highest and best use,” which is usually reflected in the property’s zoning, said Scott Teruya, Maui County’s real property tax administrator. This proposed change could affect units being placed into the proposed short-term rental classification because many condominium units are built on properties zoned hotel, are grandfathered in for short-term rental purposes or have received conditional permits to operate short-term rentals.
Those who use their units as their primary residence can claim the homeowner’s exemption and would not be affected by these bills, Teruya said.
Although the budget committee did not set property tax rates in its proposed bills, Tom Croly of the Maui Vacation Rental Association says that, more than likely, taxes would go up for those affected by the changes.
Teruya countered Croly’s comments, saying there are many factors that determine property tax bills, including the rates set by the council, overall property valuation and how much money the county needs in its budget.
Mahalo and Aloha,
Neal
