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DocuSign Envelope ID: B2DOC3EF-E687-4AA6-93CF-D16200518BC6 <br /> M,M3" <br /> In addition to the prior recommendations,the Review Group is also recommending the <br /> following: <br /> I Recommendation to maintain the current tax classifications based on highest <br /> and best use.After many meetings, including presentations from the County of <br /> Hawaii Planning Department.and review of other local government tax codes, the <br /> Review Group is recommending to maintain the current tax classifications at this <br /> time. This decision, in the context of Short Term Vacation-Rentals (STVR) and the <br /> apartment classification, was not made lightly and is based on several important <br /> factors including: <br /> a. The current Hawai'i County Code tax 'Classifications are based on highest and <br /> best use. <br /> b. The County of Hawai'i Planning Department only requires certificates for <br /> STVRs which are non-hosted properties for rentals under thirty days. This <br /> differs from the State of Hawaii and County of Hawai'i Real Property Tax <br /> Division as both reflect vacation rentals as anything under six months (or 180 <br /> days)whether it is hosted or not. <br /> c. There are additional burdens this Division would incur. The management of <br /> constant changes in actual use with no additional support staff would likely <br /> result in greater <br /> ater levels of inequity in assessments. An example would be the <br /> evolution of an STVR which can change within a relatively short period'of <br /> time from hotel/resort classification into a proposed vacation rental tax <br /> classification, and back to hotel/resort classification. In addition,there is no <br /> reliable mechanism in place to provide data on these changes as they occur <br /> which would present administrative challenges. <br /> d. With the exception of County of Kauai and County of Maui,the County of <br /> Hawaii Real Property Tax Division staff were unable to locate another <br /> jurisdiction within the country which had a vacation rental tax <br /> classification/rate for real property taxes. <br /> e. There are implications of moving STVRs to the hotel/resort classification <br /> from the apartment classification. During the analysis, it should be noted that <br /> based on current tax rates the hotel/resort classification is often lower than the <br /> current apartment classification based on highest and best use. <br /> f. Upon review of the apartment classification, which includes condominiums <br /> and apartments, the group identified the Affordable Rental Housing Program <br /> as an alternative mechanism to separate apartments from condominiums. The <br /> Affordable Rental Housing Program provides for a preferential tax rate upon <br /> affirmation of rental rates at affordable levels. Changes are to occur to allow <br /> for a focused communication to educate apartment owners of the Affordable <br /> Rental Housing Program in an effort to change this through internal <br /> procedure. <br /> 2. Update the Affordable Rental Housing Program. Update the portion of the <br /> Hawaii County Code to reflect requested changes discussed in 2015 and 2016. <br /> During that period there were five meetings between County staff and local property <br /> 4 <br />