2024-04-01 PL-CCI-2024-000003 Bill 121 Brian Fredrickson Testimony

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Safety is a significant consideration for Hawaii Island visitors. However,ocean safety is the most significant risk of injury and death by a wide margin. According to the Hawaii State Department of Health, drownings are the 3"leading cause of M type of death,behind heart disease and cancer, and the leading cause of injury-related death, ahead of suicide, falls,motor vehicle crashes, and other causes."14 Of course,visitors can be injured in any number of ways while using either hotel/motel or transient vacation rental properties. For instance, a man fell to his death from a Waikiki hotel while trying to climb from balcony-to-balcony.15 In another example, a two year old was injured when his "Crocs"were caught in a hotel escalator.16 Falls are a leading cause of non-fatal injuries across most age groups on Hawaii Island, according to a report by the Hawaii Department of Health." These falls can occur anywhere,including in both hotel/motel and transient vacation rental properties. E. Transient Vacation Rentals are Already Taxed at the Same Rates as Hotels The perception that transient vacation rentals are not legally required to pay the same taxes as other forms of tourism lodging is incorrect. Transient vacation rentals are required to pay the General Excise Tax (4.5%),the Transient Accommodation Tax(10.25%),and the newly enacted Hawaii County Transient Accommodations Tax(3%). These payments are required by state statute and local ordinance regardless of whether a separate ordinance exists for transient vacation rentals. One of the larger transient vacation rental on-line platforms,Airbnb,now provides information on hosts who brought in more than $2000 in revenue to Hawaii Department Taxation.18 The obligation to pay these taxes is equivalent between transient vacation rentals,time-shares,hotels, and other forms of lodging. Whether individuals or companies pay these taxes is an issue of compliance. Tax authorities already have the tools to enforce payment absent any additional authority provided by a special ordinance designed for transient vacation rentals. Summary: It appears that Hawaii County's proposed TAR ordinance favors the interest of the hotel/motel lobby at the expense of private property owners. The American Hotel and Lodging Association is engaged in a nation- wide effort to promote the strict regulation of TARS. Whether unwittingly or not,many local governments have bought into the rhetoric of this effort and have included major components of the industry's model TVR ordinances into their own programs. The draft Hawaii TAR ordinance has a raft of requirements requiring transient vacation rental owners to live on-site and to be available on a 24-hour basis to respond to potential complaints or emergencies. What other businesses require the property manager or owner to live in the next bedroom?There are lots of reasons why private property owners might wish to have the option to rent out or exchange their Hawaii properties to friends,relatives, and acquaintances. These motivations include preventing vandalism,theft, supporting property maintenance,meeting insurance standards for occupancy and having options to experience living elsewhere in the world. The desire to use private property owners like housing agencies is indefensible and does not produce the desired results. If given no choice,many property owners will let their homes sit empty rather than to foreclose all personal use. This choice will negatively impact Hawaii's economy and the thousands of jobs created by short-term transient vacation rental properties. Given that this ordinance was developed with a top-down public participation process,we expect it will be passed with some minor changes to the ordinance language. We would join the many property owners who would support a challenge to this entire ordinance and to the goals it supposedly achieves.My professional career involved going through lots of administrative hearings where new administrative rules were proposed. Each one of these rule changes required the development of a"Statement of Need and Reasonableness"where an administrative law judge was presented with evidence that the rule was a necessary and reasonable solution to a well-defined problem. Hawaii County has not come close to this 4 1 P a g e