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

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rights of property owners and how they can use,enjoy, and protect their homes and properties. The County is trying to force a significant number of private property owners into a position where they either have to sell their property,rent it long term or let it sit vacant for long periods of time. There are assumptions underlying all TVR ordinances,including the Hawaii County's version,which are briefly discussed in the sections that follow. These assumptions are not supported by a thorough examination of the evidence or any real dialogue with impacted stakeholders. This situation almost guarantees the ordinance will remain a point of contention for the foreseeable future. A Transient Vacation Properties are Only One of a Myriad of Factors Impacting Housing Affordability and Availability. One of the key narratives used against transient vacation rentals is that they have a negative impact on housing availability and affordability in Hawaii. If this assumption is true,then the Hawaii County's housing markets,vacancy rates and rents should have responded accordingly after the original transient vacation rental ordinance was implemented. However,except for a smaller increase in 2018-2019,the US Department of Housing and Urban Development(HUD) Fair Market Rent on the Big Island increased appreciably year-after-year from 2016 to 2022 (see Table I below) .' Of course,2018-2019 was the anomaly because Kilauea erupted on Hawaii Island destroying over 700 single family homes and displacing residents and renters throughout the Puna region. The Fair Market Rent also increased during the COVID-19 pandemic when tourism declined across Hawaii and nationally. Rental vacancy rates also declined when they should have increased after the Hawaii County implemented the original TVR ordinance. The popular narrative of placing the blame for housing availability and affordability on transient vacation rentals is overstated. Transient vacation rentals are one factor in the cost and availability of housing. According to National Association of Realtors,builders failed to keep pace with historical housing construction trends to the tune of 5.5 million unit's nationally.' This trend was exacerbated by the COVID- 19 pandemic where construction ground to a halt on Hawaii Island and elsewhere.Mortgage interest rates and inflation in housing materials have also contributed significantly to increased housing costs.' Interest rates alone have more than doubled from 2021 to 2022, essentially pricing out many first-time buyers and renters. According to the National Association of Realtors, 12% of all homes acquired in Hawaii in 2021 were purchased by institutional investors.6Institutional investors,including hotel chains like Marriot, are also purchasing transient vacation rental properties(see Attachment A).'These investors TVRs are clearly in a class by themselves. However,the rules proposed to address these properties have significant bleed- over impacts on individual homeowners with far less ambitious financial property management and use goals. Date Monthly Fair Annual% Hawaii Rental Market Rent for Increase or Vacancy Rates' 2- Bedroom Unit Decrease' 2016 $1,194 +3.7 10.6 2017 $1,271 +6.5 8.7 2018 $1,322 +4.0 8.5 2019 $1,346 +1.8 7.4 2020 $1,429 +6.2 7.5 2021 $1,469 +2.8 7.3 2022 $1,531 +4.2 Source': https://www.huduser.gov/portal/datasets/fmr.html#2022 Source': https://www.census.gov/housing/hvs/data/prevann.htmi 2 Page