2018-01-08 Letter to Wakai & Onishi re GET and TAT on short term vacation rentals

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January 8, 2018 Page 2 Please consider a “two-step” mechanism, regardless of whether the third party or “platform” is acting as tax collection agents. First, the platforms should require short term rental operators provide county documentationthat the subject properties are permitted to operate as short term rentals. This would be a prerequisite to having properties listed on the platforms. Second, if an advertisement is found to be in violation of this requirement, --that is, an illegal short term rental is being advertised, the third party must remove that listing from its platform upon county notification or be subject to penalty fees. We believe this is not a free speech issue, but one regulating commerce. Advertising by illegal short term rental properties is problematic for other counties, sothis would be a much needed enforcement tool. Certification will cause a significant increase in workload, but it will be a critical function in managing short term rentals on Hawai’i Island. 5.We have no issue with third parties collecting TAT and GET taxes for Department of Taxation. However, the focus cannot be solely on capturing more tax revenue for Dept. of Taxation. Third party data submitted to Dept. of Taxation must be shared with the counties, so we can enforce short term rentals and capture more real property tax for counties that assess short term rental properties at a different rate. County of Hawai’i is considering assessing short term rental properties at a different rate. Specifically, but not limited to, we would need data on the location of the short term rental property, including unit number if there are multiple dwellings on the property, the number of nights stayed per booking, the dates of occupancy, and the operator’s name and address. B.Additional Items In additionto the five items addressed in the December 28 memorandum, we address five additional items which arose in subsequent discussions with our legal staff, and other county planning departments regarding the legal clarity of additional authority to deploy additional enforcement strategies and tools. 1.Disgorgement.Pursue “disgorgement” as an explicit remedy to collect profits obtained by illegal or unfair acts.This tool is aimed at discouraging illegal operations and ceasing any ongoing illegal activity while due process is afforded.Other counties are proposing amendments to 46-1.5(24)(a), if necessary, we can provide additional comments later. 2.Attorney’s Fees.Other counties experience indicate that the zoning enabling act be amended to allow the counties to recoup attorney’s fees and costs associated with the appeals of any violation to be paid by the ordinance violator.This tool will also expand the counties’ ability to enforce its ordinances by encouraging citizen suits.Other counties are proposing amendments to HRS 46-4(a), if necessary, we can provide additional comments later. 3.Broker Responsibility. We request to provide some penalty for a transient accommodations broker should they fail to remove an illegal operation from their online platform after receiving notice from the respective county and a reasonable period of time has lapsed to remove the advertisement. County of Hawai`i is an Equal Opportunity Provider and Employer.