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Home My WebLink AboutCOM 0675.604 2022-2024 P/ PcQLUP dill 121 GOHM.G75 // Bert T.Kobayashi.Jr.' Kenneth M.Nakasone' Of Counsel: E � Alan M.Goda* Harry M Kenneth Y.Fu Gregory M..Sato` Wendell H.Fuji' John R.Aube' Jesse W.Schiel' Clifford K.Hip' Charles W.Gall' Craig K.Shikuma" Burt T.Lau' x: G Neal T.Gota Lex R.Smith* John F.Lezak` Charles D.Hunter Joseph A.Stewart` Larry L.Myers` Robert K.Ichikawa' Brian D.Tongg David Y.Suzuki' C Christopher T.Kobayashi' David B.Tongg' Jan M.L.Y.Kutsunal' Caycie K.C.Wong Andrew M.Carmody KOBAYASHI SUGITA&GODA, LLP David M.Louie' Max A.Chin Nicholas R.Monlux 'A Law Corporation Ying Cu Jonathan S.Moore Austin H.Jim On Aaron R.Mutt Stephen G.K.Kaneshiro Bruce A.Nakamura' Travis Y.Kuwahara Ryan D.Louie Zachary K.Shikada Timothy T.Silvester Reece Y.Tanaka C74) $..' I'J f,; November 5, 2024 c COUNCIL OF THE COUNTY OF HAWAI`I 1 —< Policy Committee on Planning, Land Use, and Development 0~ Ashley L. Kiekiewicz, Chair a 'C,"- Dr. Holeka Goro Inaba, Vice Chair ,9y counciltestimony@hawaiicounty.gov .- - HEARING DATE: November 8, 2024 TIME: 9:00 a.m. Re: TESTIMONY ON BEHALF OF AIRBNB OPPOSING THE PROPOSED BILL No. 121 FOR AN ORDINANCE AMENDING CHAPTER 25, ARTICLES 1, 4 AND 5, OF THE HAWAI`I COUNTY CODE 1983 (2016 EDITION, AS AMENDED), RELATING TO TRANSIENT • ACCOMMODATION RENTALS AND HOSTING PLATFORMS Dear Chair Kimball, Vice Chair Inaba, and Council Members: We write on behalf of our client, Airbnb, regarding proposed Bill No. 121, an ordinance amending Chapter 25, Articles 1, 4, and 5 of the Hawai`i County Code 1983 (2016 Edition, as amended), relating to Transient Accommodation Rentals and Hosting Platforms ("TAR Bill"). We appreciate the Council's ongoing dialogue concerning the TAR Bill. As summarized below, we are grateful for several proposed amendments to the TAR Bill since our testimony submitted in advance of the Council's September 3, 2024, hearing. However, we continue to have significant concerns with the TAR Bill's language and respectfully request that the Council refrain from taking action at its November 8 meeting to allow the Council, staff, and stakeholders more time to address remaining concerns and discuss necessary clarifications. 999 Bishop Street.Suite 2600,Honolulu,HI 96813 I Tel:808-535-5700 I Fax:808-535-5799 I www.ksglaw.con I C 0 Comm. No J Ref. To: Ref. Dote NOV - 8 2024 COUNCIL OF THE COUNTY OF HAWAI`I November 5, 2024 Page 2 1. Airbnb Supports a Number of the Proposed Amendments Made and Offered to the TAR Bill a. Availability of Nonconforming Use Certificates We acknowledge and appreciate a number of the proposed amendments to the TAR Bill that are now before the Council.First,we appreciate the inclusion of a process permitting existing hosts to obtain nonconforming use certificates in Draft 4 of the TAR Bill ("Draft TAR Bill"). As we previously explained to this Council,' Hawai`i law is clear:"preexisting lawful uses of property are generally considered to be vested rights that zoning ordinances may not abrogate."2 This rule is deeply rooted in Hawaii law and is constitutional in nature.3 Consistent with this settled legal principle, the final TAR Bill must permit existing hosts to maintain nonconforming transient accommodation uses and provide a straightforward and ministerial process for obtaining nonconforming use certificates for such uses. b. Establishment of Visitor Destination Areas We also appreciate the Council's recognition of the importance of Visitor Destination Areas and the Draft TAR Bill's provision allowing transient accommodation rentals to lawfully operate in any zoning district within those areas.The Draft TAR Bill describes Visitor Destination Areas as follows: [A] land use designation that allows transient accommodation rentals to lawfully operate in any zoning district. This designation applies to areas that have high concentrations of transient accommodation rentals, ensuring these operations are consolidated in appropriate locations. It also applies to areas without adequate hotels or resorts, and in proximity to visitor-related establishments or activities, such as beaches, golf courses, landmarks, entertainment venues, and other scenic commercial or recreational facilities.' This is a critical designation. It appropriately acknowledges the significant role transient accommodation rentals play in Hawai`i's economy, including how they ensure access in areas lacking adequate hotels or resorts,help protect against price spikes by hotels and resorts,and make visits to the Island affordable and accessible for families and other low- and moderate-income 'For reference,we have attached our prior comment letter submitted for the August 30,2024,testimony. 2 Robert D. Ferris Trust v. Planning Corn'n of Cnty. of Kauai, 138 Haw. 307, 312 (Haw. Ct.App. 2016); Waikiki Marketplace Inv. Co. v. Chair of Zoning Bd. ofAppeals of City& Cnty. of Honolulu,86 Haw. 183, 193-94(Haw.Ct. App. 1997). 3 Ibid. 4 TAR Bill,Section 6. COUNCIL OF THE COUNTY OF HAWAI`I November 5, 2024 Page 3 visitors. Ensuring sufficient availability of transient accommodation rentals also supports the express purpose of Hawai`i's Coastal Zone Management Act, which is to provide "coastal recreational opportunities accessible to the public."5 Given the critical role transient accommodation rentals play on the Island, we support the Draft TAR Bill's designation of Hamakua,North Hilo, South Hilo,Ka`u,Kohala,Kona, and Puna as designated Visitor Destination Areas.We also support Council Member Kierkiewicz's October • 2,2024,proposed amendment to allow the Council or Director to establish new Visitor Destination Areas if certain criteria are met. 2. Airbnb Continues to Have Significant Concerns with the TAR Bill a. Registration Requirements for Hosted Rentals Transient accommodation rentals have always been lawful, residential uses in Hawaii County. And hosts have opened and shared their principal homes to transient renters for decades, providing important visitor-serving accommodations and offering guests authentic cultural experiences in all corners of the Island. These "hosted"rentals provide an incredible opportunity for visitors to Hawai`i to meet and interact with locals who graciously share their homes. The sharing of one's home and property is fundamental to the Hawaiian experience and is an activity the County should continue to encourage.Unfortunately,the Draft TAR Bill's overly burdensome, expensive, and confusing registration process would impose significant administrative burdens on hosts, inevitably leading many to exit the market. This would threaten the ongoing viability of hosted rentals in Hawai`i. To mitigate this risk,we respectfully request that the Council amend the Draft TAR Bill to establish an exemption from registration requirements for hosts who offer their principal home for transient accommodation rentals for less than 60 days per year.6 Such an exemption would balance the interests of visitors,hosts, and other stakeholders and ensure that economically advantageous rental practices are permitted on the Island. An exemption would also permit Island residents continued access to an important, supplemental income stream, further protecting the local economy. b. Excessive Fine Structure The fines proposed by the Draft TAR Bill not only function as a deterrent to hosts sharing their homes but are also so excessive as to raise federal constitutional concerns, The Eighth Amendment to the United States Constitution forbids the County from imposing excessive fines. The United States Supreme Court has held that "[t]he touchstone of the constitutional inquiry 5 H.R.S.§205A-2(b)(1)(A). 6 For any hosts that are required to register under the final TAR Bill, we support Council Member Kagiwada's September 4, 2024, proposed amendment to reduce the initial registration fee for owner-hosted transient accommodation rentals to$50 and the annual renewal fee to$10. COUNCIL OF THE COUNTY OF HAWAI`T November 5,2024 Page 4 under the Excessive Fines Clause is the principle of proportionality: The amount of the forfeiture must bear some relationship to the gravity of the offense that it is designed to punish."7 Here the Draft TAR Bill's proposed$2,500 for a first offense, $5,000 for a second offense, and$10,000 for a third offense fails to meet the principle of proportionality.8 c. Hosting Platform Requirements As drafted, the Draft TAR Bill's hosting platform requirements are inconsistent with Section 230 of the Federal Communications Decency Act.9 Airbnb has successfully worked with other Hawai`i counties,including Honolulu and Kauai,to develop agreements that ensure ongoing collaboration regarding local rental regulation and Airbnb platform offerings.Airbnb is committed to working with Hawaii County on a similar agreement.To facilitate such an agreement,we would welcome the opportunity to meet with your respective offices, County staff and County Counsel before the adoption of the TAR Bill to discuss necessary changes to the existing platform obligation language to ensure consistency with federal law and to explore potential collaborative paths forward. 3. Additional Needed Clarifications to the TAR Bill10 We appreciate that drafting complex and nuanced regulations like those contemplated in the Draft TAR Bill presents considerable challenges for any legislative body.But statutes must be clear and consistent both to be effective but also to avoid the need for future emergency amendments to resolve uncertainties or for protracted litigation to remedy unlawful consequences. The current draft is at times confusing and raises concerns that hosts may suffer potentially arbitrary or discriminatory' application of the law. As drafted, the Draft TAR Bill also raises potential equal protection concerns under both the federal and Hawai'i constitutions—concerns that must be addressed before a final TAR Bill is adopted. Accordingly, in addition to the substantive changes highlighted above, the Draft TAR Bill (as proposed for amendment by- Council Chair Kimball's October 28,2024,proposed amendments),requires several clarifications. Specifically: • Section 25-4-16.13(b) (as proposed for amendment by Council Chair Kimball): This section, governing the burden of proof to obtain a nonconforming use certificate ("NUC"), should clarify that the building site was in "use" as a transient • United States v.Bajakajian,524 U.S.321,334(1998). 8 See, e.g.,Kalthoff v. Douglas Cnty., 2021 WL 3010006, at *6 (D.Nev. July 15, 2021) (finding"it troubling that many of these fines[for violations of short-term rental ordinance][we]re for several thousands of dollars without any authority to lower the fines for particular violators' circumstances" and enjoining enforcement of fines on constitutional grounds). 9 Doe v.Internet Brands,Inc.,No 12-56638,2016 WL 3067995,at*3 (9th Cir.May 31,2016). 1°We note that Draft 4 of the TAR Bill would require a number of additional clarifications beyond what we outline in this letter. The clarifications requested herein assume Council Chair Kimball's October 28, 2024, proposed amendments will be incorporated into Draft 5 of the TAR Bill for future consideration by the Council. COUNCIL OF THE COUNTY OF HAWAI`I November 5, 2024 Page 5 accommodation rental on or before the effective date of the ordinance. The current language requiring the owner to show "regular use" is ambiguous and could lead to arbitrary or discriminatory denial of a NUC based on a determination of what constitutes"regular use." • Sections 25-4-16.10 and 24-4-16.15:These sections, governing registrations and NUC renewals,should be clarified to permit denial of a registration renewal or NUC renewal only if the applicant has violated Chapter 25,Article 4 of the Zoning Code(as opposed to "pertinent laws"). Allowing denial of renewal based on undefined "pertinent laws" could lead to arbitrary or discriminatory denials. • Section 25-4-16.1(a)(1) (as proposed for amendment by Council Chair Kimball): This section should clarify that hosted transient accommodation rentals are permitted in "dwellings" as defined in the Zoning Code" (as opposed to only "an accessory dwelling unit, additional dwelling, guest house, or single-family dwelling inclusive of a detached bedroom"). An owner or occupant of a unit in a multifamily building, duplex,or other non-single-family home dwelling should have the same opportunity to host guests in their principal home or permanent residence as those in single-family dwellings. Failure to provide this clarification would raise equal protection concerns under both the Hawai`i and United States Constitutions. • Definition of"transient":This definition should be clarified to also exclude faculty and part-time students instructing or enrolled in an educational institution in the County of Hawaii, families of clients in healthcare facilities, families of military personnel, and families of healthcare workers temporarily employed at a medical facility. These minor clarifications make sense from a policy standpoint and help address equal protection concerns. 4. Conclusion We recognize and appreciate the amendments and efforts that the Council and staff have undertaken in developing this ordinance. While the Draft TAR Bill has come a long way from the initial draft, it continues to raise serious legal and policy concerns and requires several clarifications .to avoid arbitrary or discriminatory application of the law and equal protection concerns. Airbnb is committed to working with the County on the TAR Bill, and we respectfully request that you refrain from taking action on November 8th and continue to work with 11 Hawai`i County Code§25-1-5. COUNCIL OF THE COUNTY OF HAWAI`I November 5,2024 Page 6 stakeholders to ensure the final TAR Bill addresses the Council's objectives in a lawful and effective manner without resulting in unintended consequences. Ve ly yours, • ` AVID D M.LOUIE JOSEPH A.STEWART for KOBAYASHI, SUGITA &GODA, LLP