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RIZI,M : r ,- vic ,_., - -Zile Removing harriers to Hawaii's prosperity
Nov. 8, 2024, 9 a.m.
Hawaii County Building
To: Hawaii County Council, Policy Committee on Planning, Land Use,and Development
f k y
Ashley Kierkiewicz,Chair
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Holeka Goro Inaba,Vice-Chair
From:Joe Kent, Executive Vice President Grassroot Institute of Hawaii
uND
RE: Bill 121 — RELATING TO TRANSIENT ACCOMMODATION RENTALS AND HOSTING PLATFORMS
Aloha Chair Kierkiewicz,Vice-Chair Inaba and other members of the Committee,
The Grassroot Institute of Hawaii has concerns with Bill 121. Draft 4, which would replace the existing regulations
on short-term rentals with a new set of regulations covering owner-hosted, operator-hosted and unhosted STRs.
We are concerned about the effect this measure might have on existing STR operators, small businesses and the
broader Hawaii Island economy, and we urge that the county undertake an economic analysis of the short-term
rental industry in Hawai'i County before acting on this bill.
If this bill is to move forward, Grassroot supports the amendment offered by Councilmember Jenn Kagiwada in
communication 675.472 that would lower the registration fees for owner-hosted short-term rentals.This change
would lessen the burden of the proposed regulations on local families running short-term rentals on the same
properties where they live.
In addition, Grassroot urges the Committee to extend tax amnesty or forgiveness to those who might have not
known that short-term rentals were not permitted on properties in the homeowner tax class. Losing the low rate
and the assessment cap that class provides and being subject to a tax rollback could create large financial shocks
that could cause some owners to lose their homes.
Amending section 25-4-16.25 by striking paragraph (d) might be a good place to start, but the Committee could go
further and state that all short-term rental owners who have been subject to a tax rollback in the past five years
could apply to the county to negotiate a lower tax bill.
Comm. Th .
1050 Bishop St.#508 I Honolulu,HI 96813 1 808-864-1776 1
Ref. To:
1 Ref. Dole NOV — 8 2024
As for our concerns with the bill as a whole, a 2020 study commissioned by the Hawaii Tourism Authority
discovered that STRs are generally less expensive than hotels, and that"30% respondents reported that if there was
not a home and vacation rental option during their recent stay in Hawaii,they would not have made the trip."'
That study did not look at Hawaii Island specifically, but it did find that statewide STRs added $6 billion to the state's
economy and sustained 46,000 jobs.2
The HTA study also surveyed people statewide who own short-term rentals and found that"70%of residents who
indicated that they make their living unit available for home and vacation rentals report that they do so to either
make incremental income or meet housing gaps (40%and 30%, respectively)."
Further: "Responses in 2019 track with reasons and proportions provided by respondents in 2016, where 60%of
respondents indicated that they make their living unit available for home and vacation rentals to subsidize housing
costs.The increased proportion can be partly explained by the ongoing rise in housing costs in Hawaii.i3
The HTA study indicated that many existing STR hosts—who maybe rent out a room or a second unit on their
property — use their STR income to afford Hawaii's high cost of housing.These existing hosted STRs also offer
everyday folks the opportunity to participate in Hawaii's tourism economy and build wealth for their families.
Grassroot also is concerned about the steep fines that would be imposed on those who imposed on anyone who
violates the new law.The proposed $10,000-per-day fines could quickly add up to an unpayable amount — and
even result-in the owners losing their homes to foreclosures.Such a fine would be not only excessively harsh but
also possibly unconstitutional.
Both the state and federal constitutions bar excessive fines, and the U.S.Supreme Court's decision in Timbs v.
Indiana establishes that the federal excessive fines clause applies to state and municipal actions as well.'
Recent cases,such as Tyler v. Hennepin County,' indicate that courts are increasingly prepared to strike down
aggressive state action that impairs individual property rights.Thus,we suggest that the penalties associated with
noncompliance be reconsidered and restructured.
Thank you for the opportunity to testify.
Joe Kent
Executive Vice President
Grassroot Institute of Hawaii
1"Hawaii's Home and Vacation Rental Market: Impact and Outlook,"prepared for the Hawaii Tourism Authority by JLL's Hotels&
Hospitality Group,April 20,2020,p.10.
ZIJp.4.
3"Hawaii's Home and Vacation Rental Market: Impact and Outlook,"prepared for the Hawaii Tourism Authority by JLL's Hotels&
Hospitality Group,April 20,2020,p.16.
4 586 U.S. 146(2019).
5 598 U.S.631(2023).
1050 Bishop St.#508 I Honolulu,HI 96813 1 808-864-1776 i info@grassrootinstitute.org
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