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HomeMy WebLinkAboutKohala Coast Resort Association (submitted by Stephanie Donoho) July 31, 2026 Matt Kanealii-Kleinfelder, Chair James Hustace, Vice Chair Committee on Finance Hawaii County Council 25 Aupuni Street Hilo, HI 96720 Comments on Bill 173 Establishing a Bed and Breakfast Home Classification for Real Property Taxes; Establishing a 3% Cap on Valuations; Establishing Temporary Tax Amnesty Dear Chair Kanealii-Kleinfelder, Vice Chair Hustace, and Members of the Committee on Finance, Thank you to Councilmember Heather Kimball for introducing this measure and for her past work on comprehensive vacation rental legislation. Mahalo to Councilmember Ashley Kierkiewicz, and to past Councilmembers Karen Eoff and Dru Kanuha for their leadership. We understand that regulating the visitor accommodations sector is challenging and nuanced, and we appreciate . For nearly 20 years, Hawaii County has struggled to adequately create and enforce state and county laws concerning short-term vacation rentals. As the Tourism Specialist with the Department of Research and Development, Managing Director Bill Takaba and I began working on short-term vacation rental equity back in 2007. At the time the vacation rentals existed on Hawaii Island, where they were located, and how to communicate with the owners and visitors utilizing those properties in case of emergency. Unfortunately, the County still have a fully functional system. But significant progress has been made, and we look forward to even more improvement throughout the rest of the year. When reviewing this new legislation, efforts to date. The Council passed legislation in 2018, regulating un-hosted rentals. The State of Hawaii provided the County of Hawaii with the ability to assess its own Transient Accommodations Tax (TAT) of up to 3%, when the Hawaii State Legislature , in 2022. In 2025, the Hawaii County Council passed a bill requiring registration of all short-term vacation rentals and proof of collection of TAT, general excise taxes (GET), and real property taxes (RPT) which Mayor Alameda signed into law in June 2025. Unfortunately, the implementation of that law has been delayed by the Council multiple times. Bill 175, which is currently moving through the Council, will give authority to the Planning Director to implement that law, with registration between September and December 2026. The Hawaii County Council also listened to concerns of short-term vacation rental owners in 2024 and authorized the Department of Research and Development to undertake an economic impact study. They hired Hunden Partners, which published its report in June 2025, and presented it to the Council in September 2025. That study showed that there are more than 8,000 active short-term vacation rentals operating on Hawaii Island, and that Hawaii County has been failing to collect an estimated $15 million annually in tax revenues from those operators. When multiplied out over the 20 years the county has been struggling with registration The Kohala Coast Resort Association produced its latest Economic and Community Impact Report with Kloninger and Sims earlier this month. Kloninger and Sims also Visitor Plant Inventory, Timeshare Reports, and Vacation Rental Reports in partnership with DBEDT. Our Executive Summary from that report is attached. Our association is comprised of the developers, hoteliers and timeshare managementcompanies within Mauna Kea, Mauna Lani, Waikoloa and Hualalai Resorts. Our latest report shows that there are approximately 1,100 short-term vacation rentals operating on the Kohala Coast, some managed by our members and some managed by the owners or other management companies. The vacation rentals on the coast comprise less than 14% of the total for our island. We have a number of concerns with Bill 173: The 3% cap for homeowners class property tax rates is to help Hawaii Island homeowners stay in their homes. It is not an incentive to run visitor accommodations businesses out of those homes. All other property tax classes operating in the visitor accommodations sector (hotel, apartment, residential Tiers I, II and III) have no caps. Their property taxes are tied to market values. This 3% cap for the proposed Bed and Breakfast class would therefore not be equitable with other visitor accommodations types. Many part-time residents within our resorts, currently assessed under the residential class ($11.10/$14.50/$17.00 per $1,000 valuation, based on their property values), vary the amount of time they spend on island, and rent out their property for the remainder of the year which is an allowable use within our resort zoning. If those owners stayed the required number of days in a given year, would they qualify for the homeowners class, or this new Bed and Breakfast class? If so, that decline in RPT revenues could be significant, as the vast majority of the Tier II and Tier III residential classes are located on the Kohala Coast. The homeowners class rate ($5.75 per $1,000 valuation) is a significant savings from what other visitor accommodations sectors pay for real property taxes ($11.10 - $17.00 per $1,000 valuation based on value). Allowing a homeowner to keep that rate and run a visitor accommodations business is not equitable. The temporary tax amnesty proposed in the bill is not specific. Visitor accommodations pay a multitude of taxes to the County of Hawaii TAT, GET and RPT. Some of those taxes were enacted by the State of Hawaii, and the County of Hawaii may not have the authority to provide amnesty for the collection of those taxes. Providing any tax amnesty to owners in one type of visitor accommodation does not create a level playing field with the owners of all of the other visitor accommodations. This measure does not address one of the primary goals the Council said it wanted to undertake while creating short-term vacation rental legislation: to try to return inventory in the housing arena being used as vacation rentals to full-time local residential use. Instead, this legislation could do the exact opposite, incentivizing the transition of more local homes to short-term vacation rental use. This measure does not adequately address another housing creation incentive that the Council recently adopted: allowing accessory dwelling units (ADUs) to be built on properties within specific zoning areas. Could this measure allow a homeowner to build an ADU on their property and rent it as a vacation rental, or move into that new ADU and rent their former home as a vacation rental, all under the same 3% tax cap and Bed and Breakfast class? For all of these reasons we believe this measure needs further refinement, so that all Hawaii Island taxpayers operating in the visitor accommodations sector are treated fairly. The Kohala Coast Resort Association is a collection of master-planned resorts, situated north of the Ellison Onizuka Kona International Airport at Keahole. KCRA members employ more than 5,625 Hawaii Island residents and directly support an additional 8,600 family members, at our hotels, timeshares, golf courses, restaurants, retail shops and spas. In 2025 KCRA members paid nearly $120 million in GET,TAT and TOT to the State of Hawaii and $44 million in TAT, GET and RPT to the County of Hawaii. our resorts, collectively paid $196 million in property taxes to Hawaii County in 2025, accounting for 35.4% of all property tax collections. Sincerely, Stephanie Donoho Administrative Director, Kohala Coast Resort Association PO Box 6991, Kamuela, HI 96743 * (808) 747-5762 * kohalacoastresortassn@gmail.com * www.kohalacoastresorts.com July 31, 2026 Matt Kanealii-Kleinfelder, Chair James Hustace, Vice Chair Committee on Finance Hawaii County Council 25 Aupuni Street Hilo, HI 96720 Comments on Bill 173 Establishing a Bed and Breakfast Home Classification for Real Property Taxes; Establishing a 3% Cap on Valuations; Establishing Temporary Tax Amnesty Dear Chair Kanealii-Kleinfelder, Vice Chair Hustace, and Members of the Committee on Finance, Thank you to Councilmember Heather Kimball for introducing this measure and for her past work on comprehensive vacation rental legislation. Mahalo to Councilmember Ashley Kierkiewicz, and to past Councilmembers Karen Eoff and Dru Kanuha for their leadership. We understand that regulating the visitor accommodations sector is challenging and nuanced, and we appreciate . For nearly 20 years, Hawaii County has struggled to adequately create and enforce state and county laws concerning short-term vacation rentals. As the Tourism Specialist with the Department of Research and Development, Managing Director Bill Takaba and I began working on short-term vacation rental equity back in 2007. At the time the vacation rentals existed on Hawaii Island, where they were located, and how to communicate with the owners and visitors utilizing those properties in case of emergency. Unfortunately, the County still have a fully functional system. But significant progress has been made, and we look forward to even more improvement throughout the rest of the year. When reviewing this new legislation, efforts to date. The Council passed legislation in 2018, regulating un-hosted rentals. The State of Hawaii provided the County of Hawaii with the ability to assess its own Transient Accommodations Tax (TAT) of up to 3%, when the Hawaii State Legislature , in 2022. In 2025, the Hawaii County Council passed a bill requiring registration of all short-term vacation rentals and proof of collection of TAT, general excise taxes (GET), and real property taxes (RPT) which Mayor Alameda signed into law in June 2025. Unfortunately, the implementation of that law has been delayed by the Council multiple times. Bill 175, which is currently moving through the Council, will give authority to the Planning Director to implement that law, with registration between September and December 2026. The Hawaii County Council also listened to concerns of short-term vacation rental owners in 2024 and authorized the Department of Research and Development to undertake an economic impact study. They hired Hunden Partners, which published its report in June 2025, and presented it to the Council in September 2025. That study showed that there are more than 8,000 active short-term vacation rentals operating on Hawaii Island, and that Hawaii County has been failing to collect an estimated $15 million annually in tax revenues from those operators. When multiplied out over the 20 years the county has been struggling with registration The Kohala Coast Resort Association produced its latest Economic and Community Impact Report with Kloninger and Sims earlier this month. Kloninger and Sims also Visitor Plant Inventory, Timeshare Reports, and Vacation Rental Reports in partnership with DBEDT. Our Executive Summary from that report is attached. Our association is comprised of the developers, hoteliers and timeshare managementcompanies within Mauna Kea, Mauna Lani, Waikoloa and Hualalai Resorts. Our latest report shows that there are approximately 1,100 short-term vacation rentals operating on the Kohala Coast, some managed by our members and some managed by the owners or other management companies. The vacation rentals on the coast comprise less than 14% of the total for our island. We have a number of concerns with Bill 173: The 3% cap for homeowners class property tax rates is to help Hawaii Island homeowners stay in their homes. It is not an incentive to run visitor accommodations businesses out of those homes. All other property tax classes operating in the visitor accommodations sector (hotel, apartment, residential Tiers I, II and III) have no caps. Their property taxes are tied to market values. This 3% cap for the proposed Bed and Breakfast class would therefore not be equitable with other visitor accommodations types. Many part-time residents within our resorts, currently assessed under the residential class ($11.10/$14.50/$17.00 per $1,000 valuation, based on their property values), vary the amount of time they spend on island, and rent out their property for the remainder of the year which is an allowable use within our resort zoning. If those owners stayed the required number of days in a given year, would they qualify for the homeowners class, or this new Bed and Breakfast class? If so, that decline in RPT revenues could be significant, as the vast majority of the Tier II and Tier III residential classes are located on the Kohala Coast. The homeowners class rate ($5.75 per $1,000 valuation) is a significant savings from what other visitor accommodations sectors pay for real property taxes ($11.10 - $17.00 per $1,000 valuation based on value). Allowing a homeowner to keep that rate and run a visitor accommodations business is not equitable. The temporary tax amnesty proposed in the bill is not specific. Visitor accommodations pay a multitude of taxes to the County of Hawaii TAT, GET and RPT. Some of those taxes were enacted by the State of Hawaii, and the County of Hawaii may not have the authority to provide amnesty for the collection of those taxes. Providing any tax amnesty to owners in one type of visitor accommodation does not create a level playing field with the owners of all of the other visitor accommodations. This measure does not address one of the primary goals the Council said it wanted to undertake while creating short-term vacation rental legislation: to try to return inventory in the housing arena being used as vacation rentals to full-time local residential use. Instead, this legislation could do the exact opposite, incentivizing the transition of more local homes to short-term vacation rental use. This measure does not adequately address another housing creation incentive that the Council recently adopted: allowing accessory dwelling units (ADUs) to be built on properties within specific zoning areas. Could this measure allow a homeowner to build an ADU on their property and rent it as a vacation rental, or move into that new ADU and rent their former home as a vacation rental, all under the same 3% tax cap and Bed and Breakfast class? For all of these reasons we believe this measure needs further refinement, so that all Hawaii Island taxpayers operating in the visitor accommodations sector are treated fairly. The Kohala Coast Resort Association is a collection of master-planned resorts, situated north of the Ellison Onizuka Kona International Airport at Keahole. KCRA members employ more than 5,625 Hawaii Island residents and directly support an additional 8,600 family members, at our hotels, timeshares, golf courses, restaurants, retail shops and spas. In 2025 KCRA members paid nearly $120 million in GET,TAT and TOT to the State of Hawaii and $44 million in TAT, GET and RPT to the County of Hawaii. our resorts, collectively paid $196 million in property taxes to Hawaii County in 2025, accounting for 35.4% of all property tax collections. Sincerely, Stephanie Donoho Administrative Director, Kohala Coast Resort Association PO Box 6991, Kamuela, HI 96743 * (808) 747-5762 * kohalacoastresortassn@gmail.com * www.kohalacoastresorts.com