HomeMy WebLinkAboutHawai'i Hotel Alliance
Tuesday, September 15, 2026
TO: The Honorable Rebecca Villegas, Chair
The Policy Committee on Environmental and Natural Resource
Management Hawai ʻ i County Council
FROM: Jerry Gibson, President
Hawaii Hotel Alliance
SUBJECT: STRONG OPPOSITION to Bill 183 – Relating to Sewer Service
Charges
Aloha Chair Villegas and Honorable Members of the Policy Committee on
Environmental and Natural Resource Management,
On behalf of the Hawaii Hotel Alliance (HHA), representing lodging properties, resort
operators, and tens of thousands of hospitality professionals across our islands, thank
you for the opportunity to submit testimony. I am Jerry Gibson, President of the
Hawaii Hotel Alliance, writing to express our strong and unified opposition to Bill
183.
While the Hawaii Hotel Alliance fully recognizes Hawai ʻ i County’s urgent mandate to
maintain, modernize, and fund its wastewater infrastructure, we cannot support a rate
structure that arbitrarily singles out the traditional lodging sector. Carving out an
isolated “hotel” classification to absorb steep, compounding rate increases of nearly
300% is neither equitable nor economically sound public policy.
As the Council reconvenes on this measure, we urge the Committee to consider the
serious legal, economic, and operational flaws embedded in the proposed rate case:
1. Significant Legal Vulnerabilities in Rate Construction and Definition of Use
The proposed rate case selectively isolates hotels based on their use category while
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deliberately ignoring the substantial volume of legal and unpermitted short-term rentals
(STRs) operating across Hawai ʻ i County. STRs operate as commercial transient
accommodations—generating high-density turnover and identical infrastructure
burdens—yet they remain shielded within lower residential rate categories. By singling
out brick-and-mortar hotels while leaving an expansive, competing transient
accommodations sector untouched, the County exposes this rate structure to serious
legal challenges under fundamental utility ratemaking standards, which strictly
mandate fair classification and prohibit arbitrary discrimination between similarly
situated users.
2. Disregard for Integrated Mixed-Use Realities (Nonresidential Classification)
Hotels should properly be categorized within the standard Nonresidential service class.
Hotel properties on Hawai ʻ i Island do not exist in isolation; they are integral components of
dense, mixed-use commercial nodes featuring retail centers, restaurants, recreation,
and administrative facilities. Artificially separating hotel use from the broader
commercial mix defies sound utility cost-of-service ratemaking. Wastewater rates
should be governed by actual metered demand, volume, and service costs across all
nonresidential users, not subjective industry targeting.
3. Ignoring Massive Tax Contributions and Private Infrastructure Investments
The rate case treats municipal sewer operations in a silo, ignoring the broader taxation
framework under which our properties operate. The lodging industry is already the
largest economic contributor to Hawai ʻ i County’s general fund through Real Property Taxes
and County Transient Accommodations Tax (TAT) collections—revenues that subsidize
broad municipal infrastructure.
Crucially, some of the County’s largest property taxpayers—including major Kohala
Coast resort properties—do not even use the County wastewater system, having
invested hundreds of millions of dollars to build, maintain, and operate private
wastewater treatment facilities. These off-grid operators inject substantial tax revenue
into County coffers without placing a gallon of demand on municipal facilities.
Imposing an extreme, isolated fee structure on connected commercial hotels without
factoring in these immense cross-subsidies ignores the broader fiscal contributions the
industry makes daily to countywide services.
4. Compounding Economic Headwinds on Local Employers and Working Families
Our hotels are grappling with persistent inflationary headwinds, double-digit increases
in property insurance, escalating energy rates, and unpredictable travel markets. Piling
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a 300% utility cost escalation onto properties directly threatens workforce stability,
employee reinvestment, and kama ʻ āina-friendly operations. The economic vitality of our
host communities depends on steady, predictable operational conditions.
Wastewater infrastructure is a countywide public good, and its long-term financial
stability demands a comprehensive, balanced funding approach shared across all
commercial, residential, and transient user groups.
The Hawaii Hotel Alliance respectfully urges the Committee to defer or amend Bill
183 by eliminating the hotel-specific rate classification and request the
administration to present a legally sound, uniform rate structure based on true cost-of-
service principles.
Mahalo nui loa for your leadership, service, and thoughtful consideration of our
testimony.
Jerry Gibson
President, Hawaii Hotel Alliance
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