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Home My WebLink AboutCOM 0739.041 2016-2018F,-voSIPL Go ' �r cc ERR , From: MATT HUBNER COU ` �f O:` "H�� To: Council Testimony Subject: Testimony for Tuesday, April 24 Hearing on fli 0 p eg2,7ng A rt rr' i cation Rentals Date: Monday, April 23, 2018 6:41:28 AM Attachments: Response to 3 13 2018 5TR Presentation.pdf Dear Members of the Hawai'i County Council, I am submitting my testimony in opposition of Bill 108 in its current form. I am the owner of a whole -house vacation rental in Volcano that would be subject to Bill 108. While I am not opposed to regulation, I do not believe Bill 108 in its current form is an appropriate measure and needs to be shelved or significantly amended at this time. As you are well -aware, regulation is necessary for a ruling body to address a problem that needs to be resolved for the benefit of the public as a whole. It is not objectively clear at this time if vacation rentals constitute a problem on Hawai'i Island. You will likely hear anecdotes during public testimony for and against vacation rentals, but what does the data say? Mr. Stefan Buchta presented to you that he estimates there are roughly 5,000 vacation rentals on the Hawai'i Island. I wrote to the council on March 19 and submitted additional information I gathered that estimates a little over 50% of those rentals would be located within resort or commercial districts. Simply put, this means that the majority of rentals, which are in resort zones, would not be subject to the steep annual registration fees that the minority would be subject to. According to the data I provided to you, and based off of Mr Buchta's total number of vacation rentals, there could be approximately 1,389 whole home vacation rental units on the entire island that would be subject to Bill 108's non -conforming use registration and fees. Based on 2016 census data of available housing units on Hawai'i Island, that would comprise only 1.6% of the housing stock on the Island as being used for vacation rental purposes. It is the council's duty two ask whether regulation of this 1.6% is the appropriate thing to do at this time,, especially when reports are indicating a record low in unemployment for the island. As mentioned above, regulation is typically enacted to address an issue. Bill 108 assumes that vacation rentals are an issue worth addressing, but only identifies a small subset of vacation rentals to regulate. While all rentals in all zones will be required to register, only a small subset of vacation. rentals (estimated 28% of all vacation rentals) in Agricultural or Residential zoned properties will be required to obtain a non -conforming use certificate at the cost of $500/yr. The majority of these rentals are in Puna District and other rural regions of the Districts of Hawai'i Island. Puna District has no large-scale hotels, nor does it have resort districts, yet draws in a massive amount of tourism annually (Hawai'i Volcanoes National n Park drew in over 2 million visitors in 2017 alone). Non -primary residence vacation rental 3 owners already pay general excise and transient accommodations taxes on top of higher property taxes. This annual fee simply constitutes an additional level of taxation under another `° o name. If vacation rentals on the whole are an issue worth regulating island -wide,. then all vacation rentals, regardless of zoning, should be subject to registration fees (or not). While I do believe that Bill 108 has fundamental flaws that should require it to be re- evaluated, especially in the economic context for the Puna District, I believe that the following issues could be addressed to make it better: 1. Eliminate or reduce the registration fee and require it for all vacation rentals, regardless of zoning or property type. Either option would be an equitable solution if all vacation rentals are indeed an issue worth regulating on Hawai' i Island. This would also eliminate any perception of conflicts of interest by any members of the Council who may be perceived to benefit from this regulation. 2. Establish a method for allowing new nonconforming use certificates to be issued and do not implement a moratorium. I have heard that the moratorium is part of Bill 108 in order to allow the Council time to "hit the pause button" and evaluate the situation. If the Council decides that it is necessary to implement a moratorium in order to allow time for adequate evaluation, I suggest that an end date for the moratorium be established and be in place no longer than a calendar year after the Bill's adoption. This would ensure that the Council takes up the matter of evaluating the issue in a timely manner and be held accountable for doing so. 3. If a moratorium and registration fees are enacted, I recommend that Bill 108 require funds be used to establish an independent third party to objectively evaluate the status of vacation rentals on Hawai'i Island, which can then be used to inform future action by the Council. 4. Establish whether non -conforming use certificates will be transferable with sale of the property. Bill 108 does not elaborate on the lifespan of the non -conforming use certificates. 5. Utilize the current State tax licenses that must be prominently displayed (per Act 204) as registration numbers for purposes in the Bill and strike the requirement for an additional posting on the back of our door. This should allow simplification of the process and eliminate some confusion for enforcement purposes. Mahalo for the opportunity to provide feedback. I am including a copy of the presentation I forwarded to you on March 19, 2018. To close, I would just like to note that I have owned my home since 2011. My wife and I rent it out when we cannot be on -island, and have used almost every dollar earned to put back into our house. We have used local contractors to replace catchment, re -do piping, repaint the roof, re -paint the house, repair and replace structural wood damage and were hoping to save up enough to replace the cesspool with septic in the near future. These repairs have totaled thousands of dollars paid to local people in the community, not to mention our housekeeper, whose sole income comes from cleaning vacation rentals in the Volcano area. We come out and stay as often and as long as possible with our little girls, and we desperately hope to continue doing so until the time we can retire and move permanently. Aloha and Malama Pono, Matt Hubner Volcano and Denver, CO Response to Mt 2018 STR Presentation to Hawai'i C Council Prepared by Matt Hubner STR Owner in Volcano, Hawaii March 13, 2018 Presentation • On March 13, 2018, the Hawaii County- Council listened to a 90 minute presentation by Mr. Stefan Buchta of the Leleiwi Community Association. • In his presentation, Mr. Buchta concluded that there are approximately 4,800 short term rentals on the Big Island. • Mr. Buchta, a private citizen, developed this number by evaluating Airbnb listings and cross-referencing the listings to ownership via tax parcel maps, in addition to conducting neighborhood visual inspections. • His study is certainly a thorough approach., but there are further questions and additional information that the Council should be asking or made aware of, respectively. • The following pages will outline an analysis I conducted on STRs on VRBO/Homeaway to provide additional context. Evaluation of VRBO-listed STRs on the Big Island • As of February 18, 2018, VRBO had 4,556 listings* for the Big Island. • Due to the volume and time -intensity of reviewing each listing, I chose to sample 527 of the listings across VRBO's low to high price spectrum. • I then evaluated those 527 listings for multiple listings at the same property (e."9. multiple rooms, B&B style). • I found that approximately 10% (9.8%) of the listings were multiples associated with a single property. • As a result, I adjusted the sample to 475 individual rental properties or units. • Applying that factor to VRBO's total number resulted in an adjusted 4,106 total individual rental units. • I believe this value lends credit to Mr. Buchta's total of a little over 4,800 individual rental units as I assumed Airbnb would have more listings due to their lack of a subscription charges. • However, there is more information to consider than the totals... *Listings refer to an individual pages on VRBO, but do not discriminate between multiple rooms or units at a single property. Evaluation of VRBO-listed STRs on the Blalsland • Mr. Buchta's presentation focused primarily on rentals in Residential and Agricultural zoned areas and neglected to show the complete picture of listings in all zones, including resort and commercial districts. • My analysis yielded the following: Table 1. Estimated Number of Big Island Rentals by Property Type on VRBO 1Resort District*. Residential- : Single Room/ , ' Rentals with .. Non -Permanent Apartment" Rentals Zoned .Ho'e ° , Ohana :Rentals {",, ",--Multiple Ren#als** rc Rentals (Condos; Villas, Renals Listings on, and ' Single Parcel " Townhomes). Number of =VRBO 2153:11411 579 18Z 351 17 Rentals Percentage 52.41 .... 27.81 ' 14.1 s 0.4 ' 0.83 4.4 ---- ...... . _.... _ _ _ _ -- Table 2. Estimated Number of Big Island Rentals by District on VRBO ,,. z North, Kona ; ...South , .: Puna" South Kona' South;Hilo , ; North : ,.. Ka'u ; Hamakua "North -°Hilo.,. Kohala ° Kohala " Number of. � 155811VRBO. 1122 725 265 1871 86 70. 62 31 Rentals ' Percentage E 38.0 27.3 17.6 6.5 4.6 2.11 1.7 1.5 0.8 *These rentals include condos, villas, townhomes and estates located on resort property in resort or commercial zones. **Non -Permanent Rentals consisted of yurts, tents, vehicles and other non -permanent structures. • Figure 1 is a graphical representation of STRs on VRBO by Property Type, island -wide. • Approximately 52% of STRs on VRBO are located in resort district, while 28% consist of whole home rentals. Figure 1. Percentage of STRs by Property Type Resort District Rentals Room/Ohana Rentals Non -Permanent Rentals Figure 2. Est. Number of STRs by Property Type 3000 2250 21-53 1500 750 0 Home Rentals 0 B&B or Rentals with Multiple Listings 41 Apartment Rentals U Resort District Rentals El Home Rentals 0 Room/Ohana Rentals EJ B&B or Rentals with Multiple Listings ® Non -Permanent Rentals in Apartment Rentals • Figure 3 is a graphical representation of percent STRs on VRBO by District. • Approximately 65% of all rentals on VRBO are located on North Kona and South Kohala. Figure 3. Percentage of STRs by District ® North Kona South Kohala j Puna South Kona South Hilo North Kohala " g Ka'u 0 Hamakua North Hilo Figure 4. Est. Number of.STRs by District 1600 1.558------- 1200 800 400 0 ® North Kona _ South Kohala F" Puna M South Kona South Hilo North Kohala Ka'u Hamakua North Hilo • The next two slides look closer at North Kona and South Kohala, Districts • As seen below, Approximately 68% of rentals in North Kona on VRBO are located in resorts. 21 % are whole home rentals. Figure 5. Percentage of STRs by Property Type - North Kona District Figure 6. Est. Number of STRs by Property Type - North Kona District Resort District Rentals Home Rentals v. Room/Ohana Rentals ;a B&B or Rentals with Multiple Listings Apartment Rentals Non -Permanent Rentals Resort District Rentals El Home Rentals Room/Ohana Rentals IE t B&B or Rentals with Multiple Listings Apartment Rentals Non -Permanent Rentals • In South Kohala 82% of rentals on VRBO are located in resort areas, while only 18% comprise the remainder of STRs in the District. Figure 7. Percentage of STRs by Property Type - South Kohala District 750 500 250 A Figure 8. Est. Number of STRs by Property Type - South Kohala District 919 El Resort District Rentals Home Rentals Resort District Rentals 3 Home Rentals Room/Ohana Rentals Apartment Rentals t Room/Ghana Rentals Apartment Rentals B&B or Rentals with Multiple Listings Non -Permanent Rentals B&B or Rentals with Multiple Listings 0 Non -Permanent Rentals Summary of VRBO Analysis • Analysis of the VRBO data estimates that the majority of STRs on the Big Island (52%) are located in the Resort or Commercial Districts*, primarily in North Kona and South Kohala. • Of the remaining property types, approximately 28% can b e classified as whole -house rentals in Residential or Agricultural zoning. • What does this mean in the context- of Mr. Buchta's analysis? *Note: The analysis of VRBO data did not conduct the level of ground truthing that Mr. Buchta appears to have done. Not all owners identify the exact location of their STR, but a best attempt was made to identify the correct location. Evaluation of STRs n the Bi Island usina Stefan Buchta's resentation • Applying the percentages I generated through my analysis of VRBO listings to Mr. Buchta's total for the Big Island (rounded up from 4,800 to 5,000 to remain consistent with his presentation) results in the numbers below and the figures on the following pages. • Note: There is likely to be a discrepancy in percentages as I anticipate Airbnb to have a higher percentage of owner -occupied rentals. - Mr. Buchta's presentation identifies 52% of hosts as owner - occupied, but it is unclear if that is the percentage of individual owner -occupied rentals on the Big Island or hosts. Table 3. Estimated Number of Big Island Rentals by Property Type Resort District*. Residential- Single Room/ Rentals with Non -Permanent; Apartment Rentals Zoned Dome Ohana Rentals Multiple Rentals** Rentals (condos, Villas, Rentals Listings on ,_and Single. Parcel. Townhomes). Number of Rentals 2621 1389 705 2.21 42 21 Percentage f 52.41 27.8 14.1 I i 0.4' 0.84.4 ----.. __._..... ........ Table 4. Estimated Number of Big Island ._..-..._..._....__... _. Rentals by District North Kona South Puna South -Kona South Hilo North Ka'u Ham_akua Nbrth Hilo , Kohala : Xohala a ' i ) Number of 18981 1366: t 882 323 2281 ; 104: 85, 76 38 Rentals. 1 I Percentage 38-& 27.3 I 17.6 ' .6.5 4.61 2.1 1.7 1.5' 0.8'� • Estimates based off 5,000` STRs indicate that only 1,389 may be whole homes in Residential and Agricultural zoning across the island.- The sland:The majority of STRs on the Big Island are found in North Kona, South Kohala, and Puna Districts • Puna District has no resort zoning yet is home to Hawai'i Volcanoes National Park, which drew over 2 million visitors in 2017, with approximately 89,472 choosing to stay overnight in the vicinity of the park.* Figure 9. Est. Number of STRs by Property Figure 10. Est. Number of STRs by District Type Island -wide 2000 3000--�----� , �. _ - - 1898 2250 1500 750 0 2621 1500 1000 Resort District Rentals El Home Rentals El Room/Ghana Rentals B&B or Rentals with Multiple Listings Non -Permanent Rentals Apartment Rentals *https://irma.nps.gov/Stats/Reports/Park/HAVO 500 0 North Kona [71 South Kohala Puna South Kona JU South Hilo North Kohala = Ka'u Hamakua FA North Hilo Summary c • Mr. Buchta presented to the Council that there are approximately 5,000 STRs on the Big Island without classifying what property type or whether they are already located in areas that may not be impacted by regulation (e.g. Resort and Commercial zoning). While I conclude that his total may be valid, I argue that his -presentation was misleading. • Estimates generated in this report indicate that there are approximately. 2,378 owner occupied and non - owner occupied STRs island -wide that are not in resort or commercial zones. • Further, an estimated 1 ,389 STRs are whole homes. uestions and Comments • US Census identified there were 86,778 housing units on the Big Island in 2016*. This would indicate that 1,389 whole home STIR units comprise only 1.6% of the housing units. • Mr. Buchta's total of 5,000 STRs comprises approximately 5.7% of Big Island housingu'nits. • At most, over half of those units are located in resort areas. • The Hawaii County Council needs to consider if at most 5.7% of Hawaii Island's housing units are utilized for STRs, is that a serious enough issue to warrant island -wide regulation measures Mr. Buchta outlines as options in his presentation. • Further, a holistic approach to evaluating the current conditions should consider the number of undeveloped lots on the island. I do not have those figures. *https://www.census.gov/quickfacts/fact/table/hawaiicountyhawaii/PST040216 uestions and Comments Continued • In his presentation, Mr. Buchta mentions that he has spoken to people in the City -govern men't of Santa Monica. The Council should consider whether Santa Monica (or San Francisco for that matter) is a comparable example. • In 2016, the population of Santa Monica was 92,478 in a city with a land area of 8.26 square miles (11,195 people per square mile)*. In contrast, Hawaii Island's population in 2016 was 198,449 with a land area of 4,028 square miles (49 people per square mile)**. • Of course, there is a significant amount of land that is not developed (or developable) on the Big Island, but nevertheless the differences-' between these two communities are significant and should be factored by the Council when considering regulatory approaches and measures from the mainland. *http://www.city-data.com/city/Santa-Monica-California.htmi **https://www.census.gov/quickfacts/fact/table/hawaiicountyhawaii/PST040216 uestions and Comments Continued • Mr. Buchta claims to have a comprehensive dataset, which would provide more accurate numbers versus estimates generated through this study.- I was unable to read the numbers he presented on the map on slide 4 to use as a comparison in this report. • If Mr. Buchta's presentation is to be utilized for decision-making purposes, his dataset should be made available to the Council and public for further analysis and scrutiny, though care should be taken to avoid revealing confidential information. • Mr. Buchta claims that 100-200 homes per month are being converted to TVRs. This significant claim requires equally significant data to support it. • Mr. Buchta indicates that 6% of owners take in 35% of the income on Airbnb. First, the presentation did not include the methodology Mr. Buchta utilized to determine this market -share analysis. Second, it is not apparent where the majority of the 6% are located. If a large portion of that 6% are located in resort areas, is that a genuine concern? Acknowled jement of Bias • According to his testimony, Mr. Buchta is a homeowner in a neighborhood that is facing significant challenges from STRs. I agree that the issues described in his neighborhood appear to warrant some action to prevent further deterioration of the community. However, his bias against STRs is apparent in his testimony and may skew his presentation of the data to favor his point of view. As such, he proposes significant actions and measures that may not be necessary or would be overly -burdensome for owners and county regulators alike. • For transparency purposes, I must acknowledge that I am an owner and operator of an STIR in Volcano, since 2011. I reside on the mainland, and utilize my cabin 4-5 weeks out of every year. Our hope is to eventually retire there, but in the meantime we have enjoyed renting out our home to small families and couples from nations around the world to local residents alike. I have concerns that regulations might result in the elimination of my rental property. In. Closing I ask that you as a Council approach regulation of STRs from a common sense perspective based on factual data and not anecdotes alone. These analyses should be a starting point for you to understand the situation at hand, but I would recommend you seek out an unbiased third party to provide an objective analysis. I fear that Mr. Buchta's presentation creates a false sense of urgency that may lead to quickly -enacted and unbalanced regulation without the establishment of proper implementation. Further, and most - importantly, the Council needs to evaluate STRs and tax compliance. This is often cited as a major reason for regulation, yet it was hardly discussed in Mr. Buchta's presentation. I have yet to see a credible number be provided for delinquent STIR taxpayers, but I support any efforts the County can take to enumerate and identify those not paying their fair share and bring them into the light. Mahalo, Matt Hubner