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Home My WebLink AboutCOM 0739.044 2016-2018COUNTY CLERK co OFHA A From: Ted Klassen To: Council Testimony 2918 A« I R27 Subject: Suggestions for Bill 108 k Date: Monday, April 23, 2018 11:55:31 AM Attachments: Bill 108 Suggestion Mar 14 2018 [Autosaved].pptx Aloha and Mahalo for allowing this testimony. Ted Klassen mba Kona Coast Property Management LLC, Dba Kona Coast Vacations 745565 Luhia Street, #101 Kailua Kona, HI 96740 808-329-2140 www.konacoastvacations.com - 6-%oslPc. 411 Comm. No. I Ref. To: V WC Ref. Dote APR 2 4 F918 Short Term Rentals Understanding the issues Economic Drivers 9 Tourism is the economic driver of our State and our Island economy 9 accommodations is the highest contributor to GDP in the State • According to First Hawaiian Bank —Econornic Forecast — 9 Hawaii Island Edition 2015-2016 the tourism sector is very important to Kona side [J 193 1 Ej �7 2014 7 M _7 I'spA'! Maui 6q.',I, i I I S, I C— Kona Side ahu, • https://www.fhb.com/en/assets/File/Marketing/FHB_EconForecastHawaiiIsland2015.pdf 5 0 Hawaii Island Current Reality • Hawaii island has experienced a reduction in available hotel rooms • Hilton changes 600 room tower to Timeshares- others following suit • Hapuna Prince- to sell off 1/3 of its rooms for condos • Kahalu'u hotel closed — Holiday Inn was added • Hawaiian Airlines announced contract for 10 Dreamliners (Mar 6, zoss) • New direct flights being announced by HTA— Japan, New Zealand, Canada, etc • Report on Timeshares Kauai — • 8,444 time share units created 48 million in state & local taxes, 5938 jobs. • So, estimated ST rentals on Hawaii island approximately 4,700, lets suggest ST generates % or about 12 million in taxes and 1,500 jobs? 4.16% of homes in Hawaii are Vacation Rentals • tt ://www. a aiinewsnow.co /story/37791161/re ort -l -in -2 -ho es -in- awaii-is- now -a -vacation -rental based on report from Hawaii Apple Seed... • The report suggests that 1 in 24 are vacations rentals or 1 divided by 24 = 4.16% • This includes condohotel complexes in the Kona area, such as Casa De Emdeko on Alii Drive with approximately 140 condos which have been short term rentals for the estimated past 35 years. Many of these condos include timeshares properties. • Many other complexes along Alii Drive have allowed Short Term rentals for years such as Kona Reef, Kona Alii, Kona Kai, Sea Village, Kona Makai, Alii Villas, Royal Sea Cliff, Kona Isle, Kona by the Sea, Kona Riviera, Kona Bali Kai, Banyan Tree, Kona Magic Sands, Magic Sands, Kahalu'u Bay Villas, Kahalu'u Beach Villas, Surf and Racquet Club, Kanaloa at Kona, Country Club Villas, Keauhou Akahi, Keauhou Punahele, etc. Doing the math — this suggests the 4.16% is well represented on Kona Side. Goals o -f the Bill • Regulate Short Term (ST)'rentals in residential neighborhoods • Provide tracking and accountability • Reduce neighborhood issues • Insure the GE and TA Tax collection • Provide future guidelines Situation Analysis • Short Term rentals located in areas with no -zoning guidelines restricting rentals • Noone responding to issues with noise, over occupancy, neighborhood complaints, etc. • On island contacts managing more than one property with no guidelines or licensing. • An individual operating as a service company may manage 5 or more homes, avoiding the real estate laws by billing as a cleaner, landscaper, etc. • These entities operating as "local contacts" are avoiding current Real Estate laws • I believe the majority of issues arise from homes that are not managed professionally. • Properties in the wrong zoning • Property owners not paying appropriate taxes • No accountability- no one on call or available either Off Island or On Island • No On Island emergency contact person that will attend to or address an issue Professional Managers • Operate under Chapter 467 and understand the need for a Broker and licensed representatives • We insure property owners are licensed • We insure property owners submit their GE and TA taxes • We insure properties are in the proper zoning areas • We insure that the owners carry renters and liability insurance • We utilize Trust Accounts to protect owners and guests • We pay Errors and Omissions insurance • We have On Island Emergency teams and are available 24/7 • We can evict guests that do not adhere to our strict guidelines • We can be punished by fines or by losing a Brokers' license • Licensees must attend continuing education courses to maintain their license • Our guest ratings, owner ratings and neighbor's satisfaction matters • We employ local people, contract local services and pay local and State taxes Current Legislation Chapter 237D • Transient Accommodations Tax Law— Chapter 237D • "Local Contact" means an individual residing on the same island as the transient accommodation or resort time share vacation unit or an entity with a place of business and at least one employee, officer, partner, member, or other person working on behalf of the company who is residing on the same island as the transient accommodation or resort time share vacation unit. • "Operator" means any person operating a transient accommodation, whether as owner or proprietor or as lessee, sublessee, mortgage in possession, license, or otherwise, or engaging or continuing in any service business which involves the actual furnishings of transient accommodation. Current Legislation Chapter 467 • Real Estate Brokers and Salespersons • 467-1 Definitions • "Custodian or Caretaker" means any individual, who for compensation or valuable consideration, is employed as an employee by single owner and has the responsibility to manage or care for that real property left in the individual's trust provided; provided that the term "custodian or "caretaker" shall not include any individual who leases or offers to lease, or rents or offers to rent, any real estate for more than a single owner Suggestion Please add definitions to Bill 108 to assist in clarifying the roles and adds credence to the current laws — closes the loopholes • All "local contacts" are considered "operators" or "Custodians or Caretakers" and may represent one owner. All "Custodian or Caretakers" or operators representing more than one owner are subject to the guidelines under Chapter 467 — Real Estate Brokers and Salespersons. Further study This is an issue that is complex, with many varied interests. You all have a very tough job trying to satisfy the majority of interests. I would be happy to provide input to any committees or groups wishing to understand the short term rental industry from a person that is involved in the industry, trying their best to operate under the current laws and guidelines. We support about 25 local families directly as full time employees, and another 25 or more as 1099 contractors or full time e uivalents. It is important to our company, our artners, our employees an the island that this industry survives without distur ing our neighbors. Mahalo Nui Ted Klassen ted @ konacoastvacations.com 808-329-2140