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HomeMy WebLinkAboutCOM 0739.167 2016-2018P GCOU �. P -K 0 NT OF From: MATT HUBNER .� /�J�� To: Council Testimony 5 Subject: Testimony for Monday, June 18 -Hearing on draft 3 of Bill 108 - Regarding Short-term Vacation Rentals Date: Friday, June 15, 2018 11:02:47 AM Attachments: Response to 3.13.2018 STR Presentation. pdf Dear Members of the Hawai'i County Council, I am submitting my testimony on draft 3 of Bill 108. 1 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. Further, I have concern that the council does not fully comprehend the economic impacts and losses that are occurring due to the eruption in lower Puna and the loss of tourism to other areas of Puna as a result. Moving forward with this Bill at this time does not seem prudent as it may limit County income and work opportunities during a time when thousands of displaced people are struggling. 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.The stated purpose of this Bill is as follows: The purpose of this ordinance is to manage the impacts of these short-term vacation rentals by: 1) defining where this use will be allowed; 2) establishing provisions and standards to regulate this use; and 3) providing an avenue for an existing use deemed to be improper by this ordinance, to apply for a nonconforming use certificate that would allow them to continue to operate in a non permitted district. I would like to immediately point out that this purpose statement never elucidates what the impacts of STRs are. It is unclear what detriment STRs present to the County of Hawai'i as a whole, which should be need that drives the purpose of island -wide regulation of businesses that provide additional income and jobs, as well as higher property taxes to the County coffers. I agree that defining the use is appropriate as there are a number of vocal opponents of STRs that commonly refer to any vacation rental of a whole home as illegal. Such a definition would clarify matters if the regulation is clear and understandable. Providing sensible regulation of STRs is also something I support, but the current draft describes inequitable standards to regulate this use. I also support the proposal to grandfather in existing STRs that do not conform to the proposed use with caveats that I will discuss further below. As I have submitted in previous testimony, I have researched listings on VRBO to evaluate the breakdown of property types in districts and zones, and the majority of listed STRs are condos and villas in resort areas that do not or would not impact local housing (I am including a copy of my findings with this testimony). A large percentage of the whole home house rentals that would be the primary target of this bill are or were located in the Puna district. As you all are aware, many of those homes have been destroyed or are severely impacted by the ongoing eruption. The remaining bulk of whole home rental properties that would be affected are on the Kona side, primarily in North Kona and South Kohala. I maintain that proceeding with adoption of this regulation while the economic impacts of this disaster are unclear is unfair to the people of Puna who will significantly carry much of the burden presented by this regulation. My specific concerns and recommendations with Draft 3 of this bill are bulleted below: • Section 254(b) Registration of short-term rentals: As the word "registration" appears in this document to apply to STRs in permissible zones, it is unclear if this section applies to STRs that will have to apply for a non -conforming use certificate, or in other words be "permitted" • Section 25-4(b)(3)(B): Assuming this section applies to STRs under a nonconforming use certificate, it is not clear in this bill what measures will be necessary to ensure compliance with this provision. Many whole house STR owners have drive ways and garages/carports. Will we have to bring in an inspector to verify this or will photos suffice? • Section 25-4(b)(3)(C): Again, assuming this section applies to STRs under a nonconforming use certificate, it is unclear what necessary steps will need to be taken regarding this requirement for whole house STR owners. Will the drawings in the County Tax database suffice, or will this require an inspection or creation of drawings at the owners expense? • Section 25-4(b)(4): As it is unclear if this section applies to owners of STRs under a nonconforming use certificate, it is not clear if this process applies to STR owners under a nonconforming use certificate as this is not discussed under Section 25-4- .1. Short-term vacation rental nonconforming use certificate. • Section 254(c): This section further confuses whether the sections above are applicable to STR owners with nonconforming use certificates as it describes actions for both types of STRs. Ref. To. � � Cv • Section 24-4-1(a): At a minimum, this section regarding the cutoff date should be amended to allow those who have lost their homes/rentals to the eruption an option to re-establish their businesses. As we already almost a month from the July 20th cutoff, this date should be pushed further back in the next -draft. 11 • Section 24-4-1(b): I appreciate that this section has included additional details, yet it still remains vague especially regarding "other reliable information may be provided". It is unclear what other reliable information would be required. This section should also indicate a timeframe for the Director to make a decision, and include language that specifies that if the Director is not able to make a decision in a timely manner due to the number of reviews, nonconforming properties will not be assessed penalties due to an administrative backlog. • Section 24-4-1(d): I recommend that the Planning Department utilize the tax certificate and number that must be displayed per Act 204 for the purposes of this section and sections 25-4(c)(2 & 3). Section 24-4-1(f): (This draft of the Bill does not establish if $500 will be required for registration of a nonconforming use certificate. Further, I recommend that the Council 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 the source of impacts (as identified in,the purpose of this Bill) 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. • Section 24-4-1(0(1-4): This section contains details that a renewal of a certificate may be denied if the owner or contact is unreachable. Unreachable is described further down in Section 3 as meaning being able to answer the phone at all times or to be physically present within one hour. I would agree that owners and/or their designated contacts should be reachable and able to be made present, but the time limits as described are incredibly restrictive. I request that this provision and definition be amended to provide a sensible amount of time for an owner or contact to respond to a call or be present. For example, if an owner of a STR in Puna is shopping in Kona at Costco, they may not have cell reception in the store (I do not have cell reception in the store), and may not receive the notice of the call until they depart. Then it would take up to an hour and a half or 2 hours to be present. The mandate in this provision is untenable and should afford more flexibility for non -emergency issues, especially if they are grounds for denial of a certificate renewal. • Section 24-4-1(h): The appeals process outlined is derived from major zoning amendments and variances authorized by the Director as outlined in the Hawai'i County Zoning Code (Sections 25-2-20). It should be made clear in the Bill that an appeal requires a $250 filing fee. An additional financial burden placed on the property owner. • Section 25-4.4(c): As noted above, the purpose of this Bill is to address impacts of STRs, not specifically nonconforming STRs, yet the enforcement fund established in this section is entirely funded by fees collected by non -conforming STRs. This is inequitable to single out one type of property owner to carry the financial burden when the Bill presumes that all STRs are creating an impact (which has yet to be described). I reiterate that fees be eliminated or established for all STR owners. I further recommend that Bill 108: • As this Bill appears to be driven by public outcry in specific communities in Hilo and the Kona area, I propose that the Bill afford districts flexibility to individually outline how STRs are regulated at the district level, especially those not in appropriately -zoned areas (i.e Puna has no Resort District that would allow whole home STR owners to simply register their property). • Establish a method for allowing new nonconforming use certificates to be issued and do not implement a moratorium on new STRs requiring nonconforming use certificates. I understand 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 absolutely 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. • If a moratorium and registration fees are enacted, I recommend that Bill 108 require funds be used in addition to enforcement to establish an independent third party to objectively evaluate the status of vacation rentals and their economic impact on Hawai'i Island, which can then be used to inform future action by the Council. Mahalo for the opportunity to provide testimony. Aloha and Malama Pono, Matt Hubner Volcano Aesponse to March 13, 2018 S Presentation to Hawail County 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.g. 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 Big Island • 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 Resort District* Residential- Single Room/, . Rentals with . on -Permanent., Apprinent Rentals Zoned Home , _ Ohana Rentals ;! . Multiple . Rentals** Rentals (Condos, Villas; - ;Rentals Listings,,on ' and :. Single, Parcel . : Townhomes) . Number:of 215311141 579 182' 351 17VRBO Rentals fPercentage �� � 52. . .................. . ..4 27.8:14.1; 0.4; 0.8► 4.47 ---- --- ___- --- - ----------- _ ___ _ _ _ ---......_ _..._._..._..._..---- Table 2. Estimated Number of Big Island Rentals by District on VRBO 77 North Kona __..._South .. Puna Sou#h Kona South Hilo NorthKa'u Hamakua North Hilo Kohala Kohala . i E Number of? VRBO. { 1558 ii 1122 7251 265 1871 861 70'1 621 31 Rentals ' Percentage I 38.0 27.3: 17.6: 6.51 4.61 2.11 1.7 1.51:0.81 *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 Figure 2. Est. Number of STRs by Property Type 3000 2250 1500 750 0 Resort District Rentals 0 Home Rentals - 0 Room/Ohana Rentals 0 B&B or Rentals with Multiple Listings 19 Non -Permanent Rentals 40 Apartment Rentals Resort District Rentals 0 Home Rentals El Room/Ghana Rentals B&B or Rentals with Multiple Listings Non -Permanent Rentals 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 Hilo 0 North Hilo South Kohala r-" Puna South Kona North Kohala - Ka'u Hamakua Figure 4. Est. Number of STRs by District 1600 1200 800 400 0 North Kona j South Kohala Puna 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 Room/Ohana Rentals B&B or Rentals with Multiple Listings Apartment Rentals Non -Permanent Rentals 0 12 Resort District Rentals Ej Room/Ghana Rentals Apartment Rentals E] Home Rentals B&B or Rentals with Multiple Listings 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 1000 750 500 250 Figure 8. Est. Number of STRs by Property Type - South Kohala District 919 E3 Resort District Rentals El Home Rentals Resort District Rentals Home Rentals Ej Room/Ghana Rentals Apartment Rentals Room/Ohana Rentals Apartment Rentals E B&B or Rentals with Multiple Listings Non -Permanent Rentals E. B&B or Rentals with Multiple Listings 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 be 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 STRon the Bia Island Usina StBuchta'S Dresentation. • 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 Home Ohana Rentals Multiple, Rentals* Rentals (condos,, Villas, Rentals Listings on .and Single Parcel Townhomes) E Nentals f i 13891 705 221 42 21 Rentals 2621; - : . .. ....... - -------- Percentage 52.41 27.811 14.1; 0A 0.8' 4.4 , - --------- Table 4. Estimated Number of Big Island Rentals by District North KonaSouth Puna South Kona South Hilo- North. Ka'u Hamakua North" Hilo ; Kohala Kohala I M_ Number of 8821 Rentals 189811 f I :_Percentage E 38.0 , I 1366: 8821 3231 228 27.3 17.6' - -- .._...._.. - ... - 1.5 . ...... 6.5 ... .... 4.6 104 85 F 76138 2.11 .. ._......... 1.7 - -- .._...._.. - ... - 1.5 -._..__.... -- - ._..... _ 0.8' 3000 • Estimates based off 5,000 STRs indicate that only 1,389 may be whole homes in Residential and Agricultural zoning across the island. • 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 ....�._.�_..�.�, .._....,..._�...�..�.,...��..�...,....�.._..�..w,e,M.n......�.,� .._. 1898 2250 -- 1500 750 2621 E 221 4 1500 1000 Resort District Rentals 0 f Home Rentals Room/Ghana Rentals _ B&B or Rentals with Multiple Listings Non -Permanent Rentals U Apartment Rentals *https://irma.nps.gov/Stats/Reports/Park/HAVO 500 0 w North Kona ``w..> South Kohala =, : Puna, South Kona South Hilo North Kohala Ka'u ! l Hamakua North Hilo _ Summary ow .-e 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. Questions 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 housing units. • 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 government 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/ci!yLSanta-Monica-California.html **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? Acknowle!jgement 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. 1 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 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