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HomeMy WebLinkAboutCOM 0739.211 2016-2018June 22, 2018 The Honorable Karen Eoff Chair and Presiding Officer The County of Hawaii Committee on Planning 25 Aupuni Street Hilo, Hawai` i 96749 County of Hawaii Short-term Vacation Rental (STR) Ordinances - Analysis and Amendment Suggestions to Bill 108 Aloha Planning Committee Chair Eoff, CD W. For more than 100 years, the American Hotel & Lodging Association (AHLA) has been the foremost representative of and advocate for the U.S. lodging industry. We advocate for our members so they can do their best at what matters most: serving guests, employees and their communities. With more than 150 members in Hawaii representing 110,000 employees, this is a job we take very seriously. On behalf of the lodging industry, we stand united behind responsible and appropriate regulation of short-term vacation rentals (STR) in Hawaii County. We appreciate the valuable work you are doing to ensure short-term rental companies and the unregulated commercial businesses they facilitate operate by a standard set of rules that ensure a level playing field and protect our neighborhoods. In March of 2016 CBRE released a report that examined the rise of commercial activity taking place on Airbnb nationwide, which included parts of the Hawaii market. The results confirmed what many of us in Hawaii already know—most vacation rental units here are owned by part-time residents or commercial operators, not by local homeowners renting a room out to supplement their income. In fact, 85% of Airbnb revenue on the island of Oahu came from entire -home rentals, the vast majority owned by out of State investors. This proliferation of illegal ST.Rs degrades the quality of life for our residents and worsens the problem of inadequate affordable housing supply in Hawaii. We are not opposed to our visitors having alternative lodging options like vacation rentals, but its d should not be at the expense of kama`aina communities. We should be concerned that corporations want us to turn a blind eye to the fact that most multi -unit hosts are in fact illegal a hotel operators. For these reasons, we urge your strong consideration of incorporating common' sense enforcement mechanisms into Bill 108, relating to short-term vacation rentals. For your –•1 N v 1250 1 STREET NW, SUITE 1100 \ WASHINGTON DC 20005 \ 202 289 3100 \ WWW.AHLA.COM convenience, we have prepared this white paper summarizing key issues relating to effective STR enforcement ordinances and a summary of amicable amendments to Bill 108. These amendments are designed to maximize the permitting of legal short term rentals, discourage illegal operators, hone the County's enforcement tools and maintain compliance with relevant Federal laws. Key Issues 1. Online STR Platform Accountability and Data Transparency. Lack of adequate data sharing and platform accountability cripples the County's ability to enforce regulations. 2. Affordable Housing. Commercialization of residential housing stock raises home prices above what is affordable, drives up rent, and exacerbates the affordable housing crisis. Workforce housing is being pushed further away from community centers, transit corridors and jobs. 3. Taxation. There is inequitable taxation between commercial STRs and hotels and a lack of ability to collect taxes and fees due from all STRs. 4. Permitting and Zoning. . STRs proliferate in areas that they are presently prohibited and in a manner that exacerbates our housing crisis. 5. Level Playing Field. Commercial STRs that are de facto hotels should play by the same rules and provide the same safety precautions for guests that hotels provide. Online STR Platform Accountability & Transparency • The zoning and planning ordinances currently on the books cannot be properly enforced until online STR platforms are required to be accountable for, and transparent in, their transactions and data reporting. • San Francisco's STR ordinance' is a successful mode12 for how to establish effective STR platform accountability and transparency—it is legally successful and with impactful penalties. • A saw of critical components to incorporate in The County of Hawai`i's ordinance from San Francisco include: Accountability 1 San Francisco Administrative Code, Chapter 41A: Residential Unit Conversion and Demolition ( ? _ - _ _ )• 2 CBS SF Bay Area, 6,000 Short -Term Rentals Disappear from San Francisco Almost Overnight (ht, •%/sanfrancisco cbslocaIsom/2018/01/17/san-fraacisco-short-term-rental-supply-disappears /). 1250 1 STREET NW, SUITE 1100 \ WASHINGTON DC 20005 \ 202 289 3100 \ WWW.AHLA.COM o Prohibit STR platforms from collecting a fee for facilitating any transaction for an unlicensed, illegal STR unit. "Facilitating": advertising the STR, conducting the financial transaction, etc. There must be strong penalties in the event a STR platform collects a fee under these circumstances (per violation, per day). o Require platforms to swiftly de -list any STR unit when the City informs them it is unlicensed and/or out of regulatory compliance (or face penalties per violation, per day). o These tenets of STR platform accountability have survived legal challenge on federal Communications Decency Act and First Amendment grounds.' Transparency o Without access to fully transparent, transaction -level data from STR platforms, The County of Hawaii will never be able to properly audit and identify unlicensed STR operations, tax evasion, and zoning/use violations. • E.g., the date(s) a named guest procured use of, and the nightly rental cost/taxes for, an STR transaction facilitated by a platform; the person who listed the STR on the platform; the license number posted on the listing; etc. • STR platforms must be required to provide "personally identifiable information" on the transaction -level. This data cannot be "cumulative," "total," or "anonymized." • If data requested by the government is inappropriately withheld, then a subpoena process must remain in place to obtain it. o STR platform transparency ideas/protocols have survived legal challenge on federal Stored Communications Act, First Amendment and Fourth Amendment grounds.' 3 Airbnb v. City and County of San Francisco (http5:lldigitalcommQns.law.scu.edu/ i/view-content.cgi?referer==l&article=2324&contex t=historical). After Santa Monica, California implemented an ordinance similar to San Francisco, litigation also ensued there. The Airbnb v. San Francisco decision was further supported in HomeAway (and Airbnb) v. City of Santa Monica 4 City and County of San Francisco v. HomeAway (http://www.courts.ca.gov/opinions/documents/A15O385.PDF). 1250 1 STREET NW, SUITE 1100 \ WASHINGTON DC 20005 \ 202 289 3100 \ WWW.AHLA.COM • San Francisco's STR ordinance is also a successful model for how to establish appropriate STR licensing, zoning and use standards. ➢ The County of Hawaii should consider emulating San Francisco's STR licensing and use allowances. o Only one's primary residence may be short-term rented in San Francisco. • Unlimited renting of a room or rooms when host is present ("home sharing"). • 90 -day yearly cap on "whole home rental" of one's primary residence. • No investor units may be short-term rented (only can be long-term rented). o If the County of Hawai` i wants to still allow for STRs in commercially zoned areas, then: The San Francisco STR use model can be implemented for residentially zoned areas; and In commercially zoned areas, STRs should be required to adhere to all hotel health, safety, sanitation, ADA, tax regulations, and other standards, just like hotels do. Amendment Suggestions to Bill 108: The following is a list of amicable amendments to Bill 108 which, incorporate some of the key objectives outlined above: Definitions to be added to the statute: "`Hosting platform' means a person or entity that participates in the short-term vacation rental business by providing, and collecting or receiving a fee for booking services through which an owner may offer a short-term vacation rental. Hosting platforms usually, though not necessarily, provide booking services through an online platform that allows an owner to advertise the short-term vacation rental through a website provided by the hosting platform and the hosting platform conducts a transaction by which potential renters arrange use and payment, whether the renter pays rent directly to the owner or to the hosting platform." "`Booking service' means any reservation or payment service provided by a person or entity that facilitates a short-term vacation rental transaction between an owner and a prospective renter, and for which the person or entity collects or receives, directly or indirectly through an agent or 1250 1 STREET NW, SUITE 1100 \ WASHINGTON DC 20005 \ 202 289 3100 \ WWW.AHLA.COM intermediary, a fee in connection with the reservation or payment services provided for the short-term vacation rental transaction." Section 25-4-_(b)(4): "Upon change in ownership, pe -.. . registration shall automatically ' . .. . terminate. Section 25-4-_(E): "Director duties in event of emergency. In the event of an emergency, natural or manmade, where multiple short-term vacation rentals lawful pursuant to this chapter are irreparably damaged, razed, or otherwise rendered uninhabitab(c in any given district, the director w,may facilitate the replacement of such inventory in the district of origin, ' . -a- by accepting registration applications for new short-term vacation rentals equivalent to those lost in the affected district; Section 25-4-_.1(g): "In the event of an emergency, natural or manmade, where multiple short-term vacation rentals lawful pursuant to this chapter are irreparably damaged, razed, or otherwise rendered uninhabitable and caused to cease operations " the director may prorate an annual renewal fee for a nonconforming use certificate or may reissue a registration permit without additional fees or requiring additional documentation, or both, after the emergency event, for owners who are in good standing prior to the event." Section 25-4_.5. Requirements for Hosting Platforms. a) All Hosting Platforms shall provide a notice of the County of Hawai`i's short-term vacation rental registration requirements to any owner or operator of a short-term vacation rental located within the County of Hawaii that is listed through the Hosting Platform. b) All Hosting Platforms shall list the applicable Nonconforming Use Certificate and corresponding address of any short-term vacation rental being advertised through the hosting platform for any listed short-term vacation rental located in the County of Hawai` i. c) It shall be unlawful for a Hosting Platform to provide, and collect or receive a fee for, booking services in connection with short-term vacation rentals located in the County of Hawaii if those short-term vacation rentals are not lawfully registered and/or certified for nonconforming use as required in this ordinance at the time the short-term vacation rental is advertised. 1250 1 STREET NW, SUITE 1100 \ WASHINGTON DC 20005 \ 202 289 3100 \ WWW.AHLA.COM d) Notwithstanding any other provision of law or administrative action to the contrary, for not less than three years following the end of the calendar year in which the short-term vacation rental transaction occurred., the Hosting Platform shall maintain and be able, in response to a lawful request or subpoena, to provide the County of Hawaii with the following data for each short-term rental transaction the Hosting Platform has provided a Booking Service for: (1) The name of the owner who offered the short-term vacation rental; (2) The name of the renter who procured occupancy of the short-term vacation rental; (3) The address, including any unit designation, of the short-term vacation rental; (4) The dates and nightly rates for which the renter procured use of the short-term vacation rental; (5) The registration and nonconforming use certificate number, if applicable, for the short-term vacation rental; and (6) Such other information as the director may require by rule. Short-term vacation rental'owners shall be required to maintain and be able to provide the same data for all of their short-term rental transactions under the same standards and requirements. e) Upon written notification from the County of Hawaii, a Hosting Platform shall remove from its website within seventy-two (72) hours any short-term vacation rental listing that is deemed unlawful and/or ineligible for use as a short-term vacation rental under the provisions of this chapter. f) A Hosting Platform found to be in violation of Section 25-4_.5 shall be subject the enforcement provisions and civil fines of Section 25-4_.3." Additional Considerations to encourage more locally owned STRs To encourage more local ownership of legal STRs, the county may consider appropriate incentives which if applied appropriately would allow more local's to take advantage of legal STR opportunities. Specifically: 1) Limit short-term rental property registration to "natural persons" domiciled in the County of Hawaii; 2) Establish unlimited primary residence short-term renting for natural persons present and "home sharing" and; 1250 1 STREET NW, SUITE 1100 \ WASHINGTON DC 20005 \ 202 289 3100 \ WWW.AHLA.COM 3) Establish whole home rental of a natural person's primary residence up to the annual day amount necessary to allow it to still remain a primary residence; These suggestions would boost more local ownership of STRs and allow more true home -sharing for constituents who have an interest or need in renting out part or all of their primary residence to make ends meet. This is congruent with the County's objective to utilize STRs as a means of providing economic opportunities and creative solutions to alleviate the cost burden of home ownership for County residents, not as investment opportunities for wealthy overseas speculators. Our communities are at stake. The Hotel industry is one of the most competitive industries in the world, and we welcome anyone willing to play by the rules. Our stake in this fight is about the communities where our employees live in Hawaii. Right now across Moku o Keawe our members are engaged in relief efforts for our `ohana and neighbors in Puna. While we all kolaia the families who lost their homes and those who have been displaced by the recent eruption of the Volcano, we also have empathy for the thousands in our community living paycheck to paycheck, crippled by the cost of housing driven up by illegal STRs which inflate pricing and take inventory off the market for local people trying to raise families in Hawaii. We need to crackdown on illegal vacation rentals, and Bill 108 is a step in that direction. Thank you for your leadership on this issue, and mahalo to your colleagues on the Council for their support of this initiative. Me ka pono, The American Hotel and Lodging Association Kekoa McClellan - Hawai`i Spokesperson 1.808.393.7937 kekoamcclel Ian . r;�_Ymail.com CC: The Honorable Eileen O'Hara The Honorable Aaron S. Y. Chung The Honorable Maile Medeiros David The Honorable Dru Mamo Kanuha The Honorable Susan L. K. Lee Loy The Honorable Valerie T. Poindexter The Honorable Herbert M. "Tim" Richards, III The Honorable Jennifer Ruggles The Honorable Harry Kim, Mayor - The County of Hawaii 1250 1 STREET NW, SUITE 1100 \ WASHINGTON DC 20005 \ 202 289 3100 \ WWW.AHLA.COM