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HomeMy WebLinkAbout2024-03-27 FAQ Bills 123 Council Chair Heather Kimball Hawaii County Transient Accommodation Rental and Accessory Dwelling Unit package— Bills 121,122 and 123 Frequently Asked Questions March 27, 2024 Please note the response to these questions only apply to the first introduced drafts of these bills. There will likely be changes to the bills as they proceed through the legislative process, which includes review by both Windward and Leeward Planning Commissions and at least three hearings at the County Council. What is the purpose of these bills? Bill 121 —The intention of bill 121 is to ensure that all transient accommodations in the county are operating legally, safely and in adherence to the same set of operational standards. Another objective is to preserve the character of our residentially zoned areas and ensure that culturally zoned lands continue to contribute to our County's agricultural production. Finally, the bill's also intended to help cap speculation in the housing market to both increase inventory for local residents and reduce the inflationary pressures that TARs have on housing prices and rental rates. Bill 122— Bill 122 removes the Bed and Breakfast process in the code. This is an effort to simplify the code, since all operations that currently meet the B&B requirements will be managed under the Hosted-TAR program in Bill 121. Bill 123— In addition to the Bills 121 and 122 related to transient accommodations we have also included a bill in this package that makes the process to build accessory dwelling units for multi-generational or long-term rental housing very simple. It will no longer be a separate permit from the Planning Department. Anyone wishing to build an ADU would submit for a building permit and as part of the site plan review, Planning will determine if the minimum lot size and other requirements have been met. Have there been any local studies on the impact of the TARs on the housing market? Yes, in addition to national and international studies, local studies can be found at the following links: Hawaii Appleseed Report: https://www.hawaiicountytar.com/s/Appleseed_VacationRentallmpactReport_32918_New Cover.pdf UHERO blog: Short-term Vacation Rentals and Housing Costs in Hawaii. Hawaii Housing Factbook: https://uhero.hawaii.edu/wp- content/uploads/2023/06/TheHawaiiHousingFactbook.pdf Does this mean my existing TAR could be shut down by the county? As long as your TAR is operating legally, then Bill 121 allows you to continue operating. Some things that could result in the closure of an existing TAR: There is no GET license for the property, GET, property tax or TAT have not been paid, the TAR is in a structure that does not meet safety requirements. If I am a resident, can I start a TAR later if I don't have one already on my property now? Yes, owner-hosts who use a property as their primary residence, as determined by the same criteria as the IRS determines your residency, can start a TAR at any time and in any zoning as long as the TAR is offered in the main dwelling, a detached bedroom, or a guest house. Are TARs on agricultural land illegal? No, legally operated TARs with an existing nonconforming use certificate will still be able to operate. Operator-hosted TARs on agricultural land active prior to January 2024 will also be grandfathered in with a non-conforming use certificate. Finally, owner-hosted TARs can be started at any time in the first farm dwelling, a guest house, or a detached bedroom. "Additional Farm Dwellings"are not permitted to be used as TARs, this is state law(Hawaii Revised Statutes 205) and not part of Bill 121. Are TARs in Lava Zones 1 and 2 illegal? No, TARs are not regulated by the County based on lava zone designation. Do I need a licensed broker to manage my vacation rentals if I own multiple rentals? If you manage multiple properties owned by different owners, then according to state law you need a realtor's license. However, if you own more than one property or manage more than one property owned by a single person you do not need a realtor's license. If I have an Ohana or guesthouse, can I live in the main dwelling and rent out the Ohana or guesthouse? Yes, under the proposed legislation,you can live in the main dwelling and rent out an ohana or a guesthouse, though an Ohana requires a nonconforming use certificate. If I have an Ohana, guesthouse or detached bedroom , can I live in the Ohana, guesthouse or detached bedroom and rent out the main house? The proposed bill does not address the requirement that the property owner live in any particular "dwelling" on the property. An Ohana is considered a dwelling. Guesthouses and detached bedrooms are not considered dwellings and therefore the host cannot live in them and rent out the whole main dwelling as a TAR. Do I have to CPR if I have a condo in a commercial or resort zoning to have multiple TARs if only one owner of all units? No Can I add additional bedrooms to my approved TAR? Yes, the bill includes a change in information process that would allow adjustments to be made on the number of bedrooms as needed. Is there a limit on bedrooms allowed? No, there is not a limit on the number of bedrooms under the current proposal. How many hosted rentals currently exist? Based on the DBEDT STR Records 2023 and the American Community Survey 2017-2021 the existing TAR numbers (and % of housing market) are as follows: Total County of Hawaii 6,847 (7.8%) Captain Cook 214 (5.8%) Hawi 34 (5.9%) Hilo 329 (1.7%) Honalo 98 (6%) Honokaa 48 (2.7%) Hawaiian Ocean View 64 (2.8%) Waikoloa Village 804 (17%) Kailua Kona 3,162 (16.7%) Waimea 752 (12.1%) Hawaiian Paradise Park 306 (4.3%) Kealakekua 49 (3.5%) Kapaau 32 (2.4%) Hawaiian Acres 17 (1.1%) Mountain View 64 (2.2%) Discovery Harbor 64 (4.9%) Hawaiian Beaches 371 (5.3%) Volcano 270 (10%) How many complaints did the county receive this year about TARs? The planning department received the following formal complaints: Hilo had 27 TAR complaints for 2022 Kona had 38 TAR complaints for 2022 The public works department also receives complaints, but these are not tracked. Unless the complaint has to do with permitting of structures these are referred to the planning department. The department will begin to track these complaints. Additionally, council district offices often receive complaints. If rental is unhosted it is referred to the planning department. Since hosted rentals are currently unregulated those complaints are not referred or tracked. We pay Property Taxes, GET and TAT taxes.Why are there additional fees? Your property taxes pay for all the services and infrastructure provided by the County such as police, fire, solid waste, roads etc. GET is mostly collected by the state but a '/z percent goes to pay for mass transit. State TAT also goes to the state (we don't like that any more than you do), the county TAT goes to offset the costs to our county services and infrastructure from visitors that do not pay property tax. The TAR program is funded through a special fund. The current fee structure does not provide enough revenue for the county to effectively administer the program. Registration and NUC fees will be exclusively used for program administration and enforcement. How will property taxes be affected for hosted rentals? The proposed legislation does not impact property taxes from the standpoint that the Real Property Tax Code (Chapter 19) already addresses it. Under current property tax law, properties that are operated as TARs are not eligible for the homeowner's tax rate and the homeowner's exemption is applied proportionally. For example, the new homeowner's exemption starting in 2023 is$150,000. If you use half of your property as a TAR you will get a $75,000 exemption instead of the full amount. While this language is in the proposed bill, it was only repeated there so that people would be fully aware of the tax implications of operating a TAR. Bill 121 does propose a tax amnesty program for residents that were not aware of the impacts that renting short term has on their property tax rates. This will allow people to opt out of TAR operations without back taxes or penalties. How does this change affect properties in agricultural zones? The proposed bill allows for TARs on properties that are the primary residence of the owner, regardless of zoning. It also grandfathers in operator hosted TARs and existing NUCs will be honored. While the proposed bill does prohibit the use of "additional farm dwellings" as TARs, it should be noted that this is already prohibited by state law. When a permit to develop an additional farm dwelling is granted an agreement is recorded that the additional farm dwelling will only be used for activities related to the farm. There is an exception for the housing of temporary or migrant farm workers. Can a NUC hosted TAR be transferred? Yes, a NUC for a hosted rental can be transferred with a change in ownership form and as long as this is completed within 90 days of the sale and the proposed non-conforming use is the same. For example, a hosted rental that is the primary residence of the current owner can be transferred to someone else who plans to use it as their primary residence, however it is not transferable to someone who does not plan to use it as a primary residence. What happens to already STVRs and NUCs that were registered and granted under the previous law? There will be no change for current STVR and NUC holders except that they will be required to renew their registration annually and comply with the new standards of operation and penalty structure. When will this bill become law and how can I comment on the proposal? This bill is a long way off from becoming law and there are several opportunities to comment. Both the Windward and Leeward planning commissions will hold public hearings on the bill. They will then send the bill back to the Council Policy Committee with their recommendations. This committee will hold another public hearing and may hold the bill over for additional hearings and for amendments. If the bill advances to Council, it will get a minimum of two more public hearings. If I have a Bed and Breakfast permit,will it go away if 122 passed? No, event tough Bill 122 would remove the B&B process from the code, existing B&B permits will continue be honored and will run with the property.