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HomeMy WebLinkAbout2018-01-08 Letter to Wakai & Onishi re GET and TAT on short term vacation rentals WilOkabe Managing Director Harry Kim Mayor Barbara J. Kossow Deputy Managing Director County of Hawai‘i Office of the Mayor 25 Aupuni Street, Suite 2603 Hilo, Hawai‘i 96720(808) 961-8211Fax (808) 961-6553 KONA: 74-5044lole Hwy., Bldg C Kailua-Kona, Hawai‘i 96740 (808) 323-4444 Fax (808) 323-4440 January 8, 2018 The Honorable Senator Glenn Wakai and The Honorable Representative Richard H.K. Onishi Hawai'i State Capitol 415 S. Beretania Street Honolulu, Hawai'i 96813 Dear Senator Wakai and Representative Onishi: RE: State Collection of TAT and GET on Short Term Vacation Rentals In response to your memorandum dated December 28, 2018, this letter provides comments from Hawai’i County administration. A.Memorandum of December 28, 2017 Comments on the specific issues are provided below, in order presented in your memorandum. 1.We support the suggested amendments to HRS Sec 46-1.5(24)(A)proposed by the County of Kaua’i as follows: Each county may impose civil fines, in addition to criminal penalties, for any violation of county ordinances or rules after reasonable notice and request to correct or cease the violation may been made upon the violator. 2.We support enabling legislation that would allow for each County to pursue their own opportunity to provide direct appeal from an agency decision to circuit or district court. For our county, a direct appeal to circuit or district court will likely require a county charter amendment. 3.Wesupport the amendment proposed by the County of Kaua’i but request that it apply to all counties. Therefore, remove the phrase “that only in counties with less than one hundred thousand.” 4.We support a verification mechanism, but it must actively include the counties in the process. It cannot be a “self-certified” acknowledgement, as previously considered in past legislative bills because it is not adequate verification, particularly without penalty as discussed in additional items, below. County of Hawai‘i is an Equal Opportunity Provider and Employer. January 8, 2018 Page 2 Please consider a “two-step” mechanism, regardless of whether the third party or “platform” is acting as tax collection agents. First, the platforms should require short term rental operators provide county documentationthat the subject properties are permitted to operate as short term rentals. This would be a prerequisite to having properties listed on the platforms. Second, if an advertisement is found to be in violation of this requirement, --that is, an illegal short term rental is being advertised, the third party must remove that listing from its platform upon county notification or be subject to penalty fees. We believe this is not a free speech issue, but one regulating commerce. Advertising by illegal short term rental properties is problematic for other counties, sothis would be a much needed enforcement tool. Certification will cause a significant increase in workload, but it will be a critical function in managing short term rentals on Hawai’i Island. 5.We have no issue with third parties collecting TAT and GET taxes for Department of Taxation. However, the focus cannot be solely on capturing more tax revenue for Dept. of Taxation. Third party data submitted to Dept. of Taxation must be shared with the counties, so we can enforce short term rentals and capture more real property tax for counties that assess short term rental properties at a different rate. County of Hawai’i is considering assessing short term rental properties at a different rate. Specifically, but not limited to, we would need data on the location of the short term rental property, including unit number if there are multiple dwellings on the property, the number of nights stayed per booking, the dates of occupancy, and the operator’s name and address. B.Additional Items In additionto the five items addressed in the December 28 memorandum, we address five additional items which arose in subsequent discussions with our legal staff, and other county planning departments regarding the legal clarity of additional authority to deploy additional enforcement strategies and tools. 1.Disgorgement.Pursue “disgorgement” as an explicit remedy to collect profits obtained by illegal or unfair acts.This tool is aimed at discouraging illegal operations and ceasing any ongoing illegal activity while due process is afforded.Other counties are proposing amendments to 46-1.5(24)(a), if necessary, we can provide additional comments later. 2.Attorney’s Fees.Other counties experience indicate that the zoning enabling act be amended to allow the counties to recoup attorney’s fees and costs associated with the appeals of any violation to be paid by the ordinance violator.This tool will also expand the counties’ ability to enforce its ordinances by encouraging citizen suits.Other counties are proposing amendments to HRS 46-4(a), if necessary, we can provide additional comments later. 3.Broker Responsibility. We request to provide some penalty for a transient accommodations broker should they fail to remove an illegal operation from their online platform after receiving notice from the respective county and a reasonable period of time has lapsed to remove the advertisement. County of Hawai`i is an Equal Opportunity Provider and Employer. January 8, 2018 Page 3 4.Financial Support. We have not come to a consensus with the other three counties on a specific request of support, especially, as Hawai’i County does not have an existing vacation rental enforcement program. Nevertheless, we do acknowledge our county is in the process of developing a vacation rental program and additional resources will be needed for zoning compliance. 5.Conveyance Disclosure. We understand from the meeting on December 26th the City and County of Honolulu sought requirements for disclosure relating to conveyance of residential properties, particularly that such a property cannot be used for vacation rental purposes. We generally support any enabling legislation that would allow each county to make a decision whether to require such a disclosure be recorded in the chain of title. Thank you for your interest in helping the counties manage the growth of short term rentals on Hawai’i Island. Respectfully submitted, Harry Kim Mayor c: President of the Senate, Senator Ronald Kouchi Speaker of the House, Representative Scott Saiki Senator Rosalyn Baker Senator Donavan M. Dela Cruz Representative Della Au Bellatti Representative Ty Cullen Representative Sylvia Luke Councilmember Karen Eoff Councilmember Dru Kanuha Finance Director, Deanna Sako Acting Real Property Tax Administrator Lisa Miura Planning Director Michael Dahilig, Kaua'i County Planning Director Will Spence, Maui County Planning Director Kathy Sokugawa, O'ahu County County of Hawai`i is an Equal Opportunity Provider and Employer.