2019-02-19 Letter to Sylvia Luke and Ty J.K. Cullen HB 419, HD1 Relating to TAT

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Harry Kim Mayor County of Hawai `i Office of the Mayor Wil Okabe Managing Director Barbara J. Kossow Deputy Managing Director 25 Aupuni Street, Suite 2603 • Hilo, Hawaii 96720 • (808) 961-8211 • Fax (808) 961-6553 KONA: 74-5044 Ane Keohokalole Hwy., Bldg C • Kailua-Kona, Hawaii 96740 (808) 323-4444 • Fax (808) 323-4440 February 19, 2019 Representative Sylvia Luke, Chair Committee on Finance Representative Ty J.K. Cullen, Vice Chair Committee on Finance Dear Chair Luke, Vice Chair Cullen, and Committee Members: RE: HB 419, HD1 Relating to TAT Thank you for this opportunity to comment on HB 419, HD1, offering the counties $1M each to enforce "all applicable laws and ordinances relating to transient accommodations." We appreciate the motivation behind this bill, which is to provide the counties with needed support in our efforts to contain the growing conversion of residential dwellings into commercial short term vacation rentals. We also appreciate the changes that have been made from last year's bill (HB 2605). Moreover, given our county's financial difficulties, it is hard not to support an opportunity to acquire $1 M. However, the bill raises a number of concerns: 1. Hawai'i County does not yet have a special property tax class for short-term vacation rentals. Although we intend to propose such a class hopefully by the end of this year, the class cannot be created for FY 2020-- it will be for FY 2021. We may set a rate in FY 2020, but it won't be effective until 2021. We request additional time beyond December 31, 2019 to establish a property tax rate for short-term vacation rentals. 2. The requirement to "collect all applicable taxes" could be misleading to include TAT and GET, which are collected by the State. If the intent is limited to property taxes, then the requirement should cross-reference paragraph (1) in the bill. 3. The reference to "special permits" could be misleading. Special permits are only for agricultural land. Generally, the State Land Use Commission has also held the position that overnight accommodations are not permitted on agricultural land. Instead, we suggest replacing reference to "special permits" with a more general mandate to "register or approve". 4. There are standard appeal procedures for zoning decisions. An appeal of a director's decision goes to the Board of Appeals. An appeal of a contested case (Board of Appeals or Planning Commission) goes to Third Circuit Court, where we have no control over the timelines. There should not be special expedited procedures just for short-term vacation rentals. We would prefer to delete this requirement. Harry Kim MAYOR County of Hawai`i is an Equal Opportunity Provider and Employer.