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February 2017 Update

February 14, 2017 Hawaii Rentals Comments Off on February 2017 Update

Aloha

In this edition:

1. Legislative Update – Three weeks into the Session;
2. Funding and Membership Drive;
3. New Regulations Effective January 1, 2016;
4. Specific regulations for each County

1. 2017 Legislative Session in now Open

We are three weeks into the legislative session and RBOAA has submitted testimony on over a dozen bills already. The Government Relations team has been working around the clock…if not literally, at least it feels like it!

We also got some great press from the Hawaii Free Press.

In the January update, we discussed how the 2016 session ended with Governor Ige vetoing the bill which would allow the advertising platforms to collect and remit taxes on behalf of the operators.

As you know, one of the main criticisms of vacation rentals, whether true or not, is that we do not collect and remit taxes. The hotel industry uses that argument across the nation to support increased regulation or the outright banning of vacation rentals. Last year, the bill had put forward by one of the advertising platforms in an attempt to crack down on tax cheats but also to stem the efforts of the hotel industry to shut us down.

This bill has resurfaced in 2017 with six different versions being presented.

Some versions of the bill were put forward by the hotel industry and included language which would limit transient vacation rentals to no more than 60 days of rentals per year and limit vacation rental owners to owning no more than one property.

There are about 10 bills which propose to increase taxes on us, including two which require an amendment to the State Constitution in order to allow the State to impose a new tax upon vacation rentals and residential investment properties.

We started with about 20 bills dealing with vacation rentals in four themes.

1. Advertising Platforms (such as VRBO) can collect and remit taxes on behalf of operators (you).
2. Travelers to Hawaii and people and companies who provide accommodation to the travelers should pay more in tax.
3. People who rent out residential property to vacationers should be limited to renting out no more than 60 nights per year and owning no more than one or two properties. (More on this below)
4. Counties should be allowed to change zoning to eliminate transient vacation rentals. This proposal comes up each year, but this year, it only applies to the County of Kauai.

Let’s focus on #3 first as the limitations on rentals are very concerning, obviously. Our initial understanding was that the restrictions were intended to apply to a small group of vacation rental owners. However, we later learned that the restrictions were intended to apply to every vacation rental except hotels, motels, inns and B&B’s. RBOAA vigorously opposed these bills. The bills were also opposed by the State Attorney General. The Senate committee rejected the bill on Friday afternoon and the House Committee removed the language limiting activity to one unit and to 60 days. So, put that in the win column!

Advertising Platforms as Tax Collection Agents

This remains a hot button issue. The legislators are determined to pass this bill and avoid a veto again this year. Our members are definitely split on this topic.

RBOAA is testifying on the bill and asking for amendments to improve it. We support the concept of easing both the tax collection burden and enforcement of compliance with county zoning regulations. Not only is that the right position to take, but it helps neutralize the primary criticism we face in the media and in the legislature. If our opponents (currently, it is the hotels) can’t say we don’t pay tax and we don’t comply with zoning, the legislators are far less incentivized to impose new regulations on us.

We are seeking the amendments to a) prevent the tax collection agent from charging us for collecting and remitting tax; b) allowing us to opt-out of the tax collection arrangement our advertising platform has (under certain circumstances); and c) require the state to conduct annual audits of the tax collection agents.

Taxes

As travelers don’t vote, they are a good source of tax revenue. There are a number of proposals to increase the TAT to cover education, environment and housing. There is also a proposal to add an additional tax on the property tax.

RBOAA will try to help the legislators understand that Hawaii needs to remain competitive in the tourism and convention market.

Here is a brief synopsis of the bills we are working on:

HB1470 – has passed to the second round of committees
This bill is one of many dealing with the question of hosting platforms as tax collection agents. It requires us, as operators, to keep records (putting the onus of audit on the operator). The bill provides for hosting platforms to de-list any advertiser (you) who does not comply with tax or zoning laws and requires the platforms to obtain attestation from you that you are in compliance with zoning laws.

This bill previously had the language to limit us to 60 days rental per year and limit us to owning only one property and provided for a 4% increase in the TAT. That language is all gone, but this bill remains deeply flawed and RBOAA will be opposing it vigorously until it is defeated.

HB 1471 / SB1087 – both versions have passed to the second round of committees
These bills allow anyone, not just hosting platforms, to act as tax collection agents. This bill is not offensive but it needs to be a lot better in order to be good legislation. RBOAA is strongly pushing for improvements and amendments to the bill as noted above.
We expect these bills will pass. There is very strong support at the Capitol for them.

SB1281 / SB1202 – both bills were deferred (rejected) in first round of committee

HB1242 – has not been heard in committee and is not likely to be heard
These three bills were similar in concept to HB1471 and SB 1087.

HB546 – rejected in the first round of committee
This bill proposed surtax on the TAT in order to fund housing for hotel employees.

HB180 / HB 182 / SB 686 / SB 683 – all passed to the second round of committees
These bills increase property taxes on both vacation rentals and residential investment properties to help fund the education system in Hawaii. Two bills increase the tax and two bills provide for the amendment to the Hawaii State Constitution to make the new tax legal.

Property Value Surcharge per $1000 of property value
Under $500,000 $3.50
$500,000- $750,000 $4.50
$750,000-$1,000,000 $5.50
$1,000,000 – $2,000,000 $6.50
$2,000,000 and over $7.50

So, if your property was worth $400,000, you would pay $1400 in residential property tax surcharge each year. If your property was worth $2,000,000, you would pay $15,000.

In addition, there is proposed a nightly tax of $3.00 for rents up to $150 per night and $5.00 per night for rents over $150. This is regardless of occupancy. So the $400,000 property probably commands a rent of $150 a night on average, so 365*$5 = $1825, for a total tax of $3225.

Currently, this type of tax is most likely not possible to implement in Hawaii, so they are proposing a constitutional amendment (SB683 & HB182) to allow the state to impose this tax. This is the same tax which has been the subject of a legal battle in the City and County of Honolulu.

The Counties are not in favor of this bill, nor is the State Department of Finance. However, the bills have garnered massive support for parents, teachers’ unions, schools and social agencies.
RBOAA is opposing the bills, but we expect this battle to be hard-fought.

SB862 / HB1331 – SB862 has passed to the next round of committees and HB1331 has not yet been heard.
These identical bills allow for the phase out of single family transient vacation rental units in the counties with populations fewer than 100,000, which is essentially Kauai. The County of Kauai has put forward this bill every year for at least the past 5 years. Every year it gets defeated. By narrowing the scope to just that county, perhaps they think it will have a better chance. RBOAA is opposing the bill

SB704 – passed to the second round of committees
This bill proposes to set up a committee to study transient accommodations in the State and provides for membership from vacation rental owners.

HB1586 – First hearing scheduled for next week
The preamble to the bill proposes moving the tax burden from residents to non-residents. The bill, as currently drafted, doesn’t actually change the tax structure to affect non-residents. We will continue to watch this bill as it is likely to get amended by committee.

HB1453 / SB1143 – neither version has been heard by committee
This is another tax on tourists, this one being $20 per guest to fund environmental protection and conservation. The wording indicates that a party of 4 would pay $80.

SB702 – not yet heard by committee
This bill has already garnered some media attention as it states that failure to register for TAT and GET is a class C felony. A Class C felony is punishable by a maximum of seven years in prison. Class C felonies include crimes such as theft, possession of a controlled substance, second-degree statutory rape and first-degree involuntary manslaughter.

This bill also sets up a public database whereby anyone can look you up to see if you are properly registered. This raises certain security and privacy concerns.

SB695 – not yet heard by committee
This bill is actually quite good as it attempts to clarify that TAT applies to rent and mandatory fees charged to guests. RBOAA supports clarification of tax rules.

The Hawaii Legislature opened earlier in January and will run until about mid-May.

2. Funding and Membership – RBOAA

It is, of course, membership renewal time!

“Mahalo” to all of you who renewed your membership and/or made a donation to RBOAA this year. We would not be able to do what we do without your support.

We have engaged our lobbyist in Honolulu already this year and he has been of great help so far. But, he is not cheap!

In a recent study of some of the more popular owner rental web sites, there appears to be more than five thousand owner-managed vacation rental properties in Hawaii. That number dwarfs our membership numbers so we know there are a lot of owners out there who might not be aware of RBOAA, not aware of all the good work we have done, and all of the good we will continue to do on your behalf.

We need to grow our membership in order to continue on as we have in the past. Please ask anyone you know who owns a vacation rental property to visit our web site www.rboaa.org and become a member or make a donation today. We all have neighbors, friends, or maybe even family who would benefit. Please don’t assume they are aware of RBOAA. We are all in this together and all of you can act as a small army of recruiters. Please do your part and help us spread the word.

Help us make sure everyone who self manages a vacation rental property in Hawaii is aware of the opposition we all face and that RBOAA is here to help.

So please, right now, please renew your membership at www.rboaa.org and/or click on the “Donate — Click Here” button.

Remember, none of your executive team is paid – we are all volunteers.

3. Act 204 Took Effect January 1, 2016. Make sure you are in compliance today.

The full details of Act 204 are available on our website at www.rboaa.org. The key summary points are:

• If you don’t live on the same island as your vacation rental, you need to name a Local Contact and you must identify your Local Contact by name, phone number and email address to your guests before they check in and within the rental property. Your local contact does not need to be a real estate agent unless he/she is performing tasks for which a real estate license is required (e.g. collecting rent on your behalf).

• You must post your Hawaii Tax ID number (your TAT ID number) conspicuously in all advertisements and in your rental

We are still – yes – still – waiting for the detailed rules from the DoT as to how they will enforce and interpret Act 204. We will send that along to you when we get it.

4. Specific Regulations for each County

RBOAA’s mandate is focused at the State of Hawaii level, and to consider certain issues which bridge the County level and the State level.It is very important for you to know that each county in Hawaii has its own regulations (or lack thereof) for zoning and permitting of vacation rentals. Please visit the County Regulations page on the RBOAA website, https://www.rboaa.org/county-regulations/ to check for regulations and upcoming potential regulations. The onus is on you, as owner, to ensure you are in compliance with all regulations – state, county and HOA.

We recently updated the page with information on all counties.

We will do our best to keep this page up to date, but we can’t promise it is always up to date. If you have specific questions about county regulations which you can’t answer from our website, please contact the county. RBOAA simply does not have the volunteer resources to answer questions on specific county regulations.

Mahalo,

Nea

January 2017 Newsletter

January 31, 2017 Hawaii Rentals Comments Off on January 2017 Newsletter

Aloha! 

Happy New Year to Everyone!!
In this edition:
  1. 1) 2017 Legislative Session is open;
  2. 2) New Regulations Effective January 1, 2016;
  3. 3) Specific regulations for each County;
  4. 4) Update on Oahu County Enforcement; and
  5. 5) Funding and Membership Drive

The 2017 Legislative Session in now Open.

The Hawaii Legislature opened earlier in January and will run until about mid-May.   To understand the 2017 session, we need to remember last year.  The 2016 session ended with Governor Ige vetoing the bill which would allow the advertising platforms to collect and remit taxes on behalf of the operators.    As you know, one of the main criticisms of vacation rentals, whether true or not, is that we do not collect and remit taxes.  The hotel industry uses that argument across the nation to support increased regulation of vacation rentals.  The bill had put forward in an attempt to crack down on tax cheats.  During the session, the bill took on additional burdens – namely the requirement for advertising platforms to ensure owners complied with county zoning regulations.  Read More

Archive: Hawaii Department of Taxation Modernization

July 4, 2016 Hawaii Rentals Comments Off on Archive: Hawaii Department of Taxation Modernization

According to announcements made by the Hawaii DOT on May 5, 2016:

Modernization of the Tax System

“The Department is undergoing a major modernization effort to transform its operations and meet the rising expectations of today’s taxpayers. The Tax System Modernization Program is a collection of projects slated for completion by 2020. Almost every technical system used by the Department will be upgraded or replaced, especially old systems that no longer meet Hawaii’s needs. While the process of putting in new technology might lead to temporary performance hits, new tax systems will ultimately result in better taxpayer service and improved enforcement of tax laws.” Read More

Archive: June 2016 Newsletter

July 4, 2016 Hawaii Rentals Comments Off on Archive: June 2016 Newsletter

Aloha!

In this edition:

  1. Governor Ige Vetoes HB 1850
  2. New Regulations Effective January 1, 2016
  3. Specific regulations for each County
  4. Funding and Membership Drive

 


  1.    Governor Ige Vetoes HB 1850

This bill was put forward by AirBnB and the State of Hawaii Department of Tax in an attempt to crack down on tax cheats by allowing advertising platforms to collect and remit taxes directly to the State.   As you know, one of the main criticisms of vacation rentals, whether true or not, is that we do not collect and remit taxes.  The hotel industry uses that argument across the nation to support increased regulation of vacation rentals.   RBOAA initially supported this bill in order to quiet that accusation, but right from the very beginning, we had concerns about the level of confidentiality the advertising platforms were allowed to afford their owner/advertisers.  While we supported the bill, we asked for the veil of secrecy to be lifted.  The legislators did not agree and so, in later rounds of hearings on this bill, RBOAA opposed the measure.

During the legislative process, the bill took on additional burdens – namely the requirement for advertising platforms to ensure owners complied with county zoning regulations.  While RBOAA fully agrees that owners need to comply with County zoning, it is absurd to ask a third party for-profit organization to enforce the law.  Not only have the counties been largely unwilling or unable to enforce their own laws, RBOAA has long opposed any non-governmental authority being put into a regulatory authority role – most notably, property managers and real estate agents.

Ultimately, while the legislators did not heed RBOAA’s concerns, the Governor did, and this week, he announced he would veto the bill, saying that more work needed to be done to ensure county regulations were complied with, in addition to ensuring taxes were collected.  He also stated that transient vacation rentals are the responsibility of the counties.  This last statement is disturbing as the counties are generally very opposed to vacation rentals.  For example, The City and County of Honolulu has not issued a vacation rental permit for almost 30 years and, for example, in Maui new rules require an owner of a property with a value of less than $1 million to have owned the property for 5 years before turning into a vacation rental.

Looking forward, we will need to address issues not only at the state level but also at each of the counties.  This will make our work much harder in the coming years –  much harder unfortunately as we don’t have experience or resources at those levels of government.   One last note.  This bill attracted lots of passionate correspondence, in the RBOAA email inbox, in the media and letters to the editor, in social media and in the testimony to the legislators.  For many, this bill became a referendum on vacation rentals as a whole, with the argument being that we should not be allowed to rent out our properties to tourists at all.  Various property owners (especially in high value neighborhoods), social welfare groups, unions and even some RBOAA members took this position.  Some other RBOAA members opposed the bill because of a hate-on for AirBnB (even though no one ever explained the origin of that anger).  While everyone is entitled to their opinion and has the right to express it, there were some pretty vile emails in the RBOAA inbox.


2.    Act 204 Took Effect January 1, 2016.  Make sure you are in compliance today.

The full details of Act 204 are available on our website.  The key summary points are:

  • If you don’t live on the same island as your vacation rental, you need to name a Local Contact and you must identify your Local Contact by name, phone number and email address to your guests before they check in and within the rental property.  Your local contact does not need to be a real estate agent unless he/she is performing tasks for which a real estate license is required (e.g. collecting rent on your behalf).

You must post your Hawaii Tax ID number (your TAT ID number) conspicuously in all advertisements and in your rental

We are still waiting for the detailed rules from the DoT as to how they will enforce and interpret Act 204.  We will send that along to you when we get it.


   3.    Specific Regulations for each County

RBOAA’s mandate is focused at the State of Hawaii level, and to consider certain issues which bridge the County level and the State level.  Given the Governor’s comments, your executive committee will be discussing if and how we can be active at the County level, but it is very important for you to know that each county in Hawaii has its own regulations (or lack thereof) for zoning and permitting of vacation rentals.  For up to date information, please visit the County Regulations page on the RBOAA website, https://www.rboaa.org/county-regulations/ to check for regulations and upcoming potential regulations.

The onus is on you, as owner, to ensure you are in compliance with all regulations – state, county and HOA. On the County Regulations page is a listing of the rules for each of the counties along with the links to find each county’s regulations regarding Transient Vacation Rentals.  We will do our best to keep this page up to date, but it is advisable for you visit the planning department and planning commission web pages for each county to keep up to date with potential new rules and regulations that are in the works.  If you have specific questions about county regulations which you can’t answer from our website, please contact the county.  RBOAA simply does not have the volunteer resources to answer questions on specific county regulations.  Remember all counties have different property tax rates if you are renting out your property.   


    4.    Funding and Membership – RBOAA

We have worked with our lobbyists to contain the fees this year and we spent far less money this year than we did last year.    “Mahalo” to all of you who renewed your membership and/or made a donation to RBOAA this year.  We would not be able to do what we do without your support.

In a recent study of some of the more popular owner rental web sites, there appears to be more than five thousand owner-managed vacation rental properties in Hawaii.  That number dwarfs our membership numbers so we know there are a lot of owners out there who might not be aware of RBOAA, not aware of all the good work we have done, and all of the good we will continue to do on your behalf.   We need to grow our membership in order to continue on as we have in the past.  Please ask anyone you know who owns a vacation rental property to visit our web site www.rboaa.org and become a member or make a donation today.  We all have neighbors, friends, or maybe even family who would benefit.  Please don’t assume they are aware of RBOAA.  We are all in this together and all of you can act as a small army of recruiters.  Please do your part and help us spread the word.     Help us make sure everyone who self manages a vacation rental property in Hawaii is aware of the opposition we all face and that RBOAA is here to help.     So please, right now, please renew your membership at www.rboaa.org and click on the “Donate — Click Here” button.   Remember, none of your executive committee members are paid – we are all volunteers.

Thank you for your continued support. 

Mahalo, Neal www.rboaa.org info@rboaa.org Read More

Archive: Legislative Update: February 2016

February 17, 2016 Hawaii Rentals 0

Aloha from the President of RBOAA. 

The legislative session has completed the first two weeks of the session and a lot of dust has settled, and so I wanted to provide you with an update   In this edition: 

  1. New Regulations Effective January 1, 2016. 
  2. Proposed Bills as at January 31, 2016. 
  3. RBOAA Funding and Membership Drive. 

—————-

1.  Act 204 Took Effect January 1, 2016.  Make sure you are in compliance today. We know that the media is checking and some of you are not in compliance!

The full details of Act 204 are available on this website.

  • If you don’t live on the same island as your vacation rental, you need to name a Local Contact and you must identify your Local Contact by name, phone number and email address to your guests before they check in and within the rental property
  • You must post your Hawaii Tax ID number (your TAT ID number) conspicuously in all advertisements and in your rental

If you have any questions, RBOAA recommends you contact the Hawaii Department of Taxation.  The DoT will shortly be issuing some information about how they are going to administer the new rules and I will send that along to you when I get it. Read More

Archive: Year End Update: December 2015 Newsletter

December 15, 2015 Hawaii Rentals Comments Off on Archive: Year End Update: December 2015 Newsletter

 

Aloha and Mele Kalikimaka!

We had a challenging and ultimately successful 2015, made possible through efforts of members and your Executive Committee, and it’s time to get ready for what lies ahead in 2016.

Most notably, new rules affecting our vacation rentals take effect on January 1, 2016. Please see Section 3 below to ensure you are ready.

While the future offers uncertainty, one thing is for sure: Without you, our members, we would not be in the position we’re all in today — still able to operate our legal vacation rentals in the State of Hawaii. You keep us going, and it’s your contributions, past and future, that anchor this update.

A hearty ‘mahalo’ from me and from all of your Executive and volunteers. Please keep up your volunteer support as well as, and especially, your financial support, for RBOAA —it keeps us all going!

Neal

 

In this newsletter edition, we cover a lot of territory!

  1. Upcoming Legislative Session
  2. Funding and Membership
  3. New Regulations Effective January 1, 2016
  4. 2016 RBOAA Executive Committee
  5. Ocean Safety
  6. Next Steps

Read More