We wanted to take this opportunity to share with you the current situation in Hawaii as it relates to Vacation Rentals.
As of June 1, the state of Hawaii moved into a new phase of recovery from COVID called Act with Care.
This phase allows all accommodations to conduct business. While hotels have always been able to operate in Hawaii throughout the pandemic, as of June 1, there are no State restrictions on legal transient vacation rentals from opening.
There are a few caveats, of course.
1. Until June 16, anyone travelling inter-island is still required to quarantine for 14 days. As host, you are responsible for ensuring your guests abide by the quarantine rules.
2. Travel from outside the state is still restricted as all such travellers are required to quarantine for 14 days. Again, you are responsible for ensuring that they do. The governor has not said when this restriction will be lifted, but we know it will be after July 1. We are expecting the Governor to make an announcement next week.
3. You are responsible for making sure that you comply with safe practices, minimal interaction and social distancing guidelines.
The situation is fluid and rules could change at any time. We are watching for details on the terms and conditions applied when the inter-island quarantine is lifted and when the out of state quarantine is lifted.
The story gets a little trickier when it gets to the counties.
We are confident in saying that the County of Honolulu ( Oahu ) has maintained full restrictions on vacation rentals. (Mayor’s Emergency Order #14)
We believe the counties of Kauai, and Hawaii/Big Island are still imposing restrictions on transient vacation rentals
There is conflicting information about Maui, but we believe it is the Mayor’s intention to continue to block legal transient vacation rentals from resuming operations.
There is a group of RBOAA volunteers meeting virtually on Saturday to discuss next steps, so stay tuned.
Governor Ige announced on May 29 that he intends to extend the 14 day quarantine past June 30.
I hope this message finds you and your loved ones safe and healthy. 2020 has certainly been a challenge so far and it is likely to continue to be a challenge for the rest of the year and into 2021.
As I am sure you know already, ALL vacation rental properties except hotels are considered a non-essential business in Hawaii. With only a few exceptions, until at least June 30th no short term rentals are allowed. For most of us, this hasn’t been an issue as few people are travelling to Hawaii and the prospect of staying in quarantine for 14 days after arrival is less than appealing. There are stiff penalties for anyone renting a vacation unit to a traveler who does not comply with the quarantine requirements.
Please see https://www.hawaiitourismauthority.org/news/alerts/covid-19-novel-coronavirus/
But, like all conditions in life, this is temporary and too shall pass. Your RBOAA team has been talking about what the future could hold for vacation rentals and how we can hopefully influence it.
At some point after June 30, we expect that Hawaii will cautiously reopen for tourism and the volunteers at RBOAA are working together to try and ensure that the temporary ban on vacation rentals is lifted at the same time visitors are allowed to return. We don’t want to be in a situation where visitors are only allowed to stay in hotels.
We are still working out our plan and there will be more information to come as soon as we have it – and we hope to have information very soon.
In the meantime, you should already be thinking about necessary changes to your cleaning protocols in order to put your guests at ease. If your property is part of a larger complex, you should be talking with your HOA about how common areas are being sanitized.
Stay tuned and we will keep you informed of our plans and what we need you to help us with.
Dear RBOAA Members:
We at RBOAA are happy to report that at the moment we do not see any bills that could affect our rights regarding short term rentals on the State agenda.
There were a few bills that we watched, and they did not make the crossover, so they are not going to go further this session.
We will be keeping our eye out for the famous strip and replace that the State legislators are famous for and will advise you if such an event happens.
While the State has been quiet, the counties have not. We at RBOAA do not have the funding or the manpower to deal with County issues but we have been getting inquiries about Maui County.
We are aware that Maui County has a hearing scheduled on March 6th at 3:00 HST to determine whether they will continue permitting properties that are not zoned for short term rentals. Maui currently has approximately 223 legal short-term rental homes and 140 bed and breakfast operations.
If you are affected by this proposed ban, you can find out more information from Maui Vacation Rental Association https://mvra.net/news/8780969
Lastly, due to the fact we have not had the need to retain an attorney nor a lobbyist for the past two years, we are dropping the member fee to $10.00. We will let you know when our website is updated to reflect this change.
Thank you for your support!
Dear RBOAA Members:
It’s been a busy couple of months at the Hawaii Legislature, and it’s important that all members know where we stand. At this point, three bills have progressed through the legislature that will affect our vacation rentals.
HB 419 — Significant new language was recently added to this bill. In its latest form, the bill requires the Counties to set up a database of owners of short-term vacation rentals. It also requires hosting platforms (VRBO, Airbnb, etc.) to report to the Counties the address of the vacation-rental property, the amount collected for rents, and days stayed at the rentals. It also requires the hosting platforms to collect and remit the General Excise and Transient Accommodations taxes (GET and TAT).
SB 1292 — This bill allows the hosting platforms to collect and remit GET and TAT, and requires owners to inform hosting platforms that the hosting platform must ensure that the owner’s GET and TAT numbers, and the name of their Local Contact for the vacation rental are contained in all advertising of the vacation rental by the hosting platform.
HB 1042 — This bill requires that anyone who collects rent on behalf of a transient accommodation must, at the operator’s year-end, provide to the Hawaii Department of Taxation the name, address, Social Security Number/Tax ID of the operator, the amount of the GET and TAT collected during the operating year, and the total amount of rent collected during the operating year.
We are still not sure what these bills will ultimately look like as there are still several weeks left in this year’s Legislative session. We will keep you posted as to their progress and content.
As you may know, RBOAA has always been concerned with state-level legislation and regulation, as that is the best focus for us given our volunteer resources. That said, in addition to the above state-level actions, we are aware that there are other items of concern arising from County action on vacation rentals. We have tried to ascertain County groups such as ours that we could direct you to for further information on County activities, but have been unable to find groups for all.
This means that RBOAA members will need to support County groups that do exist, and where they have yet to form, take direct action as vacation-rental owners to preserve their property rights in the County level where they operate their vacation rental.
Here’s our summary of County action and groups identified that you can support:
Maui County — Maui County Council is discussing a large increase in property taxes. They are talking about moving to $15.41 from $9.28 per $1,000 assessed value. Maui County Council, which has nine members — of which six are new this year — will make a decision on this increase this month. Council members appear to view that visitors should pay more to cover the wear and tear on County facilities and services. Accordingly, Council seeks to increase taxes on short-term vacation rentals and hotels, while reducing all other property tax rates.
We have not identified any Maui County group of owners. We will update you if an organization like RBOAA is formed on Maui; please let us know if you have any information on such a development. Until a group is formed in Maui County, owners of vacation rentals will need to take individual direct action.
You can contact the Council members at the following email addresses:
Kelly.King@mauicounty.us, Council Chair
Keani.Rawlins@mauicounty.us, Council Vice-Chair
Tasha.Kama@mauicounty.us, Presiding Officer Pro Tempore
County of Hawaii — The County of Hawaii is has a new ordinance that is placed on all TVRs that are not owner occupied. The final rules for the ordinance are expected to be published by April 19th. They do have a Facebook Page “Hawaii TVR Alliance” where you can join for more information.
Honolulu County — In Honolulu, the battle continues for the right to use your property as a vacation rental. You can get information at http://www.oahushorttermrentalalliance.org/index.html.
Kauai County — Kauai has a new organization to help preserve owners property rights, and it can be found at http://northshoretvrgroup.org/. Please sign up to receive information on the status of activities on Kauai.
RBOAA will continue to work hard at the Hawaii State Legislature to protect your property rights. We are still actively working on state-level proposed vacation-rental legislation as the Legislature is still in session.
While our resources don’t allow us to take on County monitoring and advocacy, please do let us know if you are able to form or fund such a group in your County — your vacation rental may depend on it. We will help you stay informed on County groups as they form and advance.
As always, we depend on your support to help protect your interests in the Hawaii State Legislature. I know some of you had issues contributing due to a website problem, and I’m happy to report that the issue has been fixed. Please visit our website at https://rboaa.org and click on the Donate or Join Now buttons to help us keep doing the work we do for you.
Last month Hawaii legislators returned to Honolulu armed with dozens of bills targeting vacation rental operators, legal and illegal, in their ongoing and, as yet, unsuccessful effort to hold illegal operators to account.
But RBOAA is back, too. And so am I.
In our early days of working to put a check and balance on hoteliers and property managers seeking to force us to turn control of our legal vacation rentals over to state-sanctioned third-parties to manage them, I was leader of this group and worked with legislators to turn back those efforts to interfere with our business and ultimately put us out of business.
And when I needed a break, Neal Halstead capably, and effectively, stepped in to give us new energy and new leadership, and to give Hawaii legislators new support and conviction to stand up to those who would propose any bill, any action, and any fabrication to put legal vacation rental owners out of business. Neal’s efforts for all of us for the past five years have been relentless. And successful. I think about it every time I’m able to book a new or returning guest. You should as well.
From all of us “legal” operators of Hawaii vacation rentals, I say THANK YOU Neal for everything. And to our members I say that I am rested and renewed, with the support of Neal and all our crew of hands-on volunteer’s. I’m back and ready to continue our work.
And a lot of it there is. So like never before, we need you, our members, to continue to renew your membership, to donate, and to volunteer. We use lobbyists to win. We use lawyers to win. We count on your financial support to win. So right now, before you read any further, visit RBOAA and renew your membership and, in addition, donate the funds we need to win. And share this email with people, like you, who operate legal vacation rentals in Hawaii, and tell them they need to join RBOAA, as well.
Because this year is going to be a fight like we’ve never seen. For starters, vacation rentals have become the visitors’ choice when visiting Hawaii. Hotel growth has declined, but visitors’ demand for legal vacation rentals has grown. As a result, hoteliers will redouble their efforts to ban our legal operation of vacation rentals under the guise of stopping illegal operators and create hotel monopolies. This year, Hawaii Tourism Authority has vowed to support bills that will impact our legal vacation rentals in the ongoing failed effort by legislators to find and hold illegal operators to account. And because enforcement of laws against illegal operators has failed so miserably, their job to end our legal operations, and strip us of our control over our own, legal vacation rental properties has been made that much easier.
Are there no good bills? There are some bills that would target illegal operators. But with so many hoteliers and property managers unable to compete with our legal and expertly run vacation rentals, their purpose is clear: end them all! Wipe out any and all owner-operated vacation rentals in Hawaii, legal or otherwise.
Please renew your RBOAA membership and donate now to fund the fight to preserve your rights and insure your property and legal use of it stays in your hands, under your control. And when we ask you to offer testimony, do it. And when we ask you to do it again, and again, do it again and again. You won’t regret it, because our record is strong; year after year, attack after attack, your RBOAA helps push back those who see illegal and constitution-violating bills as a fair means to creating monopolies for them.
We are tracking over 20 bills, and I’ve listed them below. But remember, these bills will change; they’re dynamic, and become very different bills as the legislative session progresses. It’s essential that you visit the Hawaii Legislative site and sign up to be provided with critical updates on their progress through committees, the amendments they’re picking up, and the threat many of them will undoubtedly pose to your continued operation and management of your legal vacation rental. Remember: when testimony is sought, especially by RBOAA, offer it.
Here’s a list of bills we’re tracking thus far, with the summary provided by the authors, which we know from experiences, can often hide the horrors inside, or yet to come through amendments, that would strip us of our legally operated vacation rentals:
- SB354 makes advertising, including online advertising, any transient accommodation or resort time share vacation interest, plan, or unit without the proper registration identification number and proper local contact information a misdemeanor. Subjects any person, including operators, plan managers, and transient accommodations broker who does not post the proper registration number and proper local contact information with the advertisement and also advertises the entire house or unit, rather than a single room, or who has multiple advertisements for multiple properties subject to an unspecified additional fine.
- HB26 and SB716 make it a misdemeanor for a hosting platform to collect a fee for booking services regarding transient vacation rentals that are not lawfully certified, registered, or permitted under applicable county ordinance
- HB29 require members in planned community associations subject to HRS 421J and unit owners in condominiums subject to HRS 514B to register units leased as transient accommodations, and to submit reports on same to the state.
- SB659 establishes the state alternative transit fund to allow counties to offer free or nearly free fares on eco-friendly county buses. Imposes a $100-a-day fine for unlicensed transient accommodations.
- HB197 and SB184 provide counties with operator names and addresses of transient accommodations contained in registration forms filed with Department of Taxation.
- HB400 allows counties to regulate transient accommodations hosting platforms.
- HB419 provides that a county shall be eligible to receive funds from the State for the purpose of enforcing all applicable laws and ordinances relating to transient accommodations.
- HB514 and SB401 require the Director of Taxation to make available to any county official charged with enforcing land use laws the name and addresses of any transient accommodation business registered with the Department of Taxation.
- HB631 authorizes each county to impose a surcharge on transient accommodations tax. Changes the transient accommodations tax rate to an unspecified amount. Repeals the distribution of transit accommodations tax revenues to the counties
- HB1173 and SB198 authorize counties to levy a county surcharge on transient accommodations tax in their respective counties pursuant to certain conditions.
- HB1348 establishes licensing requirements and enforcement provisions for transient vacation rentals to be administered by the Department of Commerce and Consumer Affairs.
- HB1472 and SB986 allow a transient accommodations broker to register as a tax collection agent for its operators and plan managers. Requires operators and plan managers to provide a statement to the transient accommodations broker confirming compliance with all applicable land use and tax laws . . . .
- SB1292 amends the definition of “transient accommodations” to include additional forms of transient accommodations . . . Makes it unlawful for a hosting platform to provide, and collect a fee for, booking services regarding transient vacation rentals that are not lawfully certified, registered, or permitted under applicable county ordinance . . . .
- SB713 establishes a 1-time amnesty program for certain delinquent transient accommodations and general excise tax obligations. Allows transient accommodations brokers to register as a tax collection agent for its operators and plan managers . . . .
- SB380 imposes the transient accommodations tax on resort fees and requires that those fees be included in gross rental proceeds.
- SB401 requires the Director of Taxation to make available to any county official charged with enforcing land use laws the name and addresses of any transient accommodation business registered with the Department of Taxation.
- SB460 requires the Hawaii Tourism Authority to develop a list of unit addresses, including housing units and rental units marketed to the visitor industry for occupancy and to post the list on its website.
- SB184 provides counties with operator names and addresses of transient accommodations contained in registration forms filed with Department of Taxation.
- SB714 imposes the transient accommodations tax on resort fees that are calculated separately from the advertised transient accommodation’s rate.
- SB716 makes it a misdemeanor for a hosting platform to collect a fee for booking services regarding transient vacation rentals that are not lawfully certified, registered, or permitted under applicable county ordinance
- HB181, SB163, HB193, SB175, HB335, SB614 amortize and phase out single family vacation rentals.
There you have it. A lot of bills, and a lot of bills, as we know from years of experience, that have a funny way of ending up with language that would strip us of our ability to operate or control our legal vacation rentals, in the pursuit of the illegal operators that never seem to be held accountable.
Again, if you haven’t already, renew your membership and donate the funds we need to win. And share this email with people, like you, who operate legal vacation rentals in Hawaii, and tell them they need to join RBOAA.
In the weeks ahead, I’m going to ask you to fight to preserve your rights and ensure your property and legal use of it stays in your hands, under your control. I’m going to ask you to offer testimony, and I need you to do it. I wouldn’t ask if it didn’t matter to you, and to all of us. Our record is strong, because of all of us working together.
Now, let’s get going. Stay alert, stay informed, renew your membership and donate the funds we need to win.
In addition to the GET surcharge of .50% levied by the City/County of Honolulu, the Counties of Kauai and Hawaii have announced new surcharges on transient vacation rentals beginning in January of 2019 in the following amounts:
County of Kauai — 0.50%
County of Hawaii — 0.25%
Please see the State Announcement to find out more information.
January 22, 2019. VRBO/HomeAway has added a new field to the property description of vacation rental properties listed with them. All owners of vacation rentals who utilize VRBO/HomeAway for advertising their properties, should be sure that their property TA and GE tax number/registration is up to date and included in the field. To locate it, access the property editor and then click on the Description tab at the top of the page. Once on the page, enter your property’s tax ID number in the “Registration Number” field.
November 29, 2018 — On November 25, 2018 an RBOAA member sent this Letter from member of RBOAA to VRBO to VRBO/HomeAway about the creation of a “registration number” field in VRBO/HomeAway ads.
In this edition:
- Legislature Update
- County Update – Big Island
- Legislature Update
The legislature is all but over for the year. There are three main bills we were dealing with at the end. The bill to require local contacts to be real estate agents fortunately was defeated quickly.
SB2963 / HB 2605
This is the latest incarnation of the AirBnB bill, allowing the advertising platform to collect and remit taxes on the owners’ behalf. It has been around for 3 or 4 years now, always failing to pass. This year however, the bill took on a lot of additional provisions, including the right of counties to obtain your personal tax information, the right for counties to change the zoning to declare a property to be ineligible for vacation rentals and then seize the property, and requiring AirBnB & HomeAway to immediately cease doing business with any owner who isn’t compliant with all regulations. The bill originally had language creating a felony for non-compliance, but that has changed to a $25,000 fine.
It essentially assumed all vacation rental operators were criminal until proven otherwise.
We learned yesterday that this bill has been deferred indefinitely. This is the best possible outcome.
The Senate was very supportive of this draconian bill, however, in the House, reason prevailed and the two houses ultimately could not agree. The House of Representatives recognized this bill as being over the top and stopped it. The House also recognized what the Senate did not – zoning compliance is a county issue, not a state issue.
AirBnB had already backed away from the bill, so even if it had passed, no advertising platform was going to voluntarily subscribe to the tax collection work.
Here is why we were concerned about this bill:
- The advertising broker (i.e. AirBnB) may collect and remit tax on behalf of all advertisers. However, if they mess up, AirBnB and the owner are jointly and severally liable for all taxes. So, if AirBnB collects TAT and doesn’t remit it, you are potentially on the hook.
- The bill also requires AirBnB to provide details of how many nights were rented, the rates per night, the address and name and number of the local contact – and this information can be made available to the Counties. The County of Honolulu has been asking for this for years to help with compliance with their complex permitting requirements. No other tax payer is required to provide this level of information without a subpoena.
- The advertising broker is required to share your 1099 information with the county. The State Department of Tax is, by federal law, strictly forbidden to release this information to anyone. The bill requires all operators to waive their right of privacy and permit the advertising platform to share all of their information.
- All operators must provide proof of compliance with all zoning, land use and tax laws. Our concern here is in providing positive proof of compliance – how do you prove you are legal in every regard. The Counties have no system to accommodate this. Most counties don’t even have current regulations
- Failure to comply with any tax or zoning law – or commit any act which the county doesn’t like – may result in a fine of $25000. Failure to respond within 7 days results in a second $25,000 fine. This is better than the earlier draft which was a Class C Felony (more than one year in prison). The bill also provides for not only seizure of the property but also all income earned from operating a vacation rental.
- The bill also allows counties to phase out all transient accommodation in any zone for any reason. This is concerning as county councils and the state legislators are very prone to pressure from unions, neighborhood groups, and anyone else who might vote.
The Hawaii Teachers union has once again brought forward the Constitutional Amendment to require the TAT to be increased in order to fund education in the State of Hawaii. We saw this one go right to the bitter end last year before ultimately failing so that the TAT could be increased to pay for the Honolulu rail system.
This year, the bill morphed into a proposed property tax on “investment real property”. The legislators didn’t define any rates and didn’t determine if any properties would be excluded from the definition. The referendum will go to a vote of the electorate, probably this November. After that, it will be up to the legislature to iron out the details.
One other bill will change the way properties owned by non-residents are taxed upon sale. When you sell a property, a percentage of the sales proceeds is withheld until you file your tax returns or other required forms. The withholding rate will go up to 7.25%.
Another bill clarifies that all amounts charged to transient vacation rental guests are subject to TAT. t seems some hotels are charging a resort fee but not collecting tax on the resort fee. RBOAA supports the hotels being required to play on a level playing field with vacation rental owners, however the Senate showed their support to the hotel industry and deferred this measure..
Speaking of hotels, they have had seven consecutive years of increased occupancies and increased room rates. Each of the past seven years has broken all historical records. Yet they are very concerned that we are providing competition to them.
- County Update
At RBOAA, we are focused on the state legislature. We would love to be able to be involved at the county level as well, but, simply put, we need volunteers to take that on.
This isn’t just our normal plea for volunteers. As we have been saying for many years now, the fight is going to move from the state to the counties. We are seeing this increasingly become true. The state is going to be taking some of the TAT revenues it gets and giving it to the counties to enforce their regulations. So, more and more, the counties are going to play a significant role.
Here is what some our eagle-eyed members have shared with us recently
On the Big Island, the county council was considering a regulatory framework around vacation rentals on the island. The original proposal seemed fair, but those watching Bill 108 are quite concerned. This bill goes back to County Council on May 8. There is a Facebook group called “Hawaii TVR Alliance” involved on this, as are three of our members fortunate enough to have property on Hawaii.
Maui recently passed a bylaw which requires a property to be owned for five years before it can be turned into a vacation rental. We think this only applies to properties which have never been legal vacation rentals in the past and is primarily focused on restricting growth of vacation rentals in residential areas. Most vacation rentals on Maui are in “resort zones” and would be unaffected by the new rules.
Maui is also creating a new property classification for vacation rentals. The rate hasn’t been set, but as my place is on Maui, I know that I already pay significantly higher property taxes than an identical property which is not a vacation rental. [On Maui, one of the lowest property tax rates is actually reserved for hotels.]
We expect all counties will come up with a new property tax classification for short term rentals.
On Honolulu, there are numerous proposals around to update their 30 year old set of regulations.
Please remember that everyone at RBOAA is a volunteer and is donating their time on top of working regular paying jobs and whatever else they have going on. These people dedicate countless hours of their personal time to help protect our – and your – investments in Hawaii.
Special thanks to Leslie F who put in countless hours on your behalf. She is truly amazing
Have a wonderful summer!
Mahalo and Aloha