Nearly half of the bills authored by state lawmakers to regulate transient vacation rentals have survived so far in the 2015 legislative session.
Five bills are the only ones still alive out of the dozen introduced by legislators on the controversial topic:
» Senate Bills 201 and 519 were passed by three Senate committees — Tourism and International Affairs, Commerce and Consumer Protection and Judiciary and Labor — during their hearing on Wednesday. SB 201 would add single-family dwellings to the definition of transient accommodations.
It would also require the Department of Taxation to manage a public database, which takes effect on Jan. 1, of all registered transient accommodation and resort time-share vacation-plan businesses. Another key provision is that the bill makes failure to register as a business of furnishing transient accommodations a Class C felony rather than a misdemeanor.
Lawmakers addressed advertising in SB 519, which would require time-share and transient owners to display registration numbers and addresses on Internet advertisements. The committees also amended the language in the bill to add a civil penalty with escalating daily fines for any person failing to follow the advertising rule.
» Senate Bill 409, which was introduced by Senate President Donna Mercado Kim, is slated to be heard on Thursday at 1:15 p.m. in Conference Room 229 at the state Capitol. The bill seeks to clarify county zoning by allowing phasing out of nonconforming single-family transient vacation rentals.
» House Bills 198 and 201, which would also seek to clarify county zoning in regard to vacation rentals, were both referred to the Water and Land and Finance committees but haven’t yet been scheduled for hearings.
The issue has divided the community for years, but has grown in urgency with the popularity of the online booking sites that have made it easier for homeowners to list rooms for rent and visitors to book them. Public debate reignited following the December release of a Hawaii’s Tourism Authority-commissioned study.
The Honolulu Star-Advertiser also ran a three-day series, "Rogue Rentals," detailing how the widespread proliferation of illegal rentals is pitting neighbors against each other, highlighting deficiencies in laws and likely leaving millions of tax dollars uncollected.
In the study, HTA identified 22,238 vacation rental units that were advertised online last year and in late 2013. That’s 15,295 more than the agency’s estimate of 6,943 for all of 2013.
Proponents of expanding home-based vacation rentals say the growth is good news for the state’s No. 1 industry because hotels cannot keep up with the demand for rooms in Hawaii. However, critics of the spread of home-based vacation rentals say the counts are thousands of units higher than what has been permitted. Both sides agree transient vacation rentals, which HTA estimates now make up 25 percent of the visitor accommodations market, have the potential to generate significant taxes.
The number of arriving airline passengers was up 2.8 percent in January over January 2014, but the hotels didn’t feel it.
"We had 2.8 percent more lift in January, but most of my hotel members said they had a terrible month," said George Szigeti, president and chief executive of the Hawaii Lodging and Tourism Association, which supports all pending regulatory measures. "We had 700,000 people visit Hawaii in January. Where are they all staying? If the visitors want to stay in vacation rentals, we should let them. However, we need to level the playing field — these businesses need to pay their fair share."
Szigeti said there would be more equity if any of the bills pass.
State Department of Taxation Director Maria Zielinski expressed concerns about SB 201 in written testimony. She said the department already has a searchable database of all registered operators and plan managers, searchable on the department’s website by name and registration number. However, she added that the department does not have useable electronic data that match the license numbers with the unit addresses.
"Adding the functionality to search by address would require a significant enhancement of the department’s current computer system and would require additional resources for the collection of data that the department currently does not have," she said.
As for SB 519, Zielinski noted that a law passed in 2012 requires display of TAT registration numbers and sets forth penalties.
HTA Chief Executive Officer Ron Williams said the agency opposed SB 201 and 519 because it had preferred SB 1237, which took a more comprehensive approach to regulating transient vacation rentals. On Wednesday, HTA supported its companion bill, HB 825; however, the measure was deferred in favor of SB 519.
George Atta, Honolulu’s director of planning and permitting, supported HB 825. But Honolulu City Council Vice Chairman Ikaika Anderson said the issue is best left to counties. Anderson, who unsuccessfully attempted to regulate rogue rentals five years ago, said he’ll try again this spring.
"I’m inclined to introduce legislation which cracks down on enforcement while allowing for the limited expansion of owner-occupied bed-and-breakfast homes," Anderson said. "I asked for public feedback on the topic and this is what the vast majority said they preferred."
Anderson also favors prohibiting the city planning director from reducing fines and requiring vacation rental owners to display permit numbers on all advertising, which could be used as evidence of violations. While these measures are similar to some of the proposals from state legislators, Anderson said he’s against their efforts to regulate what he considers a county issue.
"Some of the state legislators introducing legislation to tackle the short-term vacation rental issue were at one time Council members who helped create the problem in the first place. If Senate President Donna Mercado Kim wants to get involved, she should come back to the city … " Anderson said. "This is a land-use issue, which should fall under the authority of the city and county. But if the state persists in addressing this issue, I sure hope that they provide funding and don’t stick the county with another unfunded mandate."
Anderson said he’d prefer to consider legislation from other City Council members and from Mayor Kirk Caldwell’s administration, which backed its transient vacation unit bill Wednesday before the Planning Commission. Curtis Lum, a spokesman for DPP, said the Planning Commission voted to recommend approval of the bill, which would require vacation rental ads to include information that would make it easier for the city to identify illegal vacation rentals.