Hawaii’s Legislature and the administration of Gov. David Ige find themselves in a familiar place, searching but not finding a resolution to the skyrocketing number of vacation rental units in Hawaii.
Part of the reason they have been stymied for three years is there are no clear or accurate numbers on how many units there are. All we know is the numbers are rising.
The Hawaii Appleseed Center for Law and Economic Justice has a study showing that 4% of Hawaii’s housing units are being listed as short-term rental units on home-sharing and home-rental websites like Airbnb.
The social justice advocacy group says: “Over just the last two years, the number of VRUs (vacation rental units) has increased by 35%. There are currently 23,000 VRUs being advertised around the state. Up to 93% of them are for entire homes, rather than the rent-out-a-room image purveyed by the VRU industry.”
It argues that is just causing trouble for local residents because the industry gobbles up houses, rooms and apartments that could be used for longterm rentals.
That is just part of the issue. Some VRUs are owned by private families supplementing retirement pensions or Social Security by going on the Airbnb market, but others are commercial operations controlling blocks of units. The latter operations essentially change the neighborhood charm of residential areas, swapping local families for tourists from Omaha, hoping for luaus and mai tais for five nights.
To make the problem even more complex, vacation rental units are now part of the Hawaii tourist industry and they are are not going away or are subject to easy regulation.
Still the vacation rental market has repeatedly said, Tax us, we’ll pay, just be fair.
The great discouragement is that repeatedly the state has been unable to do it. Some may be paying general excise taxes, but not all of them are paying the required hotel room tax.
Former Honolulu Mayor Mufi Hannemann, president of the Hawaii Lodging and Tourism Association, after repeatedly failing to get some regulation through the state government, has switched his focus and is hoping that work done by Kauai, Maui and Hawaii counties will work.
“We are seeing much more success with counties. Hawaii (island) passed comprehensive legislation, Maui passed separate tax classifications, and Kauai has a separate tax for vacation units,” Hannemann said in an interview.
He doesn’t think much of current state proposals involving fees or fines to regulate the business and make some money.
“That is just chump change; you need to set up a separate tax classification. They need to start collecting the money,” said Hannemann. “It is money that is just sitting there.”
Hannemann, who ran against Ige for governor in 2014, said that if Ige is not going to pull legislators together to forge a solution, the Legislature needs to come up with a bill and tell Ige they will pass it and override his veto.
Ige vetoed an “Airbnb bill” in 2016 and his administration is pushing a new bill this year. But so far the Legislature has not shown any interest in coming up with a solution that will both give new tax money to the state and coherent guidelines for the industry.
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