I don't know the data, off hand, but there are thousands  of property owners in the State of Hawaii that do not live in the State of Hawaii...and thus...many are not up to date with local politics. I am not certain if the Moderators permit political discourse. This is very political and there will be differences of opinion depending on "Party".  These two local politicians {Evans & Green) have been engaged in this for some time...so I'm not certain why it has not been raised here, earlier. There has been only some local news in Hawaii generated and ...many of us who do live in the State of  Hawaii, especially those in the "transient" rental business,  have been aware of the "war against vacation rental owners" for some time now. It started a few years ago when rental strife was the issue between residents against "transient" rental property owners... with the "support" of individual local politicians trying to shut down "transient" rentals outside "commercially-zoned" districts on a couple of the islands.  New laws were passed....some owners were shut down....some got "permits" issued. It then progressed to local politicians enforcing higher property taxes than residents have to pay to the State if the owner does not  live in the State.  And, it then turned to force private property owners living outsite the State of Hawaii to hand over managment of their "transient" vacation home to a third-party managment. I am a resident of the State of Hawaii, thus my rental business is not directly affected by this new Bill. However, I will most likely be indirectly harmed, IMO.  My and everyone else's property value will probably plummet again if this thing becomes legislation.  Property owners living outside Hawaii will end up with too much personal loss....most likely be forced to sell....some may even foreclose...and the real estate market will dive here, again, and we all will be slammed.  I'm angry and even ashamed of what these politically motivated individuals and their politically motivated counterparts in Government are doing to this State - which depends on its tourism. I believe that this Bill will harm the individual property owner in Hawaii who is not a full-time resident here and it will harm the rest of us who are...the entire real estate market....and for that reason, we ALL have something to worry about --- I stand in support of killing this BILL.  I will write, again, to the Senate {I have done so on the two other related issues ...I wrote to the Governor of Hawaii....but he's another case {this State is in trouble because we have representatives that are "asleep at the switch"}.  The real problem is not being addressed...over spending, bad managment of taxpayers monies...government overreaching into the private sector and now private property owners....to tax them more...instead of cutting back government spending and managing the State. It's the same story everywhere in the country.

I was just wondeirng if any rep. from VRBO or other similar company was part of that testimony - to sort of stick up for private owners' rights....and then I remembered that it probably wouldn't matter to them anyway - they get their advertising $$ from private owner or mgt. company anyway....

I can understand some of the local resentment, after all who wants to live next to a party house!!!! If owners would limit the number of guests then I would think they'd be more welcome, but when cramming 8 plus into a 3 bedroom, chances are it is not mom, dad and their kids.

David

February 14th 2012 Re: SB 2089 and HB 1707 I have read both Bills and the amendment to Bill 1707 and I am astounded and appalled that the Hawaiian Legislative Branches are considering passing these Bills.

After reading the submissions to the legislators it is clear where the battle lines are drawn and who stands to benefit. Both the Hawaiian Association of Realtors and The Hawaiian Real Estate Commission have come out against these Bills noting that there are already laws in place regarding the collection and remitting of GET and TAT taxes and finding that these Bills are overkill. The other side has a very strong contingent of Rental Property Managers. These Rental Property Managers trot out the contention that millions of dollars in GET and TAT are being collected but not remitted by scofflaw owners or even worse, not collected in the first place. This flies in the face of the most recent audit of GET and TAT which found that a vast majority of owners were in compliance. What is really at issue for the Rental Property Managers is the fact the Vacation Rentals By Owner and other similar business models are putting downward pressure on their ability to a charge 30/45 % to manage a person’s vacation rental. The fact that Bill HB 1707 passed in Committee by a vote of 9 for and 0 opposed and was sent back with amendments for second reading tells you how those arguments played out. By legislating away the rights of owners to manage their own properties this legislation will hurt tourism. Who will end up paying a portion of the increased cost brought on by the monopoly the Rental Property Managers will enjoy and the fees they charge? The consumer is who! When you increase costs and prices you lessen demand which will have a negative impact on tourism in general and Hawaii as a whole.

Do I have a vested interest? You bet! But so do you! If you are an investor, say a Hawaiian who lives on Oahu but has a vacation rental on Maui your rights as an owner are about to be abridged. If you are an investor from the US mainland or a foreign investor you also lose as it will now cost 30 to 45% more to have your rental property. If you are a Hawaiian developer and hope to sell your finished properties to investors, your offering now makes less sense to investors which will cost you sales, increase the time you take to sell your property and make you think twice about starting a project in the first place. If you own Hawaiian real estate you will also notice a further softening in your values as the removal of many investors from the equation will hurt all property values ( as if the last few years weren’t hard enough). If you are a Hawaiian tax payer these Bills will have very little upside but they will definitely hurt the economy. And lastly, if you are a consumer and the cost of a vacation rental has now increased you also suffer so you may shorten your stay or you may vacation elsewhere. Once again, who wins? Oh yes, the Rental Property Manager.

Many jurisdictions such as Arizona, Nevada, California and Florida are welcoming investors and have seen investors help stem, to some degree, the blood bath of the mortgage meltdown and subsequent market collapse. In a similar vein the US Federal Government is looking to bring in a provision that provides for an extended stay residential visa ( a non employment visa) for people that invest more than $600,000 in US residential real estate. It appears that the only individuals that are looking to limit the scope of ownership for investors in the United States are to be found in the Hawaiian Senate and House of Representatives. So you have 49 states open for business, Hawaii not so much.

There is no question that GET and TAT need to be collected and paid. While there are laws in place to deal with collection and filing there could also be provisions put in place that would require owners to post their business license or tax number in their advertising which would allow for greater accountability.

As stated in the Real Estate Commission’s submission to the Legislature Feb 2nd 2012

This bill “creates an unnecessary but new specialized license of property managers within the real estate licensing statute of Chapter 467, Hawaii Revised Statutes ("HRS"); • changes the legislative policy set forth in the exceptions to the real estate licensing statute that an individual, i.e., a natural person and not an entity, who, as an owner of any real estate , may handle the management and sale of their own real estate without a real estate license or without retaining a real estate licensee (§467-2 (1), HRS); and • creates ambiguity with a current regulated area of condominium hotel operators as set forth in §467-30, HRS.”

As for my vested interest, I have a rental condominium in Ka’anapali, I have a business license, I file Federal and State taxes and I collect and remit GET and TAT. I am considered a foreign investor and I will be taxed higher, both in income tax, property tax and in future capital gains tax. I knew and accepted these realities before making my investment decision. Bills SB 2089 and HB 1707 are happening “after the fact” and as such were unforeseen as no other jurisdiction has sought to fetter private home ownership in this way. I am in negotiations to purchase a second vacation rental in Maui but these changes to the personal  ownership rules have me considering other options. I have been in touch with at least one other who is planning to collapse their conditional sale rather than deal with both the increased cost of ownership and the potential capital losses that these Bills would engender. 

I have managed my own property using the likes of VRBO and Homeaway and I hire Hawaiian residents for all my rental needs. I have a long list of happy renters from Hawaii, the mainland, Australia, Canada, Japan and the UK. My rental rates are reasonable and I provide a cost effective alternative to Hotel fees. I furnish my rental with many extras that the hotels don’t and my renters value the difference. I believe as an owner you should have a choice, the owner benefits, the consumer benefits and the State benefits. Mahalo,

AJH, I have email you and will await some communication.  There is someone else that is launching stop HB1707.  I will let you know who that is and what they are doing once I receive some communication.  They are trying to hire a lawyer to defend this.  They are trying to get as many homeowners as possible.  Mahalo Kristin

Aloha cruisn9,

Thank you for speaking up against this travesty.  I only learned about this today but I have already written testimony and sent it to the Senate Committee CPN and to all senate and house members.  It is my personal belief that if the state is not receiving taxes collected, it is much more likely to be from residents who are flying under the radar than from us non-resident owners who typically have only one or two properties. Here is my testimony:

Members of the Senate Committee on Commerce and Tourism

Members of the House Committee on Tourism

Re: Testimony re Senate Bill 2089 and House Bill 1707

Honorable Committee Members,

It is with considerable dismay that I offer my testimony.  My name is ___.  I am a resident of the state of Alaska and a very frequent visitor to the great state of Hawaii.

A few years ago, a friend and I decided to refinance our principal homes in Alaska and use part of our equity to purchase a condominium in Ma’alaea, Maui.  We have invested in the Hawaiian economy and we have taken an unoccupied, virtually derelict condo and made it into a wonderful asset for the community. We use the condo for our own visits several times a year, contributing heavily to the Hawaii economy.

When we are not personally using the property, we rent it out to our friends and relatives as well as to some vacationing tourists, using the website VRBO.com to do so.

We are registered with the State of Hawaii and possess business licenses in good standing.  We collect and pay Hawaii taxes totaling 13.25% - we do not charge a mark-up to compensate ourselves for doing the bookwork – and we have submitted all taxes timely to the State of Hawaii as required by law.

These proposed bills are an enormous disservice to responsible homeowners and vacation rental owners like us.  This bill would enrich Hawaiian realtors for nothing more than being a funnel through which our tenants submit rental monies to us.  If enacted, it would add a huge and expensive layer of middlemen to a process that is currently working well and would be an enormous drain on our meager revenues, making it likely impractical for us to continue to do business. 

We own one vacation rental unit.  The gross proceeds from our vacation rentals essentially pay for housekeeping, on-island agent retainers, taxes, association dues, lease fees, utilities and upkeep and maintenance.  Most condo buildings (at least in our vicinity) are 40+ years old and require constant maintenance.  There is virtually nothing left over.

If we are forced to use a realtor as a go-between for our guests, their fees (which I understand are routinely 25 – 40% of gross receipts) would cripple our modest operation.

These bills are a travesty! They are a transparent vehicle to enrich realtors at the expense of those of us who have invested in Hawaii in good faith and who follow the rules.  The individuals that these bills are ostensibly aimed at will continue to fly below the radar and the treasury will see no material benefit – only the realtors will profit!

Please do not pass these bills.  They do nothing to improve your economy and, in fact, will likely shut down many small operations like ours because we cannot afford another enormous layer of expense!

Sincerely,

________

Owner and Visitor

Is that page already set up?  I just did a search for it on FB and came up with nothing.