Roz On

VACATION RENTALS

Vacation rental accommodations are an important part of our visitor market. There are travelers who definitely prefer to stay in a house or condominium rather than a hotel accommodation.

During the past year, concerns were raised on the Big Island and Kauai that many owners of vacation rental properties were not paying or underpaying their Hawai’i GET and TAT taxes. Additionally there was concern that many of these properties did not have a local contact to assist their visitor clients in case of an emergency or natural disaster.

Several bills were introduced in the 2012 session to address these concerns. Unfortunately, there was a lot of misunderstanding about what the Legislature was trying to do. There was also added confusion because these bills were being considered at the same time as the County Council of Maui was dealing with limiting the number of vacation rentals that could be permitted if the property was not zoned for transient accommodations.

The purpose of our action at the State Legislature was two-fold:

  1. To provide consumer protection for the visitors to our islands by requiring a local contact
  2. To assist the Department of Taxation by requiring information to enforce state tax laws

Unfortunately, the owners and operators of the transient accommodations/vacation rentals who were complaining the loudest about the bill, weren’t even Hawai’i residents and may not have been thoroughly familiar with state laws and procedures. This bill affects any operator of a vacation rental — both Hawai’i residents and non-residents alike.

 Here is essentially what the bill requires.

  • The operator of a vacation rental must designate a local contact and this information must be included in every rental agreement.
  • The operator should display his Tax registration identification number on all advertisements for their vacation rental property.
  • The operators must update the contact information within 60 days of a change. There are additional fines in the bill to encourage compliance.

 If the operator’s property is part of a Homeowners Association or a condominium association, then:

  • The local contact information and registration ID must also be provided to the association.
  • The association is then responsible for providing that information to Dept. of Taxation.
  • The measure does not affect timeshare properties.

The measure takes effective July 1, 2012 and will sunset on December 31, 2015 if not re-enacted. This gives the Legislature and Department of Taxation an opportunity to evaluate the effectiveness of this approach or if other measures need to be taken.

We know there are lots of law abiding, taxpaying operators of vacation rentals. But there are also those who willfully disregard the law and even some who believe certain provisions do not apply to them. This bill will help foster compliance and allow renters visiting our state to trust that they are dealing with legitimate businesses.

 

KIHEI HIGH SCHOOL

Since I began to represent South Maui in 2002 I have made it my top priority to secure funding to build Kihei High School. Through my efforts in 2004, the legislature appropriated $5.5 M for plans and design, land acquisition and site improvements. However, only a portion of that $5.5M was released by Governor Lingle.

In 2008, through my renewed efforts, the legislature appropriated $20 million for land, construction and equipment of Kihei High School. Again, Governor Lingle only released $5 million for land acquisition.

This year I persuaded by Senate colleagues to include $20M for Kihei High School in the Senate draft of the Executive supplemental budget. Unfortunately, the House would not agree.

Kihei High should be built as a public private partnership. To facilitate that effort, my goal right now is to obtain funding for the infrastructure work necessary to move forward with construction. The land has been secured and the Environmental Impact Statement is under review. The school site is raw land and needs sewer, water and electricity brought to it. And the school’s intersection on Piilani Hwy must be improved.

Since the state is in better financial shape that it has been in several years, I know I can secure funding for Kihei High School. I’ll continue working with Gov. Abercrombie, the Maui Board of Education member and my Legislative colleagues to put this project at the top of their 2013 CIP list.

The infrastructure work will cost approximately $25 M and can be funded by government obligation bonds. With interest rates so low and Hawai’i having such a good bond rating this is the perfect time for bond funding. These infrastructure improvements make this school more expensive. Most DOE schools start with a developed lot not raw land. By providing infrastructure funds, the resulting turnkey campus will be a smaller line item in the DOE’s general fund budget.

It is such an important project for Kihei. And with our key partners and community behind us, I know we’ll be successful. Imua Kihei High School!