Stunning ocean, mountain and sunset vistas, romantic, luxurious and spacious homes and condos available for short-term rent in paradise. All at incredibly low nightly rates.
There are scores of such Big Island properties listed on the Internet, especially along the Kona and Kohala coasts and in Puna. Their off-island owners see the properties as investment for their retirement or a way to afford their own vacation stays in Hawaii.
But the short-term rentals, also known as transient vacation rentals or TVRs, are a source of headaches for neighbors and frustration for on-island companies trying to manage property properly.
The problems are exacerbated because many property owners are hooking up with big vacation-rental networks that aren’t following state law or collecting taxes. Not collecting transient accommodations tax and the general excise tax allows the properties to be rented for less than properties where the owners are complying with the law, said Kona Realtor Gretchen Osgood.
“They’re not paying their fair share of the taxes,” Osgood said, “and the rest of us are carrying them.”
Hawaii law requires that absent owners must use an on-island property manager and have an on-island contact to collect taxes, including transient accommodations and the general excise taxes, according to a brochure from the state Department of Commerce and Consumer Affairs.
The absent owner also has the option of employing a caretaker or custodian who can work for only one owner and perform both functions. If a property manager performs real estate functions such as offering to rent or renting the property, he or she must have a Hawaii real estate license.
The problem, however, is there is little state oversight, especially for single-family homes. Condominium associations generally police themselves, Osgood said. But residents in even the high-end, single-family neighborhoods often find themselves side-by-side with vacationers, who generally keep different hours and have different priorities from their workaday neighbors.
“The County of Hawaii does not have any vacation rental laws,” Osgood said. “It doesn’t exist in our county code.”
Complaints on the Big Island haven’t reached the levels seen on other islands, Planning Director Duane Kanuha said Monday.
“Yes, both Kauai and Maui have issues with TVRs as well as Oahu, and the industry as a whole. For some reason, it is much less of an issue on the Big Island; we don’t really get many complaints,” Kanuha said in an emailed response.
The problems have really hit home on Oahu and Kauai, where local governments have tried to regulate them. But counties have very little say over TVRs because authority rests with the state.
Bills trying to bring more control to the counties have been unsuccessful in the Legislature. But bills sponsored by the Hawaii State Association of Counties, representing the four county councils, will once again be on the plate when the Legislature convenes in January.
The Hawaii County Council plans to take up a resolution today supporting local control when it meets at 9 a.m. at the West Hawaii Civic Center.
Hilo Councilman Dennis “Fresh” Onishi, the sponsor of the resolution, said he’s offering it because HSAC requires all counties to agree before a measure can be put into its legislative package. While he’s mainly sponsoring it to help Kauai, the Big Island could benefit as well, he said.
“They’re popping up all over the place,” Onishi said, of transient vacation rentals.
Resolution 301 distinguishes single-family residential use from single-family vacation rental use and would allow counties to use their zoning authority to phase out “nonconforming single-family transient vacation rental units over a reasonable period of time in an area of any zoning classification.”
Groups such as the Lahaina, Maui, Rental By Owner Awareness Association, have fought restrictions on their vacation rental activities.
A spokesman did not respond to an emailed question by press time Monday. But in a letter to state lawmakers during the 2015 legislative session, the RBOAA maintained its strong opposition to further regulation, saying the bills create “monopolies for hotels or property managers.”
“Owners of legal Hawaii vacation rental property contribute to the state’s ability to offer the accommodation choices of any globally significant tourist destination in the competitive tourism marketplace,” the undated letter said. “We would appreciate an end to the special-interest lobby-based bills that arise each year. Such bills harm what Hawaii stands for and threatens its economic future.”
