Taxing short-term rentals

HONOLULU — A Hawaii House committee passed two bills on Tuesday that would allow the state to collect more tax revenue from the state’s proliferating vacation rental and bed-and-breakfast properties while counties figure out how to regulate them.

The two bills would allow vacation-rental websites, such as Airbnb, to collect taxes on behalf of short-term rental operators who list their properties online. Currently, operators must pay their own taxes.

State House Tourism Committee Chairman Rep. Richard Onishi said he’s aiming for legislation that would collect taxes and make sure short-term rentals are legal under state and county law.

Airbnb and an internet industry representative testified against one bill that would require websites to take down rental listings that fail to comply with local laws. They argued federal law does not require websites to police user postings.

Hotel companies and unions testified in favor of this bill.

“In general, these vacation rentals that aren’t managed by realtors should be paying their fair share of taxes,” said Julie Black, principal broker and owner of Kauai Dreams Realty. “Realtors are frustrated when we’re charging our owner the proper taxes. When somebody does it on their own — doesn’t have the manager on island, doesn’t pay their taxes — I think that frustrates everybody.”

An Airbnb and Hawaii Housing study suggests Kauai bookings on Airbnb represents 2.4 percent of the island’s housing inventory.

“I looked at the housing aspect, like the listing type, location, number of rooms, then the usage (frequency, how long) and compared that against the housing stock on island,” said Paul Richard Cassiday, who completed the study and is a researcher who specializes in analyzing residential real estate market, in a previous report in The Garden Island.

Each Hawaii county has different rules for vacation rental and B&B properties. For instance, Honolulu County hasn’t issued new permits since 1989, even though such places are increasingly popular with travelers.

Hawaii Tourism Authority data from last year shows an increase of 7 percent of visitors who stayed in vacation homes in Hawaii last year compared to the year before. That outpaced the 3.5 percent increase in visitors staying in hotels.

The state agency said there were just over 12,000 vacation rental units in Hawaii, including some 3,000 in Honolulu County.

On Kauai, there were 739 home listings advertised on Airbnb from October 2015 to October 2016. Of that number, 87 percent of the listings were booked for less than half the year. And 65 percent of the people who listed their homes on Airbnb used the website on an irregular basis.

According to the study, 97 Kauai rentals on Airbnb were booked for more than 180 days, making up 0.32 percent of the housing stock and 13 percent of listings.

“That means to say that a lot of the transient vacation rentals aren’t operating year-round on Airbnb,” said Ka‘aina Hull, deputy planning director. “Which is why it’s hard to say how many TVRs are on the island because anyone with a single-family dwelling can, at one point or another, put it on Airbnb.”

Gov. David Ige vetoed similar legislation last year out of concern that it would facilitate illegal rentals. He expressed concern that encouraging people to rent to visitors instead of residents would exacerbate Hawaii’s severe housing shortage and homelessness crisis.

Ige spokeswoman Cindy McMillan said it’s too early to comment on specific measures this year. She said the governor’s main concern is that many vacation rental owners may not comply with county land-use laws.

The bills must still be heard by other House committees. State Senate committees have scheduled a hearing on similar bills later this week.

”At least Airbnb make sure these people have their GE tax license and they have their TAT license. That would help,” Black said.

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TGI reporter Jenna Carpenter and The Associated Press contributed to this report.