Wednesday, February 1, 2012

Hawaii Legislature Discussing Transient Vacation Rentals

Vacation Rental Homes in Hawaii Under Fire

The Hawaii State Legislature is considering four new bills that aim to regulate vacation rental homes, and held a hearing at the State Capitol, 415 South Beretania Street, Honolulu, on Monday, January 30, 2012 to discuss the first one, HB 1707. The Committee on Tourism, led by Rep. Tom Brower, Chair, and Rep. James Kunane Tokioka, Vice Chair, conducted the hearing. More discussion will follow on Wednesday, Feb 1, and the bill will go to the Senate on Thursday.

Vacation Rental Agents in Hawaii
Hawaii State Capitol, photo by Destination 360

The proposed bill would require nonresident operators of transient accommodations to rent their properties through licensed real estate brokers or salespersons. Realtors would have to collect TAT (Transient Accommodations Tax) from their clients and remit them to the State or face stiff penalties. However, The Real Estate Commission's legislatively defined purpose is the "protection of the general public in its real estate transactions," not an enforcement agency. The adoption of Bill 1707 would place Real Estate licensees in a "policing" role on behalf of the Planning Department.

Opponents believe the legislation is a thinly veiled disguise to shut down the mom and pop operations and would impact many families' livelihoods. The bills don't mention establishing a permit process to make the illegal units legitimate, which has been a source of contention, especially in Kailua, Oahu.
Angie Larson, President of Hawaiian Vacation Rental Owners Association, states that her organization requires its members to register with the State taxation board and pay both GET (General Excise Taxes) and TAT taxes. "I read a lot of assumptions about how much money is being lost," she wrote to the Committee. "It is very troubling to see this Bill being motivated without documented facts." She also claims that in April 5, 2007, similar complaints were made, after which the taxation board conducted an audit and found the majority of short term rental owners were paying their taxes.

According to a recent news story by KHON2, "Exclusive Getaways President Dan Monck told the House Tourism Committee Monday the bill would allow the state to collect $27 million to $35 million in taxes that currently doesn't make it to the islands." Monck offered no documentation to prove his numbers, but his business would benefit if the bill is approved.

The other bills up for consideration are:  
  • HB 2078 (RELATING TO TAXATION) requires that ads and solicitations offering transient accommodations display a registration identification number.
  • HB 1760 (RELATING TO TIME SHARE ZONING) authorizes the counties to restrict time share units and time share plans in areas not zoned for times shares.
  • HB 2673 (RELATING TO TOURISM) allows individuals occupying transient accommodations to donate $1 to the Dept. of Land and Natural Resources for the State Park System.
Anyone wishing to add comments can e-mail Representative Tom Brower, referencing Bill HB 1707, at and/or Senator Donna Kim Mercado, referencing Bill SB 2089, at


Hawaii State Legislature, House Committee on  Tourism. (2012, January 31). Retrieved February 1, 2012, from

Unspecified Author. (2012, January 30). Hawaii could collect more vacation rental taxes. Retrieved February 1, 2012, from

State of Hawaii, Department of Commerce and Consumer Affairs, Regulated Industries Complaints Office. (2012, January 30). Testimony on House Bill No. 1707 Relating to Transient Accommodations. Retrieved February 1, 2012, from

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  1. Nice post. I hope it passes. Something needs to be done. The industry is getting out of control and few VRBOs even know what the current policies are.

    1. Something needs to be done so you can make more money? The management of my unit is far from "out of control". I find the rogue renters in my development are the real estate agents who are in foreclosure or drowning in debt and not collecting the TA or GE (or paying hoa dues). I think an audit of real estate agents who manage their OWN properties would be insightful to the Hawaii legislature.

    2. Shame on you Rob ! IT is obvious you,Rob Dalton, are only looking at this as way to line your own pockets. What do you mean the Industry is "out of control"? You are only concerned because so many people have turned away from your services due to the high expense and the loss of control of their own properties. I understand that you - Waikoloa Vacation Rentals were removed from your duties at the front office of Kolea. Makes one wonder would your agenda was.
      I agree with the person that left comment on Feb 12, 2012

  2. Rob Dalton should disclose that he is in the property management business on the Big Island and has a financial benefit in seeing this pass.

    1. This legislation is entirely driven by financial benefit! Rob Dalton and all the others--this is self serving legislation. Reaching in the pockets of families and small businesses. The Hawaii legislature should be ashamed of itself to consider this.

    2. Exactly! The legislature should be looking at some of these individuals that are trying to push these new laws into effect.

  3. Does the legislature have the stats on the number of real estate personnel who foreclosed on their second homes/rentals in Hawaii? In my development, most of the foreclosures were people in real estate who got in over their heads. They had to be evicted from the units. One hid out in it for awhile. That was classy. They didn't pay hoa dues putting our association in a terrible situation. I don't want these questionable real estate people managing my property! We pay all our taxes and bills on time. No foreclosures for us. Yet the legislature thinks the real estate people will be more ethical and can do a better job?! I think not!

  4. Please help fight this Bill

    Email and we will inform you how to help us oppose this Bill.

    It is obvious by the committees approving the Bill on 2/15 that we need to work on getting this bill killed.

    Please pass on the email to fellow owners.

  5. From: William J. Wagner, Property Owner in the State of Hawaii, e-mail:
    Sent To: The Committees of S.B. 2089 and H.B. 1707 and to the Legislatures of the State of Hawaii
    Subject: House Bill 1707 and Senate Bill 2089

    Aloha Senators, Representatives and Committee members,

    I Am Opposed To These Bills.
    I invested in Hawaii properties in 2004, It has proven to be a bad investment because of the downturn in the housing market. It is extremely hard to make a profit on renting these properties even though I do all my renting on VRBO and pay all the taxes myself.
    If this bill passes, it will be devastating to most of the property owners in Hawaii who would be forced to use a property manager who would take 40% or more of the rent proceeds. It's easy to see why all the big rental companies are in favor of these bills, they stand to fill their pockets with our money. I don't understand why the State of Hawaii would want to do that. You say it's because we property owners are not paying all the tax. For one, I pay all the tax that is due to the State of Hawaii because I don't want my property seized for nonpayment of taxes. I have been informed that Hawaii's own audits show that most property owners pay their taxes. So if it's not a tax problem, than It must be because of the lobbyist for the big property managers who don't like us renting on VRBO leaving them out in the cold.
    I believe that if these bills are passed, it would be unconstitutional, and a taking of property without just compensation. It will certainly cause a further downturn in property values. It could become a legal matter for the State of Hawaii. The State of Hawaii could be held liable for the lost property and the lost revenues unjustly transferred to the property managers.
    Think twice before you put the State of Hawaii in jeopardy. I urge you to oppose HB 1707 and SB 2089

    William J. Wagner
    Property Owner in Hawaii