HA’ENA — Take a walk through an oceanside neighborhood in North Shore Ha’ena and you’ll see construction signs, for sale signs, vacation rental signs. Signs of change. This is a neighborhood in transformation, a place where sprawling vacation rentals are
HA’ENA — Take a walk through an oceanside neighborhood in North Shore Ha’ena
and you’ll see construction signs, for sale signs, vacation rental signs. Signs
of change.
This is a neighborhood in transformation, a place where
sprawling vacation rentals are squeezing out single-family homes. It’s a
visitor destination in a residential area.
It’s not against the
law.
All that’s needed to change a single-family home into a vacation
rental are two licenses—general excise tax and transient accommodations
tax.
And they’re appraised at the same rate as single-family
homes.
Some North Shore residents, lamenting that they “can no longer ask
the neighbor for a cup of sugar because it’s a different neighbor every week,”
are calling on county government to survey the North Shore for resident versus
visitor-occupied units, and set limits on transient visitor
accommodations.
A Ha’ena beachfront property owner and lifelong Kaua’i
resident, who asked not to be named, said his family used the Ha’ena home as a
getaway until property taxes made it tough to keep the dwelling just for
occasional family use.
“To live there as a local person, you must have a
good income,” so the residents have been priced out of the neighborhood by high
rent or even higher mortgage payments, he said.
His property is appraised
at around $1 million.
Burned by long-term, resident renters who did not
take good care of the house and land, he decided to go the vacation-rental
route. And he hasn’t looked back, because it has been a good business decision
for him.
A nearby two-bedroom, two-bath, beachfront unit for sale for
$1,375,000 has annual county real property taxes of $5,171.16. Vacant
beachfront lots in the neighborhood are going for $775,000 for 13,000 square
feet, and $1,200,000 for around 27,000 square feet.
County Council Chair
Ron Kouchi worries about “double taxation,” enforcement and collection
problems, if the county tried to tax these vacation rentals at a resort rate
versus a single-family rate.
The hotel/resort tax rate is roughly double
the single-family figure. Currently, vacation rentals are appraised for real
property tax purposes as single-family homes.
Kouchi said it’s important to
him to balance property rights with community concerns.
“How comfortable do
you feel about telling someone what they can do with their personal property?”
he asked.
“I understand their concern, and I understand the importance of
wanting to build community, and choosing to live in communities,” Kouchi said
of North Shore residents’ complaints about the changing feel of their
neighborhoods.
He is also concerned about government getting too involved
in peoples’ everyday lives.
“It’s a hard issue to wrestle with,” he said.
“It’s a concern, but at this point it’s still an issue of balance as to when
does one outweigh the other as far as the desire of preserving community versus
the whole issue of private property rights, and how much should government
intrude in our everyday lives,” Kouchi said.
County Planning Director Dee
Crowell said the county had the chance in 1982 to include single-family
residences as part of transient accommodations legislation when the Visitor
Destination Area (VDA) designation was designed.
A VDA designation is
necessary when establishing timeshare and transient visitor accommodations in
the resort area. But the legislation is silent on the need for VDA designations
in residential areas.
If it is as big a problem as some people claim,
Crowell said of the changing face of neighborhoods on the North Shore and other
areas due to the proliferation of vacation rentals in residential areas, then
maybe the county should look at outlawing such uses, or requiring more
extensive permitting processes for them.
Opponents of vacation rentals and
bed-and-breakfast operations in residential areas claim such uses are illegal,
and have proliferated because of a lack of governmental concern and enforcement
of existing laws.
Kouchi said transient visitor accommodations do pay into
the TAT and the counties get a slice of that tax.
Steve Hunt, former chief
appraiser with the county Finance Department and now with Bank of Hawai’i, said
during his time with the county he was asked to look into the bed-and-breakfast
and vacation rental situations.
He sent out letters to about 100 landowners
which, based on the owners’ responses, ended up costing some of those owners
their homestead classification (a lower tax rate afforded to owner-occupied
properties).
Hunt also said County Councilmember Randal Valenciano asked
him to explore a new real property tax category exclusively for homes used as
vacation rentals.
