The challenge of the visitor industry overwhelming neighborhoods has had much policy focus in the last twelve years regarding vacation rentals. Bill 2767 being discussed at council on Wednesday 1/22/20 is targeting the remaining 218 residential properties suspected of sharing a portion of their property as a vacation rental. My hope is this bill can be set aside until a more thorough investigation can occur of what will be the consequences to these families being effected. When a clinical look at the policy is made, it may make sense to charge all visitor accommodation at the same rate. Policy is important, but as a council member I work hard to take a deeper look at the impact on the people. I had the Real Property Tax department send me the list of the the properties, and I have endeavored to call as many of them as I can find contact information. So far, I have contacted a little over 50 households, only two of which were aware of the bill.
What I have learned is the vast majority of these people are between 60-85 years old. They inherited or bought a piece of property at a rate they could manage 40 years ago. They worked hard, built their house and raised a family. Time went by, property values soared, as did taxes and insurance proportionately, the kids grew up, personal tragedies happened, ways of being able to earn an income shifted. In an effort to adapt to the changes that life threw at people, a portion of the home went into the small business of having a short term rental. Rules, fees, requirements and fines continued to shift and change. In good faith, people spent tens of thousands of dollars exhaustively working to be in compliance. Now the rules might change again and their property taxes are likely to double or much more so with the removal of the assessment cap. The outcome for most of the people has not been a grumbled acceptance at a bigger check to have to write. It has been tears, difficult stories, and a recognition that they will most probably be forced to sell their home, possibly with not enough money remaining to find a new suitable living situation.
Who are these people and who would buy their homes? There are a wide range of unique stories. They are parents and grandparents of our bright and beautiful youth that were born and raised here, intermingled with the generational families. Some are local; more came here long ago. They are contractors, construction workers, nurses, doctors, artists, former business owners, non-profit workers, surfers, farmers, waiters, foster parents, etc. Grandparents are the backbone of this community. When we remove the stability of home ownership there is often no safe place to return to for the emerging generation that struggles to gain a foundation in our difficult economy.
Because of the location of these houses, most are now valued around a million dollars or much more if they are in or near the beach communities. These houses will almost certainly sell to an off-island investor. Our local economy does not support these prices. There will be no home to leave to the next generation.
About 25% of the list that I called were wrongly included. Already, they had paid the fines and “ceased and desisted.” They have been compelled to have a long-term renter they have trouble managing as they are now in their late 70’s and have had to return to work part time. They can’t keep up with their taxes. Their home has almost no equity and they aren’t sure how they are going to make the payments. The spouse has stage four cancer. This has been a rough month of depressing phone calls.
I absolutely cannot support Bill 2767 as I see it as a tragic lose-lose. The $1.2 million in revenue that is planned to be generated will not likely materialize with the current home owners. The hardship on the generations and freshly displace people is likely to place demand on our social services. Regardless of how well the Policy sounds behind this tax shift, the collateral damage it will create for the People sounds tragic. If you have ever had a TAT tax license or a TVR permit and are no longer renting short term, please check with the county tax office so you are not inadvertently caught in this snare.
Felicia Cowden is a Kilauea resident and a member of Kauai County County Council.