We recently introduced Bill No. 2767 to ensure that all vacation rentals and hotels/resorts are paying the appropriate property tax rate to provide adequate and equitable funding for our island’s infrastructure needs.
The bill generated a number of concerned emails from residents as well as a passionate op-ed published recently in The Garden Island. We appreciate the open feedback and we wanted to take this opportunity to explain our rationale for the proposal.
Kauai currently has more tourists than our infrastructure can handle. While tourism drives our economy and helps support many local families, we need to ensure that the impacts of the industry don’t overwhelm the benefits. This is clearly stated in the recently updated Kauai Tourism Strategic Plan (which is funded by the County of Kauai, Hawaii Lodging and Tourism Association and Kauai Visitors Bureau):
“We are at a tipping point, and the risk of overtourism threatens the environment, quality of life and the visitor experience…In order for the visitor industry to continue to thrive and be a positive contributor to our economy, it must also be a vital partner in contributing to the quality of life for Kauai residents…It is clear that the status quo for Kauai tourism cannot continue. Bold action must be taken to better manage tourism to protect the environment and residents’ quality of life.”
On top of the infrastructure impacts, the proliferation of visitor accommodation units also worsens our current housing crisis. The impact on residential communities from TVRs (transient vacation rentals) is clearly outlined in our new General Plan (which is the guiding policy document for the County of Kauai). The plan states that when homes are converted to TVRs, the resident population in the area declines, negatively impacting residential neighborhoods. It goes on to explain that:
“The displacement of low- to moderate-income households changed the social character of traditional neighborhoods. Once they were close-knit places where neighbors knew each other. Today, the transitory occupancy of these neighborhoods are more vulnerable to crime, noise, and illegal parking.”
Given that, the Kauai General Plan calls for taxing all TVRs “at a rate consistent with other resort uses.” And it includes a specific goal to “reduce the impact and number of transient vacation rentals” through the use of the property tax code. The recommendations within the General Plan regarding vacation rentals are cited by the Tourism Strategic Plan as “critically important to undertake to ensure resident and visitor satisfaction.”
Given all of that, the intent of Bill No. 2767 is simply to ensure that all vacation rental operations are covering the full cost of services and infrastructure that the tourists who occupy those units are costing the County of Kauai. Along with being more equitable because it will ensure that all TVRs are paying the same rate, the bill also provides an incentive for vacation-rental owners to long-term rent their units to Kauai residents instead of visitors.
Currently, if someone lives on the same property as their TVR or hotel/resort, instead of getting taxed at the higher vacation rental ($9.85 per $1k assessed value) or hotel/resort ($10.85) tax rates, they are getting taxed at the commercialized home use ($5.05) rate, which is the same rate applied to residents who operate a long-term rental or office from their home.
Many properties have multiple TVR units on one lot, and since the homeowner lives on the property, they are eligible for the lower commercialized home use rate instead of the vacation rental rate. That means that they’re paying the same rate for multiple TVRs as someone who long-term rents or works out of a portion of their property. And, under the current tax code, it’s even possible for the owner of a hotel or resort to move onto the premises and then cut the entire resort tax rate in half to the same rate that residents pay for a long-term rental in their own home.
If passed, our bill would close these loopholes and simply ensure that all TVRs or hotels/resorts get taxed at the respective vacation rental or hotel/resort rate.
If this bill passes, vacation-rental operators who do not want to pay the $9.85 vacation rental property-tax rate can continue paying the $5.05 commercialized home use rate if they use their unit as a long-term rental home rather than a short-term vacation rental. Vacation-rental operators can achieve the even-lower $3.05 homestead rate by renting their unit affordably to a Kauai family via the county’s existing long-term, affordable-rental program. Bill No. 2767, therefore, ensures that all TVRs are more fairly contributing to the cost of tourism-related infrastructure and services, while further providing incentives for TVR units to be converted to long-term rentals for Kauai residents.
This bill will not solve our housing crisis or bring balance to our tourism industry, but we believe that along with all of the other housing initiatives passed by the County Council this year, it’s a step in the right direction, and it ensures that all TVRs are equitably contributing to county infrastructure.
For those concerned about the impacts of the bill, we would appreciate hearing from you directly. Please email us any concerns or comments at levslin@kauai.gov and mchock@kauai.gov.
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Luke Evslin and Mason Chock are members of the County Council. Evslin is Finance and Economic Development Committee chair, and Chock is the Planning Committee chair.
Great work! I fully support this bill. TVR’s are businesses just like resorts and should be treated as such.
Yeah lets tak all the mom and pop businesses like resorts too. That’s about the same logic you aree using. Oh wait you don’t use any logic. Just another uninformed synchophant spouting meaningless agreement with nothing constructive to add.
Glad to see this bill. Long overdue.
Thank you for explaining your rationale for proposing Bill 2767 in an effort to provide adequate and equitable funding for our islands infrastructure needs due to the impact of a relatively few properties where residents who live on-site host visitors.
However, your rationale is often faulty.
Please explain to resident owners, many of whom voted for you in the most recent election, and who rent out a portion of their homes as a homestay or farmstay to make ends meet, how forcing them to change the use of their property and achieve a lower tax rate, will provide more funding for the County coffers.
Please explain the great difference cited in infrastructure needs created by such a limited number of well-intentioned guests.
In fact, installing long-term renters on their properties will result in more people staying in each home and more cars both on the property and on the street. The most common tourist group staying in homes where the owner is in residence is two in number, using just one car. Long term rental laws prohibit limiting the number of residents on number of cars parked on street, Thus, the potential for conflict and resultant police intervention, is vastly increased. Fear mongering about “crime and noise and illegal parking” by visitors is pretty much absurd when a resident owner is on site and in control.
Regarding the use of the commercialized home use tax rate by those residents who operate a long-term rental or office from their home is, to my knowledge, minimal at best.
Does your neighbor who rents out a unit or two apply for this rate when they can pay homestead taxes by just keeping their mouth shut? No.
Does your neighbor who sees medical or massage clients in their home apply to pay higher taxes? Not likely.
Does the fella down the street who runs a rental business (tables, chairs, cribs, scooters) or the guy who runs a lawn maintenance business or the gal who operates a baby-sitting business, or someone who runs a financial or computer-based or even a real estate home office pay a commercialized home use tax rate? I doubt it.
So why are you targeting long-term resident owners who invite guests to come and stay and interact with a resident in their home, and who already pay taxes at a vastly higher rate than all of the other residents who are running a business from home?
What is good for the goose is good for the gander. The Council Members and Finance Director should figure out how to apply the commercialized home use rate in a more fair and equitable manner, or leave all the little guys alone.
Well said constructive dialogue and questions that are on point. Let’s see if Evslin and Chock even bother to answer you. My guess is now because they have no constructive answers only more skewed logic and discriminatory laws inviting more lawsuits.
Spoken like two politicians in the back pocket of the the hotel/visitor industry special interests. Tax the little-guy competition out of the market…great solution boys.
Moreover, your claim that TVRs displace low-moderate income people is a red herring argument. Since many TVRs are in close proximity to resort areas and are usually higher end oceanfront properties this is a specious argument. On top of that, many low-moderate income local people rely on the added revenue of short-term rentals to offset the cost of college and of course the basic un-affordability of the Hawaii economy. This situation is being driven by the state and county governments.
RG DeSoto
This bill works counter-productive to your office as county councilmembers. This bill affects the paying bill community. Those people who are really paying taxes and using vacation rentals to make extra income for themselves. As for the rest of the population, they could care less because they are the voting population and poorer and not in any way affected by your decisions on the bill. In other words, the bill affects those people who are voting for you, but not paying the bill. You still have no pay.
What are you trying to say? That only people who run TVR’s vote? Why should those that run a business like a TVR pay the same rate as someone who doesn’t run one? Maybe I’ll open a late night dance club out of my home and not pay taxes on the money I generate and, who cares what the neighbors say about the noise and disruption. They’ll get over it, and if they don’t, at least I’m making money. I don’t need to pay my fair share of taxes like the real nightclubs pay. This is basically what opponents to this bill are saying.
This is not what opponents to the bill are saying; they are paying their fair share of income tax on the money they are making, to go and tax their properties is something else, it will wipe-out any and all their side income, going after these people and double tax them is a move has Hotel and resort owners behind it 100%, they want to eliminate any and all competition.
Also, YOU cannot count the voting population and not paying a bill, just so that you can make a bill as this, and get paid for solving some vacation rentals property taxes. You cannot be serious on saying that the voters have no say. Those voters who are paying taxes, could care less of Mason Chock’s tenure as county council member. And will probably decline any lawsuit filed by the county on the county’s behalf, because Mason Chock’s signature was on the bill. It doesn’t work this way.
There will be no cooperation by these richer people who own vacation rentals.
This process is a fair and well thought out process meant to ensure that all businesses (including TVR’s) pay their fair share of infrastructure use. If you run a TVR, you should pay your fair share of taxes on your property (based on use) from your profits.
In surfing the term “kook” refers to someone who doesn’t have a clue how to surf and gets in other surfer’s way causing problems and sometimes causing people to be hurt. Evslin and Chock are kooks in the line up of life on Kauai. In their haste to “equalize” things their bias and lack of foresight are showing. If they had done their homework instead of listening to everyone with a plantation mentality they’d understand that vacation rentals are going to be bigger than hotels soon and this is driven by the demand for that type of housing. It’s going to happen and soon and vacation rentals do not equal affordable housing and anyone who thinks that it does is delusional. Now partial home rentals as AirBnb do are another story. But their bill does not even address them. Change is indeed tough for people stuck in the past and Kauai has a shameful record of ignorance in the public servants and those that form policy. And all you other people that chime in to get rid of the vacation rentals and how they have ruined the neighborhoods are also delusional. Neighborhoods change. Times change and one thing we can all agree on is that Tourism drives Kauai one way or the other. So why harass the people who are bringing business to the island and represent Kauai in such a positive way? Why put more hardship on people trying to supplement their income legally? Jealousy might be one reason. But in the case of Evslin and Chock ignorance is another. Kauai has a long history of that. Oh wait that’s right because you follow what every other uninformed backward person who blindly says “let’s just get rid of them” does and thinks. News flash…. TVRs haven’t brought more crime here. They have not created more problems than the local residents with their barking dogs, screaming households, junk cars in the yard and all the rest humans do in neighborhoods. My experience as a tvr business owner, which is longer than most, is that these visitors are quiet and respectful. Using more resources? Are you kidding me? Any visitors apply for welfare? Any visitors with multiple illegal cars on the roads? Any visitors with a million dogs barking at all hours? Any visitors taking from more than giving to the community? Really how? Any visitors breaking into cars or homes? Any visitors guilty of family abuse? And how about all that millions of dollars of profit that Evslin and Chock want to tap into? Dream on kooks. If any of you had a clue you’d know that vacation rentals have very high costs to operate. They do not make a ton of profit if they are operated and maintained well but hey you and the planning department are throwing more and more monkey wrenches instead of supporting them right? But hey let’s increase their taxes to make things more “fair”. The truth is these two kooks don’t have a clue as to what’s what and are blinded by their ignorance and wanting to do something based on that ignorance and lack of understanding of the business and benefits of TVRs be it intentional or just plain laziness to really research the business on their parts reeks of a rush to push it through and bias against TVRs. Instead of singling out a specific group and hammering them when they are already down how about taxing the folks who really do use the services of the community. The ones who really do tax the system. Oh wait that’s right they are the same ones who are in the revolving door of the legal system being let go time after time to continue to complain how visitors are ruining their neighborhoods and just plain tax the system. Or perhaps it’s the self entitled folks of Haena who think that vacation rentals have ruined “their’ neighborhoods? Hold on who’s neighborhoods are they anyway? Who’s us? Holding vacation rentals as scapegoats for your ignorance and backward mentality and lack of insight into whats really going on in front of your nose and not having the foresight to realize that vacation rentals will also help the small people trying to get ahead or pay for a house in a place where housing is very hard to buy is just plain foolish. Or employing many people. Or supplying the tourists with a quality experience. You know the lifeblood of our economy. And trying to justify it in a half assed manner in the paper because you feel guilty or whatever insecurity you have about your ignorant mistake of a bill is just that. Foolish and ignorant. These two kooks are doing nothing more than trying to better their political careers and appeal to the plantation mentality cases that still permeates the population here. If you really want to do something fair try creating a tax on everyone. And your policy of doing all you can to drive us out of business is backward and anti business. You might even say it’s anti neighborhood because believe it or not TVRs are part of the community. Remember that. Shoots we might as well ask Kaipo Asing to run again. At least he was up front about his bias and racism. Shame on you two even if you’re sincere in trying to “help” your lack of research into the TVR business itself has left you up the creek without a paddle and the PR explanation of a response you wrote to justify your ignorance just makes it look like you need to explain something to make yourselves understood. Understood by who? Us owners? You see even the ignorant masses see it for what it is. An unthought out piece of delusion passed off as something to “equalize” something that does not need fixing. Know the word kook. Own it. You’re both acting like one. Evslin and Chock are coming after good people for stupid unjust ignorant reasons. And I see that the county attorney has a $100K request to the council at the next meeting for more wasted funds defending legitimate lawsuits brought about by the county deputy mayor in his egotistical and foolish show of arrogance and lack of knowledge. Gee you can use some of the $1million you get by raping us to fund that. Get my point? Kook fits you two perfectly. Someone without experience in peoples way causing problems and possible physical damage to those of us who know what’s up and what’s right. Couple of full on KOOKS you two. I’ll see you both and the other informed plantation workers at the next council meeting.
Define fair share Doug? You are spouting the same nonsense as Mr. Chock and Evslin. Cliche’s based on what? Where’s the beef? How is what they are seeking to do fair? How do TVR’s use more county services?
This is what you get when you elect your friends and family instead of hiring from a resume of smart ,experienced, business orientated management, of people with a track record to move things forward.
Luke and Mason Best I can say is meet my attorney Greg Kugle
apply my last reply to Doug please. Mahalo
How can you possibly equate a one or two bedroom rental with a 200-room hotel that has restaurants, shops, etc.? TVR’s are already paying a significantly higher property tax for commercialized home use. Along with the higher tax rate, they are assessed at least $64 per month for refuse pickup.
This makes sense that vacation rental owners should pay the same rate as a hotel. However we need more $$$ to add more public transportation, fix up our parks, roads, waste treatment, etc. etc. As a property owner on the island, I feel that we need a new type of taxation other than property taxes to remedy the collateral damage to our infrastructure resulting from tourism. We need to implement an airport infrastructure and public transportation tax to every visitor coming to the island. $50 per adult visitor without a valid Hawaii ID will give us some serious $$$ to keep up with the infrastructure etc. We get about 1,280,000 visitors to Kauai and if those numbers paid us $50 each, the county would take in 64 million dollars each year! This is almost three times the amount of money we get from the TAT tax after it gets portioned out to each island. There was an increase in what Kauai gets now to $24.4 million from $14.9 million in 2018. However it is still not enough to keep up so we should do what New Zealand is now doing and charge an infrastructure tax at the airport. Property owners should not be the only people bearing the burden.
It’s about time someone addressed the housing shortage. When people choose to rent it as TVR/AirBnB they are in probability taking away housing from a resident. Renting it temporarily nets you more money and virtually no rules. Something breaks, just give a discount for the night. Collect the rental up front with security deposits and you”re good to go. Permanent rentals you can have tenants that decide to stop paying rent and an expensive eviction process and good luck getting money out of them even if you win a decision, so why wouldn’t you choose to rent it as a a TVR instead of to a resident.
Getting rid of so many TVR’s would really help towards the housing crunch and bring down rents as more places would become available for our local residents.
If your’re really interested in providing “adequate and equitable funding for our island’s
infrastructure needs”, you need to address more than the “appropriate tax rate”. The tax rate is just half of the equation when determining how much revenue will be raised. The other half of the equation is assessments. Assessment is how much the County values the property. That amount determines how much money is raised for infrastructure once you multiply it by the “appropriate tax rate”.
The more important question is what is the “appropriate assessment” or the value of the property that the County assigns to it. (There is ten years of assessment data online available to the public for free, for every property. To get data further back, a citizen would have to pay for it but as Council members that data is available for free.) What i found after
roughly tracking hotel/resort assessments for more than 10 years, is that the value the County has put on them has increased very little. At the same time, resiential has doubled or tripled in the same time period. I may be wrong, and encourage you to do your own study but it looks like we should be asking the question “why hasn’t the assessments for hotel/resorts gone up more over the last 20 years”? Assessments are based on market value. If there’s more tourists now than there was 10 years ago, that means occupancy
at the hotels have gone up, making the hotels more profitable, which gives them a higher market value. Shouldn’t that be reflected in property assessments for resorts? There’s no increasing competition for resorts and hotels because very few new permits have been given in the last 20 years to add to the inventory. Why should residential and agricultural land be the only land classification to go up in value over time?
The amount of revenue collected from a couple percent in a tax rate applied to a few indivdual TVR’s is insignificant compared to the amount of revenue that coud be raised by assessing hotels and resorts real fair market value that is tied to increase in tourism. If you really care about everyone paying their fair share for infrastructure, I suggest doing a historical study of how resort/hotel land classification has been assessed over the last 20 years, and see if there’s justification that those assessments should be higher.