RESOLUTION

WHEREAS, the Legislature finds that due to a combination of market demand, minimal county enforcement, and internet facilitated marketing and reservation systems, there has been an explosion of individual transient vacation rentals, many of them illegal and located outside of designated resort areas or hotel zones; and

WHEREAS, while many of these individual transient vacation rentals are bed and breakfast operations with on-site host families, a large and increasing number of these individual transient vacation rentals are single or, in some cases, multi-unit dwellings without any on-site host or operator; and

WHEREAS, so long as they do not generate significant problems for neighboring residents, bed and breakfast operations with on-site host families may provide many benefits, including but not limited to:

1. Meeting a proven market demand for small scale alternative lodging in Hawaii's rural and residential settings, thus diversifying the sorts of accommodations available to visitors and strengthening the overall visitor industry;
2. Generating substantial revenues for government (assuming that operators are paying appropriate taxes);
3. Injecting expenditures directly into local communities, where they are more likely to circulate in the Hawaii economy;
4. Increasing the opportunities for visitors and neighboring residents to meet and socially interact as equals; and
5. Offering residents availability of in-neighborhood accommodations for visiting friends or family; and

WHEREAS, while some residential and rural neighbors do report problems with bed and breakfast operations, most of these problems reported are the result of the uncontrolled increase in individual transient vacation rentals in residential or rural areas that have no on-site host or operator; and

WHEREAS, these individual transient vacation rentals that operate without an on-site host or operator in residential or rural neighborhoods are causing increased problems, including but not limited to:

1. Increased traffic, on-street parking congestion, and other irritations for neighbors, including occasional noise or other offensive "partying" behavior inconsistent with peaceful residential neighborhoods or rural settings;
2. Overloading of infrastructure designed for lower-density uses;
3. Diminished respect for law and loss of rights when zoning ordinances appear to be widely flouted;
4. Diversion of residential housing stock into either:

(A) Professionally-managed bed and breakfasts (as opposed to owner-occupied bed and breakfasts);

(B) Full-time individual vacation units; or

(C) Second homes that are financed by part-time individual vacation unit use when off-shore owners are gone;

5. Attendant escalation in property values and property taxes because many purchase prices are now based on transient vacation rentals income potential rather than just the rural or residential uses for which they are legally zoned; and
6. A belief not only that a sense of community is lost when the density of transient vacation rentals exceeds some point, but also that entire residential or rural areas may be (or already have been) effectively converted to commercial use with no deliberate policy decision or public review; and

WHEREAS, the situation has reached a level of concern that warrants urgent action; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2005, the Senate concurring, that each county is requested to review and revise its land use laws and regulation and transient vacation rentals permit regulatory systems, so that they:

1. Ensure that bed and breakfast operations with on-site host families are in compliance with all county land use laws and rules;
2. Eliminate individual transient vacation rentals that operate without an on-site host or manager from residential, rural, or agricultural districts;
3. Include a dedicated funding system, based on county bed and breakfast permit fees, that will ensure adequate funding for enforcement of both county land use ordinances and also tax and fee collections for both the State and the county;
4. Consider a limit on the number of bed and breakfast operations that maybe allowed in a residential, rural, or agricultural district or subdivision; and
5. In areas where bed and breakfast operations are permitted, provide real property tax provisions that protect against inflationary effects of land purchases based on bed and breakfast income potential; and

BE IT FURTHER RESOLVED that each county is requested to submit a report of its findings and recommendations, including any proposed legislation, to the Legislature twenty days before the convening of the Regular Session of 2006; and

BE IT FURTHER RESOLVED that the Department of Taxation is requested to not grant any transient accommodation tax licenses to new transient vacation rental owners or operators unless they demonstrate that they are a permitted use under county land use and transient vacation unit ordinances and rules; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Mayor, Council Chairperson, and Planning Director of each county and the Director of Taxation.

Report Title:

Transient Vacation Rentals