Planning director concerned about ‘Airbnb bill’ passed by Hawaii Legislature

McLean backed versions that would help find unpermitted vacation rentals

Maui County Planning Director Michele McLean expressed concern Friday about the measure dubbed the "Airbnb bill" -- that would allow the state to tax vacation rentals -- that cleared the Legislature on Tuesday after a narrow Senate vote and was sent to Gov. David Ige's desk.

"We are disappointed that earlier versions of these bills did not make it through final passage," she said.

Those measures called for hosting platforms, like Airbnb, to provide the physical location of the vacation rental, she said. That would help the county locate unpermitted operators.

"We understand, and support that the Legislature's focus was on getting the GET (general excise tax) and TAT (transient accommodations tax) revenue through the registration and tax collection process," she said. "We had simply asked that the hosting platforms be required to provide the physical location of the vacation rental with their registration information. 

"That is all we need to enforce."

The measure, Senate Bill 1292, reportedly has the potential to bring in more than $40 million in tax revenue to the state.

Earlier versions of SB 1292, which passed the Senate when Sen. Clarence Nishihara switched his vote, and other measures required the disclosure of the addresses, but they "didn't move forward," McLean said.

State senators "seemed to understand the counties' challenges with enforcing illegal operations," but the majority in the state House "would not support this strong stance," she said. McLean added that the Maui County delegation in House was "responsive, supportive and helpful."

McLean, along with planning directors from Kauai and Honolulu, testified before House and Senate committees and "made a good effort, which the Senate clearly understood, but there are those in the House that apparently still need convincing," she said.

"We are already discussing next session, and our Maui delegation in the House and Senate have been supportive," McLean added.

The vacation rental hosting platforms, who would collect and pay taxes on behalf of short-term vacation rental hosts, had expressed privacy concerns with disclosing owners' information. In fact, Expedia Group, which owns HomeAway.com and VRBO.com, said after the bill passed the Senate that it was concerned about the requirement that platforms submit confidential information about customers to the state.

Knowing the location of vacation rentals goes beyond enforcement, McLean said. There is a health and safety issue if the county is unaware that there are visitors in homes during an emergency, like the Lahaina fire or the Kauai flooding last year.

"Visitors in illegal operations do not know who to call, and we do not know that they are even there and may need help," McLean said. "It is very dangerous."

Maui's permitting process requires an on-site operator or local manager who is available 24/7 and would receive emergency alerts like residents do. And the county knows the location of permitted vacation rentals and could offer help to visitors.

During the Hanalei flood on Kauai in April 2018, visitors did not know where to go, what to do or how to get help, she said Kauai officials noted.

"So it is important for the counties to know where these operations are," McLean said. "Enforcement is for the benefit of our residents and our visitors."

For the operators of the 11,700 permitted vacation rentals on Maui, the measure presents an accounting issue but also evens the playing field with unpermitted operators, said Tom Croly, who operates a vacation rental and is a former board member of the Maui Vacation Rental Association. (He said he does not think the association has taken a position on the measure.)

Vacation rental operators receive customers from dozens of hosting platforms, not just Airbnb, and from their own websites, he explained. The measure could be "confusing for our own accounting" because the hosting platforms will be handling the state excise and hotel taxes that permitted operators already pay on their own, he explained.

Croly noted permitted operators pay the state taxes and "double the property taxes compared to those without permits." The hosting platforms would be collecting those taxes from unpermitted operators.

The bill "is a good thing" because properties will be "properly paying their taxes," he said. "There cannot be anything wrong with that."

Croly believes the governor should sign the bill. "It will be remiss of the governor to not collect the tax," he said.

* Lee Imada can be reached at leeimada@mauinews.com.