 and to be on you always. Aloha everyone and welcome to Hawaii together on the Think Check Hawaii Broadcast Network. I'm Kaylee Ikeena, your host and the executive president of the Grassroot Institute of Hawaii, delighted to be with you today. And we're talking about something that's on everyone's heart. That is, how do you make a living in Hawaii? The cost of living is skyrocketing. Our residents are leaving. And there are ordinary folk that want to use their homes in order to rent out a room or two in order to make additional income. Today we have the privilege of talking with a couple, but who are doing this independently of each other to individuals. However, their problem as it is the case with many people who have short-term rentals is that that business is in jeopardy on the island of Oahu and throughout the neighbor island. There's a bill that is in our county council now that could wash short-term rentals. I have with me today and we'll introduce them to you in just a moment. Ed Jones and Peggy Oran are on Oahu. But we're going to talk about what the Honolulu County council members are considering right now. It's a measure called Bill 41. And what that would do basically is limit short-term rentals on Oahu no less than 180 days at a time. That's six months. That's a very long short-term rental and finding tenants for that period of time makes it quite difficult if you're simply trying to let your room out for a very short period of time. Vacation rental owners, Ed Jones and Peggy Oran say the bill, if enacted into law would be devastating for Hawaii's rental agents, vacation rental industry. Now imposing strict restrictions on short-term rentals may hurt Hawaii residents more than it actually will help. We're going to talk about both sides of the issue, but we're going to also discuss better policy approaches with Ed and Peggy that will benefit vacation rental owners on Oahu and all residents across the island. I do want to stress that today we've decided not to go with subject matter experts per se or with corporate representatives, but ordinary folk, people who have homes want to rent out a room or two. And so I want to introduce to you today Ed and Peggy. Ed Jones, Aloha Ed, thanks for joining us today. Aloha, glad to be here. Ed, where do you live? Over in Coloma Valley and my responsibility is probably the simplest case. It is just two rental rooms under the Unpermitted Use that is allowed under Bill 89. We can have up to two rooms with some requirements and basically we have been doing this for around 35 years. My goodness, so you really are a Kama'aina family and I want to welcome Peggy to the program. Peggy Oran. Aloha. Aloha to you Peggy. Peggy, you're also where you located Peggy. I'm located in Hawaii Kai. I have a four bedroom home. It's been in the family for 50 years and I have a small cottage behind the garage where I live and I rent out the whole house four bedrooms. And I've been doing that for five years now. Before that, when I was working on the mainland, I rented it out long term. But now I'm retired and I need the short-term income to be able to live. Now, Peggy, when you say that you need the income in order to live, you're not really exaggerating, are you? I mean, what is the reality of that statement here in Hawaii? I have a small social security check, but it wouldn't pay the taxes and the bills. Well, how much of a difference does it make that you can rent out some of your property? Well, I figure if I went with the long-term rental thing, long-term rental rates are a lot lower than short-term rental rates. If I did, if I followed this bill, okay, and usually I can get people here for a week, if I followed the bill 41, I could make $7,000 in a year, okay? I can't do that. I wouldn't be able to pay my taxes. I wouldn't be able to pay the expenses of running this house, and I'd have to sell it. So what you're talking about really is managing life here in Hawaii, being able to afford the high cost of living. That's right. Okay. Ed, when you're not a corporation or a big company or anything like that, you're just handling a private property. What is your feeling about that? People talk about property rights that owners should have the right to be able to rent out a room or two. What are your thoughts? Yes, the bill 89 really struck a basic, this is our ordinance, 1918, and this is what we're functioning on. It was passed in 2019, so just before COVID, and it provided the infrastructure so that we can operate legally. So we operate under the Unpermitted Use Section, and we comply with things like making sure we have the parking and the room space and access and place to enjoy outside, and very quiet, and quite a cheerful piece of paradise. Well, you know, let's zoom ahead now from bill 89 to this current bill being considered at the county council, bill number 41. Peggy, what is the situation with vacation rentals here on Oahu and the impact of bill 41? Well, if we can only rent twice a year, which is what 180 days means, first of all, the city would not get a cent in transient accommodations taxes, tax. I would file returns for zero, zero, zero month after month after month. So I don't think they've considered that, but if I can only rent to two tenants a year, I might as well just go to an all-long-term rental because I can't charge the $500 a night that I get for renting out those four bedrooms. I can sleep 10 people. You know, it's a bargain for them, really. And if I'm forced to do the two six-month leases, I might as well just say, well, I'm just going to rent it long term. And that would bring me probably $7,000 to $8,000 a month to that particular house, because it sleeps a lot of people. But that's still barely enough to pay the taxes and keep the place running and keep it well repaired and looking good from the street. Ed, would you have anything to add to give us some background on bill 41 and the impact you think it would have? Yes. Bill 41 is an effective ban on renting. This kind of renting is month-to-month renting that we do here. And it is under state law, a 30-day renewal month-to-month renting. So the tenant has the option to renew for the next month, as most of them do. We've had tenants here for them anywhere from just the one month to 10 years. So it provides them with a great deal of flexibility. But the most important thing is this is an implementation of affordable housing. And I hope that that will be considered as Bill 41 continues to get more attention. And we consider the wide range of what we do. I hope that folks will in the City Council and in DPP and in the proponent groups will gather around the table and talk about what we do and the benefit that it has for the community as a whole. We believe that we're part of the solution here when it comes to affordable housing. Not the problem. I'm at a loss because no one is providing me with any kind of evidence at all that renting rooms has a negative impact on the community. Well, what do you say? Because it's often cited by opponents to vacation rentals, short-term vacation rentals, that this uses up our valuable resources of housing and it increases the cost of housing and making it unaffordable to many of our locals. You said you've not seen the data on that. Ed, let me switch to Peggy. Do you have any thoughts on that? Well, what do you say? They have a very interesting and rare opportunity during COVID when the government are shut down vacation rentals for seven months. My house stood empty. I lost $100,000 and had to sell my home near my grandchildren in California and move in behind the garage to cope with it. But it provided us on the upside with an opportunity to look at what happens with the market for potential affordable housing when the number of houses on the market increases. The number of houses that could be affordable rentals did increase. I had some friends that had to bail out and move to the mainland and shut down their businesses. It did increase and you would expect the prices to go down since the number of houses went up, supply and demand. But that didn't happen. The prices went up. I think that's very interesting. I think most affordable rental projects feel good, look good things that politicians put on the table to get elected. Once they get elected, they base reality and it gets too expensive. I think there have been more cancellations of affordable rentals in that department and there have been people buying houses that are otherwise vacation rentals. Mine is not an affordable rental house anyway. Well, thank you, Peggy. Ed, your further thoughts on what you'd say to people who argue that short-term vacation rentals really heat up our affordable housing and then the prices through the roof were locals? Well, with this ban on affordable renting, the results would be that we would be down through rooms to be tenant. We wouldn't be allowed to rent to those tenants. It is really unreasonable to ask someone to up front 90 days or 180 days of rental payment. That's not the affordable housing model. In the case we use Airbnb as our platform, so folks easily go on to Airbnb and they just pay that one month up front. There isn't even a security deposit because we know who they are. We can see the reviews. We don't need a security. Now, I understand that there's a further draft of bill 41, the latest draft. Are you familiar with that? Does this latest draft increase the minimum days allowable to rent, either of you? It does have a proposal for, so this is a draft. It does not mean that the base of 41 is dead. Our discussions are with each one that is being considered. Now we have at least two of them that are being considered right now. The number of days is 90 instead of 180. It is still not compatible with a month-to-month renting model. So dropping the number of days has not been helpful from 180 to 90 as a solution for affordable housing. If either of you could fix bill 41 in any way, what would you do to it? What would you tell council members that they need to do? The first thing I would ask them to do is to do appropriation. The request is there for $1.3 million in a staff estimate. I think we've talked about three of the four revenue streams that they can draw revenue from. TAT, GAT, real property tax, real estate investment. If the next governor signs a bill for real estate investment, those are all revenue streams for enforcement, subsidized affordable housing, to make it possible for more people to find a place to live. Peggy, would you add anything? Yes, those are all great ideas. I think part of the increase in whatever we have to pay to do business should go to an affordable housing fund. So these projects that are proposed can be built. Right now that's not happening. We're sort of a scapegoat, a whipping boy for the politicians in Honolulu. If there's a problem with affordable housing, let's blame the vacation rentals. If there's a problem with the noise in the neighborhood, let's blame the vacation rentals. I have a situation in my neighborhood where I have noise from 4 a.m. to 1 a.m. I have drunks in the middle of the street in the middle of the night throwing trash in my yard. We have naked trespassers invading people's houses. The parking is so bad that rescue vehicles can't get down the street. 9 people died at this place in 2021. And no, Larry Bartley, it isn't a vacation rental. It's a beach park. And guess who put it in place? The city and county of Honolulu. Well, Peggy, we're going to segue from what you've just brought up and take a break. When we come back, I want to ask both of you about some of the concerns that members of the community express regarding short-term vacation rentals and how you would respond to that. But first, we're going to take a one-minute break. This is Kaylee Akeena on the Think Tech Hawaii Broadcast Network. Why are you together with my guests today, Ed Jones and Peggy Lohrund discussing short-term vacation rentals? Don't go away. We'll be right back. Two major crises have descended upon humanity. I'm a change and the coronavirus. They may seem independent of each other. In fact, they are very closely linked. The emergence of COVID-19 on top of climate change is a spiraling crisis. And it's just the beginning. But for 33 years and you have to have a nickname, I get to host on Think Tech Hawaii two shows. Figments, the power of imagination, and figments on reality. The power of imagination introduces you to some of my incredible friends and their life experiences. Astronauts, war heroes, Hollywood writers, you name it. They're on it and you'll be inspired and entertained. In on reality, I'll give you something hard to find, non-political commentary on today's events. That's right, non-political because the vitriol doesn't help folks. So figments, the power of imagination, figments, on reality, both on Think Tech Hawaii. Welcome back. This is Kaylee Iakina. We're on the Think Tech Hawaii Broadcast Network Hawaii together. And my guests today are discussing a very important issue and that is short-term vacation rental. Just before we left, Ed Jones and Peggy Oran gave us some of their experience and their concerns about bill 41. Now I've got a tough question for you. Whenever we turn the news on, there's a segment if short-term vacation rentals is being covered in which people are interviewed saying short-term vacation rentals are a blight on the land. They result in strangers coming into our neighborhoods. They result in noise, pollution, late into the night, partying. They result in trash, overuse of utilities. I could go on and on. And I'm sure that you are confronted with this from time to time. I just want to hear what you both have to say in response to that. We'll start, Peggy. Okay. Of course, I hear all of that stuff. The opponents of vacation rentals like to smear all of us with the same black brush, right? However, most of us want to comply with whatever laws there are. Most of us are law-abiding people, and our aim is to make people happy. I try to make my guests happy. I try to keep my neighbors happy. I've had some neighbors for 35 years that have never lodged a complaint. And I'm not a super host or a premier partner on websites I use to book guests because I refuse to do instant booking. Everybody who walks through my door has been vetted. I know they're not going to be a kegger for a week of noisy, shouting people. The people I have are good neighbors. They're going to be a credit to any neighborhood, wherever they are. And I want them to be good neighbors while they're at my house. All of my parking is off street, and I make sure my people are quiet, and they observe the noise, refuse. They know this up front. I tell them. I said, I don't want noise. And if you're not willing to be quiet, then go someplace else. I'd rather just have it set up front. And I think there are many, most of the vacation rental hosts on a are just like me. I think the problems come from a very small group of people that are giving our opponents a field day as far as things to complain about. The rest of us, I don't think you'd even know my vacation rental is there. Thank you, Peggy. Ed, your thoughts? To add to that, now for our owner-occupied situation. So it is really not hard to accomplish this goal in an owner-occupied for rooms. But I would point out that our tenants were yet to rent to the first tourist in 35 years. Our tenants are from all walks of life in the military, in nursing. They're small business owners themselves. The tenant we have right now is returning from last year to write the second half of her book. It needs a quiet place in paradise to do that. And this is where she can think clearly. Those are the kinds of requirements that we respond to. There's a high degree of skill. But in addition to that, there has also been many, many rentals that have occurred with folks local, with their regular job working in the community. I should talk a little bit about misbehavior, though. The ordinances we're talking about are ones that apply to all of them. So it is important to, when there is a complaint, to call HPD and to support those that come here to carry a badge. In addition to that, I'm understanding that for any of the other kinds of violations that are occurring that are in DPP's jurisdiction, I believe that they should also follow a community policing model. In the latest draft, there is an extensive discussion on a binder that we maintain information about the rental or the benefit of tenants, and also DPP. A regional DPP enforcement officer should be completely aware of the contents of that binder for all the properties in the region. And when that kind of dialogue occurs, I think we'll see that complaint evaporate from the impact community. How about taxes? Do vacation rental home owners pay taxes for the visitors who come? Thank you. You want to take that one? Yes. All right. There are three kinds of taxes that can be levied on a rental home. One is the general excise tax or get. They get it. We don't. And the hat, that is the transient accommodations tax. If you're renting for less than that magical 180 days, that's the only place, incidentally, in state law, where 180 days comes into the law as it is written. Right, Ed? We're talking about that. That's correct. I was referring to the landlord tent code, which allows and defines the parameters on month-to-month rent. And that's where the long-term rental of 180 days starts. When I rented long-term last year in desperation, it was a long-term rental. So I had zero on my tax returns for about a year, but I filed them. Anyway, you've got get, you've got tap, and you've got property taxes. So I pay my property taxes. They've just increased my assessment by 38%. And I have tax taxes when I have short-term guests, and I have get taxes for all of them. There's a question here about the difference between what hotels pay and what a vacation rental owner like me pays. The only difference is the value of the hotel for property tax purposes. They have a higher assessed rate. It's $1390 per $1,000 valuation. Mine as a bed-and-breakfast home would be $650 per $1,000 of valuation. And I think they were revamping this code in the latest iteration of Bill 41. And I think the one thing they want to slip in there is Classification J for bed-and-breakfast homes. You pay more money than you would for a residence. The lowest fee for a residence is $350 per $1,000. And that's for an owner occupied home with an exemption. We all pay the taxes. It's just how much one or the other. In what way beyond the tax revenues that short-term vacation rentals generate, in what way do short-term vacation rentals help the community at large? What are some of the positive features of having this available? One, for example, being that it may not be only tourists who take advantage of them, but locals as well. That's right. Ed? Yeah, so I guess there's a couple of categories to that. There is more that we have to purchase to maintain a vacation rental property. So there's a whole lot of vendors from pest control to a maintenance of the property. I do some of that myself, but there is a lot that goes out to the local businesses in the community. The other category there is monies paid out by renters themselves. Every time they purchase a meal. Costco is probably pretty busy today, and we have a record number of Kobe cases, but we still have a considerable number of people in Costco who are residents here or in a variety of residents that are tenants in our short-term rent. Peggy, do you see any other advantages as well? Yes. First of all, a lot of tourists are vibrant, smart people, and they are interested in the culture here, and I try to educate them as much as I can on that. Sometimes I take them places that they wouldn't have known of otherwise. The average visitor to Oahu spends $201 per day per guest, and I figured out the economic impact of my vacation rental on Oahu's economy for the last normal year we had, which was 2018. I spent $150,000 keeping the place running, and that's paying things to City Mill, where local people work. It's a local company. To the local food stores, all of my workmen, day laborers, yard men, the pest control, the pool man, et cetera, et cetera. They're all local people. Hiko, Oiantelcom, Board of Water supply, all the people that work for those people are benefiting from that $150,000. I paid $5,000 in taxes, all three kinds, and then there's the spending by my guests, and that adds up to, for one little old lady's house, $625,000. You multiply me times $4,000, and you've got in excess of $2 billion a year. Well, Peggy, wipe us out. Thank you very much. I want to thank both of you, Ed and Peggy, for being with us today. It was very insightful to learn from you, your experiences, and to get to know you. Thank you very, very much. And to our listeners and viewers, we'll be back again on Think Tech Hawaii, Hawaii Together. But keep in mind, Bill 41 and the short-term vacation rental industry, it's ordinary people. Take care. Aloha.