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LETTER: Condo Owner Objects to Vacation Rental Bills

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   April 2nd, 2012 · 45 Disqus Comments · Maui Discussion

Maui Now tries to present a broad spectrum of viewpoints. Here is one of several communications we received over the weekend from owners of legal vacation rentals on Maui who object to legislation pending in the state Legislature. These laws, if passed, will require them to hire property management firms instead of self managing them as they presently do.

By Marsha Vaughn, Kihei condo owner

Maui vacation rental

File photo.

It has been two short years since I made a huge decision to invest in a vacation rental condo in Maui.

From the very first month I had tenants booking through VRBO.com. I was so excited to be able to provide for others the wonderful vacation experiences I have had in Maui when I rented from other legal condo owners.

My tenants, so far, have been families who come from Europe, Canada and of course all over the mainland. Many of them have expressed to me personally and in writing in their web reviews what a lovely condo I have and how great it was to deal with me directly. When the tsunami threatened Maui last year, I was on the phone with the tenants before they even knew what was happening and informing them of what to do and where to go.  If they were coming to celebrate a wedding, anniversary or birthday I made sure to have a special gift (wine or flowers) for them on arrival.  I have prided myself on providing fantastic service and sharing my mainlander’s experience of the spirit of aloha.

Having run several small businesses in the past, it was not difficult to get started in the vacation rental-by-owner business.  It is not for everyone, admittedly. But for me, it has been a lot of fun and rewarding, although not in a financial way. I knew when I decided to invest in Maui real estate that it was not the most lucrative investment but I was betting on the fact that I would get such a personal reward from the contact with happy tenants that I wasn’t as concerned with turning a huge profit. My concern was to break even and to be able to vacation there myself a couple of times a year.

To that end, it has been a huge success. This year I broke even.  I love my visits there when I get to redecorate or even stock up with supplies from local stores. I have purposefully shopped locally instead of bringing supplies with me or shopping online to further support the Hawaii economy.

Fast Forward to February

Fast forward to February 2012 when I received a notice from VRBO.com that there was legislature pending in the Hawaii government that could effect my small business. Shocking legislature. Legislature that deemed me a tax cheat by virtue of the fact that I was a non-resident. Legislature that is designed to take away my right to own my own business and manage it myself.

I purposefully bought a condo that was zoned as vacation-rentable. I paid my GE and TAT taxes diligently and usually early each quarter. Now, the Hawaiian legislators had created not one, not two but at least four different bills designed to force me to turn the management of the business I so lovingly created over to licensed property managers or real estate agents.

Why? Because some other people cheat on their taxes. Because the Department of Taxation can’t figure out how to find the people who do. So in some convoluted way, they decided that if they forced non-resident owners, like myself, to hire licensed property managers to manage our condos, somehow they’d catch the tax cheats. I’m not sure how exactly. I can’t imagine if I were cheating on my taxes already that I would suddenly walk into a property manager’s office and say, “Wow, you know, I’ve been cheating on my taxes up ’til now but since they passed this new law, I’m going to hire you to rent out my illegal, unregistered unit.“

At first, alone at my computer, I just cried. Cried in disappointment. Cried at the idea that I would be falsely accused and that what I had found to fill my life with such pleasure was to be taken from me.

Taking Action With Other Vacation Rental Owners

Then I took action.  Many, many other owners received the same notice.  We have shared stories, experiences and of course, our outrage.  We have created petitions, written countless emails and submitted pages of testimony on each bill as it came before the legislation.

First there was HB 1707.  We petitioned.  We testified.  It was deferred.

We celebrated.

Then suddenly, there was SB 2089. Same bill only with even more rights taken away. Again, we mobilized. Even more energetically this time because this one would have forced us out of business for certain.

Two more versions of the same bill appeared. HB 1706 and HB 2078. This was becoming like the kid’s game Whack-A-Mole. The most recent iteration, HB 2078 was passed today with amendments. We are waiting to see what the next mole looks like and where it pops up.

We Are Not Tax Cheats

It has been exhausting, demoralizing and disheartening to have spent the last month working to convince the same group of Hawaiian legislators, headed by Senator Roz Baker that we are not tax cheats, that we are law abiding, smart and professional small business owners who happen to live in another state but who love Hawaii.

What has surfaced in all of this that has been most disturbing to me has been the amount of vitriol and rage that some residents have towards non-residents, just because we are non-residents.

I have read hateful and accusatory postings on websites directed towards non-resident owners solely because we don’t live full time on one of the islands.  This is why today, I sit here, no longer crying, but deeply, deeply disappointed in the lack of heart, compassion, empathy and understanding that has shown up around this issue.  In all good faith, I brought my heart and soul to Maui.

Today I feel like I am continuing to be kicked in the face.

You can visit Hawaii.gov’s Measure Status (login required) for any or all of the following measures: HB1706, HB1707, HB2078 and SB2089.

Marsha Vaughn is a Kihei condo owner, California home owner and Licensed Clinical Social Worker

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  • lek

    I’m sorry for your trouble.  However, people continually buying vacation condos here not only don’t pay the hotel tax (which is what supports the state), they also drive up the cost of local people being able to afford a first HOME here…never mind a second home or vacation rental.  You own more of Maui than I do and my family’s been here for 4 generations.  I d0 not want every condo given a dual zoning for hotel and residential, because I work with visitors all day long and don’t want to go home to them.  Buy a second home here if you can afford the mortgage on your own, but if you thought you would pay for it through vacation rental…I’m sorry, your realtor should have told you that is against the law and has been for decades.

    • Dakine

      @Lek, I dont think you read her letter.  She bought a condo from a commercially zoned condo complex that allows vacation rentals.  She hasnt broken any laws, and has clearly paid her taxes.  Her buying that oceanfront condo has taken zero housing away from local people nor her purchase would have raised the cost of real estate.  You can not equate her situation with those in places like Haiku who have been renting illegally for decades.  Its apples and oranges.  

      • Marshavaughn

         Thank you Dakine…I think you must understand what Lek was saying better than I do.

    • Rrs7132000

      lek, you state that buying a property in Hawaii and utilizing rental income to help pay for it has been “against the law and has been for decades.” This is the first I’ve heard about that; please cite your source.

      After being encouraged by a friend, a true Hawaiian, to invest in a place, we intentionally bought a condo unit zoned as vacation rental. Our island real estate agent knew our intent and directed us to properties zoned for vacation rentals. Obviously our agent has a different understanding of the law than you do. I assumed buying a condo in an area zoned for vacation rentals meant that I could set it up as a vacation rental. Lek, help me if I’m wrong.

      Lek, you also must have me confused for someone who actually is not paying GET, TAT, and State Income tax. Be careful of sweeping generalizations. Stereotyping is prejudicial and makes assumptions that can keep you from getting to the truths. How many of the big hotel/motel/resort chains are local? Are they keeping their corporate profit on island or does it go back to corporate offices in New York, Los Angeles and Tokyo? Are their profits ending up with local businesses or are they being doled out to stockholders and suppliers around the world? Do you see where I’m going with this…

      Many off island owners bought a piece of the islands because their hearts are their even if they physically cannot be there at this time. I  personally encourage guests to shop at local businesses  such as local restaurants, farmer markets, etc… Not only do I pay taxes, but I also encourage guests to buy Hawaiian.

      Are their cheats out there, definitely! Are there as many cheats as the proponents for this bill claim? I’m skeptical. Even the State’s own studies from a few years back discredited the allegation set forth as a basis of this current legislation. If you want to recover lost monies from cheats, go after the cheats and make them pay, don’t force small businesses out of business.

    • Kristin

      Lek, I hope that when and if you choose to buy a house in the united states that you will get a warm welcome wherever you choose to live.  Its amazing to me the local resentment for owning a home or a second home in the United States.  Yes, there are Visitor Desitination Areas that allow for transient vacation rentals.  Lek if you are speaking about illegal rentals that aren’t zoned in VDA then I agree with you wholeheartedly.  Hawaii needs some enforcement.  It is not our fault that we have the ability to invest in real estate in Hawaii.  I would have never personally been able to invest without the death of my mother-in-law.   

    • Marshavaughn

       I actually paid for the condo outright and do not have a mortgage.  I’m not sure what you are saying is against the law, to pay your mortgage by renting your legal vacation rental?  If that is true, I would really, really appreciate seeing the law that cites this so I CAN take it up with the realtor I bought it through.

  • http://www.mauirealestatesearch.com/maui-condos-for-sale-c24174.html Alex

    Marsha, the Realtors Association of Maui is strongly opposing the proposed legislation. Keep spreading the message.

    • Marshavaughn

       Doing the best that I can.  Thanks for your support, Alex.  I am fearful that this bill will resurrect itself several more times before the legislature goes on vacation…

  • JSantos

    This legislation is pure politics, in hopes that those it affects most are not aware to fight it.  

    • Marshavaughn

       Unfortunately, JSantos, this legislature is like taking a chain saw in where a scalpel would do the correct job.  It is going to hurt and effect many, many people who it should not.  Some of them are aware and some are not.  Some of those who it is supposedly designed to effect, it is not going to touch…

  • Anonymous

    I just don’t understand why some people think that because we purchased a condo in an area LEGALLY ZONED FOR VACATION RENTALS and we pay TRIPLE the tax rate of locals, on time and in full which helps support local infrastructure, schools etc. and we bring in countless $ in tourism which also contributes to the local economy and that we are providing jobs to local people and that we are supporting local business that we are some how taking away opportunities from local people!
    ps. We are not rich! We have worked very hard and  scrimped and saved for 37 years while raising 3 great kids to be able to fulfill our dream.

  • bigisland resident

    I live here in Hawaii and  can totally sympathize with Marsha. We should
    be thankful to the people that purchase second homes and vacation
    rental places. Not only do the folks pay more in taxes on their
    property, they also create jobs. You ask how.. lets see, you have
    housekeepers, maintenance personnel, pool cleaners, restaurant staff,
    gift stores, airline jobs, car rentals..   get my drift. Our economy
    would be bust without tourism.. Tax cheats are cheats period. Do not
    classify those that pay and do not pay their taxes just because of where
    they live. I for one appreciate it.. Thank you Marsha and all those
    other law abiding citizens. Not every one in paradise 

    • Marshavaughn

       Thank you Bigisland resident – I grew up in a tourist town so know very well the resentment that locals can have towards tourists.  This is also why I did my best to not be one of those vacationers that comes and takes the place and the people for granted.  Tourists need to be respectful of the places they visit and the people who are of service to them there.

  • John Eckel

    A very well written article by a non resident who loves Hawaii so much she bought a second home in the Aloha state. And what has been her reward? Innuendos that she cheats on taxes and bills submitted to the legislature to take away her rights to rent her property directly to guests. If this is how Hawaii treats people who love Hawaii and invest their money here, there will soon be far less people willing to do so. The end result will be fewer jobs and opportunities for those residens who want them and lower tax revenue to the State.

    • http://www.facebook.com/profile.php?id=564722054 Melonie Cole-Fernandez

       I agree John. Just a little heads up… this IS how Hawaii treats people not born or raised here. It has been going on for generations. Now given, not all from Hawaii who work with visitors are like this, not all who were born here and have a business here are like that. Kind of like the lava that boils underground, yet because things seem okay on the surface, it isn’t paid attention to. Hawaii is THE WORST for business owners of any type. That is even taught to us in our business courses at UHMC.

      • Marshavaughn

         Wow! Melonie that is so depressing…If it is taught at UHMC, why isn’t something being done to change it?  Don’t worry, I’m not expecting you to answer.  I fully understand that generational dysfunction is the most difficult to effect any change in.  Thanks for your candid opinion!

  • Ada Eschen

    Marsha, Thank you for submitting this article.  It represents my feelings exactly, as I also went thru the same roller coaster of emotions as these bills progressed thru the system.  What a relief it was when I discovered that I was not alone and there were hundreds of others that were feeling the same way and talking about it and taking action.  We all love Hawaii and most of us do not profit from our investments, and if we do show positive numbers, we return that by upgrading our units so they will continue to be enjoyed by our guests.  This is an act of love and passion, and not just a business prospect.  We do not look only to improve the bottom line, but to improve the experience.  Being wrongfully accused and made out to be the bad guy, was a betrayal I did not expect.

  • konagirl

    Marsha, thanks for your letter. I have been following thse bills and writing to the legislature as well. I have continuously pointed out that passing these laws isn’t going to incent the non-tax paying TVR owners to start paying taxes, all it does is harm the tax-abiding non-resident owner as well as the wonderful State of Hawaii. These bills may cause many to sell their property in an already depressed real estate market that is finally starting to (maybe?) recover, and cut off income to those we pay for services and goods. In addition, an owner could choose to make their property a long-term rental, thus eliminating the TA taxes that are currently paid, reducing the TA cofferss for the State of Hawaii.

    • Marshavaughn

       Yes, konagirl, I’ve spent some long, late nights trying to decide if I should just sell and walk away or rent long term…Still waiting for the outcome before I decide.

      • Hawaiiansupaman

        Aloha Marsha,  The legislature will probably create bills like these from entities that are in competition with you.  These entities have a lot of political power because they contribute to the politicians’ campaign. Who would benifit from putting you out of business?  Half the battle is knowing who is really behind this and why.  

        • Marshavaughn

           This is something I have been suspicious of but very difficult to know the truth when you are an ocean away…

        • Dakine

          Very true.  You dont have to look far to find where the influence comes from.  

  • Quickly24

    it is not all about taxes.  actually ,when a pipe would fail and flood the condo, would they e-mail or call you?  if you were available, would you know locally who could fix it.  that is why you need a agent to represent you 24/7 and pay them a fee.  

    • Bumpy

      Im pretty sure condo owners are resourceful enough to figure out how to resolve a crises.  You dont need an agent 24/7 in the rare event of a flood.  Anyone can call a plumber out of the yellow pages.  And in your example of a condo, the condo management would notify the owners in any event.  It would be no different than if you lived there and went on a 2week vacation.  Should you have to hire an agent while you are on vacation?  If not, who is going to let you know if your condo sprung a leak while you are away?  They would probably turn off your water at the outside shut off before you even got notice.  

      • Lisa Mitchell

        Bumpy….you are spot on.  It doesn’t matter if you live 40 or 4,000 miles away from a unit you own and rent out.  You  make sure you have resources for any situation that comes up.  That’s just something that a responsible property owner does.

    • Rrs7132000

      Quickly24, I am not objecting to have a designated on island emergency contact person. My objection is that it seems the promoters of this bill were thinking that only designated real estate personnel are suited to do this work.  We currently have an arrangement with a local who is paid a generous hourly rate “as needed” should emergent situations arise. This person acts as out “agent” when needed, but I think the intent of “agent” in these bills was originally  to be a professional real estate “agent” so that specific group would benefit financially from the passing of the bill. I have not seen the current amendments to the bills. I am not opposed to the on island representative but do oppose the idea of the representative having to be a professional real estate agent or property manager.

      • Marshavaughn

         My understanding, as I think it was posted above, is that many real estate agents did NOT want this responsibility.  Too much of a headache with too little pay off.  Can’t blame them.  The property management firms, however, were very eager for this to pass.  One, in fact, sent out an email crowing about how they were now going to “get all the money…”

    • Marshavaughn

       Actually, yes.  I would be called 24/7.  I sleep with my cell phone by my bed.  And yes, I DO have a list of numbers of people to call in emergencies like that.  I can likely find someone more quickly than an agent who may NOT sleep with their phone by the bed…

  • Mauigo

    lek
    In your post you stated, “I work with visitors all day long and don’t want to go home to them.”  Since your employment is dependent upon visitors and tourism, then you should reconsider your statements and show a little more “Aloha” to the visitors and vacation rental property owners who provide your livelihood and have fed the 4 generations of your family.  You are free to live where you want, however do not begrudge them the opportunity to legally own and provide accommodations for themselves or their guests, who bring billions of dollars to the islands from the mainland.

  • ecattlin

    I think that you shouldn’t kick a gift horse in the mouth.   If you’ve been here for four generations and still can’t afford a home, what do you do?  Did you go to college, do you have a marketable skill?  Have a savings plan regardless. It’s tourism that supports the islands, and without it, where would the community be?  Don’t hate success, look in the mirror and find your own path to success, but don’t stomp on a successful entrepreneur.  It’s people like Marsha Vaugn that have made Hawaii a destination that’s attainable for all.  By driving up fees, and alienating mainlanders you will kill Hawaiian tourism.

  • Marshavaughn

    Update on this legislature. The newest version of one of the bills no longer required that I hire a licensed real estate agent or property manager.  I can just hire a local contact person however ONLY if that person does not provide the same service to anyone else.  So all of you locals who are housekeepers and maintenance people for condo owners, if you are providing the service of being their local contact, you can only do that for ONE person if this passes.  Just thought you’d like to know….

    • Mauigo

      As if this version makes any sense???  Every off island owner is already required to have a designated person on island to address problems, emergencies, etc.  It is time for these proposals to die on the vine.  They solve nothing and will only hurt tourism and the Hawaii real estate economy.

    • http://www.facebook.com/profile.php?id=564722054 Melonie Cole-Fernandez

       Oh this just caused a whole bunch of single owner housekeepers/maintenance people a massive hit in their income. Example… The Whaler on Ka’anapali Beach… there are about 5-10 single owner businesses that are contacts, cleaners, etc… for  several condos. Some have as many as 20 or more condos. Now THAT affects them and the local businesses/economy hugely.

  • Anonymous

    I have a lot of sympathy for Ms Vaughn and others like her in this situation but I think we need to consider the fact that they, unfortunately, don’t represent enough of a percentage of owners that the shenanigans of the rest can continue to go unaddressed.  The reality is that the compliance rate cries out for action, not to punish Ms Vaughn and others like her but to keep her and everyone else’s taxes as low as possible by making certain that everyone else pays their share as well.

    As a Social Worker she surely understands that society is often inconvenienced by mandates which exist to make it difficult for people to escape their responsibilities.

    • Marshavaughn

       mcbob – It is my understanding that there are already ample laws on the books to catch tax fraud but the enforcement of the existing laws is non-existent.  The answer is not to make MORE possibly unenforceable laws.  There are still SO many ways for people to cheat on their taxes if they want to and SO many people willing to turn a blind eye to it.  I agree heartily that the compliance rate cries out for action but the action that ONLY targets those who are law-abiding is not an effective action, imho.

      • Anonymous

        Marshavaughn – You have to agree that you haven’t exactly described a unique situation.  We have countless laws and rules that were made for the purpose of curtailing noncompliance with other laws.  

        I agree completely that it would be better if they just went after the cheats but that approach seems to have fallen out of favor for whatever reason.  Rather than taking action when obnoxious drunks gather on a beach they ban alcohol at the beach.  Everyone who peacefully enjoys watching the sunset with a glass of wine pays for the misdeeds of a few.  The same thing is taking place with dogs on beaches.  People who don’t pick up after their dog don’t get ticketed, nor do those who won’t leash theirs.  Instead there’s a call to ban dogs from beaches.  

        I’m not excusing any of this.  These are just my observations.

        • Marshavaughn

           Because that is how people in power want it to work right now, doesn’t mean we have to succumb to being legislated out of our rights.  And laws only work if they are enforced equally.  Otherwise, they are just arbitrary and usually discriminatory.  Are there now going to be dog police on every beach?

  • Tired and Discouraged

    We also have a second home on Maui – a condo – and live
    someplace else. We started with a local property management company and in
    stark contrast to most of the 328 pages of written testimony submitted about HB
    2078, do not have any horror stories to share about the quality of service the local
    property manager provided. I can tell you that we can’t make ends meet with a property
    manager and their fees in the loop. Our management company only charged 25
    percent, others charge as much as 50 percent of the booking fees. We now manage
    our own unit, have fabulous reviews and have finally broken even after seven
    years of building up a clientele.

    HB 2078 as of last Tuesday contained an
    exemption on the local management company requirement for those who register
    with the Department of Revenue and pay their taxes. This exemption is now gone
    in the current version. Additionally, the bill contains the following language:
    “For purposes
    of this section, the agent shall
    be an individual who, for compensation or valuable consideration, is employed as an employee by a single Owner
    and has the responsibility to manage or care for the transient accommodation left
    in the individual’s trust.” This would appear to
    eliminate management companies entirely and only allow one manager  to manage one property. It would appear that
    this could be considered constraint of trade and should be opposed everybody –
    nobody wins with this wording.

     

    I
    agree completely with the thought that Hawaiian Government has very little Aloha   for nonresident owners. Most people who live
    in Hawaii probably don’t realize that just the mere fact that I chose to try
    and rent my property to make ends meet meant my property taxes increased by
    almost double. My condo in 2005 had taxes of a little over $3,000 per year. It
    went to $5800 as soon as I started renting and paying my accommodations tax and
    sales tax. It increased to almost $7,000 per year at one point – for an 1100 sf
    condo with T1-11 siding 30+ years old. It would appear I pay a lot more in
    taxes because I rent my property. Does this sound like discrimination to you? I
    don’t know of another single place in the Country that has these kinds of
    taxation  practices. Hawaii only has one
    real industry – tourism – and it appears they do very little to help or encourage
    the independent rental property owner to be successful. Perhaps we should all
    dump our rental properties on the market, have them bought at a lower price by
    new owners who don’t rent the property out, and buy property in Mexico. At
    least there nobody is surprised when somebody cuts your throat.

     

    There
    are supposedly 1600 – 1700 illegal T.V. Rentals on Maui that they know about.
    Many violate zoning and covenants. What percentage do you think are owned by
    non-residents? I’d bet anybody dinner at Mama’s Fish House that if they
    checked, a majority of those are going to be owned locally – by Hawaii
    residents and businesses – that don’t pay taxes – because they don’t want to
    draw official attention to themselves.

  • Diane

    Aloha Marsha
    Our story is very similar to yours.  After traveling to Hawaii for 15 years, we found a hotel condo 23 months ago that we thought we could afford/invest and own a piece of paradise.  While we had a 35% down payment, we found that no Hawaiian Banks would give a mortgage on condo/hotels at that time.  We acquired an equity loan on our home on the mainland which was totally paid for to make this purchase possible.  Maintenance fees, leasehold fees, and mortgage payments after two years  which we feel we has been fairly successful far as rentals, we are yet to be at a break even status. It seems to us that some lawmakers may be unaware  of what a condo owner spends and contributes to the economy of Hawaii.  We make additional trips to the island for maintenance, improvements, and a little enjoyment while spending our money on the island.  We are not taking any money out of Hawaii, all the money that our condo has generated to date has stayed in Hawaii.  The first thing we did when we purchased our condo was to apply for Hawaii State ID.  We have paid all TAT and GE taxes quarterly and high non-resident property taxes.  When we heard of this bill requiring us to have a property manager, our first thought was to put our condo up for sale.  We had a remodel scheduled for May, which was postponed because of this bill.  I’m sure we will not be doing anything until this issue is finally settled.

    Diane

    • Marshavaughn

       Yes, I’m in a very similar wait-and-see mode myself.  Had a summer trip planned to do some work on the condo and now am considering carefully whether or not to sell….VERY sad.

    • lucky13

      What I fear is that the legislators could care less if property owners are forced to sell. It appears that Maui especially is in a position to benefit from increased foreign tourism, and with the expansion of their airport and increased air routes directly to the islands predicted, forcing off-island owners to sell and force down the price of available rental units would work in favor of the big real estate property management firms to acquire new units at a bargain price. How convenient for them!

  • Tired and Discouraged

    Wonder what Rob Dalton thinks of the language that now says a resident property manager must be an individual (not a company) and can only manage one property. Don’t look now, but I think he’s out of business, courtesy of the Hawaiian Legislature if this gets passed.

    If it gets through we will have to get together and take it to court in class action suit.

  • Dmsfremont55

    To Tired and Discouraged:

    On the contrary, Rob Dalton will get more business or else people will stop using their properties as vacation rentals. If they choose to sell, he might get some listings. The law says the local contact can only service one owner, but reality is that those folks service many nonresident owners, especially at places like The Whaler in Kaanapali, Maui. To follow the law owners will have to hire someone else like a professional property manager.

    I think a class action suit is inevitable. Then after much expense and heartache all around, the law will be declared unconstitutional. Hawaii’s aloha reputation will be tarnished, property values will be depressed and some locals, like KIK in Kailua, will be really happy they have driven away tourists.

    • JSantos

      If companies are NOT allowed to be the emergency contact, and only individuals, how does this increase his business.  He is actually excluded from doing what he petitioned to do.

  • D Smith

    To JSantos:

    The bill states, “A designated agent UNDER THIS SECTION shall not perform the duties of a real
    estate broker or real estate salesperson without being licensed pursuant to
    chapter 467.”

    This wording is clarifying the difference between a licensed professional real estate manager and a designated local contact, who is restricted and limited to working for one owner. Professional managers are licensed and can work for several owners. The purpose of the bill is not to hurt the business of professional real estate property managers.

    Another thought–If property values plummet due to this bad law, imagine how many units could be picked up cheaply by locals because nonresident owners are dumping.