LETTER: Condo Owner Objects to Vacation Rental Bills

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

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