Aloha Committee Chair Rawlins-Fernandez and Committee Members,
I am submitting this testimony on behalf of the REALTORS Association of Maui (RAM) and our 1,800+ REALTOR members and affiliates in opposition to BFED-78 and the legislative proposal to establish a vacancy tax. Not only does this proposal seek to abridge basic property rights by instituting a punitive tax structure, but it is also impractical and impossible to administer and enforce.
Property rights are often discussed as a “bundle of rights,” which includes the right of possession, the right of control, the right of enjoyment, the right of exclusion, and the right of disposition. The imposition of a vacancy tax is a direct affront on this “bundle of rights,” because it creates a penalty against a lawful use of property, simply because that use is not precisely as the County Council desires at this time. Property owners have a long recognized right to exclude others from their property, a right to refuse title permanently or temporarily to another if they so choose, a right to use their property in a lawful manner without undue scrutiny or burden imposed on them from government, as well as a right to occupy or not occupy their property at any given time. Imposing a penalty on property owners simply for using their property in a lawful manner that is not precisely as this Council desires is a fundamental violation of property rights, and an exercise in government overreach. What will the Council do next, impose a penalty for having an unoccupied accessory dwelling? Impose a penalty for having an unoccupied room in their homes? Impose a penalty for going on a trip or being hospitalized for too long? If you will impose a penalty on people who aren’t occupying their properties for more than 50 days in a year, the rest of these penalties are plausible and foreseeable from this Council as well.
Aside from the affront on property rights this legislation represents, it is also written in a manner that makes it overly subjective and impossible to practically administer in a reasonable manner. What does it mean that a property “could easily be used for long-residential use?” Does that include properties that need renovations or improvements? To what extent or cost? Who will be responsible for checking that the property is being used for residential purposes for more or less than 50 days? Who will have the burden of proof? What will be permissible evidence of residential use? Has the Council or Department of Finance considered any of these questions? I simply do not see how this law could be implemented and administered in an equitable manner, and I question if equitable enforcement is even the intent of this bill.
This bill seems designed to punish certain property owners for not using their properties precisely in the manner that this Council deems appropriate, and that should not be the role of government. In the period of a year, this Council’s tax policy has shifted from taxation based on actual use, to taxation based on “highest and best use,” to taxation based on the attitude of the Council toward the use. If a residential property is not conducting short term rentals, and is not permitted to conduct short term rentals by zoning or license, the Council should not just arbitrarily categorize them as such for the sake of punishing the property owner. If you want a proliferation of illegal short term rentals, along with a slew of other unintended consequences, pass this bill. However, RAM and our members would strongly prefer if you leave property rights intact and leave property taxes as they are.
Mahalo,
Jason A. Economou
Government Affairs Director
REALTORS Association of Maui
Aloha Committee Chair Rawlins-Fernandez and Committee Members,
I am submitting this testimony on behalf of the REALTORS Association of Maui (RAM) and our 1,800+ REALTOR members and affiliates in opposition to BFED-78 and the legislative proposal to establish a vacancy tax. Not only does this proposal seek to abridge basic property rights by instituting a punitive tax structure, but it is also impractical and impossible to administer and enforce.
Property rights are often discussed as a “bundle of rights,” which includes the right of possession, the right of control, the right of enjoyment, the right of exclusion, and the right of disposition. The imposition of a vacancy tax is a direct affront on this “bundle of rights,” because it creates a penalty against a lawful use of property, simply because that use is not precisely as the County Council desires at this time. Property owners have a long recognized right to exclude others from their property, a right to refuse title permanently or temporarily to another if they so choose, a right to use their property in a lawful manner without undue scrutiny or burden imposed on them from government, as well as a right to occupy or not occupy their property at any given time. Imposing a penalty on property owners simply for using their property in a lawful manner that is not precisely as this Council desires is a fundamental violation of property rights, and an exercise in government overreach. What will the Council do next, impose a penalty for having an unoccupied accessory dwelling? Impose a penalty for having an unoccupied room in their homes? Impose a penalty for going on a trip or being hospitalized for too long? If you will impose a penalty on people who aren’t occupying their properties for more than 50 days in a year, the rest of these penalties are plausible and foreseeable from this Council as well.
Aside from the affront on property rights this legislation represents, it is also written in a manner that makes it overly subjective and impossible to practically administer in a reasonable manner. What does it mean that a property “could easily be used for long-residential use?” Does that include properties that need renovations or improvements? To what extent or cost? Who will be responsible for checking that the property is being used for residential purposes for more or less than 50 days? Who will have the burden of proof? What will be permissible evidence of residential use? Has the Council or Department of Finance considered any of these questions? I simply do not see how this law could be implemented and administered in an equitable manner, and I question if equitable enforcement is even the intent of this bill.
This bill seems designed to punish certain property owners for not using their properties precisely in the manner that this Council deems appropriate, and that should not be the role of government. In the period of a year, this Council’s tax policy has shifted from taxation based on actual use, to taxation based on “highest and best use,” to taxation based on the attitude of the Council toward the use. If a residential property is not conducting short term rentals, and is not permitted to conduct short term rentals by zoning or license, the Council should not just arbitrarily categorize them as such for the sake of punishing the property owner. If you want a proliferation of illegal short term rentals, along with a slew of other unintended consequences, pass this bill. However, RAM and our members would strongly prefer if you leave property rights intact and leave property taxes as they are.
Mahalo,
Jason A. Economou
Government Affairs Director
REALTORS Association of Maui