March has been a busy month in the Islands. From the hills of Kalihi, the young men and women of Kamehameha Schools Kapalama Campus showcased their angelic voices in front of a live audience for the first time since COVID19 for the internationally broadcasted 103rd Kamehameha Song Contest. Along the storied beaches and picturesque hotels and lodging establishments throughout Hawaii we enjoyed an uptick in occupancy with kama‘aina and visitors enjoying spring break, making memories with friends and family. March was filled with much transition into this Spring season.
As we enter ‘Apelila (April), legislation at our State’s Capitol and throughout our counties focusing on our Government budgets, Green Fees, and permitting structures will continue to be top of mind in our advocacy. We are also working hand in hand with our partners at the American Hotel and Lodging Association to provide clarity around the necessity of and transparency with which Resort Fees are applied. As has been widely covered, the President and Senate have launched an effort through executive action and the introduction of legislation on Capitol Hill to put guardrails on certain “Junk Fees” with “surprise resort fees” being part of that conversation.
While there is no active legislation at the local level throughout Hawaii that would eliminate or curb Resort Fees, this is an important issue for our State. Nationally, only 6% of hotels apply a resort fee, while in Hawaii more than 70% of our properties apply a resort fee for these necessary resort services and amenities. The focus in our advocacy on resort fees will be first in educating stakeholders on the transparency with which hotels apply resort fees (up front and at the point of booking) and on ensuring parity in responsibility for disclosure of resort fees up front to include third party brokers, whose pricing often does not reflect the application of a resort fee that appears prominently when booking direct with a property’s own website.
On a personal note, I would like to extend a warm aloha to all the participants in next month’s Merrie Monarch Competition as well as a big congratulations to Luana Kawelu, President of the Merrie Monarch in celebrating the festival's 60th Anniversary! You can find out what is happening at this year’s Merrie Monarch at the following link: https://www.merriemonarch.com/
Mahalo for your membership with the Hawaii Hotel Alliance.
NEWS AND ACTIONS AROUND THE ISLANDS:
Around the Capitol -
1. HTA Repeal - new “Office of Destination Management”
SB1522 remains on final referral to the House Finance Committee. In its current form, the measure preserves the elimination of HTA and the establishment of the “Office of Destination Management.”
It is important to pause and acknowledge the tremendous work by so many industry and community stakeholders who have contributed to the restructuring of the HTA. For a generation the HTA has been working diligently in targeting quality visitors, enhancing the authentic representation of our host culture across the tourism value chain, funding visitor education and enculturation programs in every Moku, and deploying destination marketing and management programs congruent with kama'aina sentiments about our industry.
In its current version, SB1522 preserves all of these key engagements of the HTA while restructuring and re-prioritizing the State’s approach to destination marketing and management. It is also important to note that significant funding at or above HTA’s original budget request have been included in SB1522, up to $100 Million, and as the saying goes, show me your budget and I’ll show you your priorities. SB1522 must be filed by the House Finance Committee before COB on April 6th to move forward.
2. “Green Fee” moves forward
SB304 - the surviving “Green Fee” bill has advanced to Conference. In short, both chambers (House and Senate) have approved some version of SB304 and the measure can now move forward for mutual consideration by a joint committee of the House and Senate for form, funding, and technical substance.
In its current form, the Green Fee targets the use of natural spaces by non-residents, places collection and enforcement within the Department of Land and Natural Resources, and does not appear to trigger concerns around creating a ‘landing fee.’ Early in the legislative cycle and session HHA and AHLA representatives met with key stakeholders regarding this fee which helped to guide the discussion towards a fee collection that was centralized at the State (no Hotel collection), avoided creating a tax on Kama’aina (no landing fee), and dedicated funding to directly support the natural spaces for which the fee is intended (funds not deposited for general fund use).
Honolulu Hale Happenings
1. Bill 10 hearings continue
Bill 10, which would update the City and County Land Use Ordinance’s (LUO) use regulations, including the master use table, specific use standards, and use definitions. These provisions regulate where and under what circumstances certain land use activities may occur. Currently, the LUO does not define bars, nightclubs, taverns, cabarets, or eating establishments. There are significant proposed changes being proposed to commercial uses, including hotel uses, in the proposed CD2 as well as in additional proposed amendments that CM Kiaaina and her team have worked on with the Department of Planning Permitting staff.
The Planning and the Economy Committee will be focusing on commercial use amendments at its next hearing, scheduled for April 6, 2023. I would encourage you to take a look at the current proposed CD2 and the proposed additional amendments and submit testimony with specific recommendations or to let Chair Kiaʻāina know if there are provisions you particularly support.
While not currently in the proposed amendments, it is anticipated that there will be a discussion by members about the purpose for creating two distinct hotel land uses—minor hotel and major hotel. The proposed CD2 would allow both land uses in the same zoning districts, including the BMX-3 district and there may be discussion about whether amendments should be made with regards to its standards and where each land use should be allowed.
The top of page 3 on the agenda points out the specific pages and sections for commercial uses.
Bill 10 Proposed CD2: https://hnldoc.ehawaii.gov/hnldoc/document-download?id=16843
Kiaaina Proposed Amendments: https://hnldoc.ehawaii.gov/hnldoc/document-download?id=16895
2. Council Mulls “Hotel Inspection” Bill for Waikiki Shoreline
While it has not yet been introduced, the Council is considering a measure to require mandatory inspections by the Department of Planning and Permitting of hotel properties in Waikiki along the shoreline. These inspections are intended to identify the safety of properties in the wake of concerns in other parts of the world where deferred maintenance has led to the erosion of large shoreline properties, in some cases resulting in their collapse. This kind of derelict management of key business and community assets is clearly not something that Hawaii’s Hotel community would ever allow.
To this end, the Council Chair has invited our hotel community to advise the Council on the existing standards of care in place by our shoreline properties in Waikiki in an effort to reinforce the City’s confidence in our industry’s ability to manage our assets without additional interference from the City. HHA has convened a loose working group on this issue, to participate please contact Diane Kadomoto at email@example.com.
3. City Reviews Budget - Considers RPT Tables Tax Relief for Kama‘aina
As part of the Annual ratification of the City’s Budget, Honolulu’s real property tax rate tables are opened up for consideration, discussion, and amendment. On the heels of yet another record increase in assessments, it is unlikely that adjustments to increase the rate charged per $1,000 of assessment will be increased for resort zoned properties. That notwithstanding, there is always a risk that a member will point to the visitor industry to solve a budgetary puka. Accordingly, we are closely monitoring these budget proceedings. There are however a number of proposals designed to reduce RPT tax liability on our kupuna and on long term housing by providing a tax break for kupuna and by removing the increased real property tax on long term housing that currently falls into the “Residential A” tax bracket. These are fantastic ideas that will kokua our constituents, concurrently we will want to ensure that these reductions in revenue do not translate to an increase in taxation on our already heavily taxed industry.
There has been little movement during the last month on the updates to Hawaii County’s TAR bill. Stephanie asked Council Chair Kimball for an update earlier this month, and she said that everything is still being reviewed. The current version of the proposed bill, as well as comments from the community can be found here: https://www.hawaiicountytar.com/
Because of the Planning Commissions timing requirements to take up Council initiated bills (90 days) we may not see this issue move forward until summer, with potential implementation of the new law in early 2024.
2. The Kona-Kohala Chamber of Commerce’s Annual Luncheon
Government Affairs Committee and Board of Directors invited the Hawaii County administration to present during the Chamber’s annual luncheon with the administration at Westin Hapuna on 3/3/23. We took a deeper dive into three key areas that impact everyone on Hawaii Island: 1) permitting and affordable housing; 2) water development and 3) management of Mauna Kea and the astronomy industry.
Good news: the county is making progress on the backlog of permits in the EPIC system. And the Mauna Kea Stewardship Authority is working closely with the University of Hawaii during the next 5 year transition period.
Bad news: the County of Hawaii acknowledged that the state Committee on Water and Resources Management (CWRM) is holding up the development of critical wells in West Hawaii, which is detrimental to all affordable housing and commercial development, in part due to a flawed study by the National Parks Administration which states that our aquifers in West Hawaii are over-used.
3. State Legislature
We had 8 meetings with elected officials on Tourism Day and encouraged them to update First Hawaiian Bank economist Leroy Laney’s Tourism Industry Study from 2009, which looked at the visitor industry’s impacts not just in terms of direct spend and taxes, but also our positive impact on other industries (ag, construction, retail, real estate). Senator Glenn Wakai, vice-chair of the Tourism, Energy and Economic Development Committee, and Representative Natalia Hussey-Burdick, vice-chair of the Tourism Committee are each going to make that request to Carl Bonham at UHERO.
4. SB67 SD1
This bill contains additional fines and enforcement actions for pre-setting of beach equipment. Representative Linda Ichiyama passed an amended bill out of the Water and Land committee on 3/14/23. Ichiyama’s amendment will now make the bill only applicable to Oahu and Maui counties. The bill has been referred to Representative David Tarnas’ Judiciary and Hawaiian Affairs Committee in the House.
1. Council Committees
CM Gabe Johnson – Agriculture, Diversification, Environment, and Public Transportation (ADEPT)
CM Yukilei Sugimura – Budget, Finance, & Economic Development (BFED)
CM Tamara Paltin – Disaster, Resilience, International Affairs, and Planning (DRIP)
CM Keani Rawlins-Fernandez – Efficiency Solutions and Circular Systems (ESCS)
CM Nohelani U’u-Hodgins – Government Relations, Ethics, and Transparency (GREAT)
CM Tasha Kama – Housing & Land Use (HLU)
CM Tom Cook – Water & Infrastructure (WAI)
CM Shane Sinenci – Water Authority, Social Services, and Parks (WASSP)
2. Bill 154 - Cultural Overlay Bill
We are working with CM U’u-Hodgins on a new Cultural Overlay bill. The first meeting is scheduled for 3/25 with the working group.
3. Bill 21 – Lighting Bill
We are working with CM Paltin on Bill 21 – Lighting Bill which goes into effect in July 2025. We will be creating a working group to retract Bill 21 for a few reasons which we will be providing in our final report and recommendation. We will be starting work on this after budget hearings in April.
3. Water Infrastructure
We are working with CM Cook on our water infrastructure and creating a budget to start addressing those needs. Currently, the county’s R1 water system stops about two (2) miles prior to entering Wailea. We are working on creating ways the county can continue to work on the R1 system on the southside. This seems to be a work in progress looking at the cost and the longevity of such a project.
We are also working with CM Cook on storm drainage improvements on the southside as well as our watersheds.
We’ve been working with Chair Lee in exploring ways to better manage tourism and address the community’s issues with tourism, coastal erosion, employee ride sharing, and educating tourists.
Discussions have been made to cut Maui Visitors Bureau’s funding and directing it to another organization that can better facilitate and manage the funding in addressing the community’s pushback towards the visitor industry. Through discussions exploring this option, for FY 2024, it’ll be better to keep the funding with MVB, but we provide the budget items and how the funds should be appropriated.
Chair Lee has expressed a strong desire to expand the current hotel employee shuttle.
We have put together budget proposals to expand the hotel employees’ shuttle, to expand the funding for Maui Nui Marine Resource Council (MNMRC) and Environmental Solutions Maui (ESM) to work with our hotels and resorts along the coastline to reduce their need for synthetic fertilizers, herbicides, pesticides, and irrigation. The project will continue to be conducted by MNMRC in collaboration with ESM, as part of MNMRC’s Reef Friendly Landscaping Project.
The third proposal is the creation of a “Coastal Resilience Project Plan”. The purpose of this plan is to provide the industry the opportunity to sit at the table to create such a plan and to apply for funding to assist in executing the proposed plan. We are still working out the logistics to assure that this is executed appropriately to assist our hotels and resorts in the hotel and resort district zone, as well as certified 501(c)(3) non-profit organizations that own vulnerable coastal property that is open and accessible to the public.