Oct. 6, 2026, 3:30 p.m.
Hawaii County Building
To: Hawaiʻi County Council Committee on Finance
Matt Kaneali`I-Kleinfelder, Chair
James E. Hustace, Vice Chair
From: Grassroot Institute of Hawaii
Jonathan Helton, Policy Analyst
RE: Bill 197 (2026) — RELATING TO A TEMPORARY REAL PROPERTY TAX AMNESTY FOR CERTAIN HOSTED TRANSIENT VACATION RENTALS
Aloha Chair Kaneali`I-Kleinfelder, Vice Chair Hustace and other members of the Committee,
The Grassroot Institute of Hawaii supports Bill 197 (2026), which would require the county finance director to waive any rollback taxes imposed on homeowners who are found to be operating unpermitted short-term rentals on their property.
This bill could mean the difference between a homeowner keeping their house or selling and moving away.
Our conversations with county homeowners have revealed that many are unaware that the county has regulations on short-term rentals hosted at someone’s primary residence.
These regulations do not allow homeowners in this situation to receive the tax benefits associated with the homeowner class. Instead, they are supposed to be assessed and taxed as a part of the residential tax class, which carries a much higher tax rate.
For example, the owners of a single-family home in Kona valued at $1 million in the homeowner class would face a tax bill of $4,887.50. If that property were assessed and taxed in the residential class, its owners would face a tax bill of $11,100 — a more than 100% difference.[1]
Tax rollbacks can extend as far back as three years, so a property owner could be forced to pay more than $15,000 in additional taxes if caught hosting an unpermitted short-term rental at their residence. This is an expense that few Hawaiʻi County households can afford.
The bill would require the finance director to waive these additional taxes if the homeowner ceased operating the unpermitted rental or if they applied to operate it under the county’s rules.
Grassroot does offer two amendments to strengthen the bill’s protection for homeowners.
First, the Committee should impose a sunset date of Dec. 31, 2027, instead of opening this relief valve for just the remainder of 2026.
Second, the Committee should strike Section 19-(b) of the bill, which states in part: “This section does not apply to any owner who, prior to the effective date of this ordinance, was subject to property tax adjustments, rollback taxes, penalties, or interest on the basis of a violation.”
Thank you for the opportunity to testify.
Jonathan Helton
Policy Analyst
Grassroot Institute of Hawaii
1050 Bishop St. #508 | Honolulu, HI 96813 | 808-864-1776 | info@grassrootinstitute.org
[1] “Real Property Tax Rates For Tax Year July 1, 2026 To June 30, 2027,” Real Property Assessment Division of the Honolulu Department of Budget and Fiscal Services, July 2026.
