The fate of short-term vacation rentals on Oahu is again in the hands of the Honolulu City Council.
The Honolulu Planning Commission on Wednesday forwarded a controversial crackdown on short-term rentals to council members following contentious meetings in August and September. Members voted to advance the measure by a vote of six to one.
The proposal from Mayor Rick Blangiardi’s administration seeks to limit the number of in-home bed-and-breakfasts and transient vacation rentals on the island.
While rentals can currently be booked in Oahu for 30 days or more, the draft legislation seeks to require bookings of at least 180 days, or six months. There would be some exceptions, but the city is still working on the specifics, according to Department of Planning and Permitting Director Dean Uchida.
Fines for violators would increase from up to $10,000 per day to $25,000 per violation per day.
The bill would also prohibit nearly all new short-term rentals in residential areas, regardless of whether the owner lives on the property. They would only be allowed in and around resort areas such as Waikiki, Ko Olina and Kuilima, near the Turtle Bay Resort.
Under the proposal, bed-and-breakfast properties with on-site owners would be taxed at the bed-and-breakfast rate. Whole-home rentals, or transient vacation units, would be taxed at a higher hotel and resort rate. Both would be required to pay general excise and transient accommodations taxes and maintain a minimum of $1 million in commercial general liability insurance at all times, the proposal states.
The bill has drawn support from community members and elected officials who feel short-term rentals have allowed tourists to take over residential areas.
However, the effort has also attracted fierce opposition from short-term rental operators and platforms like Expedia.
Among the opponents’ arguments is that legislation passed in 2019 should be sufficient to reign in illegal rental activity. The 2019 law, Ordinance 19-18, was the result of months of heated meetings full of passionate testimony.
In the end, the law restricted most rentals to resort areas but promised to permit 1,700 new rentals in residential areas. But the Blangiardi administration halted an administrative rules process that would’ve allowed it earlier this year.
“Why are you throwing out the baby with the bath water when everything was in place with Ordinance 19-18 for a good solution?” Waianae residents Thomas and Melissa Dalbert wrote in testimony ahead of Wednesday’s meeting.
Rental operators have also accused the city of working on behalf of corporate hotel interests.
“This is clearly an attempt by the hotel industry to deprive residents of a livelihood and much needed income,” James Lambert wrote.
At Wednesday’s Planning Commission meeting, commissioners discussed ways to amend parts of the bill that have become targets of criticism.
Vice Chair Ken Hayashida suggested that instead of an 180-day minimum for rentals, operators could instead be limited to a certain number of 30-day bookings per year.
Commissioner Aki Marceau questioned how DPP would enforce the 180-day limit. If exceptions are made for students or traveling health care workers, as DPP has suggested, people could still “game the system,” she said. No matter what, enforcement will be challenging, Uchida said.
Commissioner Nate Kinney said he supports the 180-day rule. He said tough action is needed, given that Hawaii’s housing costs have only continued to increase since the 2019 law was passed.
“In the vein of protecting affordable housing for local people, I believe the 180-day requirement is sound, and if it is unworkable, we can go back to it,” he said. “I’m in favor of local families, and I believe more enforcement and a tighter regime are going to help local families.”
Commissioner Art Tolentino also expressed concern about rentals’ impacts on local residents.
“They want their community back,” he said.
Hayashida, however, said he felt the city did a good job with the 2019 law because it created limits on the rental industry while still allowing some tourists to enjoy the “authentic” experience of staying in a residential neighborhood.
“I thought that was a nice balance that we did before,” he said. “This bill seems to be excessive in some places.”
Ultimately, Commissioner Steven Lim was the only member to vote against sending the proposal to the City Council. He said there needs to be more community engagement.
The council is expected to hold several public hearings on the measure, and the Planning Commission urged the city to conduct further outreach to neighborhood boards.
City Council Vice Chair Esther Kiaaina recently told the Civil Beat editorial board that taking action against rentals could help solve local quality-of-life issues.
“I think it’s one of the most important issues that the city and county has faced in decades,” she said. “I’m waiting to see the parameters of it.”
City Council Chair Tommy Waters expressed mixed feelings about it. He’s in favor of taxing rentals at the same rate as hotels and using the revenue to fund DPP enforcement, he told the editorial board. But he doesn’t like the idea of having short-term rentals in areas of Waikiki zoned for apartment living. He also said the 180-day rule could be “a little bit too much.”
“There’s parts that I like about the bill, parts that I don’t like about the bill,” he said.
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