After hours of testimony and extensive discussion, the Honolulu City Council on Wednesday passed a controversial measure aimed at curbing short-term rentals on Oahu. 

The final version of Bill 41, which was approved 8-1, requires a minimum booking period of 90 days for short-term rentals in most areas of Oahu. The current minimum outside resort areas is 30 days. Short-term rentals would still be allowed in resort areas and in specific areas near resort zones. 

The legislation also imposes new restrictions, fees and fines on short-term rentals; prohibits unregistered rentals from advertising daily rates; requires non-conforming rental units in residential neighborhoods to limit visitors to four adults; and requires an off-street parking spot for each room rented in residential areas. 

Demonstrators in opposition to Bill 41 hold signs on King Street near Honolulu Hale.
Demonstrators protested Bill 41 with signs on King Street near Honolulu Hale on Tuesday. Short-term rental operators have organized against the measure for months. Cory Lum/Civil Beat/2022

Councilmember Andria Tupola was the only member to vote against it. Councilmembers Heidi Tsuneoyshi and Carol Fukunaga both voted yes, but with reservations. The rest of the council voted yes.

“People are just tired,” Council Chair Tommy Waters said. “I’m not necessarily against having people staying in a bed and breakfast or even in (a transient vacation rental) but at some point, we’ve got to say enough.” 

Bill 41 now heads to the desk of Mayor Rick Blangiardi, who is likely to sign it. His administration proposed the original form of the bill.  The ordinance would take effect 180 days after its approval.

The debate around Bill 41 has been part of a broader struggle between the demands of Hawaii’s tourism industry and residents who feel the island is increasingly overrun by tourists. Whereas visitors used to largely stay confined to the resort zone of Waikiki, the proliferation of vacation rentals on online platforms like Airbnb has caused problems in residential areas.

Bill 41 received support from residents who feel short-term rentals are disruptive and have gobbled up housing stock, driving up already high real estate prices. 

Supporters of the bill criticized short-term rental operators as being motivated by greed and suggested they convert their units into long-term housing. 

“Hawaii’s neighborhoods are not for sale,” said resident Mathew Johnson, who testified in support of the bill. “They’re descending upon this place from everywhere.” 

But there was also a mountain of opposition. 

Supporters of the bill feel short-term rentals are disruptive and have gobbled up housing stock, driving up already high real estate prices. Cory Lum/Civil Beat/2021

Many critics have pointed to the passage of Bill 89 in 2019, which would have allowed 1,700 permitted vacation rentals throughout the island. The plan was for Airbnb and Expedia to help the city enforce the new law once the city started issuing new permits.

However, the city never funded seven enforcement positions it created to accompany that law, and the memorandums of understanding with the platforms never took effect because the city didn’t issue those new permits. 

Short-term rental supporters have accused the city of not giving that 2019 law a chance. 

“In failing to implement existing law and the corresponding agreement Expedia Group signed to assist with enforcement, Honolulu County and its residents are being left without a policy solution that will meaningfully address community concerns,” Richard de Sam Lazaro, a spokesman for Expedia, said in a statement. 

Airbnb also opposed the bill. In a letter to the Honolulu City Council, the rental platform said the legislation represents an unconstitutional taking of property rights.

“Bill 41 severely damages, if not effectively destroys, the reasonable, investment-backed expectations of these property owners and may constitute a taking that requires the payment of just compensation to injured property owners,” the company wrote. 

Bill 41’s critics also have argued that the legislation unfairly favors the hotel industry and accused the city’s permitting director, whose wife is a hotel executive, of helping to craft legislation in which he has a conflict of interest.

Department of Planning and Permitting Director Dean Uchida speaks to media during Mayor Blangiardi’s press conference about illegal vacation rentals and how the city will be handling enforcement. August 23, 2021
Department of Planning and Permitting Director Dean Uchida, a proponent of Bill 41, became a target of criticism because of his wife’s employment in the hotel industry. Cory Lum/Civil Beat/2021

Department of Planning and Permitting Director Dean Uchida has denied there was a conflict but at the urging of the Honolulu Ethics Commission, recused himself from involvement in Bil 41 in January. 

“This bill is tainted,” Hawaii Kai resident Natalie Iwasa, a frequent critic of city government, said during oral testimony. “I think the whole bill should be shelved.” 

There were more localized complaints with Bill 41, too. 

Stephanie Brooker testified on Wednesday that she purchased property in Ko Olina for the purpose of renting it for 30-day periods, but the bill would make her unit illegal. 

And The World Surf League of Hawaii said the bill’s 90-day rule could “devastate professional surfing in Hawaii.” 

Surfers generally cannot afford the pricey hotels on Oahu’s North Shore, one of the surfing capitals of the world, the organization’s regional director Robin Erb said in testimony. They need affordable, short-term options, she said. 

“Please do not let Hawaii, the birthplace of surfing, be the place where professional surfing dies,” Erb wrote. 

Council Not Entirely Satisfied With Bill

Several councilmembers, even those who voted for the bill, expressed concerns about the legislation.

Honolulu City Council Member Carol Fukunaga.
Honolulu City Council Member Carol Fukunaga said there should be some allowances for certain kinds of short-term stays. Cory Lum/Civil Beat/2021

Fukunaga was worried about taking away the opportunity of month-to-month rentals for medical patients, traveling health care workers, students, military personnel and others who are lodging on Oahu for reasons other than vacation.

She introduced floor drafts to Bill 41 to carve out exceptions for these groups but withdrew them at Wednesday’s meeting.

The bill does allow for tenants of long-term rentals to covert their leases to month-to-month arrangements.

Councilman Calvin Say observed that the city’s enforcement of the existing short-term rental law seems “weak.” He also previously proposed a floor draft with changes to the bill but abandoned the effort at the meeting and voted in favor.

Tsuneyoshi, who represents the North Shore, raised concerns about the bill’s “punitive” impact on people who bought property in resort areas and will now be required to pay registration fees that hotels and timeshares don’t.

“Many of those property owners are understandably concerned about the equity of that,” Tsuneyoshi said.

The District 2 councilwoman proposed instituting a tax rate for short-term rentals that is lower than the resort rate to make up for that “injustice.”

Chair Tommy Waters noted that it’s unclear how much revenue the bill would cause the city to gain or lose. Zoning Chairman Brandon Elefante, who supported Bill 89 in 2019, offered few comments on Wednesday but voted in favor.

Honolulu City Council member Andria Tupola speaks during council meeting held at Honolulu Hale.
Honolulu City Councilwoman Andria Tupola was the only council member to vote against Bill 41. Cory Lum/Civil Beat/2021

Tupola, whose district covers the areas from Ewa to Waianae, outlined numerous issues she has with the bill.

She said she opposes illegal vacation rentals and welcomes more enforcement against them but said Bill 41 is “not an enforcement bill.” DPP could enforce the existing law now, she said.

Tupola questioned why only two hotels will be allowed to operate short-term rentals mauka of Kuhio Avenue in Waikiki – both properties owned by Aqua-Aston, where the DPP director’s wife works.

The councilwoman said the administration hasn’t adequately communicated with her about the legislation and that the entire formulation of the bill was “very disturbing to me.”

“We’re not supposed to be making laws that are preferential,” Tupola said.

The District 1 councilwoman also echoed Fukunaga’s concern about temporary workers needing affordable places to stay. And she lamented that areas of Ko Olina will no longer be able to rent short term.

“They’re been complying for years and now they’re cut out for no apparent reason,” she said.

Waters acknowledged that he didn’t understand the rationale for everything in the bill either. He said it may be amended later on.

“Vote your conscience,” he told members. “I’m not sure why there is a line drawn here or there, but we can always come back.”

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