Honolulu Mayor Rick Blangiardi is scheduled to hold a press conference on short-term vacation rentals on Thursday, and he will have two starkly different choices to deal with one of the thorniest controversies facing local government officials in recent years.

On one hand the mayor can settle the lawsuit that has successfully blocked implementation of the law, which was set to take effect next week. That would mean giving in to people who want to rent out their residential properties to tourists — or anyone else — in blocks of at least 30 days.

On the other hand, Blangiardi can continue a fight that’s raged for years, spurred on by neighborhood groups, hospitality unions, housing advocates and hotel operators fighting against the short-term rentals.

U.S. District Court Judge Derrick Watson set the stage for Blangiardi’s thorny decision last week when Watson granted a preliminary injunction blocking the city from enforcing a new ordinance meant to limit people from renting residential properties to tourists.

Mayor Rick Blangiardi is expected to address how the city will regulate short-term vacation rentals on Oahu following a federal judge’s order enjoining the city from enforcing parts of a recently passed ordinance. David Croxford/Civil Beat/2022

The ordinance prevents people from renting out properties — rooms, guest houses, whole homes and the like — for anything less than 90 days. That’s a dramatic shift from the 30-day minimum in place for decades. And Watson says that new minimum goes too far.

Visitors aren’t the only ones who rent places for more than 30 days but less than 90, Watson wrote. Others include residents who have sold and bought homes, people traveling to Oahu for medical care and military families in transition.

In any case, the judge said, who the person is or how long the person stays at a property matters little, as long as the person is doing what is normally done at a residence, like sleeping, and not things like repairing cars. Zoning laws generally regulate the way land is used, Watson’s order notes, not the duration of the use.

“Whether a use is residential depends much more on what is being done at a residence than for how long,” he wrote.

If the city chooses to proceed with the litigation, the city will likely lose on the merits, Watson indicated.

So will Blangiardi settle? Or will the mayor continue the battle by appealing Watson’s interim decision to the 9th U.S. Circuit Court of Appeals? Or is there another, less obvious, path?

“The Mayor will be holding a press conference this Thursday at 1:30 p.m. in the Mayor’s Conference Room,” Brad Saito, a deputy corporation counsel who is representing the city in the litigation, said in an email. “My understanding is that he will address these issues at that.”

Vacation Rentals Are Boon For Some, Bane For Others

The most recent legal tussle is the latest iteration of a controversy that’s raged for years.

Its origins lie in a series of ordinances adopted in the 1980s, which Honolulu passed pursuant to a state law meant to prevent the islands from being overrun with tourist accommodations. Watson’s order quotes from the legislative history of the state law, which explained that “transient vacation rentals should not be permitted where the lifestyles of the permanent residents will be disrupted in an unreasonable manner.”

Fast forward four decades, and many people say transient vacation rentals are doing just that — thanks to the proliferation of online entities like Airbnb. Although Honolulu’s 1980s-era ordinances generally restricted short-term vacation rentals outside parts of Waikiki and Ko Olina, Oahu had as many as 10,000 operating at any given time by the late 2010s — far more than the roughly 800 previously grandfathered in under 1980s laws.

For many people, this marked a boon. Some tourism executives marveled at how the new accommodations had allowed Oahu’s visitor numbers to soar by millions despite a dearth of new hotel rooms. Home owners and real estate investors enjoyed newfound business opportunities and revenue. And a cottage industry of cleaners and landscapers sprung up serving the vacation properties.

Demonstrators in opposition to Bill 41 hold signs on King Street near Honolulu Hale.
While neighborhood, environmental and labor organizations supported the new City Council ordinance, others such as these demonstrators on King Street near Honolulu Hale in April, opposed the measure. Cory Lum/Civil Beat/2022

But others weren’t happy. Housing advocates said places once rented to working-class residents were now going to tourists, who could pay higher rents. Hotel unions said the vacations rentals were taking jobs from their members. Residents in neighborhoods like Kailua and the North Shore complained that their lives were, in fact, being unreasonably disrupted, as transients took over their neighborhoods.

“We are hard-working, middle-class working families who value the concept of community, the safety of knowing your neighbors, and enjoying the peace of our neighborhoods,” a coalition of neighborhood, environmental groups and labor groups wrote in January, supporting the bill Watson partially enjoined last week.

The proliferation of short-term rentals, they wrote, “has hurt our housing market, making it near impossible to buy a reasonably priced home and next to no long-term rentals in some places. It is turning our island into a land of haves and have nots.”

Cade Watanabe, political director of the hotel workers union Unite HERE, Local 5, who had signed the testimony, did not return requests for comment on Watson’s order. Other members of the coalition who signed the testimony – Donna Wong of Hawaii’s Thousand Friends and Kathleen Pahinui of Save North Shore Neighborhoods – declined to comment.

Gregory Kugle, an attorney for the property owners, said a simple solution for the city is to grandfather in property owners who already have been renting residences for between 30 and 89 days. Watson ruled these owners have a vested right to use the property in this way.

“It has been done in the past by the City and County of Honolulu,” said Kugle, whose client is known as the Hawaii Legal Short-Term Rental Alliance. Kauai and the Big Island also have established such systems, he said.

“It certainly can be done here,” he said. Kugle estimated there are 1,000 or fewer properties that would qualify.

Litigation challenging a bill like this isn’t uncommon, said Mufi Hannemann, a former Honolulu mayor who now runs the Hawaii Lodging and Tourism Association. He suggested Blangiardi continue enforcing provisions of the ordinance outside the scope of Watson’s order.

“It behooves us to allow the legal process to play out before even considering any new legislation or amendments to the current measure,” he said.

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