Honolulu Council Adopts Two Approaches To Short-Term Rental Regulations

Jun 17, 2019

Several opponents of short-term rental regulation showed up Monday outside of Honolulu Hale, but at least one counter-protester appeared to support the proposed bills.
Credit Ryan Finnerty / HPR

UPDATED: June 17, 6:36 p.m.

The Honolulu City Council on Monday unanimously approved Bill 89 that would implement stiffer regulations for short-term vacation rentals. A related, but conflicting measure, Bill 85, also passed, although with two fewer votes. The two proposals next go to Mayor Kirk Caldwell for action.

Earlier in the day, approximately 50 protesters lined the sidewalk in front of Honolulu Hale to demonstrate their opposition to two proposed laws. The highly emotional issue has galvanized supporters and opponents for the past year.

The protesters were a mix residents tied in some way to the industry, including gardeners, caretakers, property owners, and realtors.

A single counter-protester walked the line in support of Bills 85 and 89, citing increased traffic, noise, and a lack of available housing for residents in her Kaneohe neighborhood.

 

Today’s votes culminated a year-long effort to regulate vacation rentals on Oahu, which have been growing in number despite being largely banned.

An opponent of bills to regulate short-term rentals being taken up by the City Council expressed his point of view outside of Honolulu Hale Monday.
Credit Ryan Finnerty / HPR

Rentals of less than 30 days are currently permitted in the resort areas of Waikiki, Ko Olina, and Turtle Bay. Approximately 800 permits for properties outside those areas have been issued by the City and County of Honolulu.

In 2018, the city estimated there were 10,000 properties on Oahu being listed as short-term rentals.

Lack of enforcement, and tremendous profit potential, has led to the development of a grey market industry that is now worth in excess of $1 billion annually.

Many local companies have evolved to incorporate vacation rentals into their business. That made curtailing the industry, which by one estimate is worth 7,000 jobs, an economically and politically painful process.

That was reflected in May, when the City Council appeared on the verge of passing the restrictions, but walked them back after hours of angry testimony.

A few changes have been made, like the removal of a provision that would explicitly authorize residents to sue one another for operating unpermitted rentals. However, the core of Bills 85 and 89 appear largely the same as in previous versions.

Bill 89 allows for the owners of approximately 1,700 properties islandwide to rent out individual rooms in those properties, what the city classifies as a bed-and-breakfast.

Only one half of one percent of total homes in each of Oahu’s eight Development Plan Areas would be permitted for short-term rentals.

Under Bill 85, no short-term rentals would be permitted outside of resort areas.

Both proposals would require property owners to register with the City and County of Honolulu and obtain a permit number. That number would then have to be displayed on listing sites like Airbnb and VRBO.

Those companies, which typically take a cut of the owner’s profit, would be required to take down any listing that does not display a city permit number. Booking platforms would also have to submit regular reports to the city detailing which properties are being rented.

Philip Minardi, policy communications director for Expedia Group, which owns listing sites HomeAway and VRBO, told HPR that the company is prepared to comply with those stipulations if city officials meet it halfway.

“As long as we’re living in a world where the vacation rental industry continues to operate on the island, we’re willing to remove listings that do not display a permit number when the city brings them to us.”

For Expedia, that means allowing some whole-home rentals, which the city has dubbed transient vacation units or TVUs, to continue operating on Oahu.

The company had suggested an alternative regulatory plan which would do that, but cap the number of units in each development area based on specific concerns about housing or economic activity in those neighborhoods.

Expedia Group was seeking to delay Monday’s vote to gain traction for its proposal, but the two proposals moved ahead after a full day of testimony.

Limited provisions of both laws would take effect in August, with the full rules becoming enforceable in October 2020.