Thirty years ago, the City and County of Honolulu placed a moratorium on vacation rentals on Oahu. At the time, they allowed 2,400 people to continue renting out their homes. Today, most of those permits have expired and the city has yet to update the rules.
Thankfully, the Honolulu City Council is now finally poised to update regulations for the first time in decades. City leaders have a real opportunity to control the growth of the short-term rental industry and create modern enforcement tools, while avoiding drastic economic harm.
However, some proposals include a complete ban on TVUs, or vacation rentals. This would have a catastrophic effect on Oahu’s tourism economy, including jobs, airlift, and visitor spending, not to mention the families who operate vacation rentals across the island.
In 2017, one in seven travelers to Oahu stayed in an alternative accommodation; this helped generate $2 billion in economic activity and support 12,000 jobs on the island. Local residents have turned to sharing their homes to supplement their income to keep up with the rising cost of living in Hawaii.
While the economic benefits are clear, we also recognize concerns about the impact of short-term rentals on Oahu’s housing supply and character of our neighborhoods.
Legislation pending at the Council, Bill 89, is a step in the right direction. With minor changes, we believe it has the potential to strike a balance between the economic benefits and key community concerns. We believe the Council should strive to adopt a policy that:
>> Establishes a registration system: A simple registration system that requires all operators to register and report their activity would allow the city to better enforce the law and encourage compliance amongst short-term rental operators.
>> Cap the number of B&Bs and TVUs: Place reasonable caps on the number of vacation rentals outside of resort areas at 1.5 percent of the total housing stock. This would cut the number of vacation rentals outside of resort areas by half. Reductions in certain areas of the island would be even more drastic.
For instance, the entire North Shore, including Mokuleia, Wailua, Haleiwa and Sunset Beach would only have 100 TVUs or B&Bs. Koolau Loa, including Hauula, Kaaawa, Laie and Kahuku, would have even fewer units. Allowing a minimal number of B&Bs and TVUs through sensible and balanced policies like this can help control growth, preserve critical housing while at the same time avoiding catastrophic impacts to the economy.
>> Require owners to pay their fair share: Require whole-home vacation rentals in residential areas to pay the same tax rate as hotels and resorts, which is $12.90 per 1,000 square feet. TVUs can afford these increases. Even better, this figure has the potential to generate up to $18 million annually for the city. This revenue can then be used to fund a variety of city services, including affordable housing, rail or other critical matters.
>> Enact sensible rules to address complaints and protect neighbors: Requiring a 24-hour hotline to report complaints and implementing a ban on any operator with three confirmed city violations will set clear expectations and help curb nuisance issues.
These rules would go a long way in protecting the island’s natural resources and acknowledge the concerns of neighborhood residents, while promoting an industry that supports the livelihood of countless local residents and businesses.
A total ban on vacation rentals will only harm the local economy and our residents who rely on this industry to support their families. A total ban is not the answer. Instead, we urge city leaders to find reasonable solutions.
Brynn Rovito is an attorney and vice president of the Oahu Alternative Lodging Association.
