A bill allowing up to 4,000 new bed-and-breakfast permits to be issued while at the same time strengthening enforcement of residential vacation rentals moved out of the City Council Planning Committee on Monday.
Bill 89 (2018) now goes to the full Council for further review and still needs several more approvals before becoming law.
No permits for vacation rentals outside resort- zoned areas have been approved on Oahu since 1989, but the estimated number of illegal rentals has jumped to what the city estimates as between 8,000 and 10,000 units.
Honolulu mayors and City Councils have struggled with the issue for decades. Supporters of vacation rentals have pressed the city to make more of the units permitted while opponents of the units have demanded stronger enforcement of existing laws.
Mayor Kirk Caldwell submitted the bill as an omnibus approach to the conundrum. In a significant change from that original draft, language allowing more transient vacation units (TVUs) to be permitted in residential areas was removed. B&Bs are vacation rentals of up to 30 days where the property owner is present. TVUs do not have an owner present during the rental period. So under the latest draft, B&B units would be allowed only on properties receiving a homeowner exemption.
Other key components of the bill as advanced Monday:
>> The cap on the number of B&Bs allowed would be 1 percent of the number of dwelling units in each of Oahu’s eight designated development plan areas. The cap would not apply to resort zones or certain apartment apartment districts where they are already allowed without permits.
>> Advertisements for both B&Bs and TVUs would be required to include city registration or nonconforming use certificate numbers. A hosting platform — a person or company that provides booking services for vacation rentals from owners or operators for a fee — would need to “exercise reasonable care” to confirm that the units are legal and are complying with advertising requirements. It would also need to give the city listings of the rentals using its service.
>> New property tax classifications would be established for B&Bs and TVUs.
>> The property owner would need to provide one off-street parking stall for every guest room.
>> An advertisement would be allowed to be used as prima facie evidence that a B&B or TVU is being operated at a listed address.
The committee heard testimony from more than 70 people over more than six hours before Monday’s vote.
Kaimuki resident Georgietta Chock said that since her longtime renters moved to California, she has had a difficult time renting out her two-bedroom first-floor unit “because all interested prospective renters did not qualify or had a bad payment history,” so the unit was left vacant.
After her husband died unexpectedly in August, she spent sleepless nights worried about how she was going to keep her house, she said. “It’s been financially and emotionally rough for me,” Chock said. But she took her grandson’s advice and began listing her unit as a vacation rental. The move provided critically needed income — and the chance to forget about her grief and share the spirit of aloha with people from around the world, she said.
Nanakuli resident Cleo McKeague said she’s a widow raising three boys on a hotel worker’s wage. She said she knows homeless people living on the beach or other camps because they can’t afford rents. “That’s why I want to keep our area a residential zone, not make it into a commercial zone. Because we love our neighbors who know each other.”
The 9th Circuit Court of Appeals last week reaffirmed a Santa Monica, Calif., ordinance that holds hosting platforms responsible for booking short-term rentals that aren’t permitted by the municipality.
Attorneys from both sides of the vacation rental issue in Honolulu disagreed on how the ruling would affect Honolulu’s ability to impose regulations on hosting platforms.
David Louie, an attorney for Airbnb and a onetime Hawaii attorney general, said the city still needs to adhere to the federal Communications Decency Act, which says a hosting platform can’t be held liable for the content of a particular advertisement, and the Stored Communications Act, which limits the types of electronically stored information a government can access.
But attorney Ivan Lui-Kwan, an attorney for Hilton Hawaiian Village and a former city budget director, said both the Santa Monica decision and a U.S. District Court case that validated a similar San Francisco ordinance are relevant to the Honolulu proposals. ”You can’t enforce this activity without data,” Lui-Kwan said.
The committee Monday also moved out Bill 85, which allows a neighbor to seek legal action against a B&B or TVU operator who is violating city laws. It also would make hosting platforms liable for illegal transactions.
Mike Tsai is on leave. His Incidental Lives column will resume when he returns.