It’s finally come down to the wire, and residents will see on Monday whether the City Council will summon the courage to vote for placing some serious and necessary constraints on Oahu’s uncontrolled short-term rental market, even in the midst of howls of protest.
At long last, and after numerous false starts, two bills will come up for final votes, laying out stricter regulations for the vacation-rentals industry.
Bill 89 takes the most reasonable approach, laying down requirements, penalties and a means of legalizing some new bed-and- breakfast rentals. It strikes a firm but fair balance, making a measured allowance for legalizing B&Bs in which the host is on premises and includes strict enforcement provisions.
Bill 85 makes no allowance for any more legal vacation rentals and focuses entirely on enforcement against the illegal units. This is unrealistic, considering both the scale of the problem and the fact that a limited number of the rentals can be a desirable element of Oahu’s tourism sector.
Among those watching the Council most intently should be Gov. David Ige. While the Council has dithered on vacation-rentals regulation for years, Ige has held off on approving a system for collecting state taxes through online rental platforms such as Airbnb. Should the Council pass Bill 89, the governor very well may consider signing the current proposal passed by lawmakers, Senate Bill 1292.
Ultimately, nobody is ever entirely happy with any compromise. But the unhappiest surely are the businesses that own the rentals, work on their upkeep or otherwise cater to the guests. They are confronting the significant possibility of losing much of their income from rentals.
The allowable B&B count would be smaller than now exists, but not unreasonably so. In resort zones, Waikiki’s resort mixed-use district, low- and medium-density apartment zones, hosted B&Bs would be allowed without limit.
Beyond that, though, Bill 89 would authorize B&B permits to only half of 1% of units in each of the island’s eight sustainable communities plan areas; that amounts to roughly 1,715 in residential zones, Oahu-wide.
All must be hosted: The bill would not authorize any more transient vacation units (TVUs), also known as whole-home rentals without a host on premises. And TVUs comprise the majority of the illegal rentals that have proliferated in single-family neighborhoods since, in 1989, the City Council stopped issuing nonconforming-use certificates for them.
Closing the door on TVUs, at least at this initial stage, is essential to one key objective: It would return rentals for tenants on Oahu, which has a persistent housing shortage.
Some of these TVU homes are investment properties owned by individuals or corporations based elsewhere. In some areas, they are overtaking entire neighborhoods.
There is room to be sympathetic to those who have built businesses on what’s been a surging vacation- rental sector. Ratcheting back the industry to a manageable level will cause serious disruption for them.
However, many might be able to adapt their homes to host guests in the B&B model. And in any case, nobody had the right to expect a livelihood based on an activity that is illegal — not to put too fine a point on it, but they all knew it to be illegal.
Here are a few of the reasonable revisions the Council Zoning, Planning and Housing Committee added to Bill 89:
>> Importantly, the final draft of the bill now makes it illegal for an online platform to provide booking services to unpermitted units.
The platform must submit monthly reports to the Department of Permitting and Planning (DPP), disclosing details such as the transient accommodations tax number of the owner or operator. SB 1292 failed to include accountability to the online sites.
>> Civil fines are now $1,000 for a first violation, if paid by a stated deadline; those who miss the deadline will be further charged $5,000 per day. Recurring violations draw $10,000 before the deadline, and $10,000 daily if that’s missed.
Stiff fines will add teeth to enforcement, as illegal hosts will be deterred. Informants will be more likely to turn them in, with the expectation they will stop their activity quickly.
>> A B&B must have no more than two guest rooms; detached dwellings used as B&Bs must be occupied by a family.
The effectiveness of the new regulation will depend on enforcement, of course. DPP must come down hard on violators from the start, or there will be no end of scofflaws trying to fly under the radar. This is particularly true for those that will try to rent with the legal minimum term of 30 days on the contract but actually rent to multiple guests in that period.
This regulation regime is a work in progress. It’s unclear now whether limits will need adjustment, or what strategies for enforcement will prove most effective.
But if Honolulu cares about maintaining its sense of place and local community, the Wild West of vacation rentals must be reined in. Let’s start now.