An organization representing “30-day” vacation rental operators filed a lawsuit against the city Thursday, arguing that those who rent to a single party every month should be allowed to continue business as they have been doing.
The U.S. District Court lawsuit seeks an injunction to stop the city from enforcing the broad-ranging vacation rental ordinance that took affect Thursday.
Ordinance 19-18 Opens in a new tab makes
it illegal to rent or advertise unpermitted short-term rentals that are outside a
resort district. It also ups the fines for renting or advertising such units to a maximum of $10,000 a day from the previous $1,000 a day.
Short-term rentals are defined as rentals of less than 30 days. They include both whole-home or unhosted
vacation rentals, also known as transient vacation units, and hosted bed-and-
breakfast operations where the operator is on-site when the renter is there. The city stopped issuing exemptions for such rentals in 1989,
although about 1,700 new permits will be allowed beginning in October 2020
under a separate section of the new ordinance.
The Hawaii Vacation Rental Owners Association, also known as the Kokua
Coalition, represents 450-500 operators who rent their units to only one party
every 30 days even if the renters stay for less than
the entire 30 days.
A settlement agreement reached last year between HVROA and the city Opens in a new tab — which was approved by a federal judge — allowed the 30-day rental operations to continue, so long as the tenant has the exclusive right to the unit for the whole period. Opponents, however, called them “fake rental agreements” and
accused 30-day operators of trying to exploit a loophole.
Greg Kugle, attorney for the group, said it only wants its operators to be allowed to continue renting to a single customer each month, regardless of the actual length of stay.
“That’s what’s legal and we’re seeking to preserve that. People have understood what they can and cannot do under the old
version of the Land Use
Ordinance, and I don’t think the new ordinance changes that,” Kugle said.
Kugle said there appears to be a conflict between the new law and the Department of Planning and Permitting’s interpretation of it. While the ordinance states 30-day rentals are OK, DPP’s website devoted to the new vacation rental ordinance suggests they’re not, Kugle said.
He pointed to the FAQ section Opens in a new tab, which states, “Advertising is a new violation, but actually staying in a home for less than 30 days is still a violation. The DPP will continue to monitor for occupancy violations.”
Kugle said that flies in the face of the settlement agreement and that, at the very least, the members of his group should be allowed to continue operations under
a “grandfather” clause. He said DPP’s interpretation bypassed what should have been a standard rule-making process because of the city’s haste to begin enforcement.
“There never has been, nor is there in the new bill,
a requirement that the tenant actually remains fixed in a unit for 30 days,” Kugle said. “That’s pretty
extreme,” he said, adding that the only way to ensure a tenant stays 30 days is to imprison them.
City officials declined to comment on the pending
litigation.
There are other portions of the ordinance that
HVROA is challenging in the lawsuit. Both the U.S. and Hawaii constitutions guarantee certain rights regarding search and seizure, due process, property, privacy and free speech, the lawsuit said. The law also violates federal and state laws pertaining to confidential information, zoning laws and administrative procedures, according to the lawsuit.
At least one other group has threatened to challenge the new ordinance with a lawsuit.
The Waikiki Banyan Association of Apartment Owners says it should be allowed to continue operating its short-term vacation units in part because it’s been operating in the same manner since it was built in 1979 and is surrounded by traditional hotels. The Waikiki Special District plan says the tower complex lies in a mixed use-apartment precinct, which prevents owners from using their units as vacation rentals as those in resort precincts such as the buildings across Kuhio Avenue can.
Also on Thursday a separate group of vacation rental operators and their supporters known as the O‘ahu Short Term Rental Allliance launched a social media campaign “that highlights the dangerous impact of (the new ordinance) and the related fumbled enforcement of the new short-term rental rules.”
“Our elected officials have placed special hotel interests over local communities, over local small businesses and over individual citizens,” said OSTRA spokeswoman Ann Otteman in a press release.
OSTRA, which says it has a membership of more than 400 local residents, has set up a Facebook page called “Hurt by STR Bans” Opens in a new tab where the public can air their gripes about the new ordinance and its impacts on them and the community.
