The Honolulu Department of Permitting and Planning is working on changing the short-term rental ordinance to crack down on illegal vacation rentals.

Hawaii Tourism Authority Chief Executive Officer John De Fries said that although tourism in Hawaii is increasing, hotel room numbers are not.

“The growth from 8 million to 10 million visitors came without one net additional hotel room being available. So where did those 2 million go?” he asked on the Honolulu Star-Advertiser’s Spotlight Hawaii.

“In some cases, they ended up in illegal vacation rentals. And I’m encouraged by the diligence with which each of our county mayors now sees that as part of the solution to take that illegal inventory away.”

De Fries applauded Mayor Rick Blangiardi and DPP’s move to adjust the short-term rental ordinance.

“Getting that inventory out of the system is going to lead to a reduction in visitor accommodations being available,” he said.

While the city was not yet ready to share specifics on what changes would occur, a DPP spokesperson said that a draft is expected to be completed in the coming weeks.

Since 2019, the department has been trying to develop a plan to distribute bed-and-breakfast permits to about 1,700 Oahu homeowners. In a draft of the rules, DPP proposed using a lottery system to select the homeowners who could get B&B permits.

The new rules were supposed to take effect in August. However, after an April public hearing on the rules, where many community members spoke against the proposal, DPP decided to suspend the program.

“After consulting with its attorneys, DPP determined that some sections in the ordinance would create bigger problems for the city, as well as (Short Term Rental) owners,” the department said in an April statement.

“The adoption of the administrative rules and start of the registration process are on hold until further notice.”

The main issues people testified against were the 1,000-foot separation requirement between B&Bs, the lack of enforcement on illegal vacation rentals and a lack of trust in a fair lottery process.

The public hearing on the new rules was one week after five DPP employees were charged by the U.S. attorney with allegedly soliciting thousands of dollars in bribes for giving favored treatment to building projects — a practice suspected for years.

One bill to help reform DPP is already making its way through the City Council. Bill 17, introduced by Council Chairman Tommy Waters, would codify how the DPP should respond in blatant violations of the housing code, such as monster homes.

Under Bill 17, if a property owner has outstanding fines over $150,000 or has failed to pay fines for five years, the building official must attach the civil fines to fees such as vehicle registration, liquor licenses or driver’s license renewal and place a lien on the property, which would allow the city to enter the foreclosure process. Currently, the DPP has discretion on fines.

The measure is on second reading and expected to be heard at a full Council meeting. The next one is scheduled for Aug. 11.