The full House and Senate will now consider the question of whether to allow each county to determine how — if at all — to regulate short-term vacation rentals on their islands, including the possibility of outlawing them.
A joint House-Senate conference committee Wednesday unanimously voted 10-0 to approve the latest version of Senate Bill 2919.
Gov. Josh Green has promised to sign it if it gets to him.
SB 2919 also attempts to clarify a 1957 law adopted two years before Hawaii
became a state that was used to successfully challenge Honolulu’s efforts intended to clamp down on Oahu vacation rentals by prohibiting rentals between 30 and 189 days.
On Dec. 21, U.S. District Judge Derrick Watson granted the Hawaii Legal Short-Term Rental Alliance a permanent injunction that exempts owners of existing rental homes from a provision in a 2022 city law that sought to increase the minimum rental period for residential properties on Oahu to 89 days from 30 days.
State Sen. Jarrett Keohokalole (D, Kaneohe-Kailua), a lawyer who introduced SB 2919 and chaired the Senate side of Wednesday’s conference committee, said he wanted new, clear language to help protect against future legal challenges to county efforts to further regulate vacation rentals, if the counties so choose.
At the state Capitol on Tuesday, Green told a cheering crowd of Lahaina Strong members that he will sign SB 2919 once it gets to him.
Green sees converting short-term rentals into longer-term housing for residents as the fastest way to fill a shortfall of 50,000 affordable homes across the state.
The gap between affordable housing and vacation rentals — especially on Maui — was exacerbated by the Aug. 8 Maui wildfires that continues to see survivors living in hotels while waiting to move into longer-term housing, especially in West Maui.
Green told the Lahaina Strong members Tuesday that SB 2919 “will have a positive, profound impact on our people. People will be able to get housing again.”
To free up housing for fire survivors, Green previously threatened to ban short-term vacation rentals on Maui — and then more specifically in West Maui — but has since said a ban won’t be necessary.
David Callies, a retired University of Hawaii law school professor who taught courses on land use, property and state and local government, previously said that no ban of its kind had ever been attempted in
Hawaii, but would likely be legal under Green’s emergency powers in the aftermath of the wildfires.
Following Wednesday’s conference committee vote, Callies told the Honolulu Star-Advertiser that legal challenges are likely to follow any county actions to further regulate vacation rentals if SB 2919 becomes law.
“It won’t happen until the counties take advantage of the situation,” he said. “The courts won’t strike it down now.”
In response to possible legal challenges of “we don’t see where you (counties) get the power to regulate short-term rentals,” Callies said that the intent of
SB 2919 is specific:
“It clears the obstacles about any source of power,” he said.
Hawaii has “very weak home rule powers,” Callies said. “We’re one of the weakest home rule states. The theory is that the state is the repository of all police powers.”
Through SB 2919, Callies said, when it comes to enforcement of vacation rentals, the state would make it clear to each county, “‘We grant you that police power.’ That’s really the main issue.”
It’s not surprising that Green signaled his intent to sign SB 2919 into law ahead of its final hurdles in the Legislature, Callies said, because “housing is his signature issue.”
Green, Maui Mayor Richard Bissen and the Maui County Council must feel “pretty intense” pressure to clamp down on vacation rentals, Callies said.
Specifically, he said, “The council and Mayor Bissen are probably under a lot of pressure to abolish them.”
But converting vacation rentals aimed at tourists into long-term housing — especially on Maui — won’t necessarily make them
affordable for working
families, he said.
The Council for Native Hawaiian Advancement has been helping fire survivors find longer-term housing, providing “gap” funding to cover the difference between what landlords are now charging since the fires and what the Federal Emergency Management Agency will pay — and working to develop its own affordable housing on Maui.
Before the fires, survivors told CNHA they were paying a median price of $1,200 a month for a one-bedroom unit and can generally still afford $1,200.
At the same time, landlords are now asking $5,000 a month for a one-bedroom unit and FEMA will provide up to $4,476; people in two-bedroom units were paying about $1,500 a month while owners now want $6,000 a month, with FEMA providing $5,476; and families in three-bedroom units paid a median rent of $1,500 but landlords now want $7,000 a month,
according to CNHA.
So converting vacation rentals into long-term housing does not mean they
suddenly will become
“affordable” for most Maui residents.
“I’m not convinced it will affect the availability of affordable housing,” Callies said.
Ahead of Wednesday’s conference committee vote, the Hawaii Mid- and Short-Term Rental Alliance — which represents more than 35,000 legal short-term rentals across Hawaii — testified in opposition.
In addition to visitors, the alliance said its members provide furnished housing for displaced residents, traveling medical personnel, neighbor island residents receiving medical care on Oahu, newly housed residents who cannot qualify for a long-term lease, military, contractors, interisland labor, students and others including neighbor island legislators in need of housing while working at the state Capitol.
Before the conference committee voted on
SB 2919, the alliance also distributed a list of “negative economic impacts … on the thousands of residents who legally own mid- and short-term rental accommodations statewide” and pay “all required state and county taxes.”
Further regulating short-term rentals, including banning them, would hurt “kupuna who need this rental income for living expenses,” the alliance said.
Possible implications also could result in annual losses of state general excise and transient accommodations taxes totaling nearly $300 million, according to the alliance, and another loss of more than $550 million annually for the counties.
The alliance provides nearly 24,000 local jobs, it said, and changes could lead to annual losses of
$1.2 billion in household
income.
