The city administration has resolved, as it should, to enforce Honolulu laws regulating short-term rentals in a major way that counts: by seeing that the scofflaws pay the fines. Reviewing the status at this point, in which only a small percentage of payments owed has hit city coffers, it’s plain that a lot more work must be done to see that the price for violations is met.
And there is a lot of money at stake, revenue the city certainly could use for these fiscally uncertain times. The city has issued more than $100 million in fines for short-term rentals violations, but less than $2 million has come in.
The primary problem appears to be a logjam in the system set up for handling zoning enforcement disputes, a review process that is not designed to handle the volume of cases. An expansion of what is now a single zoning appeals board, volunteers who meet twice monthly to handle all kinds of zoning disputes, has to be part of the solution.
Fortunately, the city agency handling the short-term rentals issue, the Department of Planning and Permitting (DPP), and the City Council agree that efforts to clear the logjam are essential. Reforms are being eyed among election-year proposals for 2026. It’s not too soon to begin discussing potential fixes to the Honolulu City Charter to keep things from slipping through the cracks.
Vacation rentals persist as a decades-long zoning headache for the city, a management problem that has spread to the neighbor islands as well. Critics of this once-unfettered tourism subsector say that the conversion of homes to bed-and-breakfast or whole-house vacation units has depleted the rental inventory for local residents.
Dawn Takeuchi Apuna, DPP director, said that since 2022 the department has pursued 3,510 requests for investigation of short-term rentals (STRs). Of this total, 2,243 cases led to citations by the city. DPP then issues cease-and-desist orders to violators, who are fined $10,000 per day the violation is unresolved after that.
Many of those fined contest the violation through the city Zoning Board of Appeals, Takeuchi Apuna said — some 45% of the fines are currently uncollectible because those cases are pending. That’s unfortunate, for both the city coffers and for the deterrence message that brisk penalties would send.
The collections issue came to light in January when DPP presented a report to the City Council, said Councilmember Tyler Dos Santos-Tam, chair of the budget committee and vice chair of the zoning committee.
The bulk of collections so far have been handled by DPP staff. The department is partnering with the private Aargon Collection Agency, which was hired in 2023. In lieu of a contract salary, Aargon is authorized to keep 18% of fines that it collects.
This does not appear to be a sufficient incentive, partly because making the actual collection is so difficult. Many of the alleged violators bring their cases to the zoning board, which is plainly overwhelmed. The rental owner can continue earning illegal rental income for years while waiting for their cases to come up.
Curing this problem entirely is impossible — and certainly settlements for far lower fines will be made. Further, there are ways to evade detection that confound some STR enforcement efforts.
However, the city can get a far better return. DPP is exploring having scheduling hearings and other minor motion hearings performed by a hearings officer, rather than by the board itself. And Dos Santos-Tam said he favors breaking the zoning board into at least one more appeals board to hear only vacation-rental cases. Those would be ways to streamline the process and bring in more city revenue.
The Council needs to reopen the broader discussion on vacation rentals and propose an amendment to the Charter Commission that could reform the zoning review. Violators must be deterred, rather than seeing enforcement fines merely as a low-level cost of doing business.
