The Hawaii visitor industry has done better than merely weather the economic storms of the last six years, and the people marketing this destination seem to be bullish on its future potential.
So it makes sense that the Legislature is finally grappling with an element whose growth needs far better management: vacation rentals.
Witnessing the relative health of mainland economies, the Hawaii Tourism Authority has raised its target for this year to nearly 8.6 million visitors, even after a slight decline in the first month. More people arriving, driving on the roads, enjoying the beaches — spending money that buoys business.
But more people also means more tax revenue is needed to help the state bear up.
Hawaii can no longer allow a quarter of the industry to conduct business in an underground fashion without adding enough to the coffers that support it. That 25 percent comprises the home-based vacation rentals, also known as transient vacation units, or TVUs.
Their owners should pay the transient accommodation tax, or TAT, just like any other visitor-lodging operation.
The collection of that tax, and the distribution of shares of it to the counties, is the state’s job and the nexus of its responsibility to set some regulatory boundaries, as it does with restaurants and other businesses.
Up to this point, this has been treated as a land-use duty that has been managed with mixed success by the counties. Vacation rentals do present land-use conflicts involving noise and traffic; they are essentially tourist lodgings that are scattered among areas zoned and equipped for regular home life.
Although the City Council is considering another attempt at regulating its growing market of illegal TVUs, elected leaders have been balky about regulating the growing illegal market.
So it’s heartening to see the state stepping up to get a handle on TVUs. House Bill 825, which would establish a system of state licensure, is one part of the strategy that should be advanced for further discussion.
The bill was passed by the House Tourism Committee but shelved by the Consumer Protection panel. Fortunately, last week it was resuscitated.
Although the bill’s prescription has gaps to be filled, Tourism Chairman Rep. Tom Brower said passing some form of it will at least begin the process of rationalizing the vacation rental sector.
Essentially, the bill would establish licensing requirements and enforcement provisions for TVUs under the state Department of Commerce and Consumer Affairs.
Some of the problems were raised in testimony submitted by DCCA Director Catherine Awakuni Colon, who started by citing a law requiring the state auditor to conduct a "sunrise analysis" of any new regulatory scheme proposed.
That may delay the full implementation of any state licensure. However, surely the state could get the ball rolling this session by at least enacting the part of the bill requiring vacation rental advertisements to include any existing permit numbers issued by counties, or some indicator marking them as legitimate.
That would particularly help Oahu, which currently lacks any such enforcement aid, and which could then assess fines on the thousands of currently illegal TVUs in operation.
But what ultimately needs to happen is at least some of the operations need to be given the opportunity to get right with the law. On Oahu it seems logical to start with bed-and-breakfast operations in which the owner- occupant is on the premises to keep an eye on things.
Standards must be set for these establishments, ensuring that enough on-site provisions are made for parking, and that the guest capacity in homes be kept in check.
There is clearly a demand for tourist experiences other than what’s provided in hotels, a demand that has fueled the underground rental market for years.
The HTA study put the statewide total at more than 22,000 home-based lodging units, including condominiums, houses and bed and breakfasts.
This is not a sector that can be ignored any longer. Those who believe that city officials can merely enforce a ban on the books since 1988 have got to admit that the ban has never worked well and certainly doesn’t work now. In the era of the Internet, with websites and smart-phone apps enabling an easy search, people will find a way to get around such a prohibition.
TVU regulation is not an instant fit within the current structure of the DCCA, which licenses professionals, not facilities. But it can and must be done: Managing the tourism industry to the benefit of the public is clearly within the state’s domain.
Even if the counties refine the regulations to suit their own needs, someone needs to tame the Wild West that vacation rentals have produced.
State legislators, you’re nominated.