The state of Hawaii — Gov. David Ige, specifically — seems on the brink of a deal with the online vacation-rental broker Airbnb. The terms of that pact either could forge a partnership for a balanced approach to this tourism sector, or legitimize an industry that, to a large extent, has operated outside the law.
It’s unclear how those terms are written now, because they are part of a private agreement. The details can’t be disclosed, the Ige administration contends, due to privacy laws.
That in itself is unacceptable. This deal will have real impact on efforts to control vacation rentals, throwing county regulation of residential zones into disarray. It demands more disclosure.
A spokesperson for Ige said
Friday that the governor has not changed his position on the issue: The state does not want an agreement that allows illegal vacation rentals. The final accord must fulfill that intent.
On Monday, company executives circulated a memo to lawmakers describing the “voluntary collection agreement” it has with other jurisdictions, and is seeking here.
The state “would have access to information that allows it to audit the taxes we remit to ensure every dollar is accounted for,” Matt Middlebrook, Airbnb Hawaii public policy director, wrote in a commentary that appeared Wednesday in the Honolulu Star-Advertiser.
This means the state would need to conduct an audit to confirm that taxes are paid accurately. On that score, the deal may resemble one struck with Hillsborough County, the area including Tampa, Fla.
The principal worry comes in the company’s assertion that the agreement would not allow the state to share with the counties any of the properties’ identifying data because state law bars the sharing of taxpayer information.
But that ignores the fact that some data — address of the property, for example — is submitted to an online broker independently of its tax collection function. A rental “host,” as they’re called, submits that to advertise its availability to rent. And finding out which properties are being rented for the short term is essential to ensuring that zoning laws are upheld.
That’s why some critics of Airbnb’s position counter that there would be nothing to prevent the state from mandating, as a term of the agreement, that the address be released. Among them is Ed Case, former congressman and now the senior vice president and chief legal officer for Outrigger Enterprises Group.
There is the possibility of a
middle ground here, an agreement that does not task Airbnb with vetting the legality of the host properties but allows the state and counties to do their job.
Case pointed in particular to a settlement earlier this year between Airbnb and the San Francisco Board of Supervisors. Airbnb and a competing online broker,
HomeAway, had sued the city over the board’s decision to fine the companies for listings by hosts that the city had not legally registered as vacation rentals.
Under the settlement, broker sites will collect data from vacation rental hosts, and San Francisco will use that information to pursue registration of the rentals.
And in New York City last December, Airbnb settled another lawsuit challenging a state law allowing hosts to be fined for listing an illicit rental on an online platform. Airbnb had argued that the hefty fines could deter hosts and curb its revenue in the city, a major vacation rental market. Under the settlement, the city can enforce the new law as long as it does not fine Airbnb.
The company is negotiating deals in municipalities all over the country. In many of them, Case said, the government is accepting, without challenge, the tax revenue remitted in aggregate by Airbnb.
It is plain that Hawaii finds this new revenue stream tempting, especially for what it could yield from Oahu rentals. In 1989, the city placed a moratorium on issuance of new permits for bed-and-breakfasts as well as “transient vacation units.”
In the intervening years, though, the rentals have proliferated in residential zones, mostly illegally, fueled in part by the easy online advertising.
At last, the city is hammering out legislation to provide a means of legalizing a limited number of these rentals, as well as requirements in advertising to help confirm the legality of listed rentals.
However, Case said, online platforms have no incentive to play any part in regulation because they make more money in an unfettered marketplace. Without oversight in place first, the revenue starts pouring in and the drive to enforce land-use rules drains away.
Ige is aware of this reality. In 2016 he vetoed a tax-collection bill similar to the agreement in the works. He should maintain that stance now, and insist on a deal with transparency about who is paying taxes for what.
Judging by experiences elsewhere, the state will have to fight for that outcome. But keeping these visitor units from multiplying unchecked, to the detriment of local neighborhoods, is an objective worthy of the fight.
