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Mayor Kirk Caldwell’s plan to legalize more vacation rentals but under stricter regulations got mostly lukewarm feedback from a housing advocate and key City Council member, as well as both a supporter and opponent of short-term rentals. Read more

Mayor Kirk Caldwell’s plan to legalize more vacation rentals but under stricter regulations got mostly lukewarm feedback from a housing advocate and key City Council member, as well as both a supporter and opponent of short-term rentals.

The city has long wrestled with the issue of short-term vacation rentals, both transient vacation units and bed-and-breakfast establishments. Bed-and-breakfast units are rented for less than 30 days by an owner living in the same dwelling. Transient vacation rentals, or TVUs, are other units rented for less than 30 days where the owner does not live in the same dwelling at the same time. The city stopped issuing permits for both in 1989-90, except in hotel-resort zones.

But that hasn’t stopped what the Hawaii Tourism Authority has estimated to be roughly 23,000 vacation rental units statewide from operating, most of them illegally.

Those who are troubled by the growing proliferation of vacation rentals said Caldwell’s plan allows too many new units without inserting enough safeguards to stem abuses.

Council Zoning Chairwoman Kymberly Pine said she won’t support any bill allowing more short-term rentals unless she’s assured that the Department of Planning and Permitting will put together a strong enforcement team that will track down and fine illegal rentals.

“So far, the (Caldwell) administration has not proven to me that they can even enforce the illegal activity currently going on on Oahu, so they will need to demonstrate they will have a new program to increase enforcement,” Pine said. “Otherwise, every idea presented to the City Council is useless.”

Pine, who heads the committee that will consider any vacation rental bills, said she is proposing funding in next year’s operating budget for such a team.

The proposal must go to the city Planning Commission for its recommendations before moving to the Council.

The plan, which Caldwell outlined Tuesday night in his State of the City address, proposes:

>> All short-term rentals, both hosted and unhosted, be required to obtain registration numbers from the city and to place those numbers on all their advertising materials. Only owner-occupants, those who live in their units and claim homeowners’ exemptions on them, would be eligible.

>> Unhosted vacation rentals be permitted only outside of areas zoned for single-family residential use such as apartment, business or mixed-use districts; while bed-and-breakfast units will be allowed in all areas, including single-family residential units.

>> Increased property taxes for both types of vacations rentals, but higher rates for TVU operators.

>> Increased penalties to $25,000 per day starting seven days after the first Notice of Violation is issued and going as high as $100,000 a day.

>> No limit on the number of B&Bs allowed, but TVUs cannot exceed more than 1 percent of all available housing units in each of the city’s nine planning regions as defined in the city General Plan.

>> No change in the number of units allowed per household, which is currently two, or in the parking requirement of one stall for every unit.

Victor Geminani, co-executive director for the Hawai‘i Appleseed Center for Law and Economic Justice, said Caldwell’s proposal offers nothing in terms of increased enforcement and seems more focused on collecting more tax revenue for city coffers — by increasing the number of vacation rentals — than helping the island’s affordable-housing crunch.

His organization won’t support legislation that places no limit on the number of B&Bs, as Caldwell’s plan proposes, because they only contribute to the housing shortage, he said. “Any B&Bs that are created are going to be taking away from affordable housing opportunities for individuals.”

Geminiani said he also wants to ensure that whatever bill is passed will include language shifting the burden of proof in illegal advertising to the operators, which would be similar to the language in the recent bill allowing for Accessory Dwelling Units.

Larry Bartley, who has been sitting on a city advisory panel regarding vacation rentals, said he’s disappointed the mayor’s proposal does not specifically address more enforcement of illegal units.

The city has the ability to impose fines now, but instead now generally chooses to negotiate settlements with offenders allowing them to pay fines much lower than originally imposed, he said.

Like Pine, Bartley wants sting operations set up allowing inspectors to pose as visitors. An automated enforcement system would make it easy enough that violators could be caught without the inspectors even needing to leave the office, he said.

“Until we see a change in enforcement attitude by the city, we can’t accept any expansion of any permitting or additional acceptance by the city,” he said.

Matt Middlebrook, public policy manager for Airbnb, said in a statement he had yet to see the details of Caldwell’s proposal, but warned that passing legislation that would place burdens on operators could have dire consequences.

“We are concerned about restrictive rules on transient vacation units, which would be catastrophic to the local economy, devastating businesses, local residents and hosts who rely on the income,” Middlebrook said.

In related news, the Senate Ways and Means Committee passed a version of House Bill 2605, which would allow counties to penalize violators of of transient accommodations laws with a minimum civil penalty of $25,000.

It also allows online hosting platforms to serve as tax collectors for clients, but it clarifies that the $25,000 penalty also would apply to hosting platforms if they provide or collect a fee for booking services from transient vacation rentals that are not lawfully certified, registered or permitted under applicable county ordinances.

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Star-Advertiser reporter Allison Schaefers contributed to this report.

State of the City 2018 Caldwell by Honolulu Star-Advertiser on Scribd