Most speak against vacation rental bill

Most of the nearly 50 people who testified on Mayor Kirk Caldwell’s proposed short-term vacation rental bill Wednesday found something to dislike about it.

One segment of those who spoke said the omnibus bill goes too far by allowing an unlimited number of bed-and-breakfast establishments in Oahu’s residential districts while another group said the measure would be too onerous for families just trying to make a few extra dollars to get by.

With 35 registered speakers yet to speak and time running out for the allotted use of the Mission Memorial Auditorium, the Honolulu Planning Commission halted the hearing at 4 p.m. and will resume taking testimony at 1:30 p.m. on Sept. 19.

Chairwoman Kai‘ulani Sodaro said the commission will make a recommendation to the Honolulu City Council on the draft bill after public testimony closes. Under city rules, the commission has 30 days from the close of a public hearing to make a recommendation on a draft bill.

Among the key components of the draft of the omnibus short-term rental bill:

>> It allows for the permitting of an unlimited number of bed-and-breakfast establishments in residential districts, but only for owner-occupants with home exemptions. But it bars transient vacation units in residential neighborhoods, allowing a limited number of them in apartment and business districts, also only for those with home exemptions. Permits would need to be renewed annually.

>> It creates new property tax classifications for both B&Bs and TVUs, which more than likely would require the owner-operators to pay at a higher rate than standard residential property owners.

>> It makes it illegal to advertise without displaying the number from one’s approved registration permit. It also establishes stiff penalties for those who violate vacation rental laws — a minimum of $10,000 for violating B&B provisions, a minimum of $25,000 for TVUs.

Kathy Sokugawa, the city’s acting planning director, said she does not believe the bill and two accompanying measures will solve all the issues tied to vacation rentals. “However, we believe that it will strongly and significantly improve enforcement and reduce the impact on residential neighbors,” she said.

Bed-and-breakfast units are rented for less than 30 days by an owner living in the same dwelling. Transient vacation rentals are 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.

As the number of illegal vacation rentals has grown exponentially in the nearly 30 years since, successive mayors and City Councils have grappled with a new model to balance the different interests. The Department of Planning and Permitting reports there are only 816 legally recognized B&Bs and TVUs on Oahu, but that there are between 8,000-10,000 illegal vacation rentals.

Kailua resident Stu Simmons said he’s adamantly opposed to the omnibus bill, arguing that it could make Oahu’s housing crunch even worse by essentially allowing visitor accommodations to be legal in most residential neighborhoods.

“This would spread tourism sprawl everywhere,” Simmons said, adding that he fears “tens of thousands of homes could be converted to short-term rentals” if the bill passes.

John Price, a Kailua resident, said he sees no reason the city should allow more vacation rentals when it has a difficult time enforcing existing laws.

One illegal operator he’s aware of had accrued more than $600,000 in fines but “DPP compromised the fine down to $1,000 and offered only the explanation that they seek compliance, not punishment,” Price said.

Martine Aceves-Foster said she rents out a room in her Kailua home “to help make ends meet.” Her guests include family and friends of nearby residents as well as tourists who’ve already stayed in Waikiki and want a different experience. Area businesses get a boost from those staying with her, she said.

While she supports the idea of fair legislation for short-term rentals, Aceves-Foster said, she questioned the plan to force B&Bs and TVUs to pay more in property taxes when she already pays excise, transient accommodations, state and federal income taxes. She said she earned $10,780 before taxes by renting out her guest room 137 days last year. “I honestly feel that doubling my property taxes for earning such a modest amount for renting one bedroom in my home for less than half a year is excessive,” she said.

Others who support short-term rentals also took issue with the new tax classes and suggested that only the portion of the homes being rented be taxed at the higher rate.

Aiea resident Cara Goodrich said she supports the intent of the new bill but believes there should also be an opportunity for people to operate TVUs in residential zones.

She and her husband are paying for the expenses of three generations of family members and being able to rent their house would help, she said.

“The long-term goal of my husband and I was to move to a neighbor island and retire, and rent out the two extra rooms,” something they would not be able to do without a TVU permit, Goodrich said.

For more information, look for the links on short-term rentals at honoluludpp.org.