Editorial: Vacation rentals need strict control

Spurred on by online home-sharing platforms such as Airbnb and Homeaway, Hawaii’s vacation rental industry is booming at a wild and reckless pace. The statewide count of vacation rental units (VRUs) jumped by an estimated 35 percent between 2015 and 2017.

Last year, the Hawaii Tourism Authority counted about 23,000 VRUs statewide, which means that one in every two dozen of our housing units is being tapped for short-term stays, according to a report released last week by the Hawaii Appleseed Center for Law and Economic Justice.

The lure is easy to understand: Given the growing ranks of visitors now opting for residential rather than traditional hotel lodging, thousands of homeowners can book short-term guests for much of the year and rake in two or three times more revenue than a long-term rental would yield. The trouble, of course, is that the vast majority of the units are illegal.

If left unchecked, we can expect the proliferation of outlaw rentals to spin further out of control — reducing the already tight housing supply for residents, increasing already high housing costs and changing the character of residential neighborhoods.

The Appleseed report,“Priced out of Paradise,” sizes up VRU laws in several tourist-magnet cities and offers the nonprofit’s take on ordinances that prioritize serving residents over non-resident investors. The 27-page report should be required reading for Hawaii’s county and state leaders who are continuing to grapple with weak regulation and enforcement quandaries.

Among the cities spotlighted: San Francisco. Two years ago, the city had slightly more than 1,600 registered VRUs yet there were more than 7,000 hosts advertising on Airbnb. The city then took aim at illegals by putting in place “platform liability,” through which enforcement teams hold online platforms (like Airbnb) accountable for facilitating illegal transactions, rather than placing full responsibility for compliance on hosts. That fix and others have prompted a 70 percent drop in VRU listings.

It’s encouraging that a few recommendations in the Appleseed report align with elements in a bill that’s now being weighed by Honolulu’s City Council. Both call for limiting VRU operators to one unit, prohibiting VRUs in certain neighborhoods based on zoning, and imposing steep fines for scofflaws.

Other report recommendations include following San Francisco’s platform liability move, and focusing enforcement actions on those who rent out multiple properties. Nearly 75 percent of Hawaii’s hosts have multiple listings, and the bulk of those are entire homes or apartments, according to the report’s findings.

It’s alarming — but not surprising, due, in part, to the combination of Hawaii’s low property tax and toothless oversight of this industry — that more than half of VRUs in Hawaii are tagged as owned by non-residents.

The report rightly points out that limiting the number of units a person or entity may operate agrees with the image promoted by home-sharing platforms: locals supplementing income and tourists booking affordable accommodations. There’s a clear need for both in Hawaii.

But there’s no chance of attaining any sort of symbiotic balance between the two unless Hawaii effectively shuts down the flow of nonresident investors streaming in to make low-risk money on what are essentially unhosted hotels dotting residential streets.

Honolulu’s official VRU inventory, which includes hosted bed-and-breakfast and unhosted transient vacation unit (TVU) rentals, totals 816. The B&B count has not budged since the late 1980s, when Oahu banned new operations; additional TVUs are supposed to be limited to hotel-resort zones. But the island’s inventory of illegal units is gauged at between 8,000 and 10,000.

The only apparent way to tame this trend is to impose regulation that limits VRU inventory in such as way that preserves housing stock for residents, and backing that up with consistently strong rule enforcement and penalties.