Editorial: Council must be forceful to reduce illegal short-term rentals

Business is booming for home-sharing platforms such as Airbnb in tourist-magnet cities like Honolulu. Growing ranks of visitors are opting for residential rather than traditional hotel lodging as it’s often less expensive and presents opportunity to glimpse everyday local life.

Both reasons are understandable — as is the obvious attraction for property owners to open their doors for home-sharing. The image promoted by online platforms highlights the sharing of a little aloha with tourists. The stronger draw, of course, is the chance to scoop up a lot of supplemental income.

Given that tourism is our economic engine, there’s a place for home-sharing here. There could be a symbiotic balance. But in the absence of effective industry oversight through city regulation — guided by commitment to preserve housing stock for residents — what we have is a parasite problem.

The Honolulu City Council is now weighing seven bills that aim to corral and then stamp out the parasite — namely, the illegal home-sharing operation. This problem dates back to the late 1980s, when Oahu banned new bed &breakfast operations, and limited additional unhosted transient vacation units (TVUs) to hotel-resort zones.

In subsequent decades, the parasite problem festered as weak city laws and enforcement were outmatched by strong demand for short-term vacation rentals. In recent years — spurred by online platforms that are not currently required to vet the legality of a Hawaii home-sharing operation seeking to advertise — the inventory of outlaw operations has exploded.

For example, a few years ago, when Honolulu’s official vacation rental inventory included 41 B&Bs and 775 TVUs, online booking sites featured a whopping 4,400 “individually-advertised units” across two-dozen communities on Oahu, according to the Hawaii Appleseed Center for Law and Economic Justice.

Honolulu Hale now gauges the illegal tally at between 8,000 and 10,000 units. In addition to missing out on collection of fines and tax revenues, there are now growing neighborhood complaints tied to home-sharing, such as illegal parking and strained residential infrastructure.

What’s more, since homeowners can book short-term guests for much of the year here, raking in more revenue than a long-term rental would yield, the outlaws are reducing the already tight housing supply for residents. Clearly, the only responsible course of action is for the Council to toughen up home-sharing industry oversight.

Last week, the Council gave first-reading approval to a set of bills that hold much potential to thwart the parasite.

The bill attracting the most attention, rightly, is Mayor Kirk Caldwell’s omnibus proposal, which would allow permits to be issued for possibly up to 4,000 B&Bs and TVUs islandwide by capping the number at no more than 1 percent of all dwelling units in each of the island’s eight development plan districts.

This provision is an improvement over a now-scrapped version of the bill, which would have allowed an unlimited count of hosted B&Bs. The Honolulu Planning Commission panned that bid, correctly pointing out that it could yield more residential snags. Caps are needed to maintain neighborhood character.

Also, Caldwell’s plan, Bill 89, would establish new property tax classifications rather than allowing units to remain in the residential class. The rates would likely be higher, closer to those paid by resort properties, which seems fair, given the hybrid nature of the house-sharing business.

Another reason to support this proposal: It slaps illegal operators with a stepped-up penalty starting at $25,000 per day. Failure to pay would result in liens against the property and other penalties. Stiff penalties are needed to deter would-be underground operators.

Finally, technology would be key to enforcement. Rentals would need a registration number on all advertising, including on social media platforms. If the registration number is not shown, a violation is issued. This approach is showing promise in other cities contending with scofflaws.

The other bills before the Council range from one that would allow a neighbor to bring a civil action against a violator of vacation rental rules, to another that would make it a misdemeanor — punishable by jail time, hefty fine or community service — to lie to a city representative during a home-sharing unit investigation.

The Council must now carefully examine the proposals and take sensible, forceful action. Further delay would be a disservice. In years past, Council resolve has repeatedly drooped amid supporter- opponent standoffs.

The impulse to sympathize with a homeowner operating an illegal unit as a means to make financial ends meet is understandable, given the high cost of living here. But now outweighing such sympathy for individual cases are looming big-picture concerns for Oahu.

This time, the Council must push forward for the sake of establishing a better balance between collecting taxes owed and deterring the further rise of illegal vacation rentals.