City proposal takes aim at illegal vacation rentals

Hundreds of illegal vacation rentals generating millions of dollars could be shut down under a proposal city officials hope will make it easier to enforce the law that bans short-term rentals without a permit.

A proposed ordinance would require vacation rental owners to include their city permit numbers on any advertisements in an effort to deter illegal businesses. The bill has come up before without success in the decades-old debate about vacation rentals on Oahu. Just last year it was included in a proposal that would have removed the city’s ban on bed-and-breakfast operations.

Under the latest plan, a vacation rental operator would face an initial fine of up to $1,000 for failing to post a permit number. If an ad without the number remains in place seven days after a warning, potential fines of $1,000 to $2,000 a day would kick in.

“This is just one more arm of enforcement,” said John M. Friedel, chief of the Code Compliance Branch of the city Department of Planning and Permitting. The new law would help in enforcing vacation rental zoning laws, he said.

The city Planning Commission is scheduled to review the measure Aug. 10.

The contentious debate about vacation rentals has long pitted neighbor against neighbor. A moratorium on new permits for rentals and for bed-and-breakfast operations was instituted in 1989, but effective enforcement has remained a problem.

Opponents argue illegal vacation rentals create noise in residential areas and that tourists should find accommodation in visitor destination areas.

But others say shutting down rentals could result in some people losing their jobs at a time when the economy is not doing well.

“I’m in shock at this amendment,” said Angie Larson, president of the Hawaii Vacation Rental Owners Association. “It seems premature to have this.”

The association has argued that having more rental units helps to support the economy.

Larson said a 2005 study conducted by the Kauaian Institute for the association showed transient vacation rentals generated an estimated $65 million a year in business revenue on Oahu.

Larson said the association feels more permits as well as enforcement are needed.

She said the ordinance allowed about 2,235 transient vacation units, including bed-and-breakfasts, to be issued permits if they were in operation before Oct. 22, 1986.

But Larson said the number of permits has decreased to 875, with fewer than 200 outside Waikiki.

Without a permit a residence can be rented for no less than 30 days. Friedel said enforcement officers often have to conduct a “sting operation” to figure out when renters arrive and depart to establish whether it is an illegal vacation rental.

Friedel said there are fewer complaints about bed-and-breakfast operations, where people rent a room in their home.

Larry Bartley, an official with Save Oahu’s Neighborhoods, said he is still gathering comments about the bill from members of his group.

Bartley said the bill seems to have “some good things,” but he is unsure whether it closes the loopholes.

Karen Luke, an association member, said she feels laws could be passed regulating visitor rentals in residential areas.

Luke, a retired Ewa Beach resident, said operating a bed-and-breakfast in her home would provide her with additional income.

The Planning Commission meeting starts at 1:30 p.m. at the Mission Memorial hearings room near City Hall.