Votes fall short on vacation rental statute

The Honolulu Planning Commission failed to muster enough votes to pass a bill intended to crack down on illegal vacation rentals by requiring that permit information be included in advertising.

With more than 150 people attending a second public hearing Wednesday, the commission voted 4-3, failing to gain a five-vote majority.

Commissioners are scheduled to review the amendment again on Sept. 7 and take a second vote. The meeting starts at 1:30 p.m. at the Mission Memorial hearings room.

A public hearing at the same site attracted more than 300 people on Aug. 10.

Deputy Corporation Counsel Winston Wong said procedural rules allow the commission to vote a second time on the same amendment if it fails to gain a majority.

Wong said that if the second vote fails, the proposed amendment will be forwarded to the Honolulu City Council without a recommendation.

Commission Chairman Rodney Kim, who voted against the amendment, said the bill needs to be more comprehensive than the one proposed by the city Department of Planning and Permitting.

Under the proposal, a short-term rental operator would be required to list a certificate number and address or tax map key in advertisements.

The proposed amendment, if passed, would allow the city to impose an initial fine of up to $1,000 on rental agents that fail to list the information, even on websites.

The amendment is similar to a state law that requires contractors to list their licenses in advertisements.

Department Director David Tanoue said he sees the vote as a positive step based on commissioners’ comments about wanting improved enforcement.

"I think it’s really positive. They’re understanding our situation," he said.

Testimony about the bill was generally split between those who want more enforcement and those who believe the city should increase the number of vacation rentals in residential areas. Since 1989, the number of permits has decreased from 2,500 to 900, with the idea of the city eventually phasing out short-term rentals in residential areas.

But the number of unpermitted vacation rentals in residential areas has increased into the hundreds on Oahu.

Mahealani Schneider, whose family owns Buzz’s Original Steak House, said the business was able to make donations of $15,000 to $20,000 annually to the community because of the high percentage of visitors at short-term rentals in Kailua.

"This proposed legislation will cut off our contributions," she said.

Vacation rental operators said short-term rentals provide an affordable alternative to travelers who otherwise would choose to spend their vacations elsewhere, and that current laws against them are outdated and ill-conceived.

"They want to stay in a house," real estate broker James Lewis said. "They don’t want to stay in a hotel."

Supporters of the proposed amendment said short-term rentals reduce the number of rental homes available to residents, contribute to homelessness, bring down neighborhood property values, take work away from hotels and create noise late at night.

"That’s total baloney that their properties are quiet," said Hawaii Kai resident John Kraemer.