Law allowing more B&B permits and stiffer regulations on the way

A bill that would allow for a limited number of new bed-and-breakfast permits to be issued on Oahu while establishing stiffer fines for unlawful vacation rentals soon will go before the City Council.

The Council instructed the city Department of Planning and Permitting to come up with a proposal to deal with the rapid expansion of bed-and-breakfast operations. The department’s acting director, Kathy Sokugawa, said she is working on a bill that will be sent to lawmakers.

How many new permits would be allowed has not been determined, she told the Star-Advertiser, and the proposal may set limits for individual districts rather than a single total for the entire island.

“It could be a saturation point in a neighborhood, in a district,” or some other area “so that you don’t have essentially a village of them all clustered together,” Sokugawa said. “We want to spread them out so that they don’t overwhelm the character of our neighborhoods.”

The City Council has struggled for decades to come up with a policy on how to deal with the bed-and-breakfast issue. Permits for new vacation rentals, except in resort-­zoned districts, have not been been issued by the city since 1989, a detail that has not deterred hundreds of illegal ones from operating.

A 2017 study by the Hawaii Tourism Authority estimated there are 23,000 vacation rental units statewide, a 35 percent increase over two years.

B&B supporters say renting out space in their homes helps cash-strapped residents cope with the high cost of living in Hawaii. Proponents also say the B&Bs offer a popular alternative for visitors to Hawaii’s shores and have helped keep tourism growing in the state.

Opponents argue the operations are a growing blight on residential neighborhoods, eating into the available long-term rental inventory during a severe housing shortage and often overburdening roads, water and sewer lines and other infrastructure.

“I am personally not going to support or (put forward) a bill to allow any more short-term rentals if it doesn’t have a strong set of new enforcement tools,” Sokugawa said. “That is what we’ve prepared.”

Sokugawa added that a vacation rental advisory group and other key stakeholders will be see the proposal “by the end of this month or early next month.”

A bill now moving through the state Legislature aims to better regulate vacation rentals by giving the counties more powerful enforcement tools.

Sokugawa said she’s hopeful that House Bill 2605 includes stronger civil fines (starting at $25,000 per violation) and authorizes the counties to “disgorge” all profits property owners collect unlawfully.

“I don’t know if people will stop doing it, but I would think twice about doing this if you could lose all the profits you make on this plus a minimum fine of $25,000,” she said.

Sokugawa said what happens at the state Capitol won’t affect what her department is working on.

“We’d like (a state bill) to move forward, but we’re not sure we need one to move forward with our own,” she said. “We’re not waiting for that bill to pass.”

In related news, the Hawai‘i Appleseed Center for Law and Economic Justice last week released a report on the impacts vacation rentals are having on state’s the housing market and economy.

The report said one in every 24 housing units in Hawaii is being used as a vacation rental, taking a bite out of available housing inventory for Hawaii residents.

“Families who have lived in Hawai‘i for generations are being displaced from their homes and their islands by a steady flow of short-term visitors,” the Appleseed report concluded.

The report estimated that at least 52 percent of vacation rentals are owned by nonresidents, and that between 74 percent and 93 percent were for entire houses or condominiums.

The report recommended, among other things, that there be increased enforcement, new laws that would make advertising an illegal site the trigger for citations, fines for platforms that advertise illegal rentals, and a requirement for the platforms to identify illegal operators.